Thursday, 22 September 2011

Standards and Patents

If your company plans to manufacture products or deliver services that are required to comply with certain standards it is advisable to become familiar with the IPR or patent policy of the relevant standard making body. Any company, large or small, that plans to adopt a standard for its products, processes or services, should first and foremost verify if there is/are any “essential” patent(s) for which a license is required and the broad terms and conditions under which the license will be granted to your company. If there is a need to obtain a license from a holder of an essential patent to meet the industry standards, it will generally be necessary to contact the patent holder directly and sign a license agreement under negotiated terms and conditions that are acceptable to both the parties. Ignorance of this knowledge may put your company in a difficult situation because you may be sued for infringement of a patent while your company thought that it was following a standard! Extending it further would also imply that you have to choose your vendors very carefully.
Standards of any kind are aimed to ensure that consumers of products receive products, which meet certain specification related to dimensions, properties, performance, safety and other parameters. Standards influence the food we eat, the drugs we take, means of communication, electric gadgets and endless other activities. Almost every product available in the market has been developed in accordance with some voluntary or mandatory standards. A product usually incorporates many components and each component is a product by itself. In a larger product the interconnectivity and interface of components is equally important as the components themselves. This is very true in IT. If components are not properly related (connected) and do not talk to each other the manner in which are expected to, the product may not be acceptable in the market. However, if components and the product are so designed that they could establish uniform, consistent and reliable performance then it is easy to win the allegiance of market place. This allegiance is easier to attain if the products and components are designed according to some standards either already existing or established for the product in question. Take the example of power supply in different countries. In India the power supply follow 220V-50 Hertz system whereas in USA it is 110V-60 Hertz system. Appliances such as hair dryers and electric irons designed for the Indian market will not work in USA without an adapter. Similarly, take the sockets, which hold electric bulbs. There is a standard followed for the design of the bulb in terms of dimensions, electrical properties and design. Bulbs are manufactured by different companies to fit the standard sockets even if there are differences in manufacturing techniques, materials etc. If this was not the case, each manufacturer of bulbs would be marketing their own sockets. There would be so many different types of sockets in the market, a situation difficult to comprehend today.

In a more complex product such as a personal computer which is a combination of hardware and software and which has to talk to many different outside systems such as its connection with internet, maintaining standards becomes challenging. Each component like Intel microprocessor or Window 2003 has been designed to some standards, which are practised and accepted practically all over the world. All such components have a strong element of inventiveness built into them and would usually have strong IP protection through one or more forms of IPR. In the absence of standards it would be very difficult, in most cases impossible, for competing firms to develop compatible or interoperable products.

Standards are rules that define the ways in which a product performs. They provide a basis of reuse, inter-networking, cooperation and portability. Standards are specified by a large number of formal and informal organizations. Some standards are never formalized but become de-facto standards due to market dominance of a particular product or service. Mandatory standards generally pertain to health, safety or the environment and are set and enforced by, or on behalf of, the relevant government. Most standards are voluntary, however. The International Organization for Standardization (ISO) defines a formal standard as “a document, established by consensus that provides rules, guidelines or characteristics for activities or their results.” A standard, therefore, is generally a set of characteristics or qualities that describes features of a product, process, service, interface or material. A standard may also describe how properties are measured, the composition of a chemical, the properties of an interface, or performance criteria against which a product or process can be measured. Apart from health, safety and environmental concerns, standards are important for a number of other reasons. For example, the existence of standards makes it possible to develop compatible or interoperable products by competing firms.

        De-facto standard is a convention, product or a system that has achieved a dominant position in the market by public acceptance or market forces. These standards are often but not always proprietary. QWERTY system for layout of letters on a typewriter or a keyboard is a universally adopted convention and it was not designed to any existing standard because there was no standard at that time for this purpose. QWERTY system has become a de-facto standard and no typewriter or keyboard follows any other system for layout of letters. Many competitive systems were designed based on a different layout but none could replace the QWERTY system. VHS format for video recording and play replaced Betamax system completely due to superior marketing tactics. These standards also emerge in response to an immediate industry needs. They gain in use and popularity through market dictates. They are usually maintained and managed by the company or the group of companies that originated them and they do not undergo any community review. These standards are not approved by any standard organization. They are widely used by the industry. It could be seen that these standards tend to be narrower and designed for specific use.
           The intricate relationship between standards and patents is least understood by most people because it appears so distant as standards have nothing to do with monopolistic rights. The development of standards more and more frequently anticipates technology rather than following it, leading to conflicts between standards and patents. MPEG-2 standard for visual and audio compression is covered by about 100 patents.
© R Saha

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