07-2 Institute of Electrical and Electronics Engineers, Inc. (IEEE) and Its Standards Association (IEEE-SA)

DEPARTMENT OF JUSTICE
Antitrust Division
THOMAS 0. BARNETT
Assistant Attorney General
Main Justice Building
950 Pennsylvania Avenue,
N.W.
Washington, D.C. 20530-0001
(202)
5 14-240 1 / (202) 6 16-2645 (Fax)
E-mail: antitrust@usdoj.gov
Web site: http:Nwww.usdoj.govlatr
April 30,2007
FACSIMILE TRANSMITTAL
Michael A. Lindsay, Esq.
Dorsey
& Whitney LLP
50 South Sixth Street
Suite 1500
Minneapolis, Minnesota
55402- 1498
Dear Mr. Lindsay:
This letter responds to your request on behalf of the Institute of Electrical and Electronics
Engineers, Inc. ("IEEE") and its Standards Association ("IEEE-SA) for a business review letter
from the Department of Justice pursuant to our Business Review Procedure,
28 C.F.R. 9 50.6.
You have requested a statement of the Department's antitrust enforcement intentions with respect
to a proposed patent information policy that will allow patent holders to publicly commit to
specific restrictions on their future licensing terms and conditions for the use of patents that are
essential to IEEE standards. This proposed change in
IEEE's patent information policy is
designed to better ensure that any willing licensee can implement IEEE standards and that IEEE
standards will become widely adopted.
I. IEEE and IEEE-SA
IEEE is a non-profit professional association with over 385,000 members whose technical
interests cover the fields of aerospace systems, computers, telecommunications, biomedical
engineering, electric power, and consumer electronics.' IEEE has long been involved with
technological collaborative standard-setting activities in the United States. IEEE was formed in
' IEEE, About the IEEE, http://www.ieee.org/web/aboutus/horne/index.html (last visited Feb.
2 1,2007).

Michael A. Lindsay, Esq.
April 30,2007
Page 2
1963 as a result of a merger between the American Institute of Electrical Engineers, formed in
1884, and the Institute of Radio Engineers, formed in 19 12. Standards development was a major
part of both of IEEE7s predecessor institutions, and IEEE-SA has continued that tradition by
establishing more than 900 standards, with more than 400 standards currently in development.
The standards issued by IEEE-SA are used in fields and industries including information
technology, power and energy, instrumentation and measurement, mobile and stationary
batteries, nanotechnology, organic electronics, telecommunications, and transportation
~afety.~
Many IEEE standards have been developed to enhance the interoperability of communications
products. One important example is the
802@ series of standards for local and metropolitan area
wireless and wired networks. Ethernets, token rings, wireless local area networks ("LANs"), and
bridging and virtual bridged LANs, for example, are widely used today because they allow users
to reliably access and share information over communications systems by interconnecting many
compatible products manufactured by different producers.
Two processes for developing standards are used within IEEE-SA. The first involves all
interested qualified individuals who each may vote on the decisions made in the standard-setting
process. More recently, IEEE-SA has set some standards using a corporate-based program in
which each materially interested participating corporation, educational institution, or government
agency has one vote on the decisions made in the standard-setting process.
The IEEE-SA standards-setting proess begins when a member of an IEEE Technical
Society or Council sponsors a new standardization
pr~ject.~ After determining that there is
sufficient interest among IEEE members for such a standard, the sponsor appoints a study group
chair who submits a project authorization request ("PAR) to the IEEE-SA Standards
Board.4 If
the project is approved, an official working group is formed and is given four years to draft a
~tandard.~ When the draft standard is complete, it must be approved by a balloting group made
up of interested IEEE
member^.^ At least seventy-five percent of the balloting group must vote
Id.
INST. OF ELEC. & ELECS. ENG'RS, INC., IEEE-SA STANDARDS BOARD BYLAWS 5 5.2.2(a)-(e)
(2007), available at http://standards.ieee.org/guides/bylaws/sb-bylaws.pdf [hereinafter IEEE-SA
STANDARDS BOARD BYLAWS]; IEEE Standards Association, IEEE Standards Companion,
http://standards.ieee.org/guides/companiodpal .html#sponsor (last visited Feb. 21, 2007).
4
IEEE Standards Companion, supra note 3; see IEEE-SA STANDARDS BOARD BYLAWS, supra
note 3, 5 5.2.3.
