What is a Smart Grid?

What is a Smart Grid? How should it look like? Well, the answer depends on who you ask.
There is a general consensus that:

-          The Smart Grid should be ‘smart’, i.e. should have intelligence in the network.
-          The Smart Grid will bring at least three industries together – existing power utilities, telecoms, IT.  It will also provide a boost to a fourth industry segment (home networking).

Thus, in the context of Smart Grids, the ‘network’ now spans the Power network, Telecoms network and the home network with a new set of applications being built by the services industry. This is a challenge no doubt.

On the Supply side, the Smart grid will be / will imply:

-          Smart Grids are more than conventional utilities since we will move away from predictable billing to dynamic pricing
-          Smart grids imply lower operational costs
-          Smart Grids would imply faster equipment renewal cycles
-          New competitors will enter the space from outside the ecosystem(ex Internet players)
-          Smart Grids will provide better analytics

For Governments, the Smart Grid will be:

-          A new ecosystem an opportunity for competitive positioning of their respective economies globally
-          A chance to be potentially involved in Standards
-          A chance to manage security threats

For customers:

-          Customers don’t know about Smart Grids but they do care about them
-          Customers want lower bills
-          They want to be in control of bills
-          They may be producers of energy in future

Smart grid technology could span

-          Power grids
-          Networks – including fixed and mobile networks
-          Home networks
-          In car networks

Society could be impacted by

-          Promotion of Green issues/ Green issues
-          Privacy concerns arising from Smart Grid deployment

How would Smart Grid look like from a services perspective?

-          Smart Grids could proactively detect problems before they arise
-          Smart Grids could mirror production of energy against consumption of energy by balancing supply and demand
-          Sensor measurements inside network would enable rapid management and diagnostics
-          Consumers could become producers
-          Consumers could become traders by buying and selling energy perhaps to the Grid
-          Smart Grids would enable better management of demand(low blackout probability)
-          Smart Grids would allow us to intelligently manage  home devices
-          Smart Grids would lead to Self healing networks
-          The ‘meter reading man’ would be a thing of the past
-          Smart Grid would connect diverse generation mechanisms
-          Electric cars could become more popular
-          Smart Grids would help advanced sensing of issues and remote diagnostics of problems
-          Smart Grids would lead to better decision support through trend analysis of data
-          Smart Grids would imply a Bi-directional flow of energy
-          Smart Grids would motivating for customers(would encourage customers to change their energy consumption , behavior and usage patterns)
-          Smart Grids would enable innovation and ‘Edge of network’ services through a start-up culture for fostering new innovation.’

Smart Grid Standards

Smart Grid standardization is complex. Purely because Smart Grids bring three domains together: IT, energy and telecoms. Each has existing value chains and standardization along with different industry cycles.

The task is as complex as putting a person on the moon but with the added dimension of requiring collaboration not just by one but by several industries. Standards are designed to achieve interoperability. Interoperability for smart grids can be viewed at three levels: the device level, network level and services level. Device level interoperability is relatively easy, but interoperability on the other two levels is much more complex. Standards are important but they are not sufficient for Smart Grids, since Smart Grids span domains. Formal standardization process has limitations because standardization aims for consensus through compromises. Standards provide a measure of stability but they need to be augmented by user groups. Hence, Standards Need User Groups to create implementation agreements by reducing the number of options. This strategy has worked well in other domains like WiFi through groups like the WiFi alliance.

Why Smart Grid standardization is different?

Smart Grid standardization is different from other standards approaches for the same reason of its complexity. Smart Grids have complex functional requirements and since they span domains, there is potentially an additional step which is involved in collecting all these functional requirements. This additional step is not seen in other domain specific standard initiatives.

To achieve this goal, NIST set up the Smart Grid Interoperability Standards Project. SGIP is an independent requirements gathering organization created by NIST but independent of NIST. Once requirements have been identified, they are expected to be passed to existing Standards Development Organizations (SDOs). This approach has some advantages since requirements are gathered from across the affected industries independent of technology and then standardized by different SDOs. In Oct 2010, NIST identified five “foundational” sets of standards for Smart Grid interoperability and cyber security that are ready for consideration by federal and state energy regulators.

The standards and their functions are:

-          IEC 61970 and IEC 61968: Providing a Common Information Model (CIM) necessary for exchanges of data between devices and networks, primarily in the transmission (IEC 61970) and distribution (IEC 61968) domains
-          IEC 61850: Facilitating substation automation and communication as well as interoperability through a common data format.
-          IEC 60870-6: Facilitating exchanges of information between control centers.
-          IEC 62351:  Addressing the cyber security of the communication protocols defined by the preceding IEC standards.

Conclusion and Questions

We cannot attempt to solve twenty first century problems with twentieth century processes. Smart Grids are a bold attempt to create new infrastructure and thus new value for customers, enterprises, innovators and Governments. It brings together previously discrete industries – specifically electricity generation, Telecoms and the Internet. It creates new collaborators and competitors.

