Focus on the Strategy of Patent Standardization ------ Specialized Legal Services in Audio Video Coding Industry

Author: Zhong Yi[1]   

[ Abstract ] DVD, CDMA, ATSC and other technical standards which contain patent technologies shocked us repeatedly with the power of patent standardization. In the light of the OutlineNational Intellectual Property Strategy, central and certain provincial governments successively carried out policies and measures to promote and encourage "Technology Patentability, Patent Standardization" and meanwhile TD-SCDMA, UOML, AVS and other industry alliances alike have fruitful achievements concerning the development of Patent Standardization. A burgeoning area of legal service emerges in the absence of corresponding legislation. This paper, with the perspective of establishing specialized legal services in the audio video coding industry, discusses how lawyers prepare for the ever-increasing requirements of legal services under the strategy of implementing and coping with Patent Standardization.

[ Key Words ] Patent Standardization    Patent Involved in Standard     Intellectual Property Right    Audio Video Coding   Specialized Legal Service

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1. The Status Quo of Audio Video Coding Technology and Standard

Audio Video Coding Technology is also called "Source Coding Technology". Literally explained, "Source" is the source of information. Accordingly, Audio Video Coding Technology and Standard may constitute a sort of source and base of all industries which deal with the exploitation and process of audios and videos.

MPEG-2[2], representing the first generation of Source Coding Technology and Standard, once astonished the DVD industry of our country with the enormous powers of patent standardization. Currently, with respect to Audio Video Coding Technology and Standard, among those with global reputations such as MPEG-4[3] and MPEG-4 AVC (H.264)[4] and those prevalent in Mainland China such as AVS[5], H.264 raised by Joint Video Team (JVT) with cooperation of Video Coding Experts Group (VCEG) of ITU-T and Moving Pictures Experts Group (MPEG) of ISO/IEC constitutes the mainstream technology and standard in this field. With respect to Audio Coding Technology and Standard, Dolby[6] and G.7 series of ITU-T are internationally known and DRA[7] is dominating in Mainland China.

"The one who sets the standard will dominate the industry". At this moment that the second generation of source standards like H.264, AVS, etc. compete fiercely, parties involved have come into rivalry to occupy the dominant status of the third generation of source technology and standard to control the "source" of audio video industry, which results in the complicated relationship among a large quantity of patented technologies and standards in such industry and builds a forbidding patent jungle.

2. Legislation, Administration and Judicial Status Qua of Domestic Patent Standardization[8] 

Part of provinces and cities of our country (especially the High and New Tech Park) successively raised the policies and measures[9]on promoting and encouraging "Technology Patentability, Patent Standardization" according to the Outline of National Intellectual Property Strategy of 2008. But provisions with regard to the adjustment of the legal relationship between standardization and patent are not made in Standardization Law and Patent Law of our country including the implementations or specifications respectively. However, owing to that patents are brought into the national mandatory standards, there are three cases in our country that the patentees of the patents involved in standard (hereinafter “PIS”) sued the users of standard for infringement. Although the disputes were all solved by declaring patents involved invalid, if the patents involved are valid and not conformed to the requirements of compulsory licensing, it will be embarrassed if no laws are supposed to be complied with during the judicial practice.

On June 18th, 2009, the Supreme People's Court promulgated the  Interpretation on Certain Issues Concerning the Application of Law in the Trial of Controversies over the Infringement of Patent Right (Draft), among which Article 20 provides the disclosure obligation of bringing a patent into standard and the disclosure and equitableness obligations for terms of PIS license, as well as the judicial relief to the breach of said obligations. Although the draft version has no binding force, in the author's view, patent standardization may be prosperous in the future. As the obligation for the disclosure of PIS or its terms of license has become the internationally accepted rule, the legislators will optimize corresponding laws sooner or later to balance various rights and obligations of the parties involved in standard so as to establish an orderly game rule of patent standardization[10].

