Only copyright provides sufficient incentives for R&D that enables leadership.

Kirti Gupta, “Testimony for the ITA-NIST-USPTO Listening Session: Innovating Ideas Around Standards and Intellectual Property,” Center for Strategic and International Studies, 10-11-2023, https://www.csis.org/blogs/perspectives-innovation/testimony-ita-nist-uspto-listening-session-innovating-ideas-around

Technology leadership in critical and emerging technology standards are a priority for national security. Governments around the world have recognized the importance of technology standards. China has a “2035 Standards Plan”. The EU published its “Standardization Strategy” in 2022. The U.S. published its “National Standards Strategy” in May of this year.

U.S. must protect incentives to invest in standards R&D for maintaining its technology leadership.

Technology Standards in Critical and Emerging technologies require significant investments from private organizations that voluntarily participate in standards bodies. Technologies such as 5G are highly complex requiring teams of highly skilled engineers for firms to have meaningful R&D programs and presence in international standards bodies. One of the main reasons these firms invest in R&D and participate in standards is due to their ability to license their Intellectual Property and recoup their investments.

Without strong enforcement of IP rights in any jurisdiction —U.S. or foreign— the firms investing in R&D for standards may have difficulty licensing their IP rights and are likely to have reduced incentives to innovate in these technologies.

Currently, the European Commission (EC) is considering a legislative proposal seeking to address what some have perceived as lack of transparency and predictability in the licensing of SEPs. The EC’s draft SEP legislation, among other things, seeks to establish an out-of-court procedure to determine licensing conditions and aggregate royalty rates for a given standard. Any such proposal that seeks to regulate licensing rates reduces the incentives to innovate for firms investing in these standards.

Current U.S. IP law or policy on FRAND supports U.S. innovation and global competitiveness in standards.

The market-based approach for the determination of FRAND rates has delivered a highly successful industry over the last several decades. There are more mobile subscriptions today than the number of people on the planet. Mobile technology is perhaps the most democratically adopted technology on the planet.

There is now a robust body of case law on FRAND jurisprudence across the globe in major jurisdictions providing clarity on key FRAND principles.

The U.S. policy makers have decided to leave the functioning of licensing to the markets. In early 2022, the U.S. Department of Justice (“DOJ”) circulated a draft policy statement concerning licensing negotiations and remedies for SEPs, later withdrawing not only the idea of issuing a new policy statement, but also the one that was in-place from 2019. Instead, the DOJ committed to focus on evaluating conduct related to SEP licensing on a case-by-case basis. That is the similar approach that the EU has adopted, thus-far.

Ideally, the U.S. policy makers continue to engage in a bilateral dialogue with the EU to stay in alignment. The EU’s current proposal of regulating the licensing and pricing of SEPs comes at a time when the world is competing for leadership in critical technologies such as 5G standards; indeed, 5G SEPs are a primary focus of this legislation. Regulating 5G licensing framework is likely to have an impact on incentives to innovate and lead in 5G (and future 6G and other critical standards) by the European innovators and beyond. Losing leadership in 5G, 6G, and related technologies has significant geopolitical consequences.

The Department of Commerce can strengthen U.S. participation in international technology standards by taking initiatives to maintain a rules-based standards ecosystem. I list some suggested specific policy actions for U.S. policymakers to consider, with the objectives to preserve a rules-based global standards ecosystem, adhering to and maintain a market- and consumer-driven innovation agenda, and technology selection based on consensus and merit.

Maintain a strong IPR regime. To maintain the incentives of U.S. firms to participate in long-term and risky R&D that is required to be an innovation leader and lead in critical standards, protecting the ability of U.S. firms to monetize their IP in international markets is the first step. A stronger IP regime in the U.S. is also helpful towards increasing the incentives to innovate in patent-intensive critical technologies.