But if we build it, will they come? And how do we decide what to build? While Smart grids are new, networks are not. As networks evolve, they shift innovation to the edge. The edge of the smart grid is the home network, the automotive network. All these are driven by customers. So, the goal should be to empower customers and not hinder innovation.

In terms of standardization, the approach of gathering functional requirements through a separate body like SGIP is unique. The only analogies perhaps are in Japan with government led bodies like MITI taking an active role in standardization. Will this be a new trend for cross domain services? Certainly technologies like NFC (Near field communication) have been mired because they span two domains (transportation and telecoms).

But much remains to be seen. The five foundational standards initially identified by NIST include mostly device and network layer standards. My personal view is that it is good if we can standardize those layers. Conceptually, that is like standardizing the IP and http protocols. I think the efforts of bodies like NIST should be focused at that layer. This will allow industry to focus on the application and service layers and bring in new innovation.

At this point, we can only say that we are exploring uncharted waters and smart grid standardization is different from what we have seen before.

This week we have a range of announcements from Telecoms, Cloud, Privacy and other domains

1. Fujitsu touts breakthrough in wireless charging technology

Link: www.v3.co.uk/v3/news/2269761/fujitsu-heralds-breakthrough

Fujitsu has claimed a major breakthrough in wireless charging technology that could let manufacturers design charging systems in a fraction of the time currently required. Suba Arunkumar, an analyst with Frost & Sullivan, believes that the development is significant as it comes just two months after the QI wireless standard was approved.

2. picoChip develops first public access femtocell solution

Link: www.picochip.com/news/164/

picoChip has developed the first public access femtocell solution supporting the Local Area Basestation standard(LABS)

3. 5 Ingredients for a Successful Mobile Standard

Link: www.imamuseum.org/blog/2010/09/14/5-ingredients-for-a-successful-mobile-standard/

I love it when organizations that make use of technology set their own collaborative standards. The Indianapolis museum of arts presents 5 ingredients for successful mobile standards for museums and galleries.

4. Virtualization, cloud standard on the fast track?

Link: www.networkperformancedaily.com/2010/09/virtualization_cloud_standard.html

Distributed Management Task Force (DMTF) announced at the end of August that its work on OVF standard version 1.1 had been adopted as an American National Standards Institute (ANSI) International Committee for Information Technology Standards (INCITS) standard.

5. CDA/CCD Ambassador Questions and Answers

Link: motorcycleguy.blogspot.com/2010/09/cdaccd-ambassador-questions-and-answers.html

A webinar on the HL7 CDA and CCD specifications by Keith Boone.

6. How HL7 standards affect meaningful use

Link: searchhealthit.techtarget.com/video/How-HL7-standards-affect-meaningful-use

7. Threats to online privacy, net neutrality could destroy Web, warns Berners-Lee

Link: www.computerweekly.com/Articles/2010/09/15/242855/Threats-to-online-privacy-net-neutrality-could-destroy-Web-warns.htm

Berners-Lee believes the world has to think about privacy “from a completely different point of view” in future, because the threat to personal privacy is so great.

8. Global Standards For Informatics Professionals Summed Up In New B2P Online Publication

Link: www.medicalnewstoday.com/articles/200905.php

A new online publication, targeted to health professionals working in the global informatics community, has been launched by AMIA, the professional association for informatics professionals. The Standards Standard provides a single online destination for healthcare information, communications, and technology experts who require a reliable periodic update on the activities and initiatives of the world’s major biomedical and healthcare standards- setting organizations.

9. Beware an impending e-records train wreck

Link: gcn.com/articles/2010/09/20/reality-check-health-care-data-mess.aspx

The use of outdated technologies could spell doom for HHS’s health records

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Patents and Open Source Are Not Always Like Water and Oil:
“Patents have long served to enable innovation while assuring the complete disclosure of inventions and a reasonable return to inventors”. While RAND (Reasonable And Non-Discriminatory) licensing requirements, which provide equal and fair access to IP for use in both open and closed standards, has significant support from governments and industry, there exist some within the OSS (Open Source Software) community who wish to abolish RAND licensing all together. In the first of two featured articles, Stacy Baird outlined both the motivations and consequences of this desire.

The OSS Roadmap to a Minefield of Patents:
“Standards bodies are a microcosm of the marketplace: alternative ideas compete for inclusion in a draft” with organizations offering a wide range of approaches towards IPR technology, ranging from allowing to disallowing its inclusion or alternatively falling somewhere in between. In the second featured article, OASIS’s James Bryce Clark reported that “demands for royalties are becoming rarer” particularly during the recent boom in internet technology such as cloud computing which increasingly depends upon interoperability and transparency, in contrast to traditionally closed telecommunications networks.

FOSS (Business), Standards, and Intellectual Property Rights:
There is ongoing discussion covering how FOSS can be used in scalable business and what business models support using FOSS. For instance: “how one makes money when one gives the product away for free”. Stephen Walli argued that the nature of any tension between FOSS and standards is in their relationship and concluded that a well-run FOSS project should have the same level of IPR policy considerations in place as an SDO.