3. The Analyze on the Demand of Legal Services in the Audio Video Coding Industry

The development of patent standardization raised a new request for the legislation, judiciary and administration departments that once the obligation for the disclosure of terms of PIS license and PIS itself are recognized by legislation and judiciary, which will affect corresponding administration departments, patentees involved in standard and standard makers and standard users who exercise the management functions of patent and standard. This paper, for the purpose of the potential legal demands of the following parties, makes the primary analyses as follows:

(1) The Patentee of PIS

The patentee of PIS is generally the leader of the industry and therefore, in addition to carrying out and implementing the strategy of patent standardization, they care more about intellectual property right policies (hereinafter "IPR Policies"), the patentability of the technology involved in standard and terms of PIS license (including the establishment of patent pool).

(2) Standard Maker

Taking industrial standardization organization for example, the standard makers need to carry out and revise the article of association, membership agreement, IPR Policies and other organizational structuring works; during the procedure of setting a standard, to avoid arousing intellectual property right infringements as possible as they could, in addition to complying with the laws and regulations on standardization, the copyright of documents of standard and the patent issues of standard technology shall be reviewed[11].

(3) Standard User

Before implementing the standard, the user of the standard shall, in addition to the review of IPR Policies to the standards related, PIS and terms of licensing of such PIS, negotiate with the patentee of PIS or the manager of the patent pool to get the license of PIS.

According to the above preliminary analyses, the author holds the view that the characteristics of legal services of patent standardization are as follows:

(1) Complexity

In general, the review of IPR Policies of the standard maker and the terms of PIS license are simultaneously involved in standardization law, patent law, anti-monopoly law and other laws and part of the terms of PIS license are intricate and complicated. Taking H.264 (MPEG-4 AVC) for example:

The patent pool of AVC of MPEG LA includes 17 patentees which does not cover all the patents of H.264. Subsequent to MPEG LA, Via Licensing found another patent pool which released a new royalty policy. Now 5 patentees joined in that pool. But Thomson declared no entry to any patent pool and charges independently. In other words, up till now, 17C+5C+1C have declared to charge for PIS of H.264 and such royalty policies haven't cover all the royalties of H.264[12], which makes the standard user get lost and for a lawyer who undertakes such case, it is also a tricky job.

(2) Expertise

The author once participated in drafting the standard of AVS and deeply felt that the review of PIS and decision on whether a technical proposal contains risks of patent infringement is unable to be done at all without expertise. Moreover, for the standard user, higher special requirements are raised for the review of inessential patents in the standard to avoid the risk of patent infringement before implementing the standard.

(3) Dynamics

The revision of standard and the application for and licensing of PIS always develop dynamically, which requires long-term oriented retrieve and research by lawyers. Taking H.264 (MPEG-4 AVC) for example:

From March of 2005 to the closing date of this paper, there are 9 documents in all published on the website of ITU-T[13] which constitute H.264 (including versions of corrigendum, revision and abolition).

In July of 2009, the list of PIS of H.264 (April 1, 2009 version) on the website of MPEG LA navigated by the author has two pages, while the list (August 1, 2009 version) has increased to 34 pages through the navigation of the website on the closing date of this paper[14].

(4) Globality

The goal of every technical standard is to be internationally accepted. The corporations of the Occident hold the technology leadership in the emerging industries and the implementation of standard step forward to a globalization trend. For lawyers who research on patent standardization, they should first understand the IPR Policies of international standardization organizations and standardization institutes of every country, the bibliographies of standard and PIS and the precedents related to PIS, among which even Chinese technical documents are difficult to read. If lawyers are not capable of understanding these documents accurately, no expertise service could be rendered at all.

In a word, there is no shortcut for lawyers facing the demand of legal services aroused by patent standardization. In addition to the long-term practices, systematical plan of researches and studies are also necessary.