IEEE Standards Companion, supra note 3; see IEEE-SA STANDARDS BOARD BYLAWS, supra
note 3, 4 5.2.3.
INST. OF ELEC. & ELECS. ENG'RS, INC., IEEE-SA STANDARDS BOARD OPERATIONS MANUAL
4 5.4.3.1 (2007), available at http://standards.ieee.org/guides/opman/sb-om.pdf [hereinafter IEEE-SA
STANDARDS BOARD OPERATIONS MANUAL]; IEEE Standards Companion,
supra note 3. The sponsor

Michael A. Lindsay, Esq.
April 30,2007
Page 3
on the draft standard and seventy-five percent of these votes must be
affirmati~e.~ A failed ballot
may be recirculated after addressing negative comments in order to gain the required approval.
Even after the 75/75 requirement has been met, the working group must respond to all negative
comments.' A ballot-approved draft standard is then submitted to the IEEE-SA Standards
~oard~
which approves the standard after confirming that the draft standard is within the scope of the
PAR and that the working group has followed the procedural rules designed to achieve
consensus.
lo
In order to "produce standards that any willing implementer can use and that will become
widely adopted," IEEE seeks to ensure that licenses for patent claims that are essential to
implement an IEEE standard are broadly available on reasonable terms.''
IEEE-SA's current
patent policy is found in the IEEE-SA Standards Board Bylaws and its Standards Board
Operations Manual. This policy requires working group chairs to begin every working group
meeting to develop IEEE standards by informing participants that they should disclose any patent
claims or patent applications that might be essential to implement the standard they are
drafting.12
The working group chair asks those who may hold potentially essential patents to state, in
writing, either
(1) that they will not enforce their essential patent claims used to implement the
standard, or (2) that they will license the essential patent claims to implement the standard on
reasonable and nondiscriminatory
("RAND") terms.I3 The IEEE-SA Standards Board will
sends out an invitation to join a balloting group to those IEEE members or participants it thinks may be
interested in voting on the draft standard. Those that respond affirmatively to this request comprise the
balloting group. IEEE-SA STANDARDS BOARD OPERATIONS MANUAL,
supra, 5 5.4.2.
IEEE-SA STANDARDS BOARD OPERATIONS MANUAL,
supra note 6,
5.4.3.1.
IEEE Standards Companion,
supra note 3; see IEEE-SA STANDARDS BOARD OPERATIONS
MANUAL,
supra note 6, 5 5.4.3.1-2.
See IEEE-SA STANDARDS BOARD OPERATIONS MANUAL, supra note 6, 5 5.6.2.4.
'O There are several opportunities for appeal. Working group members may appeal to the
sponsoring committee if they believe the process has been unfair and members of the balloting group
may appeal to the Standards Board. IEEE-SA STANDARDS BOARD BYLAWS,
supra note 3, 4 5.4.
11
Letter from Michael A. Lindsay, Dorsey & Whitney LLP, to Thomas 0. Barnett, Assistant
Attorney Gen., U.S. Dep't of Justice 2 (Nov. 29,2006) [hereinafter IEEE-SA Business Review Request].
l2 IEEE-SA STANDARDS BOARD OPERATIONS MANUAL, supra note 6, 5 6.3.2.
l3 IEEE-SA STANDARDS BOARD BYLAWS, supra note 3, 5 6.

Michael A. Lindsay, Esq.
April 30,2007
Page
4
consider these commitments, or lack thereof, when deciding whether to approve a draft
standard.
l4
IEEE-SA represents that it has encountered two difficulties in relying on patent holders'
commitments to license on RAND terms. First, commitments to license essential patent claims
on RAND terms are inherently vague. Such ambiguities in RAND commitments can lead to
litigation that can delay the introduction of standardized products. Patent holders may also
demand higher licensing fees than they could have profitably demanded before the standard was
set, and such higher royalty payments could result in higher prices for
consumer^.'^ Second,
IEEE-SA is concerned that its current prohibition of any discussion related to licensing terms
within working groups prevents its members from making "sensible cost-benefit comparisons"
when voting on competing technological
proposals.16 IEEE-SA believes that the uncertainty
about future licensing terms impedes the ability of IEEE-SA working group members to make
decisions on a consensus basis, as is required by IEEE-SA
procedures.I7
11.
