2.1 or animal body by surgery or therapy

2.1 Introduction:Standards:Formal standards are rules or guidelines approved and adopted by a standardization body that address permanent technical recurring problems. Standard creation could be triggered by various factors like security reasons where a certain kind of standard needs to be developed for an elevator to ensure its safety for for health reasons for certain medicines. Not only security and safety, standards can also be created when there is demand like the demand for standardization of charging sockets for certain kinds of phones or devices etc.

There are various organizations called the Standard Setting Organizations(SSOs) that creates the standards. Standards can be classified as: Measurements, Quality management, Food labelling, Pressure Equipment, CT and telecommunications (interoperability),IP Protocols, markup languages etc. Patents:A patent gives the inventor of an innovation the exclusive rights for an innovation. Any other third party cannot produce, use or sell products under patent until and unless the patent holder agrees to it. Patents in Europe are governed and granted by the European Patent Office. To become patented the invention needs to be novel or non-obvious, involve an inventive step and be susceptible of industrial application. The following are excluded from being regarded as a patent (a) inventions the commercial exploitation of which would be contrary to “ordre public” or morality (b) plant or animal varieties or essentially biological processes to produce plants or animals (c) methods for treatment of the human or animal body by surgery or therapy and diagnostic methods practiced on the human or animal body. Standard Essential Patents: A patent that is vital to a standard is known as Standard Essential Patent.

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Patented technologies that cannot be substituted and for which an alternative solution cannot be found are basically SEPs. For example, the Menu button in Apple phone is patented but it not a SEP as other companies have created menu buttons in a different way. But patents related to GSM or 4G standards are essential for setup of these technologies in all smartphones and hence they are Standard Essential Patents. Standard Essential Patents (SEPs) have been important in implementation of corporate policy decisions in the technology sector from a long time.Problems with SEPsThousands of SEPs are implemented by various SSOs over the years. Since these standards are essential for using one o the other technologies there are lots of litigation has come up.

Since once a standard is adopted, for example, the owner of an SEP will have a superior negotiating place that can be used to generate more profits based on the value of the standard rather than the primary SEP. Likewise, a standard-setting organization (SSO) may be reluctant to adopt a standard in the first place if an SEP owner refuses to license it in advance because the SEP’s value is a function of the standard’s level of adoption. To prevent these types of licensing “holdups,” as well as ensure access to SEPs so that standards can be widely adopted, SSOs created FRAND.Figure : Patent Litigation in Europe during the period 2000-2008 (http://www.fabiangaessler.

com/papers.html) Figure : Comparison of Litigation of SEPs in DE and UK.FRAND:Standard development organizations typically require their members to commit to make their patents essential to the standard accessible on Fair, Reasonable and Non-Discriminatory terms and conditions (FRAND, in the US ‘RAND’, hereinafter ‘F/RAND’) and to disclose those patents that they believe are or may become essential to the standard. ‘Fair’ means that both the parties will be treated equally in the licensing negotiation. ‘Reasonable’ means that with the help of set royalties companies can make profit without any disadvantage to them. ‘Non-Discriminatory’ obligates to treat other similar companies in a similar manner.

Terms of FRAND are decided between companies based on negotiations from both ends. Before adoption of any standard, SSO members typically are required to agree to license SEPs on FRAND terms to other SSO members and those who use the standard. This makes sure that no unfair means will be adopted by licensing company. Standards in Software:In the field of open source software, as compared to telecommunication industry, here is a distinct absence of patent standards. A large number of standard bodies have identified the fact that there is a significant lack of number of patents in this field. Usually all the patents related to software are licensed royalty free. ‘Object Management Group’, that develops standards for a wide range of technologies for large number of companies, is based on the policy that it allows either free licenses or reasonable and non-discriminatory licenses. OASIS (Organization for the Advancement of Structured Information Standards) says that claims on standards are permissible but they are usually published without initial restrictions on terms of use but also emphasis on the fact that it should be free and non-restricted.

Even the British Standards Institute (BSI) said that the royalty claims allowed under its (and International Standards Organization’s (ISO’s) rules are nearly never used. Open Source Licensing:An open-source license is a type of license that allows the source code, blueprint or design to be used, modified and/or shared under defined terms and conditions which is usually free of charge. Every user can do modifications in the source code according to their requirements and if needed also redistribute copies of it for commercial purposes. SEPs as a barrier to software industry:There are various reasons why Patents are not preferred in the Software Industry. Some of the reasons can be analyzed as below:Patents increases complexity of operation: Patents in the open source industry provides various problems for standard setting organizations.

