Apple Inc. v. Samsung Electronics Co. Ltd. et al

Filing 847

Administrative Motion to File Under Seal Samsung's Opposition to Apple's Motion for Partial Summary Judgment filed by Samsung Electronics Co. Ltd.. (Attachments: #1 Trac Declaration in Support of Motion to File Under Seal, #2 Samsung's Opposition to Apple's Motion for Partial Summary Judgment, #3 Hecht Declaration in Support of Opposition to Motion for Partial Summary Judgment, #4 Ex A, #5 Ex B1, #6 Ex B2, #7 Ex C1, #8 Ex C2, #9 Ex D, #10 Ex E, #11 Ex F1, #12 Ex F2, #13 Ex F3, #14 Ex F4, #15 Ex G, #16 Ex H, #17 Ex I, #18 Ex J1, #19 Ex J2, #20 Ex J3, #21 Ex J4, #22 Ex J5, #23 Ex J6, #24 Ex J7, #25 Ex J8, #26 Ex J9, #27 Ex J10, #28 Ex J11, #29 Ex K1, #30 Ex K2, #31 Ex K3, #32 Ex L, #33 Ex M, #34 Ex N, #35 Ex O1, #36 Ex O2, #37 Ex P1, #38 Ex P2, #39 Ex Q1, #40 Ex Q2, #41 Ex Q3, #42 Ex Q4, #43 Ex Q5, #44 Ex Q6, #45 Ex Q7, #46 Ex R, #47 Ex S1, #48 Ex S2, #49 Rosenbrock Declaration in Support of Opposition to Motion for Partial Summary Judgment, #50 Ex 1, #51 Ex 2, #52 Ex 3, #53 Ex 4, #54 Ex 5, #55 Ex 6, #56 Ex 7, #57 Ex 8, #58 Ex 9, #59 Ex 10, #60 Ex 11, #61 Ex 12, #62 Ex 13, #63 Ex 14, #64 Ex 15, #65 Ex 16, #66 Ex 17, #67 Ex 18, #68 Proposed Order Denying Apple's Motion for Summary Judgment, #69 Proposed Order Granting Samsung's Administrative Motion to File Under Seal)(Maroulis, Victoria) (Filed on 4/2/2012) Modified on 4/3/2012 Attachment #1 Trac Declaration placed under seal. Posting of attachments #16, 18, 19, 20 through 33, 37, 38, 47 and 48 are NOT in compliance with General Order 62 (dhm, COURT STAFF).

EXHIBIT 10

COOKE & CA,C:lt-,~,. ,~L
i UNOOLN’S INNS FIELDS
WC2A 3BP
8OLIOITORS

SSION OF THE

EUROPEAN C~ITIES
C0M(92) 445 final
Brussels,27’ October 1992

COMMUNICATION FROM THE COMMISSION
...;:.::!j’..

INTELLECTUAL PROPERTY RIGHTS AND STANDARD I ZAT ION

¯~i:,.¸
ti-~ "

C0M DOCS
1992

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TABLE OF CONTENTS

1 .

2.

Introduction
Principles of standardization
types of stahdards and objectives of
standardization
principles used In national and International
(2.2)
standards bodies
(2.3) use of standards by publ ic authorities
(2.1)

3.

Principles of Intellectual property protection
(3.1) general principles
(3.2) patents ......
(3.3) copyright
(3.4) semi-conductor products and other Intellectual
property rights
(3.5) effects of Inteilectual property rights

4.

The standard makln~ process
(4.1) standards Incorporating no protected material
(4.2) de facto standards
(4.3) standards created to include an Intellectual
property
right: agreement and
IIcence
(4.4) late or non-diSclosure of rights
(4.5) liability for non-dlscIo6ure
(4.6) Identification of right holders
of protected Intellectual property rights
(4.7) availability of I Icences
(4.8) Industry - specific solutions

5o

refusal

-

to

Inclusion

Other policy considerations
(5.1) competition aspects
(5.2) availability of Ilcences to third country
entitles - trade policy aspects

6.

Conclusions

(6.1) codes of practlce/guldel Ines/undertaklngs
(6.2) general principles
(6.3) Community action

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1 .. 0 .

1.1.1.

I NTRODUCT I ON
Standardization and the protection of Intellectual
property serve different objectives but have to co-exist
In the same Industrial and commercial envlronmen%.
Standardization alms at diffusing technology In ~the
public Interest, while Intellectual property rights aim
to secure private property protection. The
standardization process cannot take place effectively If
no clear solutions exist to resolve potential conflicts
between the objectives of standardization and the
principles of Intellectual property rights. At the same
time, the Incentive to develop new products and processes
on which to base future standardization will be lost if
the standard-making process Is carried out without due
regard for Intellectual property rights.

1.1.2.

In December 1991 the Commission published Its"~follow up
to the Green Paper on standards (COM(91) 521) In which I;t
was stated, In paragraph (xl) (other issues 71), that the
Commission would welcome the development by standard~
bodies of clear conditions for the Inclusion of
intellectual property rights In standards, based on
¯ practice In
the International standa-~;lz~;l~
organizations.
It was further Indicated that "in view of
the
Importance
and complexity of the Issue for
Intellectual
property
rights,
standardization,
competition and
trade policies", the Commission Intended
to produce a separate communication on the subject.

1.1.3.

Given the voluntary nature of standard-making, the
Commission Is not seeking to regulate standard-making
directly by legislative proposals, If certain principles
are not respected by standards bodies the Community will
not be able to use their standards and even less, to make
them mandatory. Certain types of behavlour on the part
either of standards bodies, or on the part of holdePs of
Intellectual property rights could bring them Into
conflict with the provisions of the Treaty, of :Community
or national legislation, or of International conv entl6ns

1.1.4.

Therefore In this Communication the Commission sets out a,~
number of principles which It believes should form th~
basis of any Internal rules which standards bodies may
wish to elaborate. Standards bodies remain free to
structure their membership rules and their Internal
organizational procedures as they wish. The results of
their activity, must, however correspond to the
standardization needs of the Community and must be made
In conformity with the laws of the Community and Its
International obligations.

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270.

PRINCIPLES AND OBJECTIVES OF STANDARDIZATION

2.1.

TYPES OF STANDARDS

2.1.1.

A standard is a technical specification relating to a
product or an operation which Is recognized by a large
number of manufacturers and users. CouncI I Directive
83/189(1) lays down the following definition In Its
Article 1 (2) "standard shall mean a technical
specification approved by a recognized standardizing body
for repeated and continuous application compliance with
which Is In principle not compulsory"

It may be the result of a formal consensus-bul Idlng
procedure managed by a recognized standardization body In
order to permit a large number of manufacturers to adopt
Identical solutions. Alternatively, the standard may
arise spontaneously by the degree of penetration of the
market of a particular technical solution (a so-cal led
"de facto" or "proprietary" standard).
2.1.2.

Standards may be developed for a wide variety of
purposes, ranging from terminology and testing to
detailed technical specifications for products, processes
and services. They may be limited to ensuring
compatibility of products or systems at their points of
Interconnectlon, or may extend to detailed specifications
In respect of the design, dimensions and materials of the
products themselves. In general terms, the Community
along with other Parties to the Agreement on Technical
Barriers to Trade of the GATT ("TBTA") Is committed to
specifying technical regulations and standards In terms
of performance
rather than
design
characteristics.

or

descriptive

OBJECTIVES OF STANDARDIZATION

2.1.3,

In the majority of Industries, the objective of the
manufacturer whose product becomes a "de facto" standard
may not be, at the outset of the commercialization of the
technology, to see It become an Industry standard. The
objective of most manufacturers remains to achieve high
levels of market penetration and to be competitive In
those markets In relation to other manufacturers.
In certain Industries, where a high degree of
standardization Is taking place, manufacturers must now,
however, be aware of the possibility that some of their
new technology may eventually form the basis of an
Industry standard.