The Proposed IEEE-SA Patent Information Policy
IEEE-SA has decided to change its policy to give patent holders the option to publicly
disclose and commit to the most restrictive licensing terms (which may include the maximum
royalty rate) they would offer for patent claims1* that are found to be essential to the
standard.19
14
IEEE-SA Business Review Request, supra note 11, at 2. Based on conversations with you, it
is our understanding that the Standards Board will defer approval of a draft standard until some response
has been received from the patent holder.
Is IEEE-SA Business Review Request, supra note 1 1, at 2-3.
l6 Id. at 5.
l7 Id.; IEEE-SA STANDARDS BOARD OPERATIONS MANUAL, supra note 6, tj 5.3.3; IEEE-SA
STANDARDS BOARD BYLAWS, supra note 3,
tj 2.1 ("The approval and publication of an IEEE standard
implies that the document represents a consensus of the parties who have participated in its development
and review. Since every attempt is made to involve all interests in the activity, it can be presumed that
the document represents a consensus of interests concerned with the scope of the standard. Consensus is
established when, in the judgment of the IEEE-SA Standards Board, substantial agreement has been
reached by directly and materially affected interest categories. Substantial agreement means much more
than a simple majority, but not necessarily unanimity. Consensus requires that all views and objections
be considered, and that a concerted effort be made toward their resolution."); IEEE, Imperative Principles
of the Standards Process
(n.d.), http://standards.ieee.org/faqs/ImperativePrinciples.ppt.
'' Patent claims are defined as "one or more claims in issued patent(s) or pending patent
application(s)." INST. OF ELEC. & ELECS. ENG'RS, INC., IEEE-SA STANDARDS BOARD BYLAWS tj 6.1
(rev.
2006), in Letter from Michael A. Lindsay, Dorsey & Whitney LLP, to Frances Marshall, Special
Counsel for Intellectual Prop., U.S. Dep't of Justice (Feb. 21, 2007) [hereinafter IEEE-SA PROPOSED

Michael A. Lindsay, Esq.
April 30,2007
Page 5
In addition, IEEE working group members will be allowed to discuss within certain limits the
relative costs and benefits of alternative technologies within technical standard-setting meetings.
Commitments to licensing terms for potentially essential patent claims will be made using
an EEE-SA Letter of Assurance
("LOA") form. The proposed policy specifies that the licensing
commitments made in an LOA will bind future holders of the patent as well as affiliates of the
patent holder, unless they are specifically excluded from the LOA. Each LOA will also apply to
amendments, corrigenda (corrections to printing errors), editions, or revisions of the existing
standard. IEEE-SA anticipates that the proposed policy changes will have positive effects.
Creating greater clarity about a patent holder's future licensing requirements may decrease the
chances that litigation will delay the implementation of an IEEE standard and improve the ability
of working groups to reach consensus, thus allowing standardized products to reach consumers
more quickly. EEE-SA states that these changes also may result in lower prices for consumers
of standardized
products.20
A. Patent Licensing Commitments
If the working group chair learns that access to a patent claim might be necessary to
implement a proposed standard, it must request a licensing assurance from the patent holder or
the patent
appli~ant.~' A patent holder can choose to respond to a request from IEEE in one of
five First, it may either choose not to provide any licensing information, by not
submitting an LOA or submitting a letter stating that it is unwilling or unable to make any
commitment about its future licensing intentions. Choosing this option, however, results in a
l9 A patent claim is essential if its use is "necessary to create a compliant implementation" of the
proposed standard when "there was no commercially or technically feasible non-infringing alternative."
IEEE-SA PROPOSED STANDARDS BOARD BYLAWS,
supra note 18, 5 6.1.
20 See IEEE-SA Business Review Request, supra note 11, at 5.
21 IEEE-SA PROPOSED STANDARDS BOARD BYLAWS, supra note 18, 5 6.2; INST. OF ELEC. &
ELECS. ENG'RS, INC., IEEE-SA STANDARDS BOARD OPERATIONS MANUAL 5 6.3.2 (rev. 2006), in Letter
from Michael Lindsay to Frances Marshall,
supra note 18 [hereinafter IEEE-SA PROPOSED STANDARDS
BOARD OPERATIONS MANUAL I]. It is our understanding that a patent holder also may submit an LOA on
its own accord. The term
"patent holder" as used in this letter refers to an individual or organization that
has, or will have, the legal right to license a patent claim that is potentially essential to an IEEE standard.
