The Conflict And Balance In IP Protection With Regard To Standardization Of Technologies

Under the evolution towards standardization of patented technologies, and the current efforts in China to standardize the technologies related to 3G standards("3G standard"),a critical topic that needs to be addressed is the conflict of interests,and the resulting imbalance in profit distribution, between the Chinese govemment,telecommunications operators and affiliated participants,foreign and multinational corporations that hold the core patents,and the telecommunications consumers in China.The two most contentious issues are the conflicts between standardization and patent protection mechanism,and the lack of alternatives for the patent users who must pay royalties.Central to the issues is the need for means or regulations to supplement existing intellectual property("IP")protection mechanisms to resolve the challenges to the system when a govemment designates certain technologies to be part of the standards for specific industries like telecommunications.From research of past cases and publications,the key to the success of certain industries and markets often hinges on the government's policies, in the name of promoting operating efficiencies as well as competition, to guide,even force,operating rules or standards.Taking the perspective of the mobile telecommunications industry,when either one of the State-Owned operators,China Mobile or China Unicorn,adopts WCDMA, CDMA2000 or TD-SCDMA as the standard for 3G operations,under the guidance of policies,all participants in the industry,like infrastructure, base station,and handset equipment supplier,will have to pay significant amount of royalties to patent holders.But,the obvious absurdity lies in a oligopoly,like the telecommunications industry;any participant,once enters the industry,must,based on existing IP protection mechanism and without any alternative,pay huge sums of royalties and significantly increases it operating costs.On the other hand,taking the perspective of the patent holders,it is natural to demand royalty payments from users after tremendous amount of time,human resources,and money invested in obtaining a patent.At the same time,to encourage research and development of new technologies,effective and comprehensive IP protection is crucial.Therefore,both views are reasonable from its own perspective but there also exists a certain degree of conflict that requires adjustment and resolution.When trying to resolve the issue purely based on "Essential Facilities Doctrine",a discovery was soon made that this doctrine focuses more on compliance of patents after being adopted into standards to be included in essential facilities.Once compliance is assured,the doctrine involuntarily opens the patent for use by the industry.This only addresses partially the strict definition of "essential facilities" but fails to address the root cause of the issue.This is also not necessarily the fight solution to resolve the conflict of individual entities having to negotiate royalty payments based on government's mandate.The view of this thesis is that,the conflict is caused by government mandate,which tilts the dynamic balance towards Publicity and Public Interest,even though the protection of IP,which is part of the private property domain,is necessary.And when IP rights meet the necessary conditions of this thesis,the balance of interest doctrine should be applied, and such IP rights should no longer be protected by existing IP protection mechanism.The balance of interest doctrine seeks to fairly address the balance between the interest of the IP owner and the IP user from the perspectives of legal,public vs.private property rights,and the specific case at hand.In the case of 3G standards,the government should be responsible for paying the royalties and charge the users reasonable fees in order to achieve the balance of interest and societal harmony.To further elaborate this view,this thesis is divided into the following six parts.Chapter one discusses the origins of the contentions on 3G standards. It stipulates that,from a pure interest point of view,the problem lies within the conflicts of IP protection and involuntary payment of royalties. It further stipulates that,from an IP protection point of view,the most serious contention is whether to offer IP protection to those patented technologies in 3G standard.Chapter two analyzes relationships between the China telecommunications market,technology standards,and patents.The market is characterized by limited number of players,oligopoly,high entry barriers,monopolistic pricing power,weak competition,and high technology content.These characteristics must be taken into account during the 3G standardization effort.We then analyze and compare between "openness",a key characteristic of a standard,and the exclusive nature of IP.Within the 3G standard framework,the merging of and coordination between technology,patent protection,and interest distribution is at the core of all contentions.Chapter three discusses the differences and factors in how a standard gets established.3G standard was established under policy guidance,and it gave the government a special role in royalty negotiations.On the other hand,the imposed standard onto all telecommunications participants goes against free-market principles.Chapter four focuses on the need to adjust IP protection for standardization based on the argument that the conflict between openness and the monopolistic power of IP protection in an oligopolistic market like telecommunications with long and capital-intensive supply chain.There is no legal precedence of similar scale when it comes to the 3G standard and thus any imbalance in interest distribution can not be resolved from existing IP doctrine.The resolution,which includes involuntary release patent from IP protection mechanisms as proposed by scholars who base their arguments on essential facilities doctrine,has major weaknesses. Therefore,this calls for a new approach that advocates an active role by the government,after establishing standard,in implementing a IP protection mechanism that is different from existing ones to achieve the proper,and fair,balance among all parties involved in 3G standard.Chapter five proposes that the balance of interest doctrine can be applied to the issue of balancing standard by govemment mandate and IP protection.It further proposes that the government,after selecting the set of patents to be included in the standard,also pays the respective royalties as a means to not only protect the patent holders,offer fair treatment to all industry participants,ensure public interest,but also,in the process, properly balances the interest for all parties.It also means that the patents in the 3G standard are not subject to the protection under existing IP protection mechanisms,are open to reasonable use by the participants, with royalties paid by the government as a way to compensate and to encourage continued innovation.It further proposes that the same approach,based on this legal framework,can be extended into the IP protection mechanisms of other industries.The thesis concludes that,even though China has already established legal protection of IP,but in mandating 3G standard,the most effective way to balance IP protection,distribute interest reasonably,and resolve other legal issues stemming from existing IP protection mechanisms,is to make the government liable for paying the royalties.Not only this resolves all the legal and implementation issues,it also offers a blueprint to resolve similar cases in the future.Through active participation by the government and all telecommunications industry entities other issues involving the 3G standard can be properly addressed and perfected.But the contentious issue of IP rights can be investigated and analyzed based on the proposed framework of this thesis so that a true solution can be found.And the mechanisms and principles of this thesis can be extended further as a key element in IP protection.