EC Closes ‘Patent Ambush’ Investigation

EU regulators on Monday closed an antitrust investigation into ‘standard setting’ rules employed by telecom standards group ETSI (European Telecommunications Standardisation Institute), an independent organisation that sets standards in Europe, to ensure that its procedures do not allow

anti-competitive behaviour.

The investigation was commenced by the European Commission (EC) due to concerns that a flaw in ETSI’s procedures could allow companies to carry out a ‘patent ambush’.Â

A patent ambush involves a company withholding information about patents held around a proposed standard. If this standard is agreed, the relevant company declares its rights, obtaining control over the standard. The other companies are then forced to pay royalties to the holder of the patent if they wish to implement the standard.

Voicing its concern over ETIS’s inadequate transparency rules the EC said, “The Company’s actions mean that the possibility of considering alternative technologies has been artificially removed, and that the competitive process has been distorted.”

The EC recommended that ETSI must make sure that information about patents surrounding a proposed standard are freely available.

“It should be clear that a particular technology is covered by a patent before a standard is set, so this can be taken into account when deciding whether to set the standard,” said an EC spokesman during the investigation period.

The dismissal of the investigation is consequent to the change in patent rules by ETSI in accordance with the EC’s recommendations as to the transparency of its procedures.Â

“Standards are of increasing importance, particularly in hi-tech sectors of the economy,” said Competition Commissioner Neelie Kroes, welcoming the changes.

“It is crucial that standard-setting bodies establish rules which ensure fair, transparent procedures and early disclosure of relevant intellectual property. We will continue to monitor the operation of standard-setting bodies in this regard,” she added.

The tougher rules now require the companies to make it clear if they have a patent that a standard depends on.

“This will avoid so-called patent ambushes where a company may only reveal after the standard is set that its technology is covered by intellectual property rights,” said EU spokesman Jonathan Todd.