(1)

83/189/EEC: Council Directive of 28 March 1983 laying
down a procedure for the provision o~ Information In
the field of technical standards and regLJlatlons.
OJ N° L 109, 26/04/83 p. 08

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2.1.4.

If a new product has elements protected by Intellectual
property legislation, as Is most !lkely to be the case,
the manufacturer will exercise those Intellectual
property rights vigorously, as a means of securing and
maintaining his lead and his profitability In a given
territory. In many high technology Industries, the
highest costs are Incurred In the research and
development phase when the Intellectual Input in terms of
man-hours of work Is at Its greatest, the manufacturing
phase being a relatively low-cost operation. The economic
value of the Intellectual property rights In such a
product will therefore constitute an Important factor In
price calculations and figures prominently as a company
asset.

2.1.5. Once a certain level of penetration of the relevant
market for
his
product has been achieved, the
manufacturer
will
’de facto’ have set the Industry
standard for
that
product and It will be difficult, If
not Impossible,
for others whose products must
Interoperate with
his, to avoid working to the standard
which he has set.
This will be particularly the case
where Interworklng
or networking Is Involved, as In the
computer ~nerg~
distribution, telecommunications and
transport Industries.
2.1.6. Once a certain level of market penetration has been
achieved, the manufacturer whose product has become a de
facto standard may accept that de facto standardization
can be advantageously converted Into a formal standard
so that the dominance of his technology Is embodied In a
more permanent form. His objective will then be to
secure the best terms from the conversion of his de facto
standard Into a formal standard.

2.1 .7.

These terms may Include royalty payments for the use of
his Intellectual property and the grant of IIcences on a
territorial basis for the exploitation of these
Intellectual property rights. These rights Include the
right to control manufacture and the right to control
distribution, Including Importation.

2.1.8.

A longer term benefit will probably accrue to the
manufacturer who voluntarily IIcences his technology to
become a standard since his market share will eventually
grow significantly In respect of the rights for which he
receives royalty payments even If he Is no longer the
sole manufacturer of the product Itself, and even If the
royalty rate which he receives Is less than that which he
would have obtained from a licensee on the open market.

2.1.9.

He will also be able to satisfy a second longer term
objective which Is to see the technology developed by his
company established as a worldwide standard with
resulting beneficial publicity.

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2,1.10. On the other hand, a standard may arise by a process of
definition and approval by a recognized national or
International standardization body.
2.1.11. The underlying objective of formal standardization Is to
generate the economic benefits for society that will
result from a more rational organization of supply and
demand and greater competition In the market Place.
Standardization tends to reduce costs for the supplier
and purchaser of goods and services and to Increase
transDarency of the market. Once the requirements of the
market are reflected In a standard, all Interested
suppl iers are put In a position to meet market needs on a
competitive basis. At the same time, purchasers are
given common assurances with respect to the performance
of the product or service against agreed criteria of
quality, Interoperabl I Ity, and so on. The Importance of
standardization as "an Instrument of economic and
Industrial Integration within the European market" has
recently been explicitly recognized by the Council In Its
Resolution on the role of European Standardization In the
EuroPean Economy of 18 June 1992.(2)
2.1.12. These economic objectives can, -~f~ cou~se,~ only be
realized Insofar as standards are made known and
available to the widest possible number of Interested
parties on fair and reasonable terms. Consequently, a
standard Is by definition a publ Icly-aval lable
document(3) and the technical specification which Is
not available to all potential users Is not a standard.

2,1.13. Benefits to purchasers and users accrue from the
existence of a recognized standard guaranteeing not only
Interoperablllty but also a certain level of quality,
safety and conformity to certain technical norms. A
European standard can find Itself In competition with
standards set by other major trading partners such as
the American or Far Eastern markets.
2,1.14. The objectives of standardization can only be met If the
technology chosen Is good, up-to-date and readily
The standardization process Is, however, by
avallable.
Its consensus-driven nature, a
lengthy one, and when
substantial delays In adopting
a standard occur, the
technology on which the standard Is based may already be
out of date. On the other hand, the most Innovative
technology may not be the most appropriate for adoption
as a standard because It Is not yet stable and
sufficiently tested In the market place.

(2) OJ n° 173 of 9.7.92, p.1

(3)

See ISO/IEC Guide 2, "General terms and their
definitions
concerning standardization and related
activities"

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2..1.15 Once chosen as a standard, a particular technical
solution tends to perpetuate Itself for a period longer
than that which it might have enjoyed on the open market
In a free competitive situation and therefore the process
of standardization may
Itself retard technological
Innovation In some areas.

2.1.16

It Is also the case that tco much standardization In a
given area at a particular moment In time may create
difficulties as that technology changes. Replacing a
substantial standardized "platform" such as a main-frame
computer operating system with a new and more advanced
standardized "platform" may prove more costly and more
difficult than the addition of new layers of system
software on to existing products.

2.1.17 A variety of approaches to the Issue of standardization
are therefore required If the most appropriate form of
standardization for a particular Industry Is to be
achieved.

2.2,

PRINCIPLES USED
BOD I E S

2.2.1.

The three European standards-making bodies recognized by
the Community at a European level are CEN, CENELEC and
ETSI. CEN (European Committee for Standardization) and
CENELEC
(European
Committee
for
Electro-Technical
Standardization) create standards for EC and EFTA
countries. Their membership Is composed of national
standards bodies and national electrotechnlcal committees
respectively. ETSI (European Telecommunications Standards
Institute) created In 1988 following the recommendation
made In the Commission’s Green Paper on Standards, groups
together administrations, network operators, users,
manufacturers research Institutions and private service
providers and has the task
of drafting European
Telecommunications Standards.

IN NATIONAL AND

INTERNATIONAL STANDARDS
.~..~,~. ....... ...~.~ ,~:~.~....

2.2.2.

At the International level,
ISO, IEC and CCITT
(international
Telegraph and
Telephone Consultative
Committee) are
the standard-making organizations. ISO
(international
Organization for Standardization) draws
Its membership
from national standards organizations.
The IEC (international Electrotechnlcal Commission) has a
similar but smaller membership In
the field of
electronics and electrical engineering.

2.2.3.

The principles applied to Intellectual property by
ISO/IEC and by CEN/CENELEC are relatively simple.
Subparagraphs b) and c) of Annex A of the ISO document
(Reference to Patented Items IEC/ISO Directives - Part 2
Methodology for the development of ,nternatlonal
standards) are applied by all four bodies. They read as
follows:

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b)

c)

2.2.4.

2.2.5.

"If the proposal Is accepted on technical grounds,
the originator shall ask any known patent holder
for a statement that he would be will Ing to
negotiate IIcences under patent and like rights
with applicants throughout the world on reasonable
terms and conditions. A record of the patent
holder’s statement shall be placed In the flies of
the ISO Central Secretariat or the IEC Central
Office, as appropriate, and shall be referred to
In the relevant International Standard. If the
patent holder does not provide such a statement,
the Technical Committee shall not proceed with the
Inclusion of the patented Item
unless the
respective Council gives permission
Should It be revealed after publ Icatlon of the
International Standard that IIcences under a
patent and like rights cannot be obtained under
reasonable terms and conditions, the International
Standard shall be referred back to the Technical
Committee for further consideration."