Betwixt and Between: Open source software and RAND standards development patent policies:
Regarding the tension between OSS and RAND, George T Willingmyre posed the questions: “What is the problem? Is this actually a “problem” or a matter of differing goals?” and “what is the lesson?” Arguing that rather than being a conflict between the Open Source definition and RAND, the tension instead comes from certain patent licensing restrictions which are included in some Open Source licenses and RAND. He concluded that the world’s policy makers should take heed when contemplating any decisions regarding Open Source policy affecting standard setting.

The Intersection of Royalty-generating Standards and OSS:
“All open source licenses are not created equal – hard line licenses, like the GPL, place more restrictions on users and thus create tensions with RAND/FRAND that don’t otherwise exist”, argued Daniel Garcia-Schwartz and Anne Layne-Farrar in their co-authored response to the featured articles. Counter to OSS ideals of “Information wants to be free”, the more restrictive the OSS license, regarding IPR inclusion, the less that information flow is possible. These licenses not only limit the pool of information from where OSS reliant firms can draw, but also delay standard implementation due to uncertainty.

Shaping the Debate – Are Some of the Tensions Created by “RAND-OSS” or by “RAND-GPL”?:
Many open source advocates reinforce the belief that RAND is incompatible with open source licenses with phases tending towards too strongly a worded, argued Jay Kesan. But the patent grant in an OSS license does not necessarily result in a royalty-free grant of all patents the distributor holds that read on a certain code, which is important to for maintaining a vibrant ICT sector.

An Open Source Approach to Policymaking?:
As global competition and the convergence of new technologies continues to increases, issues related to standards and standard development is “becoming a growing focus of policymakers who are struggling to keep up with the pace of change”. Helen Disney commented upon the discussion between proponents of open and proprietary-based standards and some of the misconceptions regarding the obstruction of innovation. She argued policymakers should neither “idolize nor demonize” business models based upon either OSS, RAND, etc and should take a more collaborative approach towards the most open, competitive ICT marketplace possible.

Open Standards and Open source – Maturity and beyond:
In many regards Open Source is maturing, claimed Ajit Jaokar citing the recent Talkstandards debate, which focused upon the evaluation a specific Open source licensing options rather than simply the OSS/IPR dichotomy, as part of a continued evolution of the discussion regarding Open Standards and Open Source. Arguing that “Open source licenses are not incompatible with IPR” and that the “Demands for royalties are increasingly depending on the domain” he outlined a series of implications stemming from this maturity.

Standing at the Intersection of RAND and OSS:
While on the surface it may seem a simple debate between RAND and “Open Source” regarding patent royalties, claimed Steve Mutkoski, “neither RAND nor OSS are singular or uniform concepts capable of such a simple comparison”. Outlined a number of ways in which the dozens of OSS licenses currently in use uniquely treat the inclusion of patents, Mukoski described the situation as a “complex legal discussion”.

Standards and Open Source Software:
“Is there an inherent tension between the FRAND … and the imperatives of Open Source software development? In one word, no” argued Timothy Simcoe. Nothing prevents a firm contributing technology to an open standard under a FRAND licensing agreement for free, via a non-assertion covenant or setting the maximum royalty rate to zero during ex-ante disclosure. Simcoe cites the potential holdup possibility as the key priority for policy consideration, in particular the improvement of IP policy (greater transparency, reduced vagueness such as “reasonable” royalty rates, etc).

Many participants in the open-source community are implementing standards and licensing patents where necessary to create highly successful, innovative products, so why would others be calling for abolition of RAND licensing?

The answer lies in licenses: not the patent licenses, but certain open source software licenses.

Simply put, there are different flavors of OSS license. Some, such as the BSD and Apache licenses, allow OSS developers to design software that plays well with others. These licenses allow OSS developers to include software (any software, not just software that implements standards) that may require the developer to pay royalties. So if you are an OSS developer and you choose to use, for example, a BSD license, the question “can I use the standard in my OSS?” is invariably answered “yes.”

However, other open source licenses, specifically GPL licenses, are intended to ensure no IP royalties flow from not only the underlying OSS, but any add-ons to, or components of the underlying OSS code, including any standards implemented in the software.

So if you are an OSS developer who decides the GPL is the best license for your software, then yes, there is a problem. It’s a problem written by the authors of the GPL licenses who seek to exclude any patents from GPL licensed software – not a problem created by the patent license or the standards setting body that adopted RAND as the right approach to licensing of patents embodied in a standard. Patrick Durusau describes this well in “Self-Inflicted Discrimination and GPL.”