22
See IEEE-SA PROPOSED STANDARDS BOARD BYLAWS, supra note 18,5 6.2.

Michael A. Lindsay, Esq.
April 30,2007
Page
6
referral to the Patent C~mmittee.~~ At the time the draft standard is published, IEEE will
announce that essential patent claims may exist for which no LOA has been
received.24
Second, after a reasonable and good faith inquiry, a putative patent holder may submit an
LOA stating that it is not aware that it owns, controls, or otherwise has the ability to grant a
license to any patent claims that might become essential to the IEEE
standard.25 Such a
reasonable and good faith inquiry does not require a patent holder to search its patent portfolio.
Rather, it involves contacting individuals associated with the company who have been involved
with the development of the
standard.26
Third, a patent holder may submit an LOA stating that it will not assert any claims against
anyone who uses its essential patented technology to implement the standard. Such a
nonassertion LOA may not include any
condition^.^^
Fourth, a patent holder may submit an LOA stating that it has patents that might be
essential to the IEEE standard and that it is willing to license the essential claims of those patents
to those seeking to implement the standard either "without compensation" or under "reasonable
rates" with all other terms and conditions on a
RAND basis.28
Fifth, if a patent holder commits to license its essential patent claims under RAND terms,
it may voluntarily augment its LOA by including details about those terms for each essential
claim. Such details may include a not-to-exceed license fee or rate commitment, other material
licensing terms, or a sample licensing
agreement.29
23 INST. OF ELEC. & ELECS. ENG'RS, INC., LETTER OF ASSURANCE FOR ESSENTIAL PATENT
CLAIMS § D. 1 .d (2006), in IEEE-SA Business Review Request, supra note 1 1, at exhibit B [hereinafter
LETTER
OF ASSURANCE]; IEEE-SA PROPOSED STANDARDS BOARD BYLAWS, supra note 18, § 6.2.
24 IEEE-SA STANDARDS BOARD OPERATIONS MANUAL, supra note 6, 5 6.3.2.
25 IEEE-SA PROPOSED STANDARDS BOARD BYLAWS, supra note 18,s 6.2 ("The Submitter of the
Letter of Assurance may, after Reasonable and Good Faith Inquiry, indicate it is not aware of any Patent
Claims that the Submitter may own, control, or have the ability to license that might be or become
Essential Patent Claims.").
26 Id. 5 6.1.
27 Id. fj 6.2(a).
28 Id. fj 6.2(b).

Michael A. Lindsay, Esq.
April 30,2007
Page 7
The patent holder may choose to provide a blanket LOA that covers all patent claims that
are potentially essential to the proposed standard. Or, the patent holder may provide different
LOAs for each potentially essential patent
claim.30 A patent holder may also submit multiple
LOAs for each potentially essential patent claim, each of which will be binding. Thus, a patent
holder may offer alternative assurances to potential licensees and each potential licensee may
choose to invoke whichever LOA it finds most advantageous during subsequent bilateral
licensing negotiations." Having submitted one LOA, a submitter is obliged to submit additional
LOAs if it learns during the standard-setting process that it owns, controls, or has the ability to
license any other patent claims that might be essential to the same IEEE
standard.32
B. Timing
If an individual or organization chooses to submit an LOA, it must do so before the
proposed standard is approved by the Standards Board, although the Standards Board requests
that LOAs be submitted as soon as it is "reasonably feasible" to do
so.33
C. Submission and Acceptance
To submit an LOA, a patent holder simply mails the completed LOA form to the IEEE-
SA's Patent Committee Administrator, who then records the date the LOA is received and
ensures that the LOA is materially completed on the appropriate IEEE form. The Patent
Committee Administrator also determines whether the signatory to an LOA has authority to bind
the patent holder. Once the Patent Committee Administrator has approved an LOA, it is posted
on the IEEE-SA
~ebsite.'~
D.
Duration of the LOA Commitment
After an LOA is accepted by IEEE-SA, it is irrevocable and applies from the date the
standard is approved by the IEEE-SA Standards Board to the date the standard is withdrawn.
