""Royalty-free" is an appealing notion, especially when applied to the licensing of a patent essential to a standard. This standard is even more compelling to an implementer when every participant in the relevant standards body or proprietary consortia, including preeminent technology companies, has pledged it will grant its essential patents on a royalty-free (RF) basis. What could be better than an entire ecosystem around a standard or proprietary solution and its implementation being bound by an RF pledge?"
"According to Dina Kallay, Deputy Assistant Attorney General in the Antitrust Division of the DOJ, the "royalty-free" claim raises concerns. In a recent speech, Kallay called out "private consortia that impose mandatory, royalty-free cross-licensing obligations on their members. . . . [I]n the context of a proprietary consortium that is made up of dominant implementers that collectively possess market power, such arrangements can be competitively harmful.""
Royalty-free licensing of patents essential to a standard can appear attractive to implementers, especially when all participants pledge to grant essential patents on a royalty-free basis. Universal royalty-free reciprocity creates an ecosystem where implementations are bound by RF pledges and is practiced by bodies such as the W3C and the Alliance for Open Media. U.S. antitrust authorities view royalty-free commitments with concern when private consortia composed of dominant implementers impose mandatory, royalty-free cross-licensing obligations, because such arrangements can be competitively harmful. Royalty-free requirements combined with forced reciprocity can operate as collusive schemes among dominant players to promote closed, proprietary standards. Reciprocity and IPR policies are complex and require careful scrutiny.
Read at IPWatchdog.com | Patents & Intellectual Property Law
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