Many OSS developers, like commercial software developers, license these patents with royalties based on unit sales (so called “per unit” royalties). But this metric is proscribed by the GPL; so alternative valuations such as lump sum or royalties based on revenues can be substituted to enable OSS developers to use a standard in a way compatible with the GPL. In fact, according to an analysis of the Redhat/Firestar settlement not even OSS developers using GPL 3.0, the most stridently anti-patent OSS license, are entirely foreclosed from licensing such patents on terms that include some form of royalty.

So what is the best public policy?

Patents and RAND licensing stimulate innovation, remunerate inventors and enable interoperability, even interoperability for highly successful OSS. When the situation warrants, the market gets creative in working out reasonable royalties on GPL-licensed software. As Hellström, Kramler and Bulst of the European Commission Antitrust unit recently wrote in Holding Standardization to a Competition Law Standard (Concurrences Review, February 2010): “As competition law should be business model neutral, there should be no preference for open source based models over other models. From a competition law perspective royalty free access to IPR is not necessarily required.” It makes no sense to abandon patents and RAND licensing, fundamental aspects of standards-setting, to accommodate one type of open source software license.

Join the Forum discussion here: http://www.talkstandards.com/questions-for-standards-and-oss-open-forum/

Standards bodies are a microcosm of the marketplace: alternative ideas compete for inclusion in a draft. Some organizations permit royalty-bearing work to be included in a standard; some don’t; and some (like ours) permit each standards project to select a set of terms. In OASIS’ experience, the overwhelming majority of member-initiated projects choose a royalty-free approach, and so only accept contributions that do not come with royalty claims.

Demands for royalties are becoming rarer, in our own domain. Structured data standards that bear royalties have grown less acceptable to the marketplace, during this last decade of widely-distributed, Internet-driven information transactions. Proprietary and royalty-bearing methods have a wholly completely legitimate place in computing and ICT. But they are less likely to be embraced for use in globally-networked open systems that depend on user elaboration. In a multi-modal, constantly-growing open network, unlike a closed telecomm network (for example), participants add themselves spontaneously, and often modify shared data constructs. In such a system, to test each new participant and data exchange against whether proper rights are in place — perhaps many times a second, in the case of some networks — would pose obvious scalability challenges.

That may be why, in our field, standards panels often seek workarounds for proposed methods that have restrictive licenses. Whether to do so is, itself, the decision of the participants. The benefit of a transparent, stable process is that all contributors may participate, and conduct an open debate about what kind of terms ought to be required for a given project. We believe that this leads to better disclosure and better results.

In free and open source software work, like open standards, there are some established venues that operate under clear and known terms. The Open Source Initiative, the Free Software Foundation and the Apache Software Foundation are obvious examples; each with a transparent governance structure and a track record of stability. Many open standards consortia benefit greatly from those “FOSS” software development communities. As a practical matter, we see these two spheres interact constantly. Many FRAND standards have open source implementation projects which pose no license compatibility problems. See, for example Softwarefreedom.

A number of more informal models also have emerged. Not all of them have binding assurances for openness or re-usability in place. Ad hoc projects are created, to pool cooperative effort for a project, and may even be called “open-source” or “open-standards” work; but often these collaborations have no participation rules, or license or permission practices, to give assurance to the end-user. Increasingly, we see governments carefully distinguishing between such ad hoc efforts, and established stable processes, in their purchasing requirements and policy development.

Patent and copyright regimes do not always deal in certainties, even at their best. Some of the legal devices used in the above environments are relatively untested. One only needs to look at the Rambus cases in the US, to see swings in the interpretations that regulators and courts apply to the duties of participants in collaborative projects (e.g. 2006 case and 2008 case). A clear definition of the enforceable meaning of “fair” or “reasonable”, when the terms of proposed licenses are challenged, sometimes seems beyond a court’s reach. Also, issues around whether one may, or ought to, apply patent protections to software, generally, under the laws of various nations, is so well known an issue this year as to require no citations.

One recent response to these uncertainties, in our community, has been an increased use of waiver forms that may make licensure diligence, and perhaps enforcement details, obsolete. Standards participants may issue a statement that supports a standard — regardless of assertions about the state of their rights — by simply disclaiming any right to demand a license for a conforming implementation. See, for example, the model “Non-Assertion Covenant” . It’s likely that developer and user marketplaces will continue to seek agile and creative solutions, or work-arounds, to the traditional high-cost methodologies involved in parsing and threading through often poorly-mapped patent minefields.

Join the Forum discussion here: http://www.talkstandards.com/questions-for-standards-and-oss-open-forum/

FOSS and Business

A business creates a marketplace and manages products through a pipeline. FOSS adds interesting new tools to the product development and customer engagement toolkit, but FOSS doesn’t fundamentally change the nature of the business. The easiest way of thinking about this may be to recognize that companies sell products (and services) to customers, while FOSS projects develop software collaboratively in community. This doesn’t mean that companies don’t mix with communities, nor that products can’t related to projects, but these are separate things with different engagement processes.

