Royalties may force standards stalemate

Pro- and anti-royalty factions have debated the issue since last fall, in a high-stakes dispute that could determine what technologies may be considered for common use at the most fundamental levels of Web design.

That in turn will have strategic fallout for high-tech giants struggling for dominance in creating ambitious new technologies such as interactive services--a battle in which Microsoft and IBM stand virtually alone with the clout to push proprietary applications on everyone else. Longtime Microsoft foe Sun Microsystems, for one, is trying to ensure that next-generation "Web services" Internet standards are royalty-free, exerting pressure on IBM, Microsoft and others to follow suit.

Next week's decision could mark a major shift in this and other standards battles if patented technology is rejected by the World Wide Web Consortium (W3C). If a final effort to craft a royalty exception is not hammered out by next week, it could die altogether, negotiators close to the talks say.

"It's an awkward moment because there have been various ideas proposed and none of them has gotten to the point that even a majority of the working group is prepared to advance them," said W3C Patent Policy Working Group Chairman Danny Weitzner. "We've been putting out these public summaries and have been getting a lot of feedback that none of this is going to fly."

The W3C found itself in a heated controversy last fall after members proposed charging royalties for patented technologies that found their way into W3C recommendations. This spring, the W3C retreated from the proposal, pledging to keep its recommendations royalty-free.

Despite that pledge, the W3C is still trying to decide what to do with patented technologies that owners are unwilling to contribute with no strings attached.

As a result, the W3C's Patent Policy Working Group is trying to hammer out an exception to the royalty-free policy. That has patent and royalty critics up in arms, helping mire a committee searching for consensus in an impasse earlier this month.

On a teleconference July 1, members discussed a proposal from three unnamed members to establish an exception to the royalty-free policy for a so-called RAND (reasonable and nondiscriminatory) license. Under the proposal, the W3C would split its recommendation, with the "core" of a specification produced by the W3C without royalties, and patented "extensions" with royalties worked out either by the W3C or other groups.

The proposal did not win sufficient support to advance, and the head of the working group warned that public opinion was siding against anything like it.

The working group is scheduled to meet again July 15 to 17 in Paris. W3C's Weitzner predicted that the volume of negative feedback the group has received on the exception--posted to the W3C's own comment threads, among others--would have a marked affect on the Paris meeting.

"I expect we'll have a final decision one way or the other and shortly thereafter have a sort of proposal that people can look at and comment on," said Weitzner. "Or we'll say we're just not doing it."

How much are they worth?
By dropping a royalty-free exception, the W3C would have to leave out technologies with royalties attached, unless the patent holders agreed to waive them. That could put major intellectual property holders such as Microsoft and IBM in a tough spot: Either give away their technology or remove it from consideration as a standard.

"This skirmish is a part of the larger 'IBM and Microsoft vs. everybody else war' that's turning the Web services arena into a big political debate," said Jason Bloomberg, an analyst with research firm ZapThink. "Every vendor wants their own specification to become the standard, and IBM and Microsoft have so much clout that that they get their way more often than not. This upsets companies like Sun, who wanted to be a market leader with that kind of clout but missed the boat."

The W3C is hardly alone among standards groups in struggling with the patent question.

One high-profile patent controversy has been Apple's reluctance to include the MPEG-4 specification in its software because of licensing terms. Apple finally released its QuickTime 6 software despite unresolved questions about the license.

Sun has also emerged as a major proponent of unpaid standards, convening a royalty-free standards group called the Liberty Alliance Project to develop online authentication services. In addition, the company held out for royalty-free provisions before joining a high-profile Web security group last month.

"We do not believe in taxing people for use of those standards," Jonathan Schwartz, Sun's software chief, said last month.

Sun worries that a standard will catch on, and once it's an inextricable part of the fabric of the Internet, those with intellectual property connected with it will begin charging for its use. It's analogous to building roads, then putting up tollbooths once the roads are essential.

Not everyone agrees with that analysis.

"We don't believe it would be in the market leaders' best interest--now or in the future--to claim that they deserve license revenue from SOAP or UDDI or any of the other core Web services standards," said ZapThink's Bloomberg. "The reality is that the core Web services specifications now have enough broad industry momentum to become de facto standards for Web services, regardless of whether they become standards in fact."

Setting a precedent
Still, Microsoft draws frequent barbs for pushing proprietary technology as an alternative to standards and exerting its intellectual property in numerous areas.

Consider 3D graphics. A Microsoft representative said the company has intellectual property that overlaps critical new features coming in version 2.0 of the OpenGL specification for standardizing how programs take advantage of graphics acceleration features.

In minutes describing a recent meeting of the OpenGL Architectural Review Board, Microsoft said it had intellectual property for two features, "vertex programming" and "fragment programming," and was willing to license it in exchange for licenses to other OpenGL technology.

Though many extensions to OpenGL have come from companies, Microsoft's position is "a big deal, because the Architectural Review Board is an independent committee of volunteers," said Jon Peddie, head of consulting firm Jon Peddie Research. "They're not lawyers; they're scientists and technologists."

Microsoft has been acquiring graphics intellectual property from SGI, Nvidia, ATI Technologies, Intel and others, Peddie said.

"They've just picking it up everywhere," he said. "They have a huge library of intellectual property."

One standards group that has allied itself with the W3C said it, too, is grappling with the issue of exceptions to a royalty-free policy.

"Patents can complicate the standardization process, but they may bring other benefits," said Tony Parisi, president of MediaMachines and a member of the Web 3D Consortium. "If a company has a vested interest in patents, and that's what it takes to get them involved in the process, you can't just throw them out. But there are open standards and freely accessible technologies--and those factors are colliding with patents. It makes for interesting times."

News.com's Stephen Shankland contributed to this report.