CCITT In Its Annex 5 Statement on CCITT patent policy
elabora~%ed 1~n ~une 1988 made the following observations.
"Over the years the CCITT has developed a "code of
practice" regarding patents... The rules of this "code
of practice" are rather simple and straight forward...
the detailed arrangements being left to the parties
Involved, as these arrangements might differ from case to
case"
ETSI has drafted a Pol Icy and Undertaking on Intellectual
Property Rights which sets out more detailed procedural
rules and which starts from two premises which differ
from those applicable In ISO/IEC/CEN or CENELEC. The
first premise Is that membership of ETSI Is conditional
on signature of %he Undertaking whereby an Intellectual
property right (IPR) holder agrees to I Icence his IPRs
according to certain I Imitations as to royalties. The
second premise is that ETSI standards are avai lable In a
specific geographical area as a consequence of the
definition of territory contained within the draft
Undertaking. Certain
conditions are
signatories of the
Undertaking. This
Undertaking has not
yet been approved
membership.

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2.3.

THE USE OF STANDARDS BY PUBLIC AUTHORITIES

2.3.1.

Because standards represent a voluntary consensus
concerning the technical characteristics of goods and
services, they are commonly used by public authorities
within the framework of regulation. This may take the
form of a direct reference In legislation which makes a
given standard mandatory or, as Is normally the case In
the Community, of conferring a "presumption of
conformity" to legislation on any product which complies
with the standard. Directives based on reference to
standards have been adopted In a number of Important
Industries,
Including
mechanical
engineering,
construction, medical devices, telecommunications, gas
appliances and measuring Instruments.

2.3.2.

Slmllarly, public authorities often use standards In
their procurement. Within the Community, for Instance,
the public procurement Directives(4) now all require
purchasing entities to define technical specifications In
their contract documents by reference to European
standards where these exist, in order to ensure that
nationally-determined specifications are not used to
restrlc~ access-~L-o~rocurement markets.

2.3.3.

Whenever public authorities Incorporate standards into
legislation and thereby confer upon them a more binding
character than their normal voluntary status, they must
satisfy themselves that:
the standards In question have been developed In
accordance with the normal procedures of standardization
(i.e. that they represent a consensus based on the views
of all Interested parties); and

- the standards In question are available for use by all
Interested parties to whom the legislation applies.
International agreements subscribed to within the
framework of the GATT (I.e. the TBTA and to a lesser
extent the Agreement on Government procurement) extend
these rights of non-dlsormlnatory treatment to certain
other GATT contracting parties.
2,3.4.

However, providing that the procedures set out below are
followed, even In the exceptional circumstances where a
standard becomes ’non-voluntary’, problems can
resolved In relation to Intellectual property rights.

(4)

be

Directives 71/305/EEC, 77/62/EEC, 90/531/EEC

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2.3.5.

If the technological solution which Is to be made
mandatory Is based on proprietary rights, these rights
must be the subject of negotiation before the standard Is
agreed and the technology Is made mandatory.
If the negotiations fall 1o produce an agreement from the
rlghtholder, the rights cannot subsequently be
expropriated unless there are over-riding Publ Ic Interest
or public safety considerations 1o be taken Into account
and no other technical ~olutlon could be devised.

2.3.6.

Therefore the question of the use of standards by public
authorities does not hinge on the question of whether any
Intellectual property rights which may underlie the
standard can be Incorporated ex post facto Into a
mandatory standard, since such rights must In all cases
De acquired by negotiation and not by legislative
expropriation.

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3.0.

PRINCIPLES OF

INTELLECTUAL PROPERTY PROTECTION

3.1.

GENERAL PRINCIPLES

3.1.1.

Intellectual property rights Include patents, trademarks,
copyright, design rights, semi-conductor topography
rights, trade secrets. Works of the Intellect are created
as the result of a given volume of man-hours of labour
and a return on the financial Investment In that labour
cost will be secured only If the creator of the work can
control how his work Is to be exploited and where.
General principles are applicable to all forms of
Intellectual property protection. They
following :

Include the

others may only use or copy the
Intellectual
creation with his permission and,
If the right
holder so wishes, he may be paid for that
permission;
In order to ensure a wider distribution and use of
works of the Intellect i~ society as a whole,
limits are set on the scope and d~-&tlon of the
Intellectual property protection;
the abusive exercise of Intellectual property
rights by Individuals or companies occupying a
dominant position Is subject to the application of
competition rules, and In particular Article 85
and 86 of the Treaty. Agreements between companies
regulating the exercise of Intellectual property
rights may be subject to the prohibition of
Article 85 of the Treaty.
3.2.

PATENTS

3,2.1,

Specific characteristics apply to each type of
Intellectual property right. So In the case of patent
rights, the object of the right Is a new creative
technical solution to a problem. The "invention" must
demonstrate novelty and be capable of an Industrial
application.

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3.2.2.

The patent right will only be granted If application
formalities are completed In which the Inventive step Is
described In detail. There may be a period during which a
patent application Is Subject to examination prior to the
grant of a patent. For this limited period of time the
patent application Is not fully disclosed to the public,
although the existence of an application may be known.
Once a patent has been granted, the disclosure to the
public Is compensated for by the temporary monopoly which
the patent right gives over the exploitation of the
patented Invention.

3.2.3.

That monopoly right can be exercised exclusively by the
patent ;.holder If
he chooses to commerclallse his
Invention himself.
If In certain circumstances he falls
to work his patent
himself or If he chooses to license
others to do so, he may nevertheless be remunerated by
others for the right to be a licensee of his patent.
The right Is not subject to any general exceptions In
respect of use by potentially competing third parties but
Is limited In time so that society may benefit freely
from technical progress Once the rlghtholder has had the
opportunity to recover his original Investment In
research.

3.2.4.

Patents are granted on a territorial basis, that Is to
say, that they are valid for the country In which they
are Issued, or in the case of a patent Issued by the EPO
(European Patent Office) they may be valid for up to 17
countries, I.e. those of the Community plUs Austria0
Switzerland, Sweden, Monaco and Llchtensteln. Rights
acaulred under patent law exhaust only on expiry of the
term of protection In the territory for which they are
granted, or, on the non-payment of any renewal fees.

3.3.

COPYRIGHT

3.3.1.

Copyright, by contrast, protects not novelty but
originality. This originality Is assessea In relation to
the expression used by the creator and protection by
copyright cannot apply to solutions, principles, Ideas,
or methods as such. There Is no monopoly In the patent
sense under copyright protection since any second maker
Is free to find his own way to express an Idea which he
has taken from the work of another. Even In technical
fields such as computer programs It Is exceptional for
there to be only one possible way to express an Idea.

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3.3.2.

In oases where Idea and expression are Inseparable, there
Is generally held to be no copyright In that expression.
The only monopoly under copyright law Is therefore the
right of the author to prohibit the unauthorized
exploitation of the expression used In a work, for
example to prevent the copying of lines of text from a
book or lines of code of a computer program.

3.3.3.

A work Is protected under copyright law as soon as It Is
created. Within the Community and according to
International copyright conventions there Is no need to
complete registration or examination formalities.
However, In some countries, registration formalities do
exist.

3.3.4.

The absence of any requirement In the Community to
register a copyright means that only litigation can prove
conclusively whether a valid copyright exists In relation
to a particular work. The protection exists regardless
of whether the work has been commercially exploited by
Its creator or not. Copyright IS not therefore a
compensation to the author for disclosure as with Patent
protection, and the essence of the copyright cannot be
reduced to a mere right to remuneration.

3.3.5.

Copyright protection Is relatively long, at least 50
years following the death of the author according to the
relevant International conventions, and Is a territorial
right. A work created or published In the Community,
can be licensed for exploitation only within the
Community, the right to exploit the work In, for
example, the US, being the object of a separate
negotiation by the rlghtholder.

3.3.6.

A limited number of exceptions to the exclusive copyright
rights are provided for In the legislation of the Member
States and by the relevant international conventions so
that certain acts may be legitimately performed by users.

