Thursday, 2 February 2017

On Inventors, Implementers, Innovators


So here's medias in res: Both inventors and implementers can be innovators.
I wrote that in several papers, said that in several presentations since I started reflecting about the relation of standardisation and innovation. There is a fundamental confusion when it comes to what innovation means in the context of standardisation. And this confusion has been reinforced in the ongoing debates about patents and standards.
Basically the issue is that invention and innovation are confused and that very often patent holders are presented as “innovators” and put opposite to “implementers”. In reality patent holders are first of all inventors, a patent is granted for an invention – not for innovation. The definition provided by the World Intellectual Property Organisation (WIPO) is very clear in this respect: “A patent is an exclusive right granted for an invention ...”
Why does that matter? Because implementers can be gigantic innovators. You might even argue whether innovation today is to large extend in process innovation and technology integration – both matters of implementing technologies and standards. The internet and the world wide web are prime examples for that. Internet of Things (IoT), Digitisation of Industry, etc. are others currently leading the innovation agenda all over the world.
This plea to differentiate better between invention, innovation and implementation does not mean to diminish the value and importance of base technology invention, nor the patent system. By no means. But it intends to value the contribution of implementations to innovation and avoid and correct the impression that implementers would stand opposite to innovators.
A clear differentiation also has the potential to lead to a better and more differentiated discussion on the relations of standardisation and innovation. Basically, there are two aspects when it comes to standardisation and innovation that should always be considered and that are substantial for making business decisions regarding which modes for making patented technologies available suit the market best. In a simplified way the following two cases may be distinguished:
On the one hand, for some standards it may be important to have leading, state-of-the-art base technologies included. These are often (based on) patented inventions. It may, therefore, be important that the inventors (!) get some incentive to contribute their technologies and be able to get some return-on-investment for their R&D work. In other words: to have some patent protection for patents that are essential for a standard, so called SEPs (Standards Essential Patents). The proper mechanism here is a FRAND IPR policy where the patent holder (who ideally is also the inventor and not just “someone” who acquired the patent) gives a promise to license his SEP(s) on a fair, reasonable and non-discriminatory basis to implementers. Actual royalty rates are then agreed on in bilateral negotiations.
On the other hand, in some standardisation cases the prime consideration may be to have a standard available and broadly adopted in the market place. These standards often form the basis for innovation at the level of the implementation of the standards and on top of them. And often such standards address interoperability, APIs, data formats, etc. In order to promote the broad adoption of such standards, usually referred to as Open Standards, industry agreed to have these standards available on a Royalty-free basis and leading global IT standards setting organisations implemented respective IPR policies, e.g. OASIS and W3C. If patent holders (inventors) would bring in patented technologies into such a standard they need to be ready to grant a license on a Royalty-free basis – or even “restriction-free”.
The latter case also has a lot of relevance in the context of Open Source. Open Standards that are available Royalty-free are implementable in Open Source – at least with least issues and restrictions.
So bottom line: please be precise (and fair) when talking about inventors, implementers, innovators. Both inventors and implementers can be innovators. An SEP is the result of an invention, not of innovation, yet it may be – and probably should be – innovative. In the debate about patents and standards it is inventors (patent holders) versus implementers. And very often an organisation is both, sometimes inventor, sometimes implementer, and hopefully an innovator throughout. 
Clarity matters for an informed discussion and for taking informed decisions.

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