A Buyer's Guide to Special-Interest Groups

For some time, silicon and hardware manufacturers have participated in cooperative programs for the development and promotion of widely adopted specifications. Such Special Interest Groups (SIGs) are crossing increasingly into the realm of combined software and hardware, or purely software specifications.

Why join a SIG?
SIGs enable participants to develop interoperable technologies (specifications, guidelines, software, and tools) which, when applied to an individual participant's products, enable the participant to expand the market segments beyond the limits imposed by proprietary specifications. Industry-wide adoption of interoperable specifications spurs rapid evolution of key technologies, which in turn expands the market for each participant's products that incorporate such specifications. An example of such a SIG is the World Wide Web Consortium, or "W3C."

In many cases, SIG participants can influence the direction of the specifications and get a jump on product development. Industry-wide adoption of technological specifications reduces product-development risks associated with competing specifications. Think of this as the Betamax vs. VHS risk factor.

Choose your flavor
Depending on the purpose, SIGs may be embodied in a variety of entities and non-entities. There are rules-based informal bodies, implementers' forums, nonprofit corporate entities, and, in limited cases, for-profit associations. While there are many different Intellectual Property (IP) licensing models, including Patent Pools and so called "Open Source" models, the majority of the entities selected for specification-development use one of three IP licensing models: Just Publish (JP), Reasonable and Nondiscriminatory License (RAND), and IP Open Space (IPOS).

Just Publish
In a Just Publish (JP) SIG, a group of promoters may agree by contract or through a formal entity to develop a specification. For example, in 1998, a group of companies agreed by contract to define protocols for Hypertext Markup Language (HTML)–based enhanced television. (See Advanced Television Enhancement Forum (ATVEF).

Under the contract, each of the developers of the specification agreed to joint ownership in copyright of the written specification. In order for anyone to implement the specification, however, it was necessary to seek a license from the owners of any necessary claims of IP embodied in the specification. The risk to implementers of JP specifications lies in the securing of IP licenses from the various holders of those rights. On the other hand, the holders of IP embodied in the specification are not contractually required to license their intellectual property to implementers, thereby leaving the leverage with the IP owner.

Reasonable and Nondiscriminatory License
Participants in Reasonable and Nondiscriminatory License (RAND) SIGs agree to develop specifications for industry-wide adoption, but unlike JP SIGs, they impose on one other a reciprocal obligation to grant all other members Reasonable and Nondiscriminatory Licenses in any and all necessary claims of IP embodied in the published specification. By reciprocal, I mean that a member may refuse to license its IP embodied in the specification to another member if that other member is unwilling to do the same in return.

This common IP licensing model lessens some of the leverage that the IP owner may impose in the negotiation of a license while ensuring similarly situated implementers a level playing field on licensing terms.

Note that during the negotiation of licensing terms for a new RAND SIG, an as-yet-unresolved conflict arose when it was determined that one or more of the members may have necessary claims of IP subject to the Open Source licensing restrictions of GNU's General Public Licenses (GPL).

Under GPL, any company may use and modify another's IP as long as that company makes it available to everyone else with the same licensing stipulation. This can cause at least one conflict within the RAND system of licensing by imposing GPL restrictions upon SIG members not otherwise inclined to enter the Open Source world. Say, for instance, that a RAND SIG's specification includes a key IP claim subject to GPL. Even though the GPL licensor may agree to reciprocal RAND licensing to other members, it would be prevented from granting licenses to those members who are unwilling to grant GPLs. Conversely, while the non-GPL member would have a reciprocal right to license the GPL member's IP, it would only be able to do so if it agreed to GPL restrictions on its license to others both in and outside of the SIG.

IP Open Space
IP Open Space (IPOS) is a royalty-free variation of the RAND licensing model. This type of licensing model is typically applied to common interfaces and, for obvious reasons, not to a company's core technologies. A further variation of this model occurs when the various members agree to form a royalty-free license. Under this model, the IP owner has very little negotiating leverage while the implementers have very little risk.
Note that IPOS should not be confused with "Open Source," which, as discussed above, is a licensing strategy for source code to foster a collaborative sharing environment for a particular software implementation both inside and outside of SIG membership.

Specification-development SIGs serve to foster competition by enabling participants to develop products based on common specifications and interfaces adopted throughout an industry. Before joining or forming a SIG, however, a potential member is well advised to review the potential IP licensing requirements of that SIG as compared with its own desire to maintain control over the licensing of its IP.