Open Source Software and Standards Development: Competition Law Implications

Abstract

Technical standards developed by standards development organizations (“SDOs”) increasingly involve software-based solutions that implicate open source software (“OSS”). SDOs generally operate pursuant to policies and procedures based on principles of consensus, due process, balance, and openness, and subject to consensus-defined intellectual property rights (“IPR”) policies that contemplate inclusion of patented solutions in standards. Consequently, SDO policies help incentivise IPR owners to contribute their new and innovative technologies to standards by providing owners of Standard Essential Patents (“SEPs”) the opportunity to offer licenses for their IPR on fair, reasonable and non-discriminatory (“FRAND”) terms. Open source projects are often pursued in consortia or similar forums, which typically do not fully observe such procedural principles, and do not contemplate FRAND patent licensing, or patent licensing at all. However, traditional SDO standards activities and open source projects are not mutually exclusive, and both can drive innovation and competitiveness. As noted by the European Commission’s 2017 communication on the EU’s approach to SEPs, integration between open source projects and standards development processes may be “a win-win situation,” and “[f]lexible and effective interactions between standardisation and open source communities will promote and accelerate the uptake of advanced technology developments.” This paper considers the competition law implications of integrating standards development and open source efforts, to help facilitate that potential “win-win” outcome, and achieve the procompetitive goals of standards development, rather than create risks of competitive harm that will deter innovation. This paper submits that consensus-based approaches to standards development, where account is taken of all stakeholder interests, and which abide by principles of openness, balance and due process, should apply equally when SDOs accommodate open source projects. Experience shows that such procedural safeguards are fundamental to avoid potential anticompetitive effects resulting from imposiing IPR policies that favour discrete stakeholder interests. This paper further explains that EU and US competition law provide the necessary tools to challenge conduct related to standardization and open source licensing that may diminish competition and innovation.