The commitments in an LOA are binding on the patent holder and all of its affiliates, except
those that have been specifically excluded, and on any assignees or transferees of the underlying
30 IEEE-SA PROPOSED STANDARDS BOARD OPERATIONS MANUAL I, supra note 21,$6.3.4. A
potential licensee may not invoke a blanket LOA if an LOA specific to that claim was filed on the same
date. Blanket
LOAs will apply to after-acquired essential patent claims unless the prior patent holder had
already submitted an
LOA for those claims. Id.
31 Id.
32 IEEE-SA PROPOSED STANDARDS BOARD BYLAWS, supra note 18,$6.2.
33 Id,
34 IEEE-SA PROPOSED STANDARDS BOARD OPERATIONS MANUAL I, supra note 21, $6.3.

Michael A. Lindsay, Esq.
April 30,2007
Page
8
patent claims.35 If the application of the technology remains the same and the patent claims
remain essential, the LOA will also apply to amendments, corrigenda, editions, or revisions of
the existing
standard.36
E. Use of the Licensing Information in the LOA During the Standard-Setting
Process
IEEE-SA working group members will have access to all accepted
LOAs, but working
group members will not discuss specific licensing
terms at standards-development meetings.37
Working group members, may, however, discuss the relative costs of the proposed technological
alternatives, and these costs may include the relative costs of licensing the essential patent claims
needed to implement the technologies under
con~ideration.~~
F. Enforcement of an LOA
By signing an LOA, the submitter
"acknowledge[s] that users and implementers" of the
proposed standard "are relying or will rely upon and may seek enforcement of the terms of
th[e]
35 IEEE-SA PROPOSED STANDARDS BOARD BYLAWS, supra note 18,g 6.2. IEEE may request an
LOA from excluded affiliates. IEEE-SA PROPOSED STANDARDS BOARD OPERATIONS MANUAL I, supra
note
21,g 6.3.
36 IEEE-SA PROPOSED STANDARDS BOARD OPERATIONS MANUAL I, supra note 2 1,g 6.3.5. A
new LOA must be requested when technologies are used in different proposed standards. Id.
37 IEEE-SA PROPOSED STANDARDS BOARD BYLAWS, supra note 18,g 6.2 ("Copies of an
Accepted LOA may be provided to the working group, but shall not be discussed, at any standards
working group meeting.");
INST. OF ELEC. & ELECS. ENG'RS, INC., IEEE-SA STANDARDS BOARD
OPERATIONS MANUAL 5.3.8.2 (rev. 2006), in Letter from Michael A. Lindsay, Dorsey & Whitney LLP,
to Frances Marshall, Esq., U.S. Dep't of Justice
(Dec. 12,2006) [hereinafter IEEE-SA PROPOSED
STANDARDS BOARD OPERATIONS MANUAL
111 ("NO discussions or other communications regarding the
following topics shall occur during IEEE-SA working group standards-development meetings or other
duly authorized IEEE-SA standards-development technical activities: The status or substance of ongoing
litigation[,
t]he essentiality, interpretation, or validity of patent claims[, slpecific patent license terms or
other intellectual property rights, other than distribution of accepted letter of assurance as permitted
under the IEEE-SA patent policy (see section 6.2 of IEEE-SA Standards Board Bylaws)."). Although
section 5.3.8 of the Proposed IEEE Standards Board Operations Manual is not officially part of the
revised patent policy, it informs our understanding of how the proposed policy will be implemented.
Section 5.3.8 was revised by the IEEE-SA Procedures Committee to be consistent with the changes to the
patent policy. These changes were adopted in December 2006 and will take effect on April 30,2007. In
that document, section 5.3.8 will be renumbered as section 5.3.10.
38 IEEE-SA PROPOSED STANDARDS BOARD OPERATIONS MANUAL 11, supra note 37,g 5.3.8.3

Michael A. Lindsay, Esq.
April
30,2007
Page 9
LOA."'~ The IEEE-SA's policy does not provide for any enforcement role for IEEE-SA or
IEEE.~'
111. Agency Analysis
The Department analyzes the competitive effects of standard-setting activities under the
rule of reason unless the standard-setting process is being "used as a sham to cloak naked price
fixing or bid
rigging."41 We examine both the expected competitive benefits of IEEE's proposed
patent policy and its potential to restrain competition.
