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The missed award speech
Leonardo Chiariglione – CEDEO.net
On the 6th of May 2008 the European Patent Office (EPO) held the third “European Inventors of the Year Award”, an event designed to honour Europe’s best innovators.
I was one of the nominees, ostensibly because of my role in MPEG, with a caveat, though. Yes, I am definitely an inventor, but not of MPEG technology. To make an example I did not “invent MP3”. On the other hand I did “invent MPEG”, the machine that has produced hundreds of innovation cases – MP3 being just one of the most well known – and, incidentally, has created new industries worth several hundreds of billion euros.
A company investing in internal innovation to make proprietary digital products has a clear business case: the better its innovation the more competitive its products should become. But if that company brings its innovation to an organisation like MPEG, whose goal is to enable interoperability in digital media, i.e. to create horizontal markets, it allows its competitors to use the same enabling technology to make competing products. If one had not already been in place MPEG should have invented a system to reward those that bring innovation to it.
Therefore MPEG and patents have a symbiotic relationship. MPEG is a machine producing outstanding standards that continue to influence the way humans and media interact because there are companies and organisation that continue to fund research that may eventually lead to technologies that, if best in their fields, will make it into MPEG standards. As a result those companies will receive a share of the royalties paid by those using the standard on condition that they declare their availability to license their patents on Fair, Reasonable and Non-Discriminatory (FRAND) conditions. With those proceeds they will be able to fund more research that, if successful, may make it again in other MPEG standards.
I was a nominee in the “lifetime achievement” category in the EPO event, but the award went to Erik De Clercq of the University of Leuven (Belgium) for his contributions to antiviral treatment.
I must disclaim that I fully support the decision of the jury. One thing is to let people enjoy their life with entertaining or educational or informational bits and quite another to save human lives. The former may make people many people lead a happier and fuller life but the latter has a divine trait in it because it is designed to save human lives.
I have one regret, though. My words above regarding the MPEG and patents symbiosis look like an paean to the role of patents. Much to my regret this is not the case and if I had been given the opportunity to pronounce the award speech at that EPO event, I would have furthered my goal of improving a vitally important system that is working, but spluttering, and sometimes doing more harm than good. I am of course aware that it remains to be seen whether that speech would have made my hosts happy.
To avoid any misunderstanding I have to make two disclainers. One is that I do believe that the idea of rewarding those who innovate with a time-limited monopoly on their invention is the right thing to do. The now almost universal 20-year duration of that monopoly may not be perfect and may not “fit all sizes” but it looks enlightened if compared with the monopoly of literary works whose duration easily extends beyond the century.
The problem with patents, common to all great solutions to thorny problems, is that they tend to fossilise because adapting them to changing conditions implies upsetting the rents of some who prosper in the cracks of the system. Unfortunately the inability to deal with changing conditions makes yesterday’s great solution today’s mediocre solution doomed to failure tomorrow.
Another disclaimer is that I do not pretend to address all issues related to patents, I only intend to speak on the basis of my little experience in MPEG. On the other hand I believe that the innovation role plaid by MPEG – as recognised by the EPO – makes its demands quite representative.
The first problem with patents in ISO/IEC (and ITU as these organisations share the same approach to patents in standards) is caused by the request contained in the ISO/IEC Directives that the holders of rights to a patented technology in a standard should be willing to license their technology on FRAND conditions. The problem is of course not in that obligation but in the fact that “fair – reasonable – non discriminatory” used to be meaningful words when standards were designed for the needs of one industry whose members generally shared the business model according to which the standard would be used.
So, the problem is not “how many cents, tens of cent or euros of licensing fee is fair and reasonable” but “how can licensing be fair and reasonable without specifying a business model”. The issue is serious and more than one MPEG standard did not have the acceptance it deserved because the licensing terms, perfectly acceptable and probably “fair and reasonable” for certain business models were rejected by those who had different ideas in mind.
Is this an impossible problem to solve? I daresay no. Granted that a “universal” licensing scheme may be difficult to work out, but it would be sufficient to publish the licensing model (not the licensing terms) at the time a new standard project is started, say, at the time a Call for Proposals is published. Users of the standard would know before the project starts if the expected output fits their business model. If a community of users badly needs that standard and is unhappy with the licensing model, it can always start a new standardisation initiative declaring a licensing model that fits their needs.
The second problem can be described as “a good game does not last forever ”. For 20 years wise companies and organisations that have invested in innovation have reaped the benefits of their wisdom. But 20 years after filing a patent (details vary depending on the country) the monopoly rights for its exploitation cease to hold. The loss of revenue streams for those companies is the last of my concerns, but I fear that the virtuous circle I have described above whereby the reward from innovation is used to create more innovation may be coming to an end.
I believe MPEG should enlarge its portfolio of standards by offering some that are expected to be royalty free and typically less performing and with less functionality next to those that are state of the art, more performing and with more functionality. As all those standards would be part of the same offering, it would be easy for MPEG to provide unbiased guidance to users by objectively describing each of them instead of having users deafened by discordant voices claiming "mine is better".
This is, more or less, what I would have said in my award speech, had I been granted the award. It only remains to me to hope that this message will nonetheless reach the intended audience, because the matter is terribly important for the future of MPEG, the digital media industry and humankind at large. And - (un)fortunately - dealing with patents is not what an ISO/IEC working group is expected to do.