WORLD TRADE  
ORGANIZATION  G/TBT/W/251/Add.1 
9 November 2006 
 (06-5389) 
Committee on Technical Barriers to Trade Original:   English 
  
 
INTELLECTUAL PROPERTY RIGHT (IPR) ISSUES  
IN STANDARDIZATION 
 
Background paper for Chinese Submission to WTO on Intellectual Property Right Issues in 
Standardization (G/TBT/W/251)  
 
Communication from the People’s Republic of China  
 
Addendum  
 
 The following communication, dated 8 November 2006, is being circulated at the request of 
the Delegation of the People's Republic of China . 
 
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 I. INCORPORATION OF INTELLECTUAL PR OPERTY RIGHTS INTO TECHNICAL 
STANDARDS IS AN INEVITABLE OUTCOME OF THE DEVELOPMENT OF SCIENCE, TECHNOLOGY AND ECONOMY. 
 
1. Standards reflect technology evolution. In corporating fruits of science advances and 
technology innovations in standards is one dis tinctive feature and a trend of contemporary 
standardization effort worldwide. Intellectual propert y rights (IPRs), especially patents, are technical 
solutions that embody those science advances and technology innovations.  Consequently, the 
technical solutions incorporated in standards may we ll coincide with those in patented technologies. 
2. Nowadays, it is common practice to protect corporate R&D results through IPR regime.  
Patented technologies almost reach every corner of  all sectors, especially high-tech ones such as 
information and telecommunication (ICT), where virtually all the key technologies of market 
significance are loaded with IPRs.  
3. Implementation of all kinds of standards, be them descrip tive/design or functional, may 
involve use of patented technologies.  Even if a standard only defines the performance of a product 
rather than specific technical features, the implem entation of the standard may still implicate IPRs, 
since the technical solutions to ach ieve the performance target can be covered by IPRs, i.e., IPRs can 
be indirectly included into standards that set requirements for product performance. 
4. Because of the great difficulties and huge cost in retrieving, analyzing and comparing 
technical solution to determine its proprietary state,  it’s impractical to avoid IPR in standard-setting. 
5. Enterprises holding IPRs, especially essential IP Rs, make significant input in worldwide 
standard setting activities.  This is particularly tr ue in high-tech sectors, where standardizations are 
often initiated and mainly advanced by those en terprises equipped with key and sophisticated 
proprietary technologies. G/TBT/W/251/Add.1 
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  II. ISSUES REGARDING COMBINATION OF IPR AND TECHNICAL STANDARDS 
AND ITS IMPACT ON INTERNATIONAL TRADE. 
6. WTO’s World Trade Report 2005 – Exploring th e links between trade, standards and the 
WTO cited a research which “found a positive corre lation between patent applications and new 
technical regulations, especially in innovative fiel ds”.  Based on a cross-country analysis, this 
research also found “that sectors with a higher propens ity for standardization tend to be more patent-
intensive and export intensive”.  It is easy to fo resee that there is an obvious trend of proprietary 
technology entering into standards.  
7. Standard Development Organizations (SDOs), at  international, regiona l and national levels, 
including ISO, IEC, ITU, ETSI, ANSI, etc, have neither avoided, nor can they avoid, the inclusion of 
patented technologies.  Therefore, on the issue of incorporating patented technologies into standards, 
they in principle have no objection against patented items.  
8. In 2005, List of IEC patent declarations recei ved by IEC posted 27 patent-related information 
releases, where one release may cover a lot of patent s.  For instance, in the information release dated 
Nov. 14, 2005, Zebra Technology Company claimed 98 patents worldwide on ISO/IEC 18000-6 
standard.  By February 8th, 2006, ITU-T Patent  Statement and Licensing Declaration Database 
contained 1494 patent declara tions, among them 137 were receive d after the approval of the 
Recommendations. Up to 1998, ETSI posted 72 patent re leases in 16 standardization sectors.  By the 
late 1990s, over 20 companies claimed to hold abou t 140 patents which they construed as ‘essential' 
to the GSM standard.  
9. Combination of IPRs with standards may be prob lematic and thus by have  negative impact on 
standardization and international trade.  
10. With regard to IPR declaration, patent holde rs may hold back patent information in the 
process of standard setting in the hope for unfair inte rests. In this regard, Dell case is illustrative.  
11. Dell was a member of the Video Electronics Standards Association (VESA), a non-profit 
standards-setting organization represen ting virtually all major U.S. co mputer hardware and software 
manufacturers.  When the association began setting a design standard for a computer bus design to 
