ITU Workshop on Standards and Intellectual Property Rights

ITU Workshop on Standards and Intellectual Property Rights (IPR) Issues Patent Pool: a possible means to reduce aggregated royalties Dr. Ir. Serge RAES, Intellectual Property & Standards Manager France Telecom — Orange New Delhi, India, 19 -20 December 2011 International Telecommunication Union

Internal Organization Orange Labs & Network Carriers R&D IP & Licensing Procurement Legal IP Standardization & Ecosystems Dev. Research & Strategy IP & Standardization Co-Ordination New Delhi, India, 19 -20 December 2011 International Telecommunication Union

Generalised model for rapid licensing PRODUCTS / SERVICES 3 G LTE Patent Pools Missing Link ? Ready made tools for fast technology transfer: - « shop window of the technology » - Collective Licensing Agreement IPR Policy : Fair, Reasonable and Non. Discriminatory (FRAND or RAND) Existing Structure Technical standards making • Standards bodies (ITU, ETSI, ANSI, ARIB, GISFI ? ) • Industry clubs (TM Forum, IPTV Forum, IEEE, IETF) International Telecommunication Union

Quantification of RAND Licensing scheme: LICENSING ADMINISTRATION Maximum Aggregated Royalty PATENT POOL Evaluates Patent Essentiality PATENT EVALUATION MECHANISM « added value » IPR POLICY OF STANDARDS BODIES (SDO) STANDARDS BODIES (ITU, ETSI, ANSI, ARIB, GISFI ? ) Basic IPR Policy Standards making International Telecommunication Union

3 G LTE situation : Acquiring Essential Patent licenses >> Essential Patents Owners >562 patent families declared (756 for GSM and 1605 for UMTS) 3 G LTE Patent Pools MAR x % MAR = Maximum Aggregated Royalties Total IPR Cost ? ? x % + ? each Company must negotiate best deal 1 : 1 ? International Telecommunication Union

Added Value within Supply Chain License scope and Royalty base: patent rights exhaustion Licenses obtained by Final Manufacturer protect all < Manufacturers and > Operators, Service Providers and Consumers RANGE OF SELLABLE SERVICES FINISHED MANUFACTURED PRODUCT WITH A SALES PRICE 30 Essential Patents 60 Essential Patents 1 Essential Patent 9 Essential Patents Manufacturer 1 Manufacturer 2 Manufacturer 3 Final Manufacturer Operator 1 Service + Application Provider 1 Supply Chain MANUFACTURING CHAIN SERVICE PROVISION CHAIN CONSUMER International Telecommunication Union

Patent Pool Suppliers’ Benefits Eliminates existing licensing negotiation deficiencies (e. g. unfair, discriminatory, complicated, time consuming, expensive) Catalyses market growth through easier access to technology Reduces exposure to patent infringement litigation though global license coverage Minimises Essential Patent cost as a real competitive cost element Reduces substantially the internal licensing and negotiation costs Knowledge of which patents are essential and their holders No competition issue associated with classical Patent Pools Retains total control over your own IPR International Telecommunication Union

Patent Pool Operators’ Benefits Reduce investment cost for the acquisition of the infrastructure Creates a more favorable business case, arising from more affordable technology cost, which will stimulate market launch and growth Removes uncertainty concerning patent infringement litigation which could impact on the service provision Defines a more certain and deterministic Essential Patents environment for the planning of new commercial services Increases the choice among competitive suppliers globally Creates a more favorable stock market view for the standard Removes the hassle of Essential Patent portfolio management Retains total control over your own IPR International Telecommunication Union

Collective Licensing: Conclusions Patent Pool is not a panacea ! Bilateral licensing negotiation will continue Large patent holders will likely stay outside Not a remedy against Non-Practicing Entity Collective Licensing Agreements may still improve : new features exploring other business strategies (e. g. defensive Patent Pools) in 2012, 3 G LTE Patent Pools defined International Telecommunication Union

Thank you Serge RAES Intellectual Property & Standards Senior Manager c/o France Telecom - Orange Office IB 313 T 38 -40 rue du Général Leclerc F-92130 Issy Les Moulineaux France Tel: +33 1 4529 6007 Fax: +33 1 4529 5126 serge. raes@orange. com International Telecommunication Union