IEEE Patent Policy Revisions: An Empirical Examination of Impact

Abstract

In February 2015, the Institute of Electrical and Electronics Engineers-Standards Association (IEEE-SA) -- one of the largest Standards Development Organizations (SDOs) -- adopted highly controversial changes to its intellectual property rights (IPR) policy. Specifically, the IEEE-SA introduced a specific definition of Fair, Reasonable and Non-Discriminatory (FRAND) licensing terms. The updated policy rules and the position of the Department of Justice (DoJ) -- stated in a Business Review Letter (BRL) -- have attracted much discussion from academic scholars and industry practitioners. The aim of this paper is to explore how the new patent policy has impacted different aspects of standards development within IEEE. Particularly, our analysis focuses on the IEEE 802 LAN/MAN Standards Committee (IEEE 802 LMSC), whose Working Groups (WGs) have been responsible for the design and development of widely used wireless technologies such as Wi-Fi and Ethernet. The first part of the analysis examines the submission pattern of Letters of Assurances (LoA), i.e., documents outlining the declaration of patents potentially essential to the standard (commonly referred to as Standard Essential Patents (SEPs)) and terms under which the submitter is willing to license its SEPs. We examine LoA submissions before and after the implementation of the new policy within the 802.11 WG, which covers the Wi-Fi technology. Next, we analyze how the comment resolution process (CRP), that is, the process of resolving comments made by 802.11 voters has changed after the policy update. More specifically, we investigate whether there is a delay in the approval process of 802.11 standards. Finally, we examine how the number of submitted Project Authorization Requests (PARs), or documents that trigger the development or revision of a standard by defining the scope and requirements for a new technical project across all IEEE 802 WGs, has changed after the policy update. PARs can be used as a proxy of new activity related to the development of standards. The empirical findings suggest a decline in LoAs with several SEP holders reluctant to license under the new IPR policy terms. More importantly, uncertainty on implementers’ side has increased, as new standards have been approved under the presence of negative and/or missing LoAs, and other standards are being developed under this “mixed bag” of LoAs. The CRP analysis reveals that the first two rounds of the process last on average longer after the policy change. Such a finding implies that the 802.11 balloting process has become more time consuming, which in turn results in a (potential) delay of approval/publication of standards. We also find that the number of new projects initiated (or PARs) in the IP-intensive IEEE standards (namely the 802 WGs) have decreased, suggesting a potential slowdon of the growth rate of innovation after the policy change.