4. The Establishment of Legal Services in the Audio Video Coding Industry

(1) Manning Level

Based on the above analyses, no any individual lawyer can satisfy the requirements triggered by patent standardization in his/her own work, fortunately, the author’s suggestion of assembling an expertise group, taking the legal services of patent standardization as the core based on audio video coding industry, has been approved by the colleagues of the law firm. Recently, our group, led by lawyers focusing on intellectual property rights, composed of members with majors in law, mechano-electronic, software, communication and English, and supported with two experts on anti-monopoly law and administrative law, may meet the special requirements of the legal service of patent standardization in the audio video coding industry.

（2） Specialization and Cooperation

To further optimize the allocation of resources and increase efficiency, we defined the specialization and cooperation of our group as follows:

Legal Panel: main tasks thereof include the research the legal issues on patent standardization based on patent law, standardization law, anti-monopoly law and administrative law and so forth, especially the ones on the cross and concurrence among any and all applicable laws; monographic study on the IPR Policies of both domestic and overseas audio video coding organizations, the establishment and management of patent pool and related matters on patent licensing.

"Patent-Standard" Panel: main tasks thereof include the finding and determination of latest tendency of domestic and overseas patent and standard information of audio video coding based on the oriented retrieve and analyses on the standard documents of ITU-T, ISO/IEC and AVC and PIS, as well as the specialized research on the solution of application for patent, reexamination, invalidation, suit on infringement, etc. in future according to the patent law (3rd revision) of our country and the rules for implementation, guidelines for examination, judicial interpretation, etc. which will be soon promulgated.

GIM Panel[15]: main tasks thereof include the research the characteristics of the translation of laws, standards, patents and technologies based on the materials that the Legal and Patent Panel retrieved and the research fruit, as well as the establishment and maintenance of translation memory database and term-base that the project needs with the application of CAT technology, which helps to provide high-quality services on language and documents for the drafting, review, revision and translation of the above documents of laws, standards, patents and technologies in future.

"A Thousand-Mile Journey Starts With A First Step!" There must be drawbacks of the above-said framework which requires us to make it optimized and adjusted in practice. We hope such exploration at least can bring more experience and lessons to the development of specialized legal services.

5. The Prospection of Audio Video Coding Industry and Specialized Legal Service

 

Figure: Technology Patentability, Patent Standardization

---- The Prospection of Audio Video Coding Industry and Specialized Legal Service[16]

 

 

Epilogue

Patent standardization is not only challenge but also opportunity to entrepreneurs or lawyers, therefore the author holds the view that "THE FIRST, THE WINNER" and advocates that lawyers shall consistently research on legal issues concerning patent technologies and standardization of a certain industry and develop with the corporations and industry simultaneously and then may jointly become the winner of the patent standardization.

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[1] Author: Zhong Yi, the partner of Shanghai Runhe Law Firm, the member of Intellectual Property Rights Committee and Foreign-related Business Committee of Shanghai Bar Association, the observing member of Audio Video Coding Standard Working Group of China and the member of Working Group of Electronic Standard under the Ministry of Industry and Information Technology. The closing date of this paper is October 7, 2009 and the Chinese version has been revised on October 28, 2009 for unifying the terms when posting the English version.

[2] ISO/IEC 13818 series standards are commonly referred to as MPEG-2 including 9 standards like 13818-1 (System), 13818-2 (Video), 13818-3 (Audio), 13818-4 (Compliance), 13818-5 (Software), 13818-6 （DSM-CC） and so on. MPEG-2 is mainly carried out by Moving Picture Experts Group (MPEG), and ATM video coding experts group established in 1990 and MPEG have cooperation on the first and second part of ISO/IEC 13818 as a result that 13818-1 and 13818-2 have become the standard of ITU-T (i.e. H.220 and H.262).

[3] ISO/IEC 14496 series standards are commonly referred to as MPEG-4 including 21 standards like system, video, audio, consistency test, etc which was carried out by MPEG.

[4] H.264, the tenth part of MPEG-4 meanwhile, is the standard for High Compression Video Coding Device raised by Joint Video Team (JVT) jointly established by Video Coding Experts Group of ITU-T and ISO/IEC MPEG. Such standard is called H.264 by ITU-T, while called 14496-10 by ISO/IEC and separately called MPEG-4 AVC.