The Department recently announced through a business review letter that it did not intend
to take enforcement action against the proposed patent policy of another standards-development
organization
("SDOV)-VMEbus International Trade Association ("VITA"). In that letter the
Department recognized the potential competitive benefits of collaborative standard setting:
Interoperability standards can enable consumers to share information with each
other and to interconnect compatible products
from different producers. In
addition, the collaborative standard-setting process can enable industry participants
to share knowledge and develop a "best-of-breed" product or process. Especially
in industries with network effects, the collaborative standard-setting process can
enlarge markets by overcoming coordination failures among those interested in
developing and using the standard so that the products are available to, and used,
by more
consumers.42
The Department noted that working group members may be able to choose among various
technological options during the standard-setting process, but once the technological choice is
made, and particularly once the standard has been commercially adopted, it can be time
consuming-and
expensive to adopt a different technology. As a result, the owner of a technology
incorporated in a final standard may be able to negotiate licensing terms more favorable to itself
than it could have negotiated before the standard
was set when competitive alternatives may have
been available without "the expense and delay of developing a new standard around a different
te~hnology."~~
39 LETTER OF ASSURANCE, supra note 23, at 6 F.
40 See id.
41
Letter from Thomas 0. Bamett, Assistant Attorney Gen., U.S. Dep't of Justice, to Robert A.
Skitol, Esq., Drinker, Biddle
& Reath, LLP 8 (Oct. 30, 2006), available at
http://www.usdoj .gov/atr/public/busreview/2 19380.pdf.
42 Id. at 7.
43 Id. at 8

Michael A. Lindsay, Esq.
April 30,2007
Page 10
The Department concluded that a policy that requires patent holders to disclose and
commit to their most restrictive licensing terms would permit SDO members to make more
informed decisions when setting a standard because they would be able to compare alternative
technologies based on differences in cost in addition to technical merit. The Department stated:
Requiring patent holders to disclose their most restrictive licensing terms in
advance could help
. . . preserv[e] the benefits of competition between alternative
technologies that exist during the standard-setting process. Currently, VITA
working group members choose between alternative technologies primarily based
on technical merit. They generally have little
information about how eventual
licensing terms for alternative technologies are likely to differ. Under the proposed
policy, each working group member also will be able to compare the most
restrictive licensing terms associated with each alternative technology, including
freely-available public domain technologies, when deciding which technology to
support for inclusion in the draft VSO specification. Disclosure of this
information, enforced by the requirement that nondisclosed patents be licensed
royalty-free, permits the working group members to make more informed decisions
when setting a standard.
. . .
The disclosure of each patent holder's most restrictive licensing terms
would allow working group members to evaluate substitute technologies on both
technical merit and licensing terms. Working group members are likely to use this
information when deciding which technologies to include in the standard. This use
likely will create incentives for each patent holder to compete by submitting
declarations that will increase the chances that its patented technology will be
selected.44
Although the proposed IEEE-SA policy does not require patent holders to publicly
commit to their most restrictive licensing terms during the standard-setting process, the ability to
make such commitments could generate similar benefits as patent holders may compete to offer
the most attractive combination of technology and licensing terms.
In addition, IEEE-SA working group members may make better informed decisions by
considering potential licensing fees when weighing the relative costs of technological alternatives
in addition to their technical merits. Moreover, the increased predictability of licensing terms,
created by LOA commitments and the knowledge that such commitments bind the patent
holder's affiliates and any future patent assignees, could lead to faster development,
implementation, and adoption of a standard as well as fewer litigated disputes after a standard is
set.
44 Id. at 9.

Michael A. Lindsay, Esq.
April 30,2007
Page
11
The proposed patent information policy permits voluntary commitments to most
restrictive licensing terms, but prohibits discussion of specific licensing terms within IEEE-SA
standards development
meetings.45 Based on your statements, we understand that this
prohibition extends to joint negotiations of licensing terms within standards development
meetings.46 The Department observes in this regard that IEEE's current policies permit limited
discussions of costs related to proposed standards. Such discussion, could, in certain
circumstances, rise to the level of joint negotiation of licensing terms. You have not requested,
and we are not providing, the Department's views on joint negotiations that might take place
inside or outside such standards development meetings or IEEE sponsored
meetings.47
The proposed IEEE-SA policy will prohibit standard setters from discussing the prices at
which standardized products would be
sold.48 The Department likely would challenge under
section
1 of the Sherman Act any activities that reduced competition by using IEEE-SA's
proposed patent policy as a cover to fix the prices of downstream standardized products. The
Department would also be likely to challenge efforts by patent holders to rig their
LOAs by
agreeing on the licensing terms they will disclose to IEEE-SA. IEEE-SA should continue its
efforts to educate those who set standards under its auspices about the consequences of such
a~tivities.~~
IV. Conclusion
IEEE-SA has an important role in setting many standards in a vast array of technical
fields. These standards promote and enable competition in the products and services that
conform to IEEE-SA standards.
