For the Record: Dave Supports ITU Working for Reasonable Patent Charges

Mike Masnick strongly opposed the ITU working to keep patent costs down. Mike has done standout reporting on the expensive absurdity of the patent system and many other issues. Mike is being consistent with his belief, “It’s often best for innovation if regulators stay the hell away from innovative industries.” On this, I have to disagree with him. I believe monopolies, including those created by standards, need rigorous oversight to prevent abuse. On Mike’s Techdirt, I posted

Great if ITU can make patent charges reasonable


Dave BursteinOct 29th, 2012 @ 2:49pm

I disagree with you here. Whatever else one may think about the ITU, it remains a key standards body. ITU sets the international standards for DSL and many other products. 

When a manufacturer’s patent is included in a standard, it could be a license to print money. The supposed solution is to require everyone involved to license patents in a “reasonable and non-discriminatory” manner. 

In practice, neither U.S. standards groups like ATIS and the ITU itself do essentially nothing to enforce the requirement of “reasonable” and throughly unreasonable charges are added to many products. This is anti-competitive. More important to me is that it raises consumer prices. 

I therefore believe that the standards bodies should take active steps to ensure the charges are “reasonable.” A logical first step is set a definition of “reasonable” charges as a % of product price. 

For example, if the target is set at 10% and there are 50 patents involved, any company seeking more than a fraction of one percent would have an extreme burden of proof. In the current system, we often have companies looking for 2-10% royalties on minor elements, enough to raise prices significantly. 

You reported the problem well, and suggested many sensible ways forward. I think any responsible standards group should jump in and do what it takes to keep royalties reasonable.

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