Now is a crucial time for the open source community to respond to the consultation launched by the European Commission on standards essential patents (SEPs). The Commission is proposing the creation of a new framework governing their use. Since this has been directed at the existing SEP-reliant industries where open source is less common, we want to be sure the voices of the open source community are heard in this public consultation.
It’s easy to misunderstand SEPs as implying that patents are essential to all standards; they are not! It is OSI’s position that many standards do not involve SEPs, that open source requires restriction-free licensing if the creators of a standard hold essential patents, and that the EU needs to harmonize its open source and standards strategies. OSI’s formal response to this Call for Evidence is forthcoming.
This public consultation came about because some standards users have found the current system for licensing SEPs has issues with transparency, predictability and efficiency. In some cases it also offers incumbents undue market control, especially over market entry. Under the current approach, patent-holders commit to license their SEPs – patents known to be inherent to implementation of a standard – to users of the standard on fair, reasonable and non-discriminatory (FRAND) terms and conditions.
But “fair, reasonable and non-discriminatory” has not turned out to be an accurate description of SEP licensing, nor has the commitment been reliably enforceable, arising as it does from participation terms of standards consortia rather than legal mandates. Every SEP license is a matter of private bilateral negotiation with confidential outcomes. There is a drum-beat of litigation involving companies complaining they have been denied fair licenses by patent holders, such as in recent cases involving Phillips.
OSI recognises that there are places where SEPs are tolerated. In the paper I wrote for Open Forum Academy, Open Source and FRAND: Why Legal Issues Are The Wrong Lens, the terms “requirements-led” and “implementation-led” are introduced to help distinguish the differing standardization world views. SEPs tend to only be present in the former paradigm, although patent-focused technology companies treat all standards as if they are SEP-bearing. This leads them to behave as if there is no alternative to falsely characterize open source as a matter of licensing technicalities alone that can be adapted to fit their pre-existent patent-dependent business practices.
In doing so, they overlook the reality that licenses serve open source by creating an environment where those enjoying the licensed software are free to do so without negotiation with the licensors. Only SEP approaches that avoid such negotiations will be compatible with the growing need to implement standards as open source software. The EU’s 2020-2023 open source software strategy outlines a vision for encouraging and leveraging the transformative, innovative and collaborative power of open source, as well as its principles and development practices.
The EU’s strategy demands that open source be considered in any related consultation, and this one is no exception. Therefore, it is important for the open source community to respond to this Call for Evidence with explanations why future changes must consider open source even if this inquiry is not structured to do so. The deadline for responses is May 9, 2022. Please be sure to independently submit your response in a timely manner so it may be considered by the EU Commission.