The Essential Guide to Standards
The Essential Guide is a book-length handbook for anyone who wants to understand standards and standards development from a hands-on perspective. If you participate in the standards development process or are a member of the management of a standard setting organization, please feel free to contact if you have questions about this topic.
Chapter 9: Government Issues and Policy
Summary: Governments the world over recognize, promote and actively engage in standards development. At the same time, they recognize the need to regulate the conduct of private parties as they engage in a process that can be abused. The ways that individual nations interact with standards varies, with some undertaking national standards development activities through government or quasi-governmental agencies, and others taking a "hands off" approach that leaves such activities to be conducted solely by private industry under the watchful eye of regulators. This article reviews, at a high level and by way of example, how the interaction between government and industry occurs in the United States and in the European Union. This article is part of the ConsortiumInfo.org Essential Guide to Standards, which can be found at http://www.consortiuminfo.org/essentialguide/. In particular, you may wish to read the following article, titled Laws, Cases and Regulations.
I – Introduction
Governments worldwide have recognized the importance and impact of standards on their economies. Standards have significant procompetitive effects such as increasing price competition as standard products are more readily compared, and solve issues such as product compatibility and consumer safety. Countries that are leaders in developing standards are at a competitive advantage, and internationally accepted standards are fundamental to the expansion of international trade.
In addition to recognizing the economic benefits of standard-setting activities, governments have an interest in standard setting in their capacity as consumers. As the purchasers of enormous quantities of goods and services, governments share with other end-users a desire to make purchases from a wide variety of high quality solutions that are interoperable.
While the benefits of standards are widely recognized, so are the potential downsides. By their very nature, standards setting activities that are improperly conducted can discourage or even eliminate competition, giving rise to antitrust concerns. In their role as regulators, governments therefore have a duty to police standard setting in order to prevent abuse of the standard setting process. Governments in the United States and some other countries have taken an active role in applying antitrust laws, in particular, to the standard setting environment.
The governments of the United States and the European Union in particular have been actively involved in observing, regulating and promoting the standard setting process. Below is a more specific discussion of the roles that these governments have assumed, and the policies they have enacted in order to encourage the evolution of a healthy and effective standard-setting process.
II – United States
The United States government has recognized that voluntary consensus standards are essential to the U.S. economy. The U.S. government's role in standards development has been to foster cooperative public and private relationships to encourage the private development of standards. On the other hand, the U.S. government, primarily through the Federal Trade Commission and the Department of Justice, has also enforced the antitrust laws in the standard setting context. How best to balance these two competing interests has been the subject of much debate.
Uncertainty surrounding the application of the antitrust laws to joint development endeavors such as the standard setting process led to the publication in 1980 by the Department of Justice of its "Antitrust Guidelines for Collaborations among Competitors". This publication was intended to facilitate the positive aspects of collaborative processes by giving guidance to the parties involved in joint research projects conducted by market competitors. Unfortunately, the fear of liability for treble damages to private parties (and particularly well-motivated and watchful competitors) which a court may award for certain antitrust violations was still a significant deterrent to collaborative activities.
In an attempt to allay those fears, Congress passed the National Cooperative Research Act, in 1984. The NCRA was subsequently amended and renamed the National Cooperative Research and Production Act of 1993 ("NCRPA"). The NCRPA attempts to clarify how antitrust laws apply to joint ventures, such as consortia, and encourages joint research and development by providing some protection to participants in such activities. Consortia can seek to limit their exposure under the antitrust laws to actual, rather than treble, damages by filing a notification with the U.S. Department of Justice (DOJ). For this reason, many U.S.-based consortia opt to make such NCRPA compliance filings.
Congress also attempted to bolster the private development of standards through its passage of the National Technology Transfer and Advancement Act of 1995 ("NTTAA"). The NTTAA promotes voluntary consensus standards for regulation and procurement by the U.S. government. The NTTAA requires that all federal agencies and departments use technical standards that are developed or adopted by voluntary consensus standards bodies and encourages federal agencies and departments to participate in standards setting activities if consistent with the mission and budget (among other things) of the agency or department.
Other laws that were not directed at supporting standards, but which contain provisions that effectively achieve this result are:
- The Telecommunications Act of 1996: This Act encourages the Federal Communications Commission to use privately developed standards that have been developed through an open and consensus-based process.
- The Consumer Product Safety Act: Pursuant to this Act, the Consumer Product Safety Commission is required to rely on privately developed voluntary consensus consumer product safety standards.
- The Health Insurance Portability and Accountability Act of 1995 : This legislation requires that the Secretary of Health and Human Services adopt standards developed by ANSI-accredited standards developers if at all possible.
- The Food and Drug Administration Modernization Act of 1997: This Act allows the FDA in some circumstances to accept manufacturers' declarations of compliance with privately developed standards during the FDA's evaluation of electrical medical devices.
In addition to the laws that relate to standard setting activities, several federal agencies have been created to represent the U.S. government in the standards development process. Chief among them is the National Institute of Standards and Technology. In addition, NIST and the American National Standards Institute have joined forces to promote the voluntary consensus standards approach.
As noted in the introduction to this essay, the United States government has a strong interest in promoting standards in its role as a consumer of goods and services. As recently as 2001, there have been discussions in Congress as to what standards (e.g., only SDO based standards, or all consensus based standards?) should be given preferred status in government procurement. Officially, it is government policy to encourage all relevant procurement to be based on useful standards whenever possible.