[5] AVS is the abbreviation of INFORMATION TECHNOLOGY - ADVANCED VIDEO CODING series standards and it is organized and drafted by the working group of standardization of Audio Video Coding Technology including 9 standards like system, video, audio, consistency test, referential software, digital right management, etc., among which INFORMATION TECHNOLOGY - ADVANCED VIDEO CODING part 2: Video (National Standard No.: GB/T 20090.2-2006) has come into effect from March 1st, 2006.

[6]Dolby Digital, except for audio standard of DVD products, is successively elected as standard by ATSC, ITU-R, DVB, etc. Dolby mainly provides services of patents and know-how and the "Dolby" Certification and the author failed to retrieve the technical standard published by Dolby.

[7] DRA, the abbreviation of national standard NORMS OF MULTI-TRACK AUDIO CODING (National Standard No.: GB/T 22726-2008), is drafted by Guangzhou Guangsheng Digital Technology Co. Ltd., which has come into effect from June 1st, 2009.

[8]For detailed contents of this chapter, see THE FIRST, THE WINNER —— COMMENTS ON THE PATENT STANDARDIZATION STRATEGY UNDER NEW PATENT LAW, Perspective on Chinese Law, LexisNexis, page 22-23, No. 9, 2009.

[9]On June 5th, 2008, the State Council promulgated the Outline of National Intellectual Property Strategy among which the 17th item of Article 4 "ad-hoc task" clearly defines that policies with regard to standard shall be carried out and be optimized and the activities to include patent into standard shall be specified. The active participation of international standard setting by corporations and industries shall be supported.

[10] In the author’s view, whereas, there’s no specific or supporting legal provision for “the conduct of business operators to eliminate or restrict market competition by abusing their intellectual property rights” provided by Article 55 of anti-monopoly law of our country, the court directly finds whether the terms of PIS license are reasonable and it is, to some extent, difficult for the practicing department due to the lack of a unified assessment standard. The author in this regard suggests that specific legal provisions of anti-monopoly law on preventing the abuse of intellectual property rights shall be optimized first and then patent standardization will be developed orderly.

[11] In the author's view, although the documents of standard generally declare no obligation of reviewing the intellectual property rights is borne, in case a dispute is aroused, the promotion and application of the standard will be affected without doubt. Therefore, practically, the standard makers are very prudent to the intellectual property rights issues involved in standard.

[12] See: the website of Audio Video Coding Standard Working Group, http://www.avs.org.cn/faq.asp (last visit on Oct. 7th, 2009)

[13] See: the website of ITU, http://www.itu.int/rec/T-REC-H.264 (last visit on Oct. 7th, 2009)

[14] See: the website of MPEG LA, http://www.mpegla.com/main/programs/AVC/Pages/PatentList.aspx (last visit on Oct. 7th, 2009)

[15] The core of GIM, Global Information Management, is CAT technology. See the author’s article To Be a Tech-Lawyer ----- On Innovation of Lawyer's Practice Skill and Service Mode in the Process of Global Economy Integration, Lawyer in Shanghai, P.45, The First, 2009.

[16] The abbreviated words and terms referred in this table shall be defined as follows:

"IPSC" means the IP Strategy of Companies;

"SPS" means the Strategy of Patent Standardization;

"PS" means the Patent Standardization;

"PP" means the Patent Pool;

"Judicial & Administrative Procedures" refers to the judicial & administrative procedures in which application, reexamination, nullity or infringement of patent is involved;

"AT & AC" means the Anti-trust and Anti-unfair Competition;

"Administrative Law Practice" refers to the tasks of lawyer to represent clients in case of administrative licensing or sanctions, enforcement, hearing, reexamination or legal proceedings is made or initiated;

"Other Doc Functions" include the draft, review, revision and translation of any or all legal instruments and other documents related to the applicable standards, patents and techniques.

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