Standard Setting in the EU’s Digital Agenda

On 19 May 2010, the European Commission made public its long awaited policy document on the Digital Agenda for Europe.  The overall aim of the Digital Agenda is to deliver sustainable economic and social benefits from a digital single market based on fast and ultra fast internet and interoperable applications.

In particular, one of the goals of the Digital Agenda is improving ICT standard-setting and interoperability, as effective interoperability between IT products and services is key to building a truly digital society.  To this end, the Digital Agenda will for example, propose legal measures to reform the rules on implementation of ICT standards to allow the use of certain ICT fora and consortia standards.

More importantly, guidance on transparent ex-ante disclosure rules for essential intellectual property rights and licensing terms and conditions in the context of standard setting is also deemed to contribute to lower royalty demands for the use of standards and thus to lower market entry costs.

In this respect, in a recent speech Neelie Kroes, Commissioner for Information Society and Media, made it clear that a legislative solution on standard setting may be a possibility, although she stressed that the aim is to make standard setting more efficient, and not more burdensome for companies.

Mrs. Kroes appears to flag that, if need be, she would be ready to go beyond the recently published Commission’s draft antitrust rules on horizontal agreements relating to standard-setting.  The draft rules, currently available for consultation (see above p. 7) rely on the well-established concepts of non-discrimination, transparency, and availability and specify minimum requirements that distinguish standard-setting from a cartel. On the important issue of licensing, Mrs. Kroes is of the view that because establishing FRAND (Fair, Reasonable and Non-Discriminatory) prices is a hard task, transparency of costs (and therefore of licensing terms) is in everyone’s interest, as it would facilitate implementation of the standard and reduce the risks of litigation.

Ultimately, according to Mrs. Kroes, the European Commission should not need to run lengthy investigations in every case where there is a lack of interoperability.  Yet, she made it also clear that companies should not be able to withhold essential interoperability information from the market when such behaviour would result in lock-in situations. [Gabriele Accardo]