III – European Union
Outside of the U.S., the European Union has its own standards processes, and participates in the International Organization for Standardization ("ISO"), the International Electrotechnical Commission ("IEC") and the International Telecommunication Union ("ITU"). ISO and the European standards organization CEN have joined forces to allow the development of standards to proceed in one of the organizations, but result in simultaneous adoption by both, pursuant to the terms of the Vienna Agreement. In addition, ISO representatives observe CEN Technical Committee development work. The IEC and European Committee for Electrotechnical Standardization ("CENELEC") have a similar agreement, commonly referred to as the Dresden Agreement. The primary difference between the Vienna Agreement and the Dresden Agreement is that the Dresden Agreement allows the IEC a right of first refusal for work in CENELEC.
Unlike the United States government, which has only rarely focused on American-origin standards as a valuable tool for gaining advantage in global commerce, the European Union has embraced Euro-centric standard setting as a conscious strategy to put EU companies at a strategic advantage. This policy includes elements such as limiting participation in standard setting to EU domiciled companies, and to specifying EU standards-compliant products in government purchasing.
IV – US Enforcement Agencies
Government policy in the United States is actively implemented and enforced by a variety of agencies, as well as binding (as to purchasing) on all agencies. The principal agencies involved in policies relevant to standard setting are:
1. Antitrust Division of the Department of Justice
The Antitrust Division of the U.S. Department of Justice shares responsibility for enforcing the US antitrust laws and regulations with the Bureau of Competition of the Federal Trade Commission. The Antitrust division states its mission to be the promotion and protection of the competitive business process and the American economy through antitrust law enforcement. The Division prosecutes violations of the antitrust laws in virtually all industries and levels of business, including manufacturing, transportation, distribution and marketing by bringing criminal suits or leading civil suits against offenders.
2. Federal Trade Commission
The Bureau of Competition of the Federal Trade Commission shares responsibility for enforcing the US antitrust laws and regulations with the Antitrust Division of the U.S. Department of Justice. The Bureau is a consumer protection agency mandated by the FTC Act to protect the marketplace from unfair methods of competition, and to prevent unfair or deceptive acts or practices that harm consumers. The Bureau has authority to file cases in both federal court and special administrative forums.
3. National Institute of Standards and Technology
Founded in 1901, NIST is a non-regulatory federal agency within the U.S. Commerce Department's Technology Administration. It states its mission as developing and promoting measurements, standards, and technology to enhance productivity, facilitate trade, and improve quality of life. NIST has four major programs - the NIST Laboratories, Advanced Technology Program, Manufacturing Extension Partnership and the Baldrige National Quality Program - through which it works with U.S. companies, universities, and numerous other organizations to build critical US technical support system infrastructure.
NIST publications include the following:
- The ABC'S of Standards-Related Activities in the United States (NBS IR 87-3576)
- The ABC'S of Certification Activities in the United States (NBS IR 88-3821)
- The ABC'S of the U.S. Conformity Assessment System (NIST IR 6014)
- Laboratory Accreditation as in the United States (NIST IR 4576)
- The U.S. Certification System from a Governmental Perspective (NIST IR 6077)
- List of Conformity Assessment-Related Acronyms
- Final Guidance on Federal Conformity Assessment Activities
- NIST Special Publication 903 provides a detailed, searchable directory of U.S. Private Sector Product Certification Programs, describing information for 178 product certification activities. Details include type and purpose of organization, nature of activity, products certified, standards used, certification requirements, accreditation and recognition by various foreign and U.S. government agencies or the private sector, service availability, cost determination methods, and organization mark.
NSSN is a cooperative partnership between ANSI, U.S. private-sector standards organizations, government agencies, and international standards organizations. Aligned with its standards developer partners, NSSN routes users to a wide variety of commercial and regulatory technical documents.
5. Interagency Committee on Standards Policy (ICSP)
The Interagency Committee on Standards Policy is the agency of the federal government that is responsible for implementing the NTTAA. ICSP advises the Secretary of Commerce and other Executive Branch agencies on standards policy matters.
6. Standards Advisory Committee
The Standards Advisory Committee is part of NIST and was formed to coordinate standards activities across NIST by facilitating communication among NIST professional staff. For a far more detailed review of the implementation of United State government policy regarding standard setting, click http://www.consortiuminfo.org/laws/
V – Useful Links
The following link and the articles available at this link contain useful information on government policy:
1. From April 17th through May 23rd, the Federal Trade Commission and the Department of Justice's Antitrust Division held joint hearings on "Competition and Intellectual Property Law and Policy in the Knowledge-Based Economy." These sessions continued the agencies' inquiry into the implications of competition and patent law and policy for innovation and other aspects of consumer welfare by focusing on a number of topics central to the intersection of antitrust and intellectual property law. Topics examined included patent pools, cross-licensing, patent settlements, intellectual property strategies and license terms in standards activities, licensing strategies, antitrust analyses of licensing practices and an international comparative law perspective on the relationship between competition and intellectual property. On April 18th, the hearings focused on consortia and standard setting. The multiple papers submitted, and the transcribed testimony given on April 18th, may be found at http://www.ftc.gov/opp/intellect/index.htm
NOTE: If you participate in the standards development process or are a member of the management of a standard setting organization, please feel free to contact Andrew Updegrove if you have questions about this topic.
Copyright 2007 Andrew Updegrove
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