If you ever connect to the Internet wirelessly from your computer, your cell phone, your gaming console, your home security system, or your television set, more than likely you are using “Wi-Fi” technology.
Five years ago, the average American household used two screens to watch content on the Internet. Today, on average they have seven, and most of them connect you to the world through the power of Wi-Fi.
For average users, it’s just Wi-Fi that works at the touch of a button. But beneath the surface, the evolution of wireless technology has accelerated data transfer speeds roughly 200-fold in the past 10 years.
Progress has been driven by intensive research and development (R&D) that generally takes place in private company labs years ahead of product development. Companies are willing to make long-term investments based on their legal right to patent and license their inventions to others in the future.
Progress is also driven by the global standards-setting process, which makes it possible for any company to license core technologies on “fair, reasonable and non-discriminatory” (FRAND) terms and manufacture highly interoperable devices. The standards-setting process has a history of being fair, open and highly competitive.
Recently, a small group of companies has attempted to change the system that has been so effective in generating innovation and growth in the wireless technology arena. They have encouraged the governance committee of the world’s leading standards-setting body, the Institute of Electrical and Electronics Engineers, or IEEE, to adopt rules that will substantially devalue patents used by Wi-Fi systems.
These entities proposed a new royalty and licensing regime that would reduce payments to inventors, and strip them of any effective means of bringing patent-infringement lawsuits against those who steal their inventions.
This action could give product companies free technology licenses and make investments in Wi-Fi R&D profitable only for those companies that manufacture their own products. Those companies that focus primarily on R&D, who believe in writing the “cookbook” that will be used to create new products, would find it hard to make a profit and stay in business.
The results of this new rule could be disastrous for the American economy and consumers. If companies that do R&D can’t expect a reasonable return on their research, they will stop doing it. In addition to the loss of thousands of high-paying research and engineering jobs in the R&D industry, the move could harm U.S. innovation leadership and slow the growth of wireless technologies that benefit everyone.
The IEEE has asked the U. S. Department of Justice (DOJ) to review and approve these new rules, and there is some danger the DOJ will do so. Under the Obama administration, the DOJ and the Federal Trade Commission (FTC) have been pushing a variety of exotic legal theories that have the effect of weakening patent protections. Approving the IEEE request would be a gift to countries, like China, that have less respect for intellectual property protection. The DOJ should instead reject the request, as it will stifle innovation and is contrary to U.S. law.
The Board of Directors of IEEE-USA, the US-based sister organization, voted on November 21 to convey its concerns about the proposed changes to the IEEE’s global board, which is responsible for voting on the proposed changes. There is no question that the views of the IEEE-USA should be taken into consideration before the full IEEE takes further action.
A standards-setting process that is fair and open to all participants – including implementers, users and technology developers alike – is the only way to ensure consumers aren’t harmed by the market power of a few companies. Moreover, a standards-setting process that provides a reasonable return on R&D investment will stimulate competition, which is the most important factor driving innovation benefitting billions of wireless consumers.
Terry served Nebraska’s 2nd Congressional District from 1999 to 2015.