Innovation in the past decade has been been propelled by collaborative yet market-driven approaches to intellectual property rights. The standard setting process is a prime example of such a collaborative effort by incorporating the best intellectual property of a given field into a standard and insuring such standard essential patents (SEPs) are then licensed to adapters on fair, reasonable and non-discriminatory (FRAND) terms. This construct has resulted in groundbreaking technology in sectors ranging from telecommunications to autonomous vehicles. However, some have argued that SEPs are incompatible with open source licenses. Examining the historical record of open source development, the open source definition and relevant case law shows that open source and SEPs can and do work together to protect intellectual property rights and spur innovation.

1. © 2018 Cravath, Swaine & Moore LLP. All rights reserved. ~6940091
Patents and Collaborative Development
14 NOVEMBER 2018
David J. Kappos
Partner
(212) 474-1168
dkappos@cravath.com

2. Collaborative Approaches to Intellectual Property
Standard Essential
Patents (SEP)
Open Source
Software (OSS)
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3. OSS-FRAND Integration
Standard Essential
Patents
Open Source
Software
• “FRAND licensing is detrimental for innovation.”
• “Open source licenses are inherently incompatible with
FRAND licensing.”
• “Open Source Definition (OSD)-compliant licenses have always
contained a patent grant.”
The assertions we tested:
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4. FRAND is Good for Innovation and Compatible with OSS
• Industries that have adopted FRAND-licensing are thriving.
• No sign of any detriment, and positive indications of strong health.
• No real-world indication that FRAND is incompatible with or discriminatory
towards OSS.
• In 2011, only 7 out of the 67 then-approved open source licenses had terms
conflicting with FRAND.
• Permissive licenses are fully compatible with FRAND.
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5. License Principles from the Open Source Initiative
Free Redistribution1.
Source Code Must Be Available2.
Permission to Make Modifications and
Derived Works3.
Integrity of the Author’s Source Code4.
No Discrimination Against Persons or Groups5.
No Discrimination Against Fields of Endeavor6.
Distribution of Original License with
Product Sufficient
7.
License Must Not Be Specific to a Product8.
License Must Not Restrict Other Software9.
License Must Be Technology-Neutral10.
The Open Source Definition
OSD 1
• The license shall not restrict any party from selling or giving away the
software as a component of an aggregate software distribution
containing programs from several different sources. The license shall
not require a royalty or other fee for such sale.
OSD 7
• The rights attached to the program must apply to all to whom the
program is redistributed without the need for execution of an
additional license by those parties.
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6. ▪Examined OSI License Review and License Discuss archives from
April 1999 through June 2018.
▪Searched for posts discussing OSD 1 or OSD 7.
OSI Archives Do Not Show Consensus on Patent Rights
0
75
150
225
300
License Discuss License Review
OSD 1+OSD 7 mentions OSD1/OSD 7 Mentions that are pro-implied patent grant
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7. There Is No Implied Patent License From OSD Compliance
• TransCore LP v. Electronic Transactions Consultants Corp., 563 F.
3d 1271 (Fed. Cir. 2009).
• Wang Labs., Inc. v. Mitsubishi Elecs. Am., Inc., 103 F.3d 1571, 1581
(Fed. Cir. 1997).
• Judicially implied licenses are “rare under any doctrine” and rely on a
theory of legal or equitable estoppel.
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8. Implied Patent License Inquiry is Narrow and Fact-Specific
Bottom line: in absence of express patent language,
courts will be hesitant to imply a patent license.
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9. What do drafters of key licenses have to say?
No patent rights granted
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10. Forced OSS Patent Grant Disturbs Innovation Ecosystem
OSS-FRAND
Innovator Implementer
Innovation
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11. OSS-FRAND: A Win-Win Situation
OSS licensors can choose to grant a patent a license or not.
Let’s preserve ability for OSS and SEPs to work together.
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13. Contact Information
David Kappos
dkappos@cravath.com
+1 212.474.1168
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