IEEE-SA's proposed patent information policy is a sensible
effort to preserve competition between technological alternatives before the standard is set in
order to alleviate concern that commitments by patent holders to license on
RAND terms are not
45 See IEEE-SA PROPOSED STANDARDS BOARD BYLAWS, supra note 18,s 6.2; supra note 37 and
accompanying text;
see also IEEE-SA PROPOSED STANDARDS OPERATIONS MANUAL 11, supra note 37,
tj 5.3.8.2.
46 IEEE-SA Business Review Request, supra note 11, at 6, 8.
47
The Department has indicated that it would typically apply a rule-of-reason analysis to joint
negotiations of licensing terms in the standard-setting context.
See U.S. DEP'T OF JUSTICE & FED. TRADE
COMM'N, ANTITRUST ENFORCEMENT AND INTELLECTUAL PROPERTY RIGHTS: PROMOTING INNOVATION
AND COMPETITION 54 (2007), available at http://www.usdoj.gov/atr/public/hearings/ip/222655.pdf.
48 IEEE-SA Business Review Request, supra note 11, at 6; IEEE-SA PROPOSED STANDARDS
BOARD
OPERATIONS MANUAL 11, supra note 37, $9 5.3.8.2, 5.3.8.3.
49
See IEEE, Instructions for the WG Chair (Feb. 2006), http://standards.ieee.org/board/pat/pat-
slideset .ppt.

Michael A. Lindsay, Esq.
April
30,2007
Page 12
sufficient to avoid disputes over licensing terms or litigation that may delay the implementation
of IEEE-SA7s future standards.
Practical consideration may lead some SDOs to prefer not to implement patent polices like
those proposed by IEEE-SA or by VITA. Some SDOs, for example, may conclude that required
or voluntary disclosure of and commitments to most restrictive licensing terms before a standard
is set would decrease participation in standard-setting activities by patent holders.
Experimentation and competition among SDOs regarding the breadth and depth of member
licensing commitment obligations or options should help SDOs and their members determine
which methods ultimately provide the best
platforms for collaborative standard setting.50
The Department has no present intention to take antitrust enforcement action against the
conduct you have described. This letter expresses the Department's current enforcement
intention. In accordance with our normal practices, the Department reserves the right to bring an
enforcement action in the future if the actual operation of the proposed conduct proves to be
anticompetitive in purpose or effect.
This statement is made in accordance with the Department's Business Review Procedure,
28 C.F.R. 9 50.6. Pursuant to its terms, your business review request and this letter will be made
publicly available immediately, and any supporting data you submitted will be made publicly
available within thirty days of the date of this letter, unless you request that part of the material
be withheld in accordance with paragraph
10(c) of the Business Review Procedure.
Yours sincerely,
Thomas
0. Barnett
50
See Gerald F. Masoudi, Deputy Assistant Attorney Gen., U.S. Dep't of Justice, Efficiency in
Analysis of Antitrust, Standard Setting, and Intellectual Property, Remarks at the High-Level Workshop
on Standardization, IP Licensing, and Antitrust 15 (Jan. 18,2007), available at
http://www.usdoj .gov/atr/public/speeches/220972.pdf ("There certainly is no affirmative requirement in
antitrust law that businesses
must create a RAND, disclosure, or ex ante licensing system. Doing nothing
remains an option, and may be a viable option in view of the fact that there are many self-correcting
mechanisms within traditional standard setting approaches. It may be reasonable to conclude that
reputational constraints are enough to prevent hold-up strategies in some industries, or that simple
economic incentives
- those who hold up a standard too much could delay or kill the standard, which
would deprive them of royalties
- would suffice. Or perhaps an SDO may recognize the benefits of a
policy like
VITA'S, yet conclude that those benefits are not enough to compensate for the additional
personnel, costs, and delays that such a policy may require.").