Companies may use software from external FOSS projects as part of the business offering, or they may publish components from their product space under FOSS licenses, and further they may develop communities of users and/or developers. There are well-understood ways for managing each process: i.) developing product channels, ii.) licensing FOSS projects, and iii.) developing technology user/developer communities. Successful companies understand that these are separate functions and how to manage each process to support the other two.

FOSS and Standards

The nature of any tension between FOSS and standards is in their relationship.

A. If there is only ever one true FOSS implementation, does there need to be a standard that would encourage multiple implementations? Probably not, and no standard should be created. Nothing is lost in the economy. People are collaborating on the implementation and not a specification for multiple people to implement differently. This tension can be seen in the lack of debate around the Perl language for a standard, but is interesting as people debate a Ruby language standard.

B. If the FOSS project acts as the reference model for a standard’s creation for which there will be multiple implementations, then is the FOSS project committed to maintaining the conformance to the standard specification once it is finished (e.g. OASIS and ODF out of the OpenOffice.org project). This would certainly aid the standard at promulgating faster if the FOSS licensing allows more people to adopt the FOSS project as a component of their products and services.

C. If the standard’s conformance criteria requires multiple genetically different implementations (e.g. the IETF), then one or more of them could certainly be FOSS licensed projects. This would again likely encourage the standard’s spread faster.

Standards and Business

Standardization does have an impact on business models. I’m an enormous fan of Christensen economic models. When a vendor begins to over deliver on functionality in products, and customers can no longer absorb the changes (or want to pay for them), the technology space is ripe for standardization. The standard can provide a reference model for a particular set of solutions to the problem and businesses (new and old) are in a position to offer new solutions to customers with the standard at their core. These new business offerings often have very different margins to the original vendor’s solution. New solutions with new margins create new business models.

IPR Tensions

The tension between standards and IPR is whether or not the IP licensing is [F]RAND or not. IPR and standards clash because they exist to support different functions within the marketplace. Standards exist to enable and encourage multiple implementations of the specification. IPR exist to protect a single idea’s expression or implementation. Every standards development organization (SDO) must deal with the reality of patents in the marketplace (regardless of whether SDO participants are the IPR holders). SDO create IPR policies to make the licensing situation as clear as possible for participants and potential future implementers. Ideally, no SDO wants to create standards with built-in taxes, but the reality is that there may be patent licensing to manage. Letting participants know the licensing landscape in the development process as early as possible is the goal.

The tension between FOSS and IPR is whether or not the IP licensing is [F]RAND and royalty-free. When FOSS projects implement standards, it’s no different to tackling any other endeavor with respect to patents, i.e. the FOSS project needs to be sensitive to the patent landscape. With respect to FOSS project participants, well-run projects fall back on a similar process to the SDO by creating some form of IPR policy. This policy is embedded in the project’s license choice/design, its contribution agreement process, or both. IP rights holders that participate in FOSS projects need to be as sensitive to how they manage those rights with respect to the FOSS project as if they were to participate in SDO, but the bar is higher because the expectation in a FOSS project’s IPR policy is that any patent licensing is royalty-free as well as [F]RAND.

A well-run FOSS project should take steps to ensure they have the same level of IPR policy considerations in place as SDO. As with the business world, the FOSS project needs any IPR to implement and distribute the standard implementation. FOSS projects suffer the same problem of patents outside their participants’ control.

Join the Forum discussion here: http://www.talkstandards.com/questions-for-standards-and-oss-open-forum/

On the one hand we are speaking of the numerous and varied licensing conditions that have evolved around the sharing of “Open source software” defined as:

“… computer software that is available in source code form for which the source code and certain other rights normally reserved for copyright holders are provided under a software license that permits users to study, change, and improve the software.” (Source Wikipedia)

And on the other hand we speak of “RAND standards development patent policies” that provide for “Reasonable and Non-Discriminatory” (RAND)  (see e.g. Abanet.org) licensing terms and conditions (including possible royalties) that might comprise a license covered by an assurance of a license from the holder of an essential patent to a particular standard.

This is to remove from our discussion the term “open standard” which can be confused with, but is distinctly different than either of the previous. We shall leave discussion what is an “open standard” for another day.

What is the problem? Some in the OSS community contend they are disadvantaged by RAND standards development patent polices where patent owners are allowed to seek reasonable royalties (and/or other reasonable terms and conditions) in licensing patents that are essential to practice the standard. They observe that OSS may be foreclosed from inclusion in standards employing RAND patent policies due to several elements generally understood to define OSS (Source Wikipedia):

“… 1. Free Redistribution

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.”

and

“… 3. Derived Works

The license must allow modifications and derived works, and must allow them to be distributed under the same terms as the license of the original software.”

A generalization is just that, and all generalizations are suspect.

Nevertheless one such recent generalization about OSS which brought to me a smile, this by Gene Quinn:

“But too many open source regimes are like the Borg of Star Trek fame, or a little like the Mafia. Once you are a member you simply cannot get out. With too many open source regimes once you join and take then anything that you produce must be free to be taken by other members of the consortium. It really is akin to a patent deal with the devil, and ignores human tendencies” (Source IPWatchdog.com)

I believe Quinn is observing whatever improvements might be made and contributed will be difficult if not impossible to monetize as Intellectual Property and that this contrasts with human nature to desire rewards for individual efforts.