 They accelerates the complexity of transactions taking place as well. W3C,IBC and IETF all discourages the use of patents and thus incorporates no claiming and patenting rules in their policies.Difficulty in examination of patents: It is most likely the case that the scope and coverage is not easy to be determined. If the patent does not have proper quality, it effects the innovation process and furthermore the business and market value. Moreover, the software patents are unduly the subject of patent litigation, with most patent defendants sued over a software patent, many of which are difficult to understand and mostly not valid.Barrier to increase networking: The Internet has been globally embraced and is a vital platform for innovation because it was consciously built upon a network of non-proprietary, non-regulatory, transparent and open standards.

The architecture of the Internet and of the Web is designed in such a way that millions of users are connected in one network. W3C’s initiative to adopt its standards worldwide, shows that OSS, the Internet and the Web are broadly spread and continually building out across many development environments and users. SEPs and FRAND as barrier to Open Source Software:As already discussed above, SEPs can be licensed in terms which are FRAND that helps in transfer of SEPs in a manner that is Fair , Non Discriminatory and Reasonable. FRAND as a solution in a general patenting scenario is very much appropriate but in the Open Source scenario it is not a good fit.

Based on the following arguments we can do the analysis.Confidentiality:FRAND terms are usually not made public. Only the parties involved knows what is terms and conditions are licensing and how much royalty is involved. FRAND seldom allows sublicensing to the third parties, in a way that requires no further action from the sublicensee to obtain the same rights to implement the standard. If such is a scenario in open source software then FRAND is difficult to co-exist with open source as applying same terms and conditions for each distributed copy would mean to make those conditions public and to apply same for each distributed copy at each level which is not possible.

Royalty Tracking:Distribution of several copies of software makes it difficult to track the copies and obtain the royalty per copy. This would also require additional terms and conditions for royalties as distribution on a more than second level basis would make it more complex to decide who would receive the royalty, the original source code creator or the one distributing the software. Also the complexity of software and royalty calculation can never be exact and will always be complex. Redistribution:FRAND does not permit to redistribute the software to downward recipients by itself as it requires to keep track of royalties and to make sure that the terms are followed for each copies. This is practically impossible as there could be thousands of copies and infringements would be very difficult to keep trail of. Obstacle to Innovation:One of the most important principle of OSS is that it promotes innovation by implementing novel ideas and developing solutions to more complex issues and problems. A community of people that does not compete with each other but just works together in creating new resources and opportunities for others to benefit from these resources.

Advantage to which is in depth analysis to the problems and varied applications. If there are legal and monetary barriers to every contributor it has serious consequences to innovation. Freedom to operate:Developers in Open Source communities are granted enough freedom to make use of free software and modify it based on their own ideas and needs. There is no regulation on how the code can be modified and either used for personal or commercial purposes. FRAND wholly defuses the collaborative open model behind OSS, by limiting the use of freedoms granted by the latter. Overhead to find the correct patent holder:One of the biggest issues in Open Source environment is to find the correct holder of patent.

It is a big issue for researchers as well as the developers. For example, researchers tried to find out about the licensing requirements for the ISO’s TIFF/EP standard, for which 19 organisations were listed in the ISO patent database. Once more, the researchers sent out letters asking about licensing details, and of the 19 contacted, not a single one repliedhttps://arstechnica.com/tech-policy/2016/05/eu-tech-standards-why-frand-not-compatible-with-open-source/. Complexity of relationships for patent holders:SEPs requires each patent holder to create private relationships with community contributors. One open source community can have several thousand of participants. It is simply not practicable to have a relationship with each and every person in the community and it just conflicts with community based open innovation and teamwork approaches. Threat of discrimination:One of the basic requirements of FRAND is to contact the SEP holder for obtaining license.

In such a scenario to grant license totally depends on the holder of SEP in which there is a threat of discrimination as SEP holder cannot define which individual can be under similar category. Discrimination is neither compatible with OSS principles nor with FRAND itself. Blanket Claims:Lots of companies are famous for blanket claims, which happens when they declare that they own SEP without specifying any details of such patents.This possesses a grey area in accuracy of information related to patents and causes difficulties for any developer to use any patent that does not have a proper information available. Consequences for SMEs:Small and Medium sized enterprises specially the ones that are just starting to make entry in the market rely on free and open source projects to start up. The don’t possess huge capital to invest on buying patents. A major set back for SMEs would be to pay up for software.

This will not only hinder the market entry of such companies but also would set back the innovation and research capability on the technology. Threat to interoperability:The science of Internet, Web and OSS is different from telecommunication sector. SEP holders in such a sector could prevent interoperability in order to reduce the competition and make utmost profits. Consider a scenario where your web browser works only with certain web pages and not all. If proper attention is not paid it would give monopoly to patent holders in the open source industry. Threat of future implications:For every participant there is a threat from current and future owners of the patents.

Incase of an influential owner of the patent in the future , it could exert more market influence without even taking part in the project. This could lead to serious business implications for the participants and their future in the market and industry.. Patents and Open source software can never go together. The basic principles on which open source is developed is to provide anyone the ability to use the software , modify , use it according to their will and redistribute it to anyone. SEPs and FRAND with their terms and conditions defies all this.