respond to demand for faster graphics performance, all VESA members voted to approve the new VL-
bus standard in 1992. As part of that approval, a Dell representative a llegedly certified that he knew of 
no patent, trademark or copyright that the bus desi gn would violate.  In fact one year ago, Dell 
obtained an American patent numbered 5036481, whic h granted Dell exclusive right on notch outline 
for receiving VL-bus card on the board.  Eight months after the standard was adopted, and following 
its widespread use in over 1.4 million computer s, Dell claimed that implementing the VL-bus 
standard violated Dell's patent rights and requested  the users to consult with Dell to determine their 
infringement of Dell’s exclusive right.  In 1995,  the Federal Trade Commission challenged Dell’s 
claim, alleging that Dell’s conduct unreasonably rest rained competition by hindering adoption of the 
standard, raising the costs of adopting the standard , and by exerting a chill on legitimate standards 
setting activity. 
12. When IPR holders refuse to license their proprietary technologies on RAND terms, 
standardizing efforts will confront crises.  In acco rdance with the prevailing patent policies of SDOs, 
if the identified patent holders refuse to licen se on RAND terms and conditions, the SDOs can alter 
the standard around the proprietary technology.  Yet it should be noted that some essential 
technologies are hard to avoid.  If that is the case, th e standard at issue may have to be withdrawn.  
Standard setting works have suffered, are suffering and will continue to suffer such inefficiency.  As a 
commentator put it, “One of the most difficult areas in standards development these days is that of intellectual property rights (IPR). Internet Engin eering Task Force (IETF) has seen many cases of  G/TBT/W/251/Add.1 
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  submarine patents and other attempts to subvert the standards process.  This is not just a problem for 
the IETF; many other standards development organiza tions have also had problems in this area.”. 
13. In light of foregoing facts, including IPR in to standards may have serious impact on the 
international standards setting efforts and the corresponding implementations .  As TBT Agreement 
aims at boosting production efficiency and facilitati ng international trade by encouraging the adoption 
of international standards, such objectives can be fru strated and therefore international trade retarded.  
According to WTO’s World Trade Report 2005, the patent dispute on 3G standard retarded the 
commercialization of 3G mobile  phone, which only just started at the end of 2004 while ITU 
approved the International Mobile  Telecommunication 2000(IMT-2000) in  2000.  3G standard patent 
dispute litigations are still active and in high profile.  Disputes of this kind will cause negative impact 
on 3G standard implementation, commerciali zation and related international trade. 
III. THE INTERNATIONAL COMMUNITIES ARE PAYING MUCH ATTENTION TO 
IPR ISSUES IN STANDARDIZATION. 
14. The impacts of IPRs on economic and trade de velopment and the urgency to address them 
had been widely recognized. Related actions  have been taken or are being taken. 
15. The international standardization setting bodies like ISO, IEC and ITU-T have recognized the 
impact of IPR issues on standard setting and implementation., and have  made great endeavor to solve 
problems related to IPR issues in standardization. They had formulated basic principles for patent 
disclosure and licensing arrangements, which are widely cited by other SDOs. These principles also constitute sound technical base and a roadmap for the discussion in WTO. It should also be highlighted that ISO, IEC and ITU-T have taken in to consideration the development needs in their 
policies and activities. For example, ISO has est ablished a specific committee (ISO/DEVCO) looking 
after developments dimension of international sta ndardization activities. IEC established the Affiliate 
Country Programme (ACP) for developing countries in  2001.  ITU-T has several Resolutions in place 
to bridge the standardization gap betw een developing and developed members. 
16. Aside from the patent policies of interna tional SDOs, United Nation Center for Trade 
Facilitation and Electronic Business (UNCEFACT) is also well aware of this issue in its 
standardization work and begins to formulate its pa tent policy for standards on electronic commerce.  
In some developed countries, these issues have capt ured the regulators’ attention.  In Japan, the 
Guidelines for Patent and Know-how Licen sing Agreements under the Antimonopoly Act 
implemented by Japan Fair Trade Commission, sti pulated that the patent holders whose patents 
implicated by standards adopted by government agencies shall not use their patents to exclude or 
control other companies, including exclusion and/ or control of commercial activities of the patent 