Another important generalization is that there are important distinctions among OSS licenses. Not all open source licenses are necessarily in conflict or incompatible with RAND patent licensing (including royalties). Rather than being a conflict between the Open Source definition and RAND, the tension instead comes from certain patent licensing restrictions which are included in some Open Source licenses and RAND.

Välimäki and Oksanen observe*:

“… popular open source have a built-in termination mechanism that does not allow the development of software that requires any kind of royalty payments for third party patents. In more technical wording, GPL and LGPL are incompatible with patent royalties: if there is a patent for some software invention and that patent is not licensed for free to everyone forever, it is not possible to develop free software for that invention.”

They continue however:

“To be precise, not all open source licenses have such patent clauses. For instance the popular BSD license lacks one.”

Is this about a problem or a matter of differing goals? Distinctions exist between the goals of OSS and standards. A goal of OSS generally is that of permitting users to study, change, and improve the software. A goal of standards generally is about creating compatible or interoperable implementations and NOT about permitting multiple and varied changes. Andy Updegrove stated this succinctly in assessing a “non-assert” patent pledge concerning a standard:

“The pledge only relates to “compliant” implementations, which does run afoul of the open source right to change anything. From a standards point of view, that serves a purpose, as it furthers the spread of interoperable implementations, which is what standards are all about. That works well from that perspective, but may leave some open source advocates less happy.” (Source Consortiuminfo.org)

Carrying forward the notion that OSS actually describes a diversity of licenses, others here correctly opined: “all open source licenses are not created equal. “ There are upwards of 75 OSI “approved” open source licenses in use today (however dozens other non-approved licenses, see Opensource.org). It is all in the details; how well the current Oracle – Google patent dispute illustrates this point! In its complaint, filed August 12 2010 (see Scribd.com) with the U.S. District Court for the Northern District of California, Oracle said Google’s Android operating system software consists of Java applications and other technology. As such, it infringes on one or more parts of seven different patents. When Oracle purchased Sun Microsystems in 2009, it acquired Java.

“Sun, though it amassed thousands of patents, was one of the biggest backers of freely sharing programming technologies. Though Sun cut licensing deals to sell Java, it offered free versions under what the industry calls open-source licenses.” (Clark and Tuna on Wall Street Journal)

Some have questioned how could Oracle now seek to enforce its patents in Java (as it has with respect to Google) and at the same time support organizations with strong positions that such commonly used standards as Java should be available without any royalties?

“However, Oracle’s patent infringement suit against Google is also an aggression against the notion of open standards. Java should be an open standard, and according to Oracle-backed organizations such as the OFE and ECIS, such standards would have to be made available on a royalty-free basis.**” (Source Fosspatents.com)

Why should it come as a surprise that businesses strive to maximize their potential value? In standards setting the term for this behavior is, “enlightened self interest”. Exactly how Oracle makes its Google case is a matter for the attorneys and juries; however, the answer may lie in the concept of multilicensing:

“The practice of distributing software under two or more different sets of terms and conditions. This may mean multiple different licenses or sets of licenses. … When software is multi-licensed, recipients can choose which terms they want to use or distribute the software under.” (Source Wikipedia)

These snippets from Why Has Oracle Sued Google? from the “land down under” indicates there may be details within Sun’s original commitments that make these commitments consistent with the current Oracle litigation.

“This appears to be the story of a clever strategy by Sun/Oracle to monetise intellectual assets (patents, copyrights, and other intellectual capital embodied in the Java platform) through open-source licensing … This strategy gives Oracle the best of both worlds: freely available development platforms to encourage widespread adoption and standardisation; and commercial licensing in the most lucrative (high volume) market segments”

What is the lesson? This could be about a real problem when advocates from one side promote government intervention to their advantage and to the disadvantage of the other when a balanced analysis leads to a different conclusion. Should policy makers try to influence the conditions for different development and business models through standardization policy?

The global voluntary consensus standards community has a long and generally successful experience with the application of RAND standards development patent policies. The earliest such text from the predecessor to the current 2010 patent policy (see ANSI) of the American National Standards Institute was nearly 80 years ago in 1932:

“That as a general proposition patented designs or methods should not be incorporated in standards. However each case should be considered on its merits, and if a patentee be willing to grant such rights as will avoid monopolistic tendencies, favorable consideration to the inclusion of such patented designs in a standards might be given.” (Source GTW Associates)

The notion that any “RAND standards development patent policy” discriminates against certain OSS is not a matter of “discrimination” in the text of such a RAND standards development patent policy. It is a matter that some self-created elements in some of the OSS licenses make it impossible for the software subject to those licenses to meet at the same time the RAND standards development patent policies that have existed for decades.

