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Innovation Policy: The Balance Between Standards and Patent Regulation

by xavier last modified 2009-05-04 09:03

Interconnectivity, commoditisation and increased reuse and recombination are key trends within the maturing information and communication technologies (ICT) industry that drive innovation and development. Harnessing this potential depends on a variety of factors, including open innovation models, such as free software.

By Georg C F Greve, president, Free Software Foundation Europe

[Editor's Note: The Standing Committee on the Law of the Patents (SCP) of the World Intellectual Property Organisation (WIPO) is expected to discuss the regulatory aspects of patents in the field of standardisation during its session in March 2009. This inside view takes a look at the policy issues in this field from the perspective of a software professional.]

Interconnectivity, commoditisation and increased reuse and recombination are key trends within the maturing information and communication technologies (ICT) industry that drive innovation and development. As the United Nations Conference on Trade and Development (UNCTAD) Information Economy Report 2007-2008 highlights, the ICT sector is a main driver for innovative and economic benefit, with the impact on ICT-enabled sectors potentially outweighing that of the ICT sector itself. Harnessing this potential depends on a variety of factors, including open innovation models, such as free software.

Interoperability is another key factor with significant economic impact in which two areas of regulation overlap: Standardisation and patents. This paper provides an analysis of the interaction of patents and standards, including a public benefit consideration to maximise innovation, development and economic growth.

The initial paper was prompted by a workshop of the European Commission’s Directorate General (DG) Enterprise and Industry in Brussels on 19 November 2008, titled “IPR in ICT standardisation.” It has been revised February 2009 for the upcoming meeting of the Standing Committee on the Law of the Patents (SCP) of the World Intellectual Property Organization (WIPO).

Both patents and standardisation are areas of regulation based on public benefit considerations. Succinctly put, a patent is a monopoly granted for a limited time by the government on behalf of its citizens to promote disclosure of breakthroughs that will in turn enable future innovation.

The term monopoly rightly carries negative connotations. A monopoly stifles innovation and increases price due to the absence of competition. On these grounds a monopoly is generally understood to be to the detriment of economy and society. It is not illegal to obtain a monopoly, but society has a legitimate interest in limiting abuse of the power that a monopoly confers, and seeks to achieve this through antitrust law.

The monopoly right created by a patent brings with it all side effects of a monopoly. It is among the strongest regulations of the market, and regulators need to be aware of both its costs and benefits.

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http://www.zeapartners.org/articles/innovation-policy001