Helping the Open Internet to Thrive

Though we often take it for granted, the global data network is one of the wonders of our world.  Without that network, users around the world would not be able to surf the web, post video and text, and communicate with each other using voice, chat, and e-mail.
The success of the global data network rests on interoperability standards that were created by standards development organizations like the IETF, IEEE, ITU-T, and W3C.  In those organizations, expert technologists meet to create the standards that define how different products made by different vendors will work together.  Without standards, the Internet as we know it would not exist.
Cisco is proud that our employees have played leading roles in the creation of interoperability standards, just as they have invented many of the foundational technologies used in the global data network.  As a result of their efforts, Cisco has a portfolio of telecom and networking patents, including patents required to implement widely used interoperability standards, that is second to none.
While we have been at the forefront of networking technology, we recognize that our customers want technically excellent products and products that work well together.  For example, our unified communications customers often use Cisco products for voice and video, but products from our competitors for e-mail or instant messaging.  They are sometimes frustrated when products they purchase from different vendors don’t work well together, or when using products from one vendor forces them to implement proprietary voice or video protocols that do not enjoy broad industry support.   In unified communications, as in other areas, collaboratively developed standards are a common language that products made by different vendors can use to make their products work together, creating a better experience for customers.

There was some news last week about the relationship between interoperability standards and patents.  It’s fair to say that relationship is under some strain.  The products Cisco develops often implement dozens or hundreds of standards, and implementing each of those standards may require licenses to hundreds of patents owned by dozens of patentees.  Because patents are increasingly bought and sold, the owners of patents required to implement standards are increasingly owned by non-practicing entities that have no stake in the success of the standards development process or the implementation of standards.
The intersection of standards and patents is not a new issue for Cisco.  We have been forceful advocates for a standards development system that gives companies that implement standards greater predictability around licensing terms, and that prevents owners of patents that are necessary to implement standards from seeking unreasonable and anticompetitive royalties.  Our voice has been heard within standards development organizations and at competition enforcement agencies around the world, who recognize the harm to consumers that abuses of the standards development process cause.
Cisco believes that our industry and our customers benefit from a standards development process that is:

Transparent: companies that participate in standards development should be able to make informed decisions about what technology to include in standards, and implementers of standards should know what it will cost them to implement the standards they use in their products.
Predictable: if a company participated in standards development and committed to license patents on reasonable terms, it should not be able to gain leverage in subsequent licensing negotiations by threatening to enjoin implementation of a standard, at least not unless it is responding to someone else’s assertion of patents against it.  That rule should apply both to the participant and to any subsequent purchaser of the patent that is subject to the licensing commitment.  And whoever owns standards essential patents, the licensing rates for those patents should reflect only the value of the patent before it was included in the standard.  That value should be limited to a percentage of the contribution that the novel aspects of the patented invention contribute to the standard, not the functionality enabled by other portions of the standard or other functions the same product performs.

We were encouraged to see the public statements that some of our industry peers made last week regarding their views on the intersection between standards and patents.  We welcome continued discussion about how to change the standards development system to introduce greater transparency and predictability.  That discussion should include both participants in standards development and stakeholders with a broader public policy perspective.  Together we can create a transparent standards development system that leads to predictable outcomes, for the benefit of industry participants and our customers.