UK's Promotion of Royalty-Free Government Procurement Standards - NOT AS REPORTED ©

By Lawrence A. Kogan*

FOSS pundits have made much ballyhoo of the recent Procurement Policy Action Note issued by the UK Cabinet Office of Government Commerce (OGC) during January 2011 that defines 'open standards' as including only those which "have intellectual property made irrevocably available on a royalty-free basis" (emphasis added).1

As an example, U.S. attorney Andy Updegrove, author of one recent article on the subject entitled, United Kingdom: U.K. Comes out for Royalty-Free Standards for Government Procurement,2 waxed poetically about the UK government document's noteworthiness. To paraphrase the author's four main points, the UK government Procurement Policy Note is noteworthy because: 1) it includes informal regional as well as national standards consortia among the internationally recognized specification or standards organizations whose 'open' standards can and should be considered by the UK for government procurement purposes;2) its definition of 'open' standards constitutes a legally acceptable "repudiation" (allegedly consistent with the policy space afforded EU Member State governments vis-à-vis the European regional lawmaking institutions) of and permissible derogation from the final, binding European Interoperability Framework adopted by the European Commission during December 2010, following many years of thoughtful deliberation and contentious debate;3) it emulates and embraces a robust definition of 'open' standards that is very similar to that contained within the national interoperability framework adopted during November 2010 by the Indian Government; and 4) it proves that corporate lobbying and forum shopping undertaken at the EU Member State governmental level on behalf of the 'penguin' (open source) and 'software-as-a-service' (SaaS) industry communities can be successful, at least temporarily.

A closer examination of the UK Procurement Policy Action Note reveals that its ostensible noteworthiness and the author's observations relating to the legal and policy issues surrounding it are more nuanced than they have been depicted.

Consortia Reference Less Than Noteworthy

Attorney Updegrove begins by an overstatement of how the Action Note specifically referenced the consortium W3C "(as compared to a national or European standards body)...as being an acceptable source of open standards". However, he omits any discussion of how the final European Interoperability Framework (