Regulators and policy makers around the world face complex questions when contemplating government actions and rules affecting standards setting or use. Now with appeals in the US for “open government” it may seem at this time of government budget deficits that standards based on OSS or that royalty free licensing policies at SSOs merit attractive consideration. The Government of India recently proposed Draft Policy on Open Standards for e-Governance including such text as, “… the patent claims necessary to implement the Identified Standard shall be available on a Royalty-Free basis for the life time of the Standard.“

Regulators and policy makers around the world take heed. Such government actions are not as simple as they might at first appear. There are many factors bearing on the choice by a standards developer of its patent policy. Standards Developing Organizations balance many and often conflicting interests and needs of their members and users of their standards in making this choice. In some cases the market corrects such mistakes that SDOs may make in this regard (resulting in the standard failing to gain acceptance or market share) and the standard or standards developer becomes irrelevant.

Government policy makers contemplating actions to alter the rules affecting standards setting should use extreme caution and they should treat as circumspect claims by participants that open source software is disadvantaged by the RAND regime, long employed across a multitude of standards development organizations.

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*Mikko Välimäki and Ville Oksanen, “Patents on Compatibility Standards and Open Source – Do Patent Law Exeptions and Royalty-Free Requirements Make Sense?”, Sept 25 at http://www.law.ed.ac.uk/ahrc/script-ed/vol2-3/valimaki.asp.

** Here is use of the term “open standard” to define presumably a standard where patents are exluded or available royalty-free but where there is ample room for misunderstandings.

This article is co-authored by Anne Layne-Farrar and Daniel Garcia-Swartz (bio Here)

As fellow commenter Stacy Baird notes in his contribution to today’s discussion, all open source licenses are not created equal – hard line licenses, like the GPL, place more restrictions on users and thus create tensions with RAND/FRAND that don’t otherwise exist. Indeed, open source and IPR protected software frequently coexist quite peaceably.

While proponents of OSS famously said some time ago, “Information wants to be free”, restrictive OSS licenses unfortunately have the opposite effect. In fact, the more restrictive the OSS license, the less information flow is possible. It is difficult to measure the cost paid for the road not taken, but it is likely non-trivial.

The potential negative effect for firms that rely on OSS with highly restrictive licenses derives from the self-imposed reduction of choice. When organizations rely on the GPL or other similarly restrictive licenses for a specific product, they are precluded from incorporating into that product software that involves royalty payments. The pool of innovation from which they can draw is therefore limited. This reduction in choice is not a problem only if we assume that all software involving royalties is inferior, less innovative, and less relevant than readily available OSS software free of all IPR payments. The moment that we admit that some proprietary software may offer solutions not otherwise available, or available only in a less efficient or lower quality form, then we must also admit that a price is indeed paid by restricting the pool of contributions from which an OSS program can draw.

But the effects are surely more wide spread than that. In particular, it is our experience that many firms that rely on IPR protection shun standard setting organizations with open source leanings. Here the issue is not that existing software solutions protected by IPR are being precluded from inclusion in open source products, but rather that software solutions are not developed at all because the firms that would develop them are leery of OSS entanglements. This second effect exacerbates the first.

A related third effect in the form of uncertainty will emerge in at least some instances. To see the price that uncertainty over IPR and OSS can impose, consider Google’s recent announcement of an “open and free” video format, VP8, “with the goal of creating a standard that anyone can use without paying royalties.”*   The controversy began almost immediately after Google’s announcement. Specifically, MPEG LA announced that it was already working on creating a patent pool with patents that read on the VP8 standard. As the technology underlying VP8 is allegedly not owned by Google and thus is not under Google’s control, neither is the standard’s royalty-free status. Despite any reassurances that Google may make, risk averse firms appear to be avoiding the standard until its status is clarified – the opposite effect that Google was striving for.

The bottom line seems clear: tension between IPRs and OSS is bound to impose some economic costs. Most likely, the presence of strict OSS licenses in a standard setting context will result in reduced innovation and less consumer choice. When uncertainty is thrown into the mix, the cost can include delayed adoption of a standard. These effects appear to be greater the greater the reliance on more restrictive licenses, like the GPL, as opposed to more accommodating ones, like the BSD.

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* See “Google’s New Open Source Standard May Never Be Free”", Technology Review, May 26, 2010

It is incumbent that scholars and policymakers understand the meaning of numerous open source licenses that are currently in use as opposed to thinking of OSS licenses as a monolithic and homogenous concept. The scope of the debate should be reshaped into a discussion of how a subset of OSS licenses, perhaps the GPL family of licenses, may or may not conflict with RAND-based licensing. In fact, there are a significant number of examples and approaches in open source licensing that create no tension with RAND-based standards licensing.

