حقوق مالکیت معنوی و استانداردسازی: در مورد GSM

This paper investigates the role of intellectual property rights (IPRs) in the process of standardization in the telecommunications industry. We take the global system for mobile communications (GSM) case as a highly relevant example, being part of a high-tech industry in which standards play a large role. In the process of designing the GSM standard, a lot of attention has been given to IPRs, mainly to avoid a situation in which a single IPR holder could hamper or even totally block the development of the standard. Nevertheless, the ultimate GSM standard contains a large amount of so-called ‘essential IPRs’, i.e., IPRs without which the implementation of GSM products is impossible. The paper provides a general discussion of the development of GSM and presents a database on the essential IPRs in the GSM standard. This database has been compiled on the basis of international patent statistics, and the data that manufacturers have supplied to European Telecommunications Standards Institute, the European standardization body responsible for defining the GSM standard. We use this database to assess the dynamic IPR position of firms in the original GSM standard and its subsequent development. We use the GSM case to underline the importance of a general European policy with regard to IPRs and standardization, and derive several concrete recommendations for such a policy.

Standards, intellectual property rights (IPRs) and competition law are all developed to serve public interests. Standardization (whether imposed de jure or emerging from the market) can overcome many disadvantages related to a too wide variety of products, services or methods. Without standardization, a battle between different technological systems may emerge, and users may get stranded in technologies that will appear from the market after a while. Obviously, these consumers may face high switching costs, for example they need to discard old equipment. On the producer side, standardization increases economies of scale, and may hence lower the price of consumer goods associated to the standard. A system of IPRs is often necessary to ensure that individuals or companies will carry out innovative activities. Without IPRs to knowledge resulting from an invention, imitation (e.g., by reverse engineering of products) will erode the inventor's profit rate, and hence lower the incentive for inventive activities. An IPR, such as a patent, grants the inventor a legal monopoly to the commercial exploitation of the invention. An IPR holder is insulated from market competition and on the same hand seen as a promoter for innovation. Competition law seeks to promote consumer and economic welfare by fostering and preserving competition (Gutterman, 1997, p. 11). The tension that is created between balancing the diverse interests of the different actors was well brought forward by Mansell (in Hawkins, Mansell, & Skea, 1995, p. 222) ‘From a policy perspective, there is an issue as to whether intervention in the market using available alternatives, including standardization, is likely to enhance a given set of policy goals. It can be assumed, on the one hand, that a mature and fully articulated competitive market is present and that it is in this context that standardization choices are taken. On the other hand, imperfect competition, monopolistic competition or oligopolistic rivalry frequently offers more realistic ways of describing a market’. At first sight, standardization and IPRs may serve conflicting interests: an IPR is aimed at appropriation of a right to exploit a piece of knowledge by a single firm, while a standard aims to identify a common pool of knowledge to be used by all parties contributing to or using a standard. Still, standards and IPRs do not necessarily conflict. Philips and Sony license their compact disc patents to hundreds of manufacturers. The widely used Ethernet and Token Ring standards for local area networks are based on patents of Xerox and IBM, respectively. In addition, the Motion Picture Experts Group (MPEG) audio and video standards cover several patents too. In some cases, patents even apply to standards that are referred to in regulatory measures. The use of the patented modular telephone jack, which can be found on virtually any device that can be connected to the telephone network, is obligatory in many situations in the US. 1 Such situations are not problematic if the patent holder waives its rights, or makes licenses available at a reasonable fee to all interested parties. The IPR holder is, however, in no way obliged to do so. The IPR holder is entitled to secure any monetary or other compensation (e.g. a cross-license) that it is able to extract from the licensee, can freely choose any license conditions, or set territorial or other restrictions on its licenses. Besides this, it is also not obliged to treat applicants alike. One may thus easily imagine that under some circumstances, IPRs may inhibit the success of standards, or even inhibit the formation of standards. This potential conflict is the main topic of this paper. The so-called essential IPRs play a crucial role in the potential tension between IPRs and standards. Essential IPRs are defined as protected knowledge that is indispensable for a product that has to comply with that standard. The definition of the essentiality of a patent used by the European Telecommunications Standards Institute (ETSI) is ‘[…] that it is not possible on technical (but not commercial) grounds, taking into account normal technical practice and the state of art generally available at the time of standardisation, to