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When FRAND meets FOSS: Bottom Up or Top Down?

Intellectual Property Rights

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Courtesy  	Yuval Y/Wikimedia Commons  GNU Free Documentation License, The U.S. may be the place where more emerging technologies bubble up than anywhere else, but when it comes to developing public policies to address new technologies, Europe continues to hold the lead. That reality was underlined recently with the release of a report summarizing the proceedings and conclusions of a European Commission (EC)/European Patent Office (EPO) workshop titled Implementing FRAND standards in Open Source: Business as usual or mission impossible?That workshop (on which more below) is only part of a larger series of efforts surrounding the ongoing evolution of the EU legal frameworkICT Standardization policy, and much more.

The workshop report makes for interesting reading.  Fourth in a series of public-private exchanges jointly convened by the EC and EPO on the topic of ICT standardization and Intellectual Property Rights (IPRs), the “main highlights” are of particular note. They include the following (verbatim):

  • Depending on their objectives, large companies can combine open source and FRAND licenses in their business models. For SMEs, however, the risk of litigation and the lack of resources to negotiate FRAND contracts make such a combination difficult.
  • Analyses show that the General Public License v2.0 and v3 (GPL2 and GPL3) are incompatible with FRAND terms, because they pass rights to the next user of the software in a cascade, without the need of obtaining a license from the original IPR owner. GPL2 and GPL 3 also presuppose royalty-free licensing, which clashes with royalty-bearing FRAND.
  • As GPL-type licenses cover around 60 per cent of the open source software market, this may hamper interoperability for a considerable part of the ICT products.
  • Most other open source licenses are, however, in principle, FRAND compatible, though the answer in any given case might require a close examination of the specific terms of the FRAND license in question.
  • Public procurement can play a decisive role in promoting the use of open source, thereby preventing vendor lock-in and enhancing interoperability. Some governments develop their own open source software for these purposes.

What is interesting about the findings excerpted above is not the conclusions themselves (which are representative of the convictions of the presenters; a different group would likely have generated findings that on some points would come out differently), but the venue in which they were reached, and the knock-on effects that they may have. The last bullet provides a clue to why this is so.

Unlike the US, where both state and federal procurement of ICT continues to occur with almost no interference (or even comprehension) by legislators, in the EU issues such as the interplay between open standards and open source software are matters of vigorous public debate. The reasons are many, and I have written about them before: lowering costs of procurement, seeking to provide a more level playing field for EU (as compared to foreign) vendors, enabling public access, and the ongoing effort to integrate a still-increasing number of member states at the government level.

The result is that questions that U.S. stakeholders usually address only in private sector organizations or in on-line debates get held in the EU in Parliamentary facilities, and then find answers in multi-billion dollar procurement policies. This can not only have significant impact on private sector strategic decisions, and indeed are intended to do so.

Nor is this a new phenomenon. Rather, it mirrors the traditional “bottom up” versus “top down” approach to standards development that has exemplified the differences between the U.S. and the EU (and much of the rest of the world). In the case of open standards to date, the bottom up approach (where the private sector drives the agenda) has on the whole favored American industry. Whether the top down approach of the EU will win the next round when it comes to the union of open standards and open source will be interesting to observe.

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If it does, U.S interests shouldn’t expect to look for help in Washington, where only isolated pockets of agency personnel are savvy to standards and open source. That’s the price of keeping policy makers at arms’ length rather than adopting a team approach.

Perhaps someday an up and coming, innovative nation will decide to try an “arm in arm” approach rather than keeping someone else on the bottom so that they can stay on top.

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