3.4.

SEMI-CONDUCTOR
RIGHTS

PRODUCTS

AND

OTHER

INTELLECTUAL

PROPERTY

The protection given In the Community to the topographies
of semi-conductor products ("chips") should also be
mentioned(5) This protection is a sui generls regime,
limited to chips produced within the Community, although
protection can be extended, on the basis of reciprocity,
to chips produced In third countries.

3.4.1.

(5)

Directive 81/54/EC

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The protection Is limited In time (10 years) and is
restricted In scope by exceptions permitting reproduction
of a topography for the purpose of private study and the
developing of other topographies, I.e. a form of ’reverse
engineering’ exception.

3.4.2.

Design rights have not yet been harmonized throughout the
Community and a variety of regimes protecting both
functional and non-functional designs exist. Some regimes
foresee a registration system.

3.4.3.

Other forms of Intellectual property such as trademarks,
trade secrets, unfair competition do not appear at the
present time to cause any specific problems In relation
to the Issue of standards and are therefore excluded from
the scopeof this Communication.

3.5.

EFFECTS OF AN INTELLECTUAL PROPERTY RIGHT

3.5.1.

Some clarification Is necessary as to what acts are
permitted or prohlbJted, in respect of Intellectual
property rights. In the case of a product or process
Incorporating a patented Invention, the part of the
product or process so protected cannot be copied without
authorization, even by observing the Ideas and principles
on which It Is based, nor can instructions In written
form, such as a specification or patent description, be
used for the purpose of producing a similar or Identical
result.

3.5.2,

In the case of a product covered by copyright, the part
of the product so protected may not be copied without
authorization but If It Is accessrble to the human
senses, as In the case of a three-dimensional object or
other works In a humanly perceivable form, It may be
studied, and the Ideas and principles derived from that
study may be used to create a similar or Identical
functionality, providing that the expression of the
copyrighted work Is not reproduced.

3.5.3. A special exception to the normal rules of copyright and
which Is of relevance In the telecommunications standards
area has been Introduced In Directive 91/250 EC on the
legal protection of computer programs to enable
Interoperable programs to be created by means of deriving
and re-using Information from existing programs. A study
of a computer program In machine-readable form may not
yield all the Information required In order to create an
Interoperable program.

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Acts WhiCh WOUld constitute technical violations of
copyright rights such as reproducing or translating the
program may need to be carried out. The Directive does
not exclude the possibility that payment may be made to
the rlghtholder for such Information as a consequence of
negotiation between the rlghtholder and the Person
requiring Information. The exception does not allow for
the copying of protectable expression.
3.5.4. As regards the specification for a standard which Is
produced In text form, copyright rules will apply to the
expression of the specification. This does not Prevent
users of the specification from Inplementlng the
specification. NO part of the product or process which
Is subject to Intellectual property rights should be
described In the specification, unless the rlghtholder
has agreed to the use of his Intellectual property rights
In that standard.
3.5.5. Once authorization has been given by the owner of an
Intellectual property right for the product or process
covered by the right to be used as the basis of e
standard, authorization to describe the standard In a
technical specification must also have been given, either
explicitly or Implicitly.
3.5.6. Ownership of the copyright, if any, In the written form
of the specification will depend on whether the
specification has been Provided by the owner of rights In
a de facto standard, or has been provided by a standards
body following agreement between the parties concerned as
to the ownership of the authors’ rights In the text.
3.5.7.

If the specification of the standard Is drawn up with
sufficient accuracy, It should contain all the
Information necessary to ensure a satisfactory
Implementation of the standard. It should not therefore
normally be necessary to look beyond the specification
for additional Information unless this can be done
without violating the Intellectual property rights In the
Product or process sO described.

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4,0.

THE STANDARD-MAKING PROCESS

4.1.

STANDARDS

4,1.1.

It Is the case In most standardization work that either
no Intellectual property rights exist or are created, or
that there Is express consent to free use of the
Intellectual property or waiver of any rights arising or
acquired. It Is also Possible that Intellectual property
rights arise but are owned and exercised Jointly by all
members of the grouping, or according to contractual
arrangements between the parties.

4.1.2.

In these Instances the question of the existence,
ownership and exercise of Intellectual property rights Is
normally resolved ab Inltlo, and no further problems
should arise. It should be stressed that, wherever
possible, standards should be devised which avoid taking
over proprietary technology
on
which
property rights already exist.

4,2.

4.2.1 .

4.2.2.

4.2.3.

INCORPORATING NO PROTECTED MATERIAL

Intellectual
..

’DE FACTO’ STANDARDS
The opposite situation exists where the product or
process developed by one manufacturer becomes, by virtue
of Its success on the market, the de facto standard. For
example, In the video cassette/recorder field, the
overwhelming success of the VHS "standard" Is a wellknown case. In these situations the products or process
will almost
certainly embody Intellectual property
rights.
These rights
may have been known to others In the
Industry If patents are Involved since patent
applications are a matter of public record once the 18
months period from first filing date Is up, at least as
far as the Community Is concerned, and It Is unlikely
that a de facto standardization can have occurred In a
period less than 18 months.
The manufacturer may even have concluded Ilcences with
third parties In respect of those rights to permit
manufacture In certain markets.
If copyright Is Involved the situation Is more ambiguous,
as far as those countries are concerned which Impose no
registration formal Itles on the copyright holder, as Is
the case In all the Member States. In these
circumstances copyright may exist and expire at the end
of Its due term without Its validity ever being tested.

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4.2.4.

Nevertheless It should always be possible for the
potential owner of a copyright to Identify the subject
matter over which he Intends to claim a prior right. A
presumption of ownership will thus be created which will
be rebuttable If he is found not to be the owner or If
the subject matter Is held not to be protectable.

4.2.5.

If the owner of the Intellectual Property right Is made
aware that a standard-making body wishes to base a
standard on his technology, he Is put on notice that a
violation of his Intellectual property rights might
occur.

4.2.6.

It Is therefore of relevance to any subsequent
negotiations or litigation to establish by what means the
rightholder could be expected to know that a violation of
his rights might be proposed.
In the event that the rlghtholder participates himself In
the standard making body It may be assumed that he
receives constructive notice by the announcement that a
standard Is due to be established using the technology In
question. In other words, an announcement by the
standards body must create a presumption that ,~the
rlghtholder has been put on notice as to the pbten{laluse of his rights.

4.2.7. However where the de facto standard concerns a technology
created by a manufacturer not belonging to the standards
body, the manufacturer cannot be said to be presumptively
put on notice. This situation will be dealt with In
paragraph 4.6 below.
4.2.8. Adoption of official standards based on de facto standard
solutions has many advantages. De facto standards are by
their nature well-tried and tested solutions, stable and
technically satisfactory. They have market acceptance
and are probably well-documented.
4.2.9.

Therefore in spite of the difficulties which the
existence of proprietary Intellectual property rights
could Potentially create, It Is unavoidable that de facto
standards will present themselves In many Instances as
natural candidates for adaptation Into recognized
standards.
No cases have been drawn to the attention of the
Commission as yet where the owner of Intellectual
property rights In a technology refused to Ilcence his
rights to enable an already agreed standard to be
subsequently Implemented.

/,

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4.2.10. Particular attention has to be paid however to the
procedures by which this process occurs In order to
ensure that the Interests of rlghtholders and standards
users are respected. These procedures are dealt with In
the fol lowing sections.
STANDARDS CREATED TO INCLUDE AN IPR : AGREEMENT AND
REFUSAL TO LICENCE.

