A Study on User-Driven Standard and Royalty Free in the Standardization Process

Abstract

This paper explores the relationship between user-driven standard and royalty-free (RF) basis of the international standardization. Recently, international standards have played a critical role in globalized businesses. However, this does not simply mean that we now have international rules denned in the TBT Agreement (Agreement on Technical Barriers to Trade) by the WTO. Many Japanese manufacturers today struggle with approaches for generating revenues from innovative technologies, and hence, investigate a business model that utilizes international standards. Characteristics of modern international standards tend to differ from those of traditional de facto standards. In general, modern standards are predefined by consensus. With such practice, it is difficult to generate revenues. Hence, the best approach is to develop a business model that utilizes intellectual property (IP). International standards contain a variety of IP. This is why a business model that can associate IP with profit-making strategies has drawn attention, particularly among Japanese manufactures with innovative technologies. Recently, we have witnessed intellectual property on a RF basis. Typically, SDOs (Standard Developing Organization) promote the development of standardization, but for some cases, they require RF instead of RAND (Reasonable and Non Discriminatory Licensing). Such a trend indicates that companies with IP should review their existing business models. From the viewpoint of these issues, this paper specifically explores questions such as "what has caused this trend to emerge?" and "what would be the implication of this trend on companies owning IP?"