IP for Business: Patents in Technical Standards

"It is virtually impossible today to develop an audio or video coding standard with a reasonable performance that does not require the use of one or, more likely, several patents," writes the ISO Bulletin.¹ The statement holds true for a number of other products, particularly in the fields of telecommunications and electronics. This means that companies wishing to manufacture products that comply with certain established industry standards may need to use patented technology associated with those standards, for which they will need prior authorization from the patent holder.

This article outlines how intellectual property (IP) issues are addressed during the standard-setting process, and the implications for businesses seeking to adopt technical standards. While this article deals only with patents, standards for products protected by copyright, such as those relating to computer programs, may also be important in this context.

The need for standards

Industry standards are present in almost every facet of our lives, in the production of the food we eat, in our means of communication, travel, work, play and so on. Almost every reputable product in the marketplace has been developed in compliance with one or more voluntary or mandatory standards. Mandatory standards generally pertain to health, safety or the environment and are set by, or on behalf of, governments. Most standards, however, are voluntary.

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 agreed specifications and criteria to be met by a given type of product, process, service, interface or material.

In addition to health, safety and environmental concerns, standards are important for many reasons. Critically, the existence of standards makes it possible for different firms to develop compatible or interoperable products. Without standards, buying a nut to fit a bolt would be a nightmare; and CDs manufactured by different companies would not work in the same player. Standards for interoperability are particularly important for network markets, such as railroads, electricity, telegraph/faxes, telephones, cellular phones, and the Internet. Product standards are often critical to the effective functioning of markets and play an important role in international trade. For consumers/users, standards provide information and assure quality.

In today's competitive context, where companies invest significantly in the development - and protection - of new technologies, it is not uncommon that the best technology on...