4.3.1. If there are proprietary Intel lectua I property rights
underlying the technology on which a standard Is to be
based and that fact Is known to the standard makers, then
the agreement of the r Ightholder must be sought I f the
work on the standard Is to continue. It Is obvious that
such an agreement shou I d be sought at the ear I Iest
possible opportunity so that, In the event of a refusal
to I Icence, alternative solutions may be explored. A
tlme-I Imit within which permission must be given or
refused can also assist In speeding up the standardmaking process.
4.3.2. Once the I imlt has passed and no agreement has been
reached between the part I es as to the use of an
Intellectual property rlght, work on that solutlon must
be halted and an alternatlve technology consldered, It
wou I d be I nadv I sab I e for a standar d-mak I ng body to
cont I nue work on a standard I f permission has not been
sought or has not been granted In respect of Intellectual
property rights.
4.3.3.

If agreement Is reached between the rlghtholder and the
standard-making body, the terms for IIcences must be
fair, reasonable and non-discriminatory. It Is not
feasible or appropriate to be more specific as to what
constitutes "fairness" or "reasonableness" since these
are subjective factors determined by the circumstances
surrounding the negotiation. If the rlghtholqer Is to be
satisfied that his Investment In research and development
can be adequately recovered, he would expect the royalty
rate to relate In some way to the normal freelynegotiated commercial rate, allowing for the greatly
Increased market for his technology which standardization
will bring.

4.3.4.

The terms which the rlghtholder offers for the use of his
rights should be flexible enough to Include the
possibility, If the parties so agree, of cross-licensing
arrangements. Cases of disputes arising In relation to
the terms and conditions offered by the rlghtholder could
be resolved If necessary by arbitration.

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In the event of an appeal against an arbitration decision
both parties may have recourse to the use of Article 86
EC.
4.3.5.

The freedom of the rlghtholder to refuse to Ilcence Is,
at the present time, absolute, since his exclusive
Intellectual property rights
cannot be
expropriation or compulsory
licensing
exceptional circumstances such
as reasons
security or over-riding publ ic interest.

subject to

except

In

of national

4.3.6. However a refusal to I Icence by the rlghtholder Implies
as a consequence that an alternative technical solution
will probably be adopted and will then challenge the
rlghtholder’s potential or de facto dominance In the
market. It Is normally therefore not In the
rlghtholder’s Interest to decline to I Icence his patent
or his copyright unless the terms offered by the
potential users fall well short of his commercial
expectations.

4.3.7.

This factor has to be borne In mind In relationship to
the "fairness" or "reasonableness" of the remuneration
which the r[ghthol:~er seeks to obtain and balanced
against the enhanced market opportunities
standardization on his technology might bring.

which

4.4.

LATE OR NON-DISCLOSURE OF RIGHTS

4.4.1 .

A potential source of difficulties can be Identified
where proprietary rights are not disclosed at all or are
disclosed late In the standard-making process. In
theory, an IPR holder (having been put on notice by a
standard-making body that his rights were potentially to
be used In the creation of a standard,) would be acting
In bad faith If he claimed those rights only once the
standard had been adopted, thereby forcing competitors to
agree to IIcence royalties higher than those which might
have been offered at an earlier stage, or DIocklng the
Implementation of the standard completely.

4.4.2. As has been Indicated In paragraph 4.2.9. above, no such
event has yet been notified to the Commission. However,
bad faith could easily be demonstrated where a
presumption of knowledge on the part of the rlghtholder
can be established.

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It Is therefore for standards-making bodies to establish
procedures whereby late disclosure or non-disclosure of
rights is penalized once actual or presumed knowledge can
be established. The degree to which late disclosure
Inconveniences the standard-making body can be regulated
by means of the time-limit Imposed on rlghtholders to
declare an Interest once a standard has been announced.
4.4.3.

If there are deliberate acts of bad faith on the part of
the rlghtholder a court might take these Into
consideration In evaluating the extent of any damages for
copyright or patent violation under civil or criminal
law.

4.5.

LIABILITY FOR NON-DISCLOSURE

4.5.1.

4.5.2.

The question arises as to the extent to which the
rlghtholder can and should be held liable for a failure
to disclose an Interest. If publication of future
standard-making activities takes place In an efficient
manner, the responsabl I Ity for conducting a search of
patents and copyrights held by a manUfa~tur~ taking part
In the standard-making process must rest with that
manufacturer. The rlghtholder may be unaware of the fact
that he Is In possession of a patent In a given area, or
that the subject matter In question might be covered by a
copyright. The task of Identifying relevant rights will
of course
be more onerous for manufacturers with
IPR portfol los and this factor should be
substantial
taken Into
consideration by the standard-making body,
perhaps by
allocating a longer time-limit for the
Identification of rights by manufacturers who can
demonstrate the magnitude of the search procedure to be
carried out In their particular case.
If on the other hand, the standard-making body accepts
the responsablllty for conducting a search of possible
patents In a given area, then the liability for
disclosure must no longer rest with the Individual
rlghtholder, alone. He can no longer be automatically
Presumed to have acted In bad faith by falling to
disclose his rights.

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IDENTIFICATION OF RIGHT HOLDERS

1.6.1.

If a standard-making body bases Its work on a technical
solution which Is not the property of any of those
participating In Its work, and makes no effort to
Identify and obtain authorization from the proprietary
rights holder, then the normal application of
Intellectual property law Impl les that an Infringement of
rights has occurred If no reasonable effort has been made
to trace the rlghtholder. Seeking authorization ex post
facto will not legitimize the Infringement of rights.
Therefore the standard-making body has to ensure that all
reasonable efforts have been made to Identify rights and
to negotiate with the rlghtholder before the SUbject
matter of the rights Is Incorporated Into the standard
even If this means that searches have to be carried out
as to the existence of patents.

.6.2.

Outside the standard-making environment, a manufacturer
wishing to launch a new product should ensure that In so
The standard will not violate existing patents all copyrights.
doing he making body has a duty toI take or
reasonable precautions to the same end.

.7.

.7.1.

~ .......... ~ ....... ~:, .

AVAILABILITY OF LICENCES

A further question which standard-making bodies must
address Is the extent to which proprietary rights should
be licensed for use. The normal practice Is for standardmaking bodies to make standards available to all users
regardless of whether they take part In the standardmaking process. Terms and conditions applied to
participants and non-participants should not
significantly discriminate against the latter. A fortlorl
where the standard-making body acts In an official or
quasi-official standard-making capacity and where Its

standards are recognized and even made compulsory by
virtue of legislation, access to the standard must be
available to all without a pre-condltlon of membership of

any organization. Similarly, any treatment of non-members
which would Impose financial or other burdens on them
which act as a direct Incentive to become a member of a
standard-making organization should be avoided. Different
conditions might be applied to different users In
relation to their contributions to the standard-making
process and the benefits and disadvantages which the
parties can demonstrate with regard to their particular
circumstances.
7.2.

The rlghtholder must In all cases retain the Initial
right to grant or refuse Ilcences on whatever exclusivity
or territorial basis he wishes, subject to the
application of Articles 30 - 36, 59, 66 and 85, 86 of the
Treaty.

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If membership of an Industrial grouping or of a standardmaking body Is conditional upon agreement to a
reciProcity arrangement between members and non-members
It Is for the rlghtholder to decide whether those
arrangements are acceptable to him before Joining the
grouping or standards body.

4.7,3.

It should be borne In mind by Industry groupings and
standards bodies that Intellectual property rights are
exclusive rights which are usually exercised
territorially. A rlghtholder can choose whom he I Icences
to reproduce, publish, manufacture or distribute copies
of his work and may grant exclusive I Icences for one
specific market, the Member States of the Community being
understood, of course, for such purposes as one single
market. The Community has taken, within the eATT Uruguay
Round negotiations, a strong line against the
International exhaustion of Intellectual property rights.
It has to be recognized at the same time that the
standard-making process entails an acceptance by the
rlghtholder of the fact that he Is no longer acting In a
totally free and geographically limited market once he
has agreed, to give I Icences as of right on fair and
reasonable conditions to all users of a standard. The
International obligations of the Community In this
respect are dealt with In section 5.0 below.

