W3C home > Mailing lists > Public > www-patentpolicy-comment@w3.org > October 2001

Re: Web page

From: <cfkaran2@eos.ncsu.edu>
Date: Mon, 1 Oct 2001 08:33:28 -0400
To: www-patentpolicy-comment@w3.org
Message-ID: <0c09b41321201a1FE8@mail8.nc.rr.com>
Good morning, my name is Cem Karan.  I am a small developer working out 
of Raleigh, North Carolina, in the USA.  I have just read your proposed 
changes to your policy regarding patents, and would like to say that I 
am opposed to the changes, specifically to the two lines below:

"may be conditioned on payment of reasonable, non-discriminatory 
royalties or fees; and
may include reasonable, customary terms relating to operation or 
maintenance of the license relationship such as the following: audit 
(when relevant to fees), choice of law, and dispute resolution"

I have two problems with this wording.  First, how do you determine what 
a 'reasonable' fee or royalty is?  There are different fee structures 
that impact different organizations in different ways.  For example, the 
flat fee structure requires a specific fee once per year.  As an 
example, lets assume that the fee is US$2000.  When faced with rising 
costs, all developers do the same thing; they roll their costs into the 
price for their own products.  With a large company that ships millions 
of units, a US$2000 fee is merely pennies per unit in terms of cost.  
For a small developer, such as myself, who only ships hundreds to 
thousands of units if I'm lucky, the cost per unit is significant.  This 
means that my product's prices are likely to be quite a bit higher than 
the prices that my larger competitors enjoy.  Suddenly, I can no longer 
compete.  The product that I produce must comply with standards in order 
to sell, but I can't afford to license the standards as it will drive my 
prices too high.  Effectively, the market has just been closed to all 
but a few.  In addition, if I can't afford a US$2000 fee, imagine what 
this might mean to someone in a developing country!  I know that you can 
have different fee structures for different countries, but then I am 
once again competing at a disadvantage.  I have several choices.
1) Move to that country to work.
2) Buy a license from someone in that country and hope that I can 
transfer it to the USA and not be sued for having done so.
3) Setup up a shell company that is based in that country that hires me 
and gives me a license (this is similar to #2, but plays havoc with 
international law).
4) Drop out of that product line, and hope to find a niche elsewhere.

In addition to the problem of fees, how do I guarantee that the fee 
structure remains the same?  As a standard becomes more popular, or as 
the company that owns the patents becomes greedier, they can change the 
structure making it more expensive to operate.  Since it is likely that 
my program is strongly dependent on being compliant with a standard in 
order to sell well, I am forced to pay the fees.  If a company wishes to 
drive all of its competition under, all it has to do is change that 
licensing structure and to drag out a court case as long as possible.  I 
for one do not have the money to fight a larger company in court; even 
if they are clearly doing something illegal, they will probably get away 
with it by simply dragging a court case until I am bankrupt, or the 
point in question is utterly immaterial because the technology has moved 
on.  How will the W3C enforce a RAND in such a way that this kind of 
behavior cannot occur, considering that the W3C itself is not a body 
recognized by governments around the world as having the right to 
enforce rules?

As a final note, I wish to state that I understand why the W3C wishes to 
implement this new policy.  There is a great deal of technology that is 
in use that, if standardized, could benefit a very large number of 
people.  However, I for one do not believe that the benefits will 
outweigh the costs.  Please DON'T change your current policy.

Cem Karan
Received on Monday, 1 October 2001 08:32:46 UTC

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