The antitrust ghost in the standard-setting machine

It is the policy of the IEEE and many other standard-setting organizations to request that any patented technology incorporated into a technical standard be made available to all users of the standard on reasonable and nondiscriminatory (RAND) terms (see IEEE-SA Standards Board Bylaws, clause 6, available at http:// standards.ieee.org/guides/bylaws/sect6-7. html#6). By the same token, such organizations typically require that participants engaged in formulating a standard disclose whether the proposed standard's use would infringe patents that their companies own. They must also disclose whether such patents will be subject to RAND licensing. Ordinarily, if it appears that a necessary patent exists and will not be available on a RAND basis, the organization requires that the technical committee change or abandon the standard to prevent a patent from blocking its use. Consequently, the technology needed to practice all or most standards is, in principle, subject to RAND licensing. The fly in the ointment becomes visible once an industry adopts a standard and uses it. The owner who promised to make the patent available on a RAND basis might have a different concept of what that means than prospective licensees. Recently , disgruntled standards users have complained that patent owners have unilaterally demanded excessive royalty notes on a " take it or leave it " basis. They have also complained of abusive and unreasonable negotiating tactics. One antitrust suit, for example, charged that the owner of a patent necessary for practicing an IEEE standard (802.11, in this case) offered to license the patent at an allegedly already very high rate. Further, the offer would remain open for only 30 days, after which the royalty rate would double. To prevent such conduct, some have suggested that standard-setting organizations should require not only an assurance of RAND terms, but also an advance disclosure of those supposedly RAND terms. Then, if the terms are excessive—for example, because of a royalty that is a large multiple of normal and customary notes in the industry—the organization can simply not adopt that technology as a standard, or at least consider other options. The IEEE and other standard-setting organizations have firmly rejected all such proposals. Thus, the IEEE has stated: " You must not discuss subjects like the pricing for use of a patent, how a patent should be licensed, validity or interpretation of a patent claim, or any terms or conditions of use " The main stated reason for …