4°8.

INDUSTRY SPECIFIC SOLUTIONS

4.8.1 .

It may be the case that In certain Industries the use of
technical standards Is more developed than In others.
The reasons may be historic, for example the Initial
overwhelming success worldwide of a particular product,
making It attractive for other manufacturers to adopt
similar solutions. The reasons may also be purely
technical, for example the need to ensure compatibility
of International air traffic control and landing guidance
systems. They may also be commercial, for example
pressure from consumers for hi-fi products of different
manufacturers to be combined Into "sound systems".

4.8.2.

As a general rule, the more mature a market, the greater
the likelihood that non-proprietary standard solutions
will be adopted, at least as far as Interfaces between
products of different manufacturers are concerned.
Mature markets may lead to a corresponding decrease In
the market dominance of the de facto standard since the
early market lead of a single manufacturer may well be
overtaken by competitors offering slml lar but Improved
product ranges.

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It Is also often the case that manufacturers
established product types prefer to concentrate
Improvements to quality or refinements of style
performance, leaving the standardized aspects of
product unchanged.

of
on
or
the

4.8.3.

The so-called ’black box’ standardization described In
2.1.2. above, (which Is I Imlted to ensuring compatibility
at the points of connection) and which can be observed
for example In the case of consumer electronics, has many
benefits tQ consumers and manufacturers. It multiplies
choices available on the market but makes few demands on
the Intellectual property rights of these manufacturers
already occupying a place In the market.

4.8.4.

In the other areas of standardization, the process Is
driven not
by reasons of interoperabl I Ity or market
acceptance,
but by reasons of quality, safety or
conformity
to certain technical norms. In these
Instances a result to be achieved has to be determined,
but a variety of technical means to achieve that result
may still be avallable.

4.8.,5.

Intellectual property rights may therefore be less In
conflict with the objectives of standardization In these
circumstances , since the standard Is IIkely to be based
on results rather than methods. As a general principle,
and for the reasons set out above, standardization based
on ¯results to be achieved rather than on a specific
design or process technology, Is to be preferred.

4.8.6.

In the telecommunications area an argument has been made
by some that the advances In technology are so rapid ~and
the degree of Involvement of Intellectual property rights
so great that existing ISO/IEC rules are Inadequate.
This Is felt to be especially the case
In
telecommunications where exact specifications must
be
respected If public networks are to function In
an
Interoperable and efficient manner.

4.8.7.

It Is not possible to say that In any specific I~dustry,
be It pressure vessels, mechanical engineering, aerospace
engineering, or telecommunications, standardization and
Intellectual property rights co-exist with greater or
lesser difficulty. Examples may be found, within one and
the same Industry, of standardization carried out for a
variety of historic, technical, commercial and safety
reasons. As a market for a particular product or process
evolves, the motives which lead to standardization may
also evolve.

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4.8.8.

The Importance of the role of governments in determining
the precise rules which affect the running of standardsmaking bodies should be noted. Governments have a
number of roles to play in this area In that they are the
procuring entity and the user of standards, the authority
responsible for setting the boundaries for standardI
making activities and at ,the same time encouraging
research and development In both the private and public
sectors, and the regulator of competition policy.
Therefore the Involvement of the legislator In the
standard-making process and In the mandating of standards
In specific areas becomes a tool of Industry policy.

4.8.9.

If a standard to which reference Is made In a legally
binding Instrument, such as a Community Directive, Is not
specific but Is rather a general reference to unspecified
standards In a given field such as those referred to In
Article 13 of Directive 90/531/EEC(6), then questions
may arise as to the role of the private standard making
bodies. If this Is the case, a fortlorl , It strengthens
the need for uniform rules to apply to standard-making In
those areas where legally binding Instruments are likely
to make reference to such standards or In areas where the
use of certain standards made by such quasi- private or
private bodies will be mandatory.

4.8.10. It also re-lnforces the underlying principle that the
rlghtholder must remain, at all stages of the process,
free to contract with the user of his Intellectual
property rights, since a standard-making body which
assumed the role of administrator of such rights on
behalf of Its membership In an area where use of
standards became mandatory through legislative action,
would de facto acquire a monopoly power In relation to
those manufacturers and users who remained outside the
standard-making body.
4.8.11. In the view of the Commission, no particular Industries
should be singled out as requiring specific solutions.
Such a policy, even If effective In the short term, could
not guarantee an appropriate solution In the ’ong term
when the Imperatives which drive the moves towards
standardization In that particular Industry ~ay have
changed.

(6)

Article 13 (2) : The technical specifications shall be
defined by reference to European specifications where
these exist.
Article 13 (3) : In the absence of European
specifications, the technical specifications should as
far as possible be defined by references to other
standards having currency within the Community.

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4.8.12. If special rules for the co-existence of Intellectual
property rights and standardization were developed on an
Industry specific basis, any resulting lessening of
Intellectual property rights could lead to a shift In
Production by manufacturers away from that Industry, and
could disadvantage, rather than stimulate, European
production.

~.~ ..-.

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OTHER POLICY CONSIDERATIONS
COMPET I T ION
5,1.1.

An Important consideration In the successful management
of standardization Involving Intellectual property rights
must also be the application of the competition rules of
the Treaty and specifically the application of Articles
85 and 86. The Issues which arise may be divided Into two
categories : those which relate to the constitution and
operation of the st~ndard-making body under Article 86
and those which relate to a refusal to grant I Icences to
use an IPR or to the offer of terms and conditions for
such I Icences under Article 86.

5.1.2.

Standards-making bodies must be mindful of the
requirements of Article 85 regarding In particular the
fixing of royalty rates or other trading conditions In
respect of standards which they make available, and,
additionally must avoid creating opportunities for
exchange of competitively sensitive Information or for
restrictive practices relating to quantities, prices,
customer and territory sharing.

5.1,3,

Restrictive agreements fall Ing under Article 85(1) may
nevertheless be exempted by the Commission under Article
85(3) where their benefits significantly outweigh the
antlcompetltlve detriments, Standard-making bodies may
therefore seek to notify the Commission of agreements
which fall within the amblt of Article 85 with a view to
negative clearance or an Individual exemption under
Article 85(3). Benefits derived from an exempted
agreement must not fall only on the parties themselves
but must also be shared by other market participants and
consumers.

5.1.4.

ThE exercise of an Intellectual property right falls
within Article 85(7) If such Is the "object, means or
consequence of an agreement"

5.1.5.

Article 86 Is also of relevance, whether to the standardmaking body Itself together with Its m~mbers as
undertakings likely to be In a collective dominant
position within the common market or In a dominant
position In their national markets or to the Individual
undertaking, member or non member, holding an
Intellectual property right.

(7)

(Art. 222 case 24/67 Parke Davis [1968] E.C.R. 55;
cases 15 + 16/74 Centrafarm 55 [1774] E.C.R. 1147,
1183).

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5.1.6, Abuse of a dominant position by a standard-making body
and Its members could manifest Itself by the activities
of Imposing unfair purchasing prices (I.e. royalty rates
to rlghtholders) or selling prices, (rates Including
royalties for the use of standards) or other unfair
trading conditions, Paragraphs (b)(c) and (d) of Article
86 might also cover abuse of a dominant pos.ltlon by a
standard-making body.
5.1.7.