They originated from another sector and through traditional SSOs, while software and web standards have advanced in a more cooperative way, i.e. through fora and consortiaMark Bohhanon, “Out of the Murky Lagoon and into… Is there a Emerging Consistent US Government Policy on Standard Essential Patents?”, 2014-08-08.FRAND cannot govern OSS. FRAND or Royalty Free ?With all of barriers considered to OSS, there are still arguments on how licensing of software will take place.

There are two approaches that are considered FRAND or RF. RF provides an assurance to the users of patents that the right to use of the patents will be without any restrictions or royalties. But the implementation of FRAND in some cases can also be debated on. Why FRAND?A scenario where an invention which is new and has never been made or thought of in the past is the base technology and the inventor wishes to protect its invention and obtain revenues for his efforts and research.

Its substantial to reward the innovators for their contribution of SEPs to standardization. In such a case FRAND is a dominant model. For example, Amazon One-Click Patent. The One-Click software lets internet shoppers avoid the online shopping cart.

If the user has their payment, billing, and shipping information saved, they can buy something with a single clickhttp://patft.uspto.gov/netacgi/nph-Parser?Sect1=PTO1=HITOFF=PALL=1=%2Fnetahtml%2FPTO%2Fsrchnum.htm=1=G=50=5960411.

PN.=PN/5960411=PN/5960411. Amazon saw increased sales and revenue after implementation of this innovation in their website. It also licensed the same to Apple to generate revenues.

It can also be said that when standardization involves more research-intensive and base technology, it is that a FRAND policy will have been selected to govern availability of SEPs. FRAND terms are often seen as mismatched with the terms and conditions of Open Source licenses, hence the fact that Royalty free policies allowing unencumbered implementation of open standards in Open Source were established in the market in a number of leading global SDOs. Royalty Free:Unlike FRAND, where the innovation is more in the application and it is value addition to the standard, a situation where more than earning incentive from the innovation, its important to have wider adoption of innovation, RF is the model that is used. For example, Linux is freely available to all and is a widely adopted software. Several thousands of developers constantly work together to make the software better and more secure.Around 33% of the usage worldwide is of Linux Operating System.

Another significant example by IBM to promote innovation and growth of industry in a more collaborative manner was to make its key technologies in over 150 open standards available royalty free to developershttps://www-03.ibm.com/press/us/en/pressrelease/7473.wss.IBM’s vice president says that “Users will adopt new technologies if they know that they can find those technologies in a variety of interchangeable, compatible products from competing vendors” https://arstechnica.com/tech-policy/2007/07/ibm-promotes-open-standards-with-far-reaching-patent-pledge/.More recent example to promote the usage of a technology by making its patent for electric cars (Superchargers) public and free was by Tesla.

Not only that CEO Elon Musk made over 200 patents openhttp://www.iflscience.com/technology/tesla-may-release-patents-encourage-supercharger-collaborators/.So we can say that RF policy can be given importance when standardization is located in top or the more on the higher levels of the technology stack. The focus is such a scenario will be interoperability. A licensing technique that does not require payment or royalties, fits best in the open source scenario.

Even W3C encourages the use of web standards on Royalty Free basis to promotes its widest adoptionhttps://www.w3.org/Consortium/Patent-Policy-20040205/. Summary (FRAND or Royalty Free):Both FRAND AND Royalty Free at different levels supports innovation.

One tries to earn more from it other tries to widen its scope in the market. That said, its also important to recognize that Royalty Free has to be incorporated more deeply in Open Source Environment and that FRAND can never be part of a true open sore culture. Also, as already discussed above, four freedoms of software emphasis on use, study, share and improve the software.

 The restrictions that FRAND imposes in the usage and sharing of software is the basic denial or rights exercised on four freedoms. Royalty free though only takes care of the issue related to payments, there could be restrictions on the way software is adopted and used.Therefore, the best practice to promote a wider adoption and innovation and truly being compatible with four freedoms of software is to make the technology restriction free.3.

ConclusionStandards are indeed very important to the software industry but the rules and regulations governing one industry cannot be applied to another industry. The concept of SEPs and FRAND rules the telecommunication industry and standards are developed by SSOs to ensure interoperability in these sectors. Open Source industry and its standards are developed in more of a collaborative manner that fosters wider adoption, easy market entry and most importantly innovation without any restrictions.SEPs poses a threat to these in numerous ways already mentioned. The solution of FRAND in the OSS industry not only is incompatible with FLOSS but also with new era of digitization and technology convergence. Indeed Royalty Free is one of the best ways to implement the concept of FLOSS but it is still not the best solution to it.

Only restriction free policies can provide true freedom and can be compatible with four freedoms of software.

Author: Margarita Mcdonald


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