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Patrick Gallagher, Director National Institute of Standards and Technology, 

Co-Chair, National Science and Technology Council’s Sub-Committee on Technology 

(Via electronic mail to SOS_RFI@nist.gov) 

Re: Standardization feedback for Sub-Committee on Standards; Comments from 

SAP AG 

Dear Dr. Gallagher: 

SAP AG (SAP) would like to thank NIST for this opportunity to provide input on the 

many issues in standards development. SAP, based in Walldorf, Germany, is the world’s 

largest business software company with more than 53,000 employees in more than 50 

countries worldwide, including approximately 13,000 in the United States. 

Interoperability has become essential for the software industry and for SAP products. For 

this reason SAP is active in dozens of standard setting organizations (SSOs). These 

SSOs have successfully produced hundreds of standards over the years to promote 

interoperability. Based on our extensive experience in SSOs, we believe that maintaining 

flexibility within and among various SSO policies is paramount for the continued success 

in standards development. By allowing various SSOs to form their own policies, SSOs 

can develop policies that best suit interests of stakeholders, which is essential in creation 

of successful standards. As such, SAP respectfully opposes any government institution 

from imposing mandatory SSO policies. 

Federal Agency Involvement

SAP believes that new or expanded oversight by government agencies is not needed and 

thus, feels that government mandated SSO policies are not warranted at this time. 

Standards development is not a new business and has operated successfully with the 

various regulatory offices already in place (e.g., the Department of Justice, Federal Trade 

Commission). If an SSO violates any rules or laws, these agencies, along with the 

existing court system, can adjudicate to correct the SSO’s behavior. As such, additional 

or expansion of oversight is not necessary in regulating SSOs. 

Notwithstanding SAP’s position here, we understand that as consumers of software, 

federal agencies have an interest in standards development and implementation. From 

this perspective, federal agencies should engage SSOs and provide input into the relevant 

standards development initiatives. However, this input should be on equal footing with 

private interests and not overshadow other SSO member input and participation. 

In this vein, SAP recommends caution when federal agencies “regulate” by way of 

mandating standards. When this occurs, the federal government runs the risk of 

impinging on free market choice by effectively giving non-government customers less or 

no choice. To the extent a federal agency mandates a standard, the selection of that 
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standard should be based on the technical merits of that standard and not the policies and 

procedures of the SSO that developed it. If not, federal government selection of 

standards based on SSO policy will have a chilling effect on the variety of different SSO 

policies we see today, and thus continued success of SSOs. 

Despite SAP’s opposition to additional government oversight in SSO policy, one area 

where federal oversight would be helpful to the standards community is a central, 

publicly accessible database that tracks the involvement of various federal agencies in the 

many SSOs. This database would be a gateway for the public and other federal agencies 

to learn where the government has standards-based interests. Such a database would also 

allow for efficient coordination of ideas in the standards setting process. 

Favorable SSO Policies

Although SAP believes NIST should be circumspect in any effort to require a specific 

policy for all SSOs, we recognize that certain guidelines can be helpful. For example, 

recommending that SSOs make their proceedings and publications available to the public 

and having membership open to all who are interested are best practices. Any interested 

member, including the federal government, should be allowed to attend meetings and 

vote on proposed standards (assuming such a member has voting rights in that SSO). 

SSO policies should also permit other parties, such as non-member contributors and 

implementers, to attend SSO activities. 

Along these lines, we also encourage publication of the policies and procedures of each 

SSO. This would foster awareness of membership requirements of an SSO, greater 

participation in the development of standards, more effective implementation of 

standards, or simply greater opportunity to observe SSO activities. 

SAP recommends policies that are internationally neutral. Establishing protectionist 

policies will be counterproductive to effective standards development. Foreclosing 

participation based solely on an entity’s pedigree threatens to deny the Unites States 

access to collaboration and innovation that may be vital to its growth and security. 

Likewise, such protectionism could invite retaliation against domestic firms, undermining 

the benefits of the global trading platform that the United States worked so tirelessly to 

establish. 

Intellectual Property Policy

Flexibility is important, and for this reason the federal government should not mandate a 

particular Intellectual Property (IP) policy in the SSO context. If, however, an IP policy 

is to be mandated for standards adopted by the federal government, licensing 

commitments that are based on reasonable and non-discriminatory (RAND) terms should 

be encouraged. When independent parties successfully negotiate an IP license, it can be 

presumed that concepts of commercial reasonableness specific to the circumstances 

ultimately will guide the process. They then negotiate what is acceptable to them in a 

free market system. That is, neither party is constrained nor coerced to offer or accept 
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terms that it finds unduly unreasonable. Maintaining flexibility in an IP policy including 

RAND terms is a key to successful licensing, and thus to the success of standards. 

Ex ante licensing terms are not preferred and should not be endorsed by NIST. The 

basics of standards development suggest this position. Given the large number and wide 

range of participants involved in standards creation and resultant product 

commercialization reflecting a wide range of opinions and business needs, it is 

impractical and unreasonable for this many parties to agree to a single set of licensing 

terms before a standard is developed. Endorsement of any specific term including ex 

ante licensing terms would be impractical and deter some from participating in an SSO, 

which would hinder development of successful standards. 

In addition, ex ante licensing terms create opportunities for collusion. In the free market, 

a group can force an IP policy in an SSO to include ex ante licensing terms that are 

unacceptable to IP holding participants. Since the IP holding participants are unable to 

attempt to seek licensing terms that they find reasonable (for example, obtaining 

reasonable compensation for the property they own), they currently have the option of 

walking away from that SSO and looking for another SSO with an IP policy they find 

more agreeable. If, however, a federal agency mandates ex ante licensing terms in all 

SSOs, IP holding companies will either have to accept unfavorable terms (i.e., anti-free 

market behavior) or not participate in any SSO activity. Neither situation is optimal. 

Allowing SSOs to adopt RAND policies permits flexibility at an appropriate level in the 

particular circumstances. An SSO can adopt RAND and any member who wishes to 

offer a unilateral license or covenant on a voluntary ex ante basis may do so within the 

bounds of a RAND commitment. Flexibility is thus given to the SSO to pass down to the 

members and implementers. 

Conclusion

SAP believes maintaining flexibility for each SSO to develop its own policies is the best 

way to foster free market behavior in the standards development process. This is 

supported by the rich and successful history of standards development. In particular, 

allowing for RAND as opposed to ex ante licensing terms is one of most important 

elements in maintaining flexibility as licensing terms play a key role in SSO policies 

SAP appreciates this opportunity to provide NIST our perspective on issues in the 

standards development process.