users.  
17. In U.S., the Federal Trade Commission (FTC) and Department of Justice (DOJ) had been 
conducting intense discussions on these issues, includi ng those on “Intellectual Property Strategies in 
Standards Activities”, “Licensing Terms in Standa rds Activities” at the FTC/DOJ joint Hearings on 
Competition and Intellectual Property Law and Policy in the Knowledge-Based Economy in 2002.  In 
EU, EC Communication on Intellectual Property Right s and Standardization (COM (92) 445 final, 
1992) recognized that IPR holders should “make best efforts to identify any IPR which they hold relevant to a standard under deve lopment and to confirm or refuse permission for its incorporation in 
the standard”; “Offer fair, reasonable and non-discr iminatory monetary or non-monetary terms for the 
license to use IPR”; and “Treat their eventual agr eement for incorporating an IPR in a standard as 
irrevocable.”  In September 2005, Mr. Ryutaro Matsumoto, Japanese Industrial Standards Committee 
(JISC) Secretary General and Director General of METI sent a letter to ISO and IEC urging ISO and 
IEC to establish the IPR ad hoc group so that memb er countries can participate in the discussions on 
the IPR issues and to clarify the operation of their patent policies.  G/TBT/W/251/Add.1 
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  IV. TO STRIKE BALANCE BETWEEN IPR HOLDERS AND STANDARD 
IMPLEMENTERS FOR A WIN-WIN SITUATION. 
18. The discussion on IPR issues in Standardization does not mean that IPR holders will lose and 
the IPR users will gain.  The real problem stands now  is that there are no sufficient rules to respond to 
IPR issues in standardization within internati onal community, including WTO framework.  Without 
well-defined rule to follow, inefficiency arises and disputes result to the detriments of both IPR 
holders and IPR users, who come from both de veloping and developed Members. While it is 
important to protect the rights and interests of  IPR holders, it’s equally significant that new 
international standards and advanced IPR technologi es are applied as widely as possible in order to 
enhance efficient, high quality production and to f acilitate world trade to the interests of consumers 
worldwide.  If there is a rule of balance that su fficiently clear to follow, the application of new 
international standard and new advanced IPR tec hnologies will be smooth, and benefits will accrue to 
IPR holders--more users, more profit. 
V. RELEVANCE OF THE IPR ISSUES IN STANDARDIZATION WITH THE WTO 
TBT AGREEMENT 
19. Article 2.4 of the TBT Agreement encourag es WTO Members to adopt international 
standards as the basis of the standards and technical regulations.  If Members are not clear of IPRs in the relevant international standard, whether all th e IPRs have been disclosed, under what terms the 
IPRs are to be licensed by the IPR holders, all WTO Members will face di fficulties when adopting 
international standards.  In the case that the nati onal technical regulations are adopted, the enterprises 
who are subject to implementation of the technical  regulations will encounter great difficulties with 
relation to disclosure of IPRs in standards a nd hard and time-consuming negotiations with IPR 
holders on the terms of licensing.  Either the IPR holders are domestic or foreign companies, every 
Member will have to face this problem, which act ually is the problem between the IPR holders and 
IPR users.  
20. From the governmental level, as well as the company level, there exists the kind of 
unwillingness of adopting international standards as the basis of their national standards and technical 
regulations if there is no common rule to regulate IPRs  in standardization.  Such a situation will bring 
negative impact on implementation of TBT Agreemen t with relation to adoption of international 
standards while this Committee en courages Members to adopt inte rnational standards to their 
maximum extent.  With a view to facilitating the setting and implementation of international 
standards, therefore the smooth implementation of the TBT Agreement, IPR issues in standardization 
must be addressed properly. 
21. China proposes that international standard se tting bodies, as well as Members, provide the 
Committee with relevant information regarding pr actices and experience on their IPR policies in 
standardization for Members’ unders tanding and reference.  Informati on exchange will be helpful and 
necessary to facilitate meaningful discussions. 
22. The discussion on IPR issues in standardization is  of great significance to the integrity of 
international standardization community and multilatera l trade system. China is of the belief that this 
issue should be carried forward within WTO.  China will continue to make her constructive 
contributions in this regard. 
 
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