The OSI’s Open Source Definition is a set of criteria used to judge whether a particular code license can be certified (by OSI) as an “Open Source” license. There is no reason why a RAND patent license would need to be certified by OSI so the application of the OSI principles in this situation is misplaced. OSI’s definition merely states that an OSS license may not require the recipients of the code to pay the code distributor a royalty. It does not prohibit the code distributor from taking a patent license from a third party and paying per unit royalties on the copies of code that it distributes under an OSS license. Indeed, there are clearly OSI approved licenses that do allow such third-party patent licenses. The key question is whether the operative OSS license (OSI certified or otherwise) contains a requirement or limitation that prohibits the code distributor from taking such a patent license.

There are currently over 50 open source licenses in use. Because each OSS license is somewhat unique, a claim that all OSS licenses are impacted unfavorably by a RAND-based standards license would require a careful review of some key clauses in each OSS license with specific identification of the RAND term that is in conflict with a term of an identified OSS license. Only after this review is conducted, can we say decide whether there is a tension between a RAND-based license and any specific OSS license. The fact that there may be some tension between a RAND-based license and one OSS license does not imply that this will be true for other OSS licenses.

Therefore, we need to create a license taxonomy or license attribute analysis that we can use to better understand the interplay between OSS licenses and RAND-based licenses in the standards-setting arena. The key components of this taxonomy are license grants, conditions, or restrictions and a group of other related provisions.

Fundamentally, an open source license is about making computer source code available for modification and redistribution by recipients including those who are downstream from the recipients. A key component of an OSS license is therefore the license grant clauses that enable recipients to make use of the source code. There may be patent grants which may relate to claims that read on some or all of the code received from the distributor under the license. A significant point to understand about the patent grant in an OSS license is that the grant does not necessarily result in a royalty-free grant of all patents that the distributor holds that read on the code.

Such an understanding is vital to maintaining a vibrant ICT sector where there is significant licensing of both proprietary and open source software in standards development and in other scenarios, and towards the continued development of a robust ICT sector where a plethora of different business models are allowed to flourish.

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On the positive side, the understanding of open source principles and ways of working has motivated us all to be more transparent, more open to creative partnerships and to place a premium on innovation as a public good.

Yet while it is perfectly fair to argue that open source does lead to greater innovation in software, it is not fair to say that open source is the only way in which innovation takes place in this field.

In fact, there is a great likelihood that those innovations in software that require substantial time and resources to reach the market, would still depend on good “old-fashioned” proprietary models, a.k.a intellectual property rights (IPRs).

Simply put, IPRs allow innovators to recoup the rewards of taking risks and often investing vast sums of money in creating products and services that would never come to market without the associated R&D efforts that were put behind them. Attempting to circumvent that process – even for the most laudable of reasons such as increasing interoperability – starts to weaken and undermine the IP system which has grown up precisely to protect this important principle.

Nonetheless, a heated debate exists between proponents of open and proprietary-based standards. In this debate, “open” is often equated with “free” and “proprietary” is seen as being synonymous with so-called “closed” efforts. One argument is that because open source efforts allow anyone to access standards at no cost, they promote more competition and better innovation than proprietary-based efforts. Furthermore, because IPR-based standards offer access at a price, they are sometimes considered to be barriers to competition and innovation, and as such, closed standards. Crucially, a distinction is not always made between proprietary standards that are not publicly accessible and those that are accessible for a fee.

In fact, proprietary-based and “closed” standards (i.e. not publicly accessible) are not necessarily synonymous. Neither are open standards and those that are free. Rather, many standards involving IPRs are publicly accessible at a reasonable, transparent and non-discriminatory price – hence, they are open. Many patent pools, like MPEG LA and the Open Patent Alliance for the field of WiMAX technology (4G wireless technology) are a good example of this. And many standards typically considered to be open (i.e. which do not involve conventional licensing structures) are still based on an IP model of some form.

For instance, “defensive patent pools” work similarly to SDOs in that they aggregate a set of standards for public use with the intent that users can implement the standards without facing litigation; however, in the case of “defensive patent pools” member companies pay an annual fee to access all the standards. In the case of RPX, members can access over 1,000 standards for a fee that is considerably less than purchasing each individual license, but the IPR regime of the rights owners is still protected. Google’s Android technology is not IPR-free either. It is available to users under an Apache License, under which copyright is still preserved and while vendors may access the technology for free, they can add proprietary extensions without making them open to the open source community. Thus, a variety of hybrid models have come to exist.

With global competition and the convergence of new technologies only set to increase in the 21st century, the issue of standards and standard development is becoming a growing focus of policymakers who are struggling to keep up with the pace of change. Indeed, policymakers may even benefit from taking a more collaborative approach to forming policy in this area, allowing for more direct inputs online from a wider range of stakeholders in order to reach a consensus on what works.

However, ultimately public policy should neither idolise nor demonise a particular business model – be it based on IPRs or on open source – but should instead allow for the most open, competitive ICT marketplace possible. For those who truly believe in creativity, open collaboration and fair competition, let us try to set the rules of the game in a way that does not exclude either proprietary or open efforts and let human ingenuity solve the rest.

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