Attachments do not seem to be working ... ----- Cisco Systems, Inc.’s Comments to Intellectual Property Policy For UCA International Users Group (Draft Version 3.04.10.kc) Submitted 5.02.10 Cisco Systems, Inc. welcomes the UCAIug’s efforts to develop an IPR policy that furthers its goal of fostering information and technology sharing in the utility industry. While Cisco understands that the UCAIug does not intend to write standards, we agree with GE’s comment that the distinction between requirements and standards setting is often unclear. This is particularly true here, where UCAIug participants are allowed to disclose proprietary (and possibly patented) information in meetings, committees, and working groups. In these situations, the UCAIug’s proposal for such a participant to merely grant limited internal research, non-commercial licenses to Members under its IPR – with only a vague obligation to negotiate commercial, royalty-bearing licenses to Members in good standing – places all implementers potentially at risk of patent holdups if such proprietary information is later standardized and commercialized. Accordingly, the UCAIug should implement a more comprehensive, open, and transparent IPR policy that is consistent with NIST’s principles for smart grid standards. See Section 4.5, “Process for Future Smart Grid Standards Identification,” NIST Framework and Roadmap for Smart Grid Interoperability Standards, Release 1.0 (January 2010). Cisco believes the following framework achieves this objective by avoiding hidden costs for essential IPR while preserving incentives for IPR holders to contribute to the UCAIug: • Disclosure of Essential Patents. Participants in the development of a UCAIug specification must disclose their essential patents and patent applications of which they are aware that cover that specification. These disclosures should be made early in the specification development process. • RAND Licensing Commitment for Essential Patents. Participants must commit to license their essential patents on reasonable and non-discriminatory terms. These RAND terms can either not require payment or require payment where such payment is reasonable in light of 1) the value of the patented technology compared to the value of the alternatives available at the time the technology was selected and 2) the overall value of patented and unpatented technology in the UCAIug specification. These two requirements are intended to reward patent holders for their true economic value of their invention while avoiding windfalls based on excessive royalties. • Allowance of Ex Ante Licensing Discussions. The UCAIug should encourage participants to take into account anticipated royalty costs when deliberating over what patented technology (if any) to include in a UCAIug specification, particularly when the UCAIug works closely with SSOs that have primary responsibility for completing standards specifications. The USDOJ and the FTC have stated that such ex ante discussions can have pro-competitive consequences by reducing opportunistic behavior by patent holders. • Irrevocability and Transferability. Participants must not be able to revoke their UCAIug licensing commitments. These licensing commitments must also be binding on subsequent transferees of the participants’ essential patents, so that later purchasers of such patents will not able to hold up the industry with non-RAND licensing demands. . We welcome further dialogue and are eager to participate in future discussions of the UCAIug’s IPR policy. Dan Lang (dlang@cisco.com) Senior Director, Intellectual Property Mike Lee (mlee4@cisco.com) Senior Intellectual Property Counsel Cisco Systems, Inc.