make, sell, lease, otherwise dispose of, repair, use or operate equipment or methods which comply with a standard without infringing that IPR’ ( ETSI 1998, Annex 6, Clause 15). Note that the given definition does not cover inventions that are commercially essential but not technically essential (i.e. there are technical alternatives but these are prohibitively expensive to implement). Although there have been discussions in standards bodies to include commercially essential patents in their definition as well, this idea was eventually abandoned ( Wilkinson, 1991, p. 197). Standardization bodies would prefer to draw up standards that have no or little essential IPR, but in practice, they may not have much choice. Indeed, ETSI takes the view that having essential patents in their standards is inevitable and unavoidable ( Tuckett, 1993, p. 23). Global system for mobile communications (GSM) has been one of the first cases where a serious clash between IPRs and standardization occurred. Eventually, however, GSM became a successful technological and market standard. We chose the GSM industry as a case study in our treatment of the tension between IPRs and standardization. With the increasingly important role of standards in the telecommunications industry, the understanding of how a successful standard can be set also becomes increasingly important. This is even more so because there has been, for more than two decades now, a (strong) global tendency towards a more liberal and open market approach by policy and lawmakers. The GSM case is, of course, a rather peculiar case. The GSM standard is essentially a de jure standard, and the process in which this is reached is quite different from standards that emerge in the market. Nevertheless, we feel that the issue of (essential) IPRs is important for all standards, although in the case of market standards, IPR issues will generally be solved in a different way (negotiations will not be influenced so much by (semi-)public bodies). GSM emerged in an era when the European Commission put much emphasis on de-regulation in the telecommunications markets (promote pan-European markets and services). The objectives of the EC are outlined in the white paper on telecommunications from 1984, the green paper on telecommunications from 1987 and the green paper on mobile and personal communications from 1994.2 Standardization was seen as absolutely necessary for this process, and also measures were taken to promote technical competitiveness (the RACE program) and diffusion of advanced technology to areas in Europe that were less developed (the STAR program). Although the importance of (essential) IPRs in this process was acknowledged (in particular in communication on intellectual property rights and standardization, COM(92)445), a clear policy with regard to the role of IPRs in telecommunications standards was never put forward by the Commission. This policy emerged largely within ETSI, the body responsible for drawing up the GSM standard. Overall, there are five players (Ericsson, Nokia, Siemens, Motorola and Alcatel) that dominate the GSM market (see Table 1). In each of the three segments switching, base stations and terminals, these five players held ≈85% of the market or more in 1996. We will attempt to provide an answer to the question how these five firms have come to dominate the market, specifically, what role was played in this process by essential IPRs. From the answers to these questions, we are interested in drawing more general (policy) conclusions for the process of technological standardization and the relationship between technology assets and firm success in high-tech markets where standards are important. Table 1. Estimated suppliers market share of the 33 largest GSM networks in Europe, December 1996, plus world-wide market share of GSM terminals during 1996 Supplier Market share switching (%) Market share base stations (%) Market share mobile terminals (world wide) (%) Rank on total GSM market Ericsson 48 37 25 1 Nokia 14 22 24 2 Siemens 21 2 9 3 Motorola 1 13 20 4 Alcatel 10 10 6 5 Lucent 2 4 6 Matra 2 3 7 Italtel 0 5 8 Nortel 1 0 3 9 Philips 0 2 10 Orbitel 0 2 11 Other 1 0 13 — Source: Bekkers and Liotard (1999), pp. 123–124. Ranking is based on the average of all three subsystems market share, assuming that all subsystems are roughly equally important in the total sales of GSM suppliers. Recent market shares are not very different from those in 1996, although for mobile terminals Nokia seems to have won a higher share at the cost of, particularly, Ericsson. Table options The main variables in our research question are interwoven in a complex pattern of causality. For example, at one level of analysis, we find that ownership of essential IPRs may strengthen a firm's position in an alliance network, and this in turn leads to market power. But at the same time, market success will enhance the firm's technological capability (learning effects as well as through availability of resources for R&D investment), and the same can be said about knowledge capital gained through networking. Hence there is a feedback from alliances and market success to knowledge capital and patents (ownership of IPRs). Moreover, there are important factors determining technological capabilities and market success that we cannot take into account in the analysis here (such as historical factors related to the regulation of the market under the PTTs regime). Our intention in this paper is not to disentangle all these causal links in a precise and final way, but rather to provide a narrative interpretation that is well founded in quantitative data and historical analysis of the GSM industry.

