Government Procurement Policy, Patent Royalties and the Myth of 'Discrimination' Against Free and Open Source Software Developers

Government policy makers have been confronted with requests by various lobbying groups to “level the playing field” for Free and Open Source Software (FOSS) developers through policies that would remove the ability of patent holders to seek royalties for the use of their technologies in standards. These groups have made claims that the Fair Reasonable and Non Discriminatory (FRAND) licensing framework that is used in most standards setting organizations (SSOs), and which allows for the inclusion of a royalty term, are incompatible with or discriminate against FOSS developers. Part I takes closer look at these claims, as well as the current market for ICT products (those covered by a FOSS license, those covered by traditional commercial licenses and those hybrid products covered by both) and finds that there is no evidence that FOSS developers are unable to implement the wide range of standards that are currently covered by FRAND commitments. Part II looks at the recent work of several commentators who have examined this issue in a detailed and empirical manner and have found not just that the claims of exclusion by FRAND (and patent royalties in particular) are exaggerated, but that there are documented instances of the successful interplay between FRAND terms (including royalties) and FOSS licenses (even the GPL). The paper concludes that absent evidence of market failure, government procurement officers should leave it to market participants to work out agreements that allow standards subject to FRAND commitments and FOSS licensed products to co-exist as they do today. The current IP licensing framework (including the possibility of a royalty) effectively balances the rights of innovators and the interests of implementers of all business models, resulting in compelling products for consumers at competitive prices