The same test will apply to the Individual undertaking,
owner of an Intel lectual property right which the
standard-making body wishes to use as the basis for a
standard. However, whereas the deflnltlon of Product
market and the establishment of dominance in the relevant
market are factors on which a considerable Jurisprudence
now exists at Community level, there have been as yet no
decision of the application of Article 86 In the
standards field.
The finding of dominance depends heavlly on the
definition of the relevant product market. Obviously,
the narrower the relevant product market Is the greater
the likelihood of dominance being established. The
concept of the relevant product market Implies that there
can be effective competition between the products which
form part of It and this presupposes that there Is a
sufficient degree of Interchangeablllty between all
products forming part of the same market In so far as
specific use of such products Is concerned. This must be
assessed Inter alia In the light of the structure of
demand and supply for each product and can lead to
holding an undertaking dominant In the market for Its own
products.(8)

5.1 .8.

(8)

The question Is the extent to which a refusal by a
rlghtholder to allow his technology to become the basis
for a standard would be antlcompetltlve. In order to
demonstrate abuse of a dominant position It would be
necessary to establish that the relevant market was the
technological solution In question and that the owner of
rights In that technology occupied a position of
dominance In relation to that market.

Hugln/Commlsslon Judgment of 31 May 1979 In Case 22/78
(1979) ECR 1869; BBC/Commlsslon (Magi I I) Judgment of 10
July 1991 In Case T-70/89 of the Court of First
Instance; HI Itl/Commlsslon Judgment of 12 December 1991
In Case T-30/89 of the Court of First Instance.

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5,1,9

If the criteria for establishing relevant market and
dominance were met the next step would be to evaluate the
behavIour of the rlghtholder In refusing to allow his
technology to become the basis for a standard.

5.1,,1.0. Until r;ow, the Court of Justice has always maintained
that a mere refusal to I Icence an IPR, absent other
Instances of abusive behavlour, will not be actionable
under Article 86(9)
Intellectual property rights are by their nature
exclusive property rights, and except In very limited and
specific circumstances, as laid down tn national
legislation or International conventions, do not have to
be made available to others by means of compulsory
IIcences unless It can be demonstrated that the exercise
of the right Involves certain abusive conduct.

5.1.11. Therefore Article 86 cannot permit the expropriation of
rights for the purposes of using the technology as the
basis of a standard where no other circumstances
establish abuse of a dominant position, and taking into
account particularly whether there are other viable
technologies available. .....
The problem should therefore be addressed before the
technology on which to base the standard has been
definitively selected. If the standard In question had
been adopted, Implemented, and made mandatory by a
Community Instrument, refusal to IIcence the technology
necessary to use the standard would, a fortlorl, create
difficulties.
5.1.12. A main objective of Article 86 Is to ensure that dominant
companies do not create conditions of trading In which
they are able to stifle or eliminate competition.
If no standard exists, the IPR holder cannot be dominant
In respect of the standard. If competition exists on the
market for the product whose technology the standardmakers seek to use, the standard-maker Is merely
prevented from exercising a particular choice as regards
the solution which he wishes to adopt to a specific
problem.

(9)

Volvo: Veng [1988] ECR Ground 8

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5.1.13. The situation where the standard-maker Is not able to
choose an alternative technology must be examined. The
circumstances In which this Is the case will be unusual.
Nevertheless, for technical or for financial reasons the
standard-maker could attempt to demonstrate the absolute
necessity of I Icences being available for the use of a
particular technology. It could also be claimed that
alternative technologies produced inferior results. In
the case of technical necessity, objective evaluation of
the scope of the patent In question should reveal whether
the Patent Is so broad as to render all other substitute
technologies not viable. It Is relatively rare for a
patent to cover such a broad Innovative area that
alternative means to achieve the same result cannot be
found.
5.1.14. As to financial necessity, excessive pricing of Its
technology by the dominant company could be Indicative
of abusive behavlour but this factor Is not of relevance
In a case of mere refusal to I Icence. It should be noted
however that excessive prices asked for by a dominant
company could amount to a de facto refusal to license.
5.1.15. If It were demonstrable that no other viable technology
existed, It would " fal I to be resolved whether the
standard-making body, or potential Users of the standard,
would be placed at a competitive disadvantage vis-a-vis
the owner of the Intellectual property right by the fact
that no standard could be made In that area, or that the
standard adopted was less efficient than the proprietary
technology. Although It could be argued that consumers
would benefit In the short term If Intellectual property
rights were compulsively licensed to serve as the basis
of standards, In the long-term, Investment In research
and development In the standardized Industrial sectors
would dry up within the Community. Non-Community entitles
with extensive research activities would be encouraged to
keep their technology out of Community markets, while
low-cost manufacturing centres outside the Community
would benefit from cheap I Icences to use ConllllUnlty
technology.
5.1.16. Therefore, any application of Article 86 In the field of
public standardization must be balanced against the
policy objective of maintaining the Community’s strength
In research and development.

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EXTERNAL RELATIONS ASPECTS
AVAILABILITY OF
LICENCES
COUNTRIES

FOR

PRODUCTS

5.2.1.

THIRD

From a pol Icy point of view the Community Is committed to
the widest possible geographical avat labi I ity and use of
standards In the interest of economies of scale and
enhanced International trade.

5.2.2.

FROM

Under the Agreement on Technical Barriers to Trade (TBTA)
concluded under the auspices of the General Agreement on
Tariffs and Trade (~ATT) In 1979 the Community has
accepted several obl igations vls ~ vls the other parties
to the TBTA (practically all Industrial Ised countries and
a number of developing countries) In relation to the
preparation, adoption and appl Icatlon of technical
regulations and standards.
The level of compulsion varies according to whether the
standard or technical regulation Is prepared, adopted or
applied by a central government body (Art. 2 TBTA) or a
non-government body (Art. 4 TBTA).
., ’

5,2,3. Under Art.2 TBTA the Community has to ensure that
standards are not prepared, adopted or applied with a
view to creating obstacles to International trade and
that products Imported from the territory of any party 1o
the TBTA shall be accorded treatment no less favourable
than that accorded to like products of national origin
and to like products originating In any other country.

Under Art.4 TBTA the Community, as regards standards by
non-governmental bodies, has to take such r--asonable
measures as may be available to achieve the <)t~jectlves
pointed out In Art.2 TBTA.
5.2.4.

Standardswhlch are given a mandatory status by Community
legislation by requiring that contracting authorities In
public procurement Directives(10) refer to European
standards must be available to entitles In the Community
at fair, reasonable and non-discriminatory terms.

5.2.5.

Standards which provide a presumption of conformity to
the essential requirements of Community ’New Approach’
Directives(11) must be available to entitles In the
Community at fair, reasonable and non-discriminatory
terms.

(10) Directives 71/305/EEC [OJ N° L185 16.8.1979, p.5],
77/62/EEC [OJ N° L13, 15.1.1977], 90/531/EEC [OJ N°L
297, 29.10.1990, p. 1]
(11) Directives 87/404/EEC [OJ N° L 220, 08.08.1987,p.48],
88/378/EEC [OJ N° L 187, 16.07.1988, p.1],
89/106/EEC [OJ N° L 40, 11.02.1989, p. 12], 89/336/EEC
[OJ N° L 139, 23.05.1989, p.19],
89/392/EEC [OJ N° L 183, 29.06.1989, p. 29], 89/689/EEC
[OJ N° L 399, 30.12.1989, p.18],
90/384/EEC [OJ N° L 189, 20.O7.!990, p.1], 90/385/EEC
[OJ N° L 189, 20.07.1990, p. 17],
90/396/EEC [OJ N° L 196, 26.07.1990, p.15], 91/263/EEC
[OJ N° L 128, 23.05.1991, p.1]

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5.2.6.

For the standards described In 5.2.4. and 5.2.5. above,
national treatment (Art.2) requires that products
originating In a Party to the TBTA be treated In the same
manner. If these standards contain Intellectual property
rights, this means that the Community must ensure that
the Importer from a country party to the TBTA can obtain
Ilcences from the IPR holder for Importation, marketing,
sale and use In the Community on fair, reasonable and
non-discriminatory terms. For other standards the level
of compulsion to reach this result Is I Imlted to the
adoption of reasonable measures.
From a pOlicy point of view It would be desirable to make
sure If Ilcences for IPRs which are required for
manufacture for export to the Community are avallable on
fair, reasonable and non-discriminatory terms In order
not to create obstacles to International trade.

5.2.7.

This Issue does not raise any conflict with Intellectual
property rights Incorporated Into a standard provided
that the holder of such rights has consented to their
Inclusion. It would become of direct relevance If the
rlghtholder subsequently refused to grant Ilcences for
the .... manufacture of products
In the Community ore";:: .... ~;~-~-::~ ~
~lmpor~-atlon of products originating In a TBTA signatory
country or if the existence of the rlghtholder was only
revealed once the standard had been made mandatory.

5.2.8.

In both the above situations, a number of solutions
exist. The standard could be withdrawn or modified.
Alternatively In exceptional circumstances the Community
Instrument Itself might have to be modified and the
standard made non-mandatory. However, It Is essential
for standard-making bodies to recognize the need to
Identify any Intellectual property rights before adopting
a technical solution and for the rlghtholder to
understand and accept the terms and conditions under
which his rights will subsequently be licensed, both In
respect of manufacturing and Importation Ilcences.

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6.0.

CONCLUSIONS

6.1.

CODES OF PRACTICE

6.1.1.

If, In spite of the apparent lack of evidence of
systematic difficulties arising at present In the
majority of standard-making bodies, there are concerns
that further codification of Procedures for the
treatment of Intellectual property rights In the
standards field Is required, then consideration should be
given to the nature of such codified procedures.

/ GUIDELINES

/

"UNDERTAKINGS"

6.1.2. As stated In paragraph 5.2.5. above, the posslbl I Ity that
a European standard may be made mandatory or given a
particular status through Community legal Instruments
places a burden of responsabll Ity on the Community and
the standard-making body to ensure that democratic and
pro-competitive processes exist for the drafting of
standard.
6.1.3.

Therefore, the standard-making process should remain
voluntary and shou|~-respec-t=~:exlstlng national and
Community legislation, and International obligations. If
changes to Community legislation or obligations are
required In order to achieve the legitimate objectives of
standardization, such changes should be effected by all
relevant means Including proposals to the Council by the
Commission for legislative action. If existing
Provisions of the Treaty, or of Community legislation are
to be given effect In the standard making area In ways
which are different from the effect normally given In
other areas, such extensions or Interpretations should
conveyed with the
Industries concerned In a fully
transparent manner.

6.1.4. As ’Indicated In paragraph 1.1.4, If standard-making
bodies choose to elaborate codes of practice or
undertakings for signature by participants In the
standard making process, care should be taken to
distinguish those private procedural obl Igatlons arising
from membership of a standard-making body and the
obligations under public law which the body or Its
members may Incur.
6.1.5,

The Commission has examined a number of the codes or
guidelines applied by International and national
standards-making bodies. Given the voluntary nature of
the standard-making Process, the common characteristics
of most such codes or guidelines are that they are non binding and remain general In their approach. However,
at least one standard-making body has attempted to create
a binding and detal led Undertaking which sets out the
mechanisms for regulating the making of standards.

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6.1.6.

It can be argued that the complexity of the relationship
between standard-making and exclusive Intellectual
property rights requires a set of rules which foresees
all possible eventualities. It can equally be argued that
without constraints on the membership of the standardmaking body, the potentially conflicting Interests of
those taking part In the process cannot be reconciled.

6.1.7. On the other hand, proponents of the general and
voluntary approach favoured until now by most
International standardization bodies argue that
unnecessary detail in such guidel ines renders the process
more complex than It need be, and argue that no evidence
of a need to depart from the voluntary approach has been
produced.
6.1.8.

It Is not for the Commission to favour one approach
rather than another, providing the requirements set out
In paragraph 6.2.1. below are met.
To the extent that standards-making bodies are private
and voluntary organlsatlons, they are free, within the
limits Imposed by Articles 85 and 86 of the Treaty, to
organize their actlvltes In the way which seems to them
1o be most appropriate. Howeve.r, In Imposing constraints
on members, standards bodies should take Into
consideration the need to encourage the voluntary
contribution by Industry of Its best technology toward
the standard-making process. The Commission has
therefore a preference for a system based on tried and
proven principles, but which balances In a transparent
and equitable way the Interests of those concerned.

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6.2.

GENERAL PRINCIPLES

6.2.1.

The Commission suggests that rights and obligations arise
for both standards makers and Intellectual property
right holders. The principles on which standardization
takes place should therefore recognize that partnership
as fol lows :
European standard-making bodies should ensure that:
1t

all persons wishing to use European standards must
be given access to those standards;
standards are available for use on fair,
reasonable and non-discriminatory terms,
regardless of whether the users participate In the
work of the standard-making body or not, but
taking into account the circumstances of the use;

3.

users are able to use the above standards to
manufacture In conformity with the standards In
the Community, and to Import Into the Community
goods legitimately manufactured In third countries ....
In conformity with the standards;

4.

best efforts are made to Identify holders of any
Intellectual property rights
- by conducting searches
- by publication of adequate Information and where
appropriate by holding public enquiries,
before adopting a standard, work on a particular
solution only continuing If all known Intellectual
property rights can be licensed for use In the
standard;

5~

fair conditions are provided to the holders of
Intellectual property rights, especially with
regard to the time limits for Identifying IPRs and
agreeing to their use, and In respect
arbitration mechanisms as to royalty rates;

of

Intellectual property right holders should:
6b

use best efforts to Identify In a timely manner
any IPR which they hold which Is relevant to a
standard which Is being developed and to confirm
or refuse permission for Its Incorporation In that
standard promptly;

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\
\..

\
offer fair, reasonable and non-d I scr I m I natory"
monetary or non-monetary terms for the I Icence to
use any IPR;
6.

6.3.

regard agreement to the Incorporation of an IPR In
a standard as Irrevocable unless the exceptional
circumstances Justify withdrawal of IIcences once
the standard Is adopted.

COMMUNITY ACTION

6.3.1.

The Commission may find Itself obliged to consider
whether Articles 30-36, 59, 66, 86 and 86 of the Treaty
~re appl icable In certain cases. Arbitration procedures
set up by standard bodies, whi Ist useful In resolving
disputes In certain areas, cannot be regarded as final
and binding upon all parties If questions arise which
fall to be decided by application of provisions of the
Treaty.

6.3.2. As

Indicated earlier In this Communication, the
Commission must ensure that where compliance with a
standard or part of a standard Is referred to in
Community legislation, either as a mandatory requirement
or as one which confers a particular status under
Community law, the contents of that standard are made
available to all Interested parties on a fair, reasonable
and non-discriminatory basis. This obligation derives
from both Community and International law.

6.3.3.

Where the Commission has reason to believe that a
standard or part of It IS not being made available on
these terms It will have to take steps to withhold or to
withdraw recognition under Community law of the standard.
This could be done In respect of Individual standards on
an ad hoc basis, for Instance, by the publication of
notices In the Official Journal.
However, If a European standardization body consistently
failed to ensure non-discriminatory access to Its
standards, the status of the standardization body Itself
under Community law would have to be reviewed.

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