The GSM case is a highly relevant case providing insight into the tension between IPRs and standardization. The GSM market has become dominated by five major firms (Ericsson, Nokia, Siemens, Motorola and Alcatel) in the late 1990s. Together, these five firms control more than 85% of the GSM market, which is estimated to be worth more than 100 billion US$.20 One may thus argue that from a generic point of view, EC policy succeeded in making the GSM(-standard) the dominant technology and market standard. But the policy did not succeed in creating a competitive and open market at least not as seen from the equipment supply side. The relationship between market power (inclusion in the top-5 equipment suppliers) and essential IPRs is not a one-to-one relationship: our empirical research shows that only two of the five dominating firms hold exceptionally strong positions in essential IPRs. One must thus conclude that a pure quantitative analysis of essential IPRs leaves important parts of the story of how these five companies came to dominate the GSM market untold. The key to understanding these ‘missing links’ largely lie in the activities of one company, Motorola, during the period just after the technical GSM standard had been set. We identified three periods in the history of GSM. The first is a pre-standard period (until February 1987). In this period, there was huge technological uncertainty on which of the competing technologies would be adopted as the standard. Thus, what later became ‘essential’ IPRs (patents) to the GSM standard from this period, were at the time just one of a number of options for the future. A high number of (with hindsight, essential) patents during this period did not necessarily lead to later dominance in the industry, as is shown by the evolution of the market position of Motorola and Philips. Philips was the company with most essential patents from the pre-standard period. However, it did not play a major role in the production and sales of GSM equipment afterwards, mainly because the firms’ management suddenly decided to withdraw from this market (Metze, 1991). Its strong early position in terms of technology and patents did, however, lead to early dominance of the technology alliances network. But this position waned when other players started to develop the GSM standard later on. Motorola, on the other hand, was able to use its relatively strong position in the pre-standard age in the period in a more vigorous way afterwards. During the period until 1991, which we characterize as the period in which the basic standard was developed, Motorola built up a strong portfolio of essential patents in GSM. Other firms, including those in Europe most involved with the development of GSM (e.g., Ericsson, Siemens, Alcatel), did not follow an aggressive patenting strategy, basically because they were used to manners of conduct in a pre-liberalization European market (Ericsson), or simply because they did not have the inventions yet (Alcatel, Nokia). By using the negotiation power that came with its patent portfolio, Motorola could dictate its licensing conditions to all firms. The company thus imposed a market structure by conducting exclusive cross-license agreements with a selected number of other parties on the market. These parties were selected because their IPRs were valuable to Motorola (not only essential patents, but also others), or because their product line complemented that of Motorola. Also, Motorola took the position of firms in the alliance network into account when selecting its cross-licensing partners (Ericsson). As a result, the importance of Motorola in the network of strategic alliances increased drastically in the late 1980s. Firms that took part in the cross-licensing agreements (i.e. Ericsson, Nokia, Siemens, Motorola, and Alcatel) dominate the market for GSM infrastructure and terminals. Only 5 years after the first commercial products were introduced on the market, other companies, including those from the far east and from the American continent, gradually succeeded in capturing some part of this huge market. In the field of technology and essential patenting, this process of catching-up took the form of a number of additions to the standard in the form of more enhanced equipment or services. We denote this as the third phase in the history of GSM. This is the period when some of the major European firms (most notably Alcatel, Nokia and Telia) took out large amounts of essential patents in GSM. This is also the period during which Nokia and Ericsson greatly improved their position in the alliances network. The play with the essential GSM IPRs, and the strategy of Motorola in particular, dramatically changed standardization processes in the telecommunications industry. From 1992 onwards, many firms have intensified their patenting activities, hoping to obtain essential IPR for future standards or additions to existing standards. Where IPR was considered a non-issue in this sector for many decades, it is now among the main issues to be resolved for any new standard, as has recently been shown with the standardization of third-generation mobile networks.21 Thus, within the major telecommunications firms, managers seem to have learned their lesson on the strategic importance of IPRs. However, at the level of the public interest in standard setting, the increasingly sharp negotiations about essential IPRs are not necessarily a positive development. The final question that remains then is how European policy may be applied to avoid the type of oligopolistic market structure that resulted in the GSM case. The research described in this paper shows that IPRs play a decisive role in this process. Below, we make two recommendations: one for ETSI, and one for the EC. The first recommendation relates to a clearer operationalization of the concept of ‘a suitable and fair reward’ for holders of IPRs that are relevant to a standard, or that of ‘fair, reasonable and non-discriminatory conditions’ as mentioned in the ETSI IPR policy. Each standardization process should start from the notion that such a reward must be given to holders of (essential) IPRs. What is suitable and fair cannot be fully defined at a general level, but must be determined on a case-by-case (or standard-by-standard) basis. To ensure an open and competitive market, the cumulative effect of license fees for a standard should particularly be taken into account here. One important step would be that the existence of license agreements and their conditions would be made public, resulting in a most favored nation (MFN) type of construction (the MFN-clause stems from the World Trade Agreement). This would make it much more realistic for a licensee to check whether a licensor meets the non-discriminatory condition of the ETSI or not. Such a transparency would also prevent double payment of royalties (i.e. when both a terminal manufacturer and its component supplier pay for the same patent). A second step would be that a maximum is set to the cumulative license fees for essential patents for a given standard. Licenses should include conditions that allow renegotiations of royalty rates once the cumulative fee exceeds this maximum. A third step would be a set of provisions that prevent licensors to generate considerable delays in reaching agreements, thus creating serious barriers for market entrants. It seems realistic to make these three steps by adding provisions to ETSI's IPR policy, among other things to prevent rules that are incompatible with rules concerning intellectual property. Although no party is obliged to commit itself to the provisions in this ETSI IPR policy, the consequences for not doing so are severe and almost all parties in the past have chosen to make such commitments. The second recommendation we make relates to the factual discrimination between formal and non-formal telecommunications standards (read: ETSI standards and others). This discrimination lies, among other things, in the allocation of radio frequency spectrum, network operator licensing practices in EC member states, terminal equipment type approval rules, and procurement rules (see Bekkers, 2001). Altogether, formal standards have much higher chances for success than other standards, and is thus fuelling extreme strategies for those that hold essential IPR for these formal standards. If the EC would further work towards a fully technology-neutral policy, IPR-holders will be prompted to be more modest, as a decision not to license their IPR at all, or only at high costs, will simply result in an alternative standard being embraced. Licensing for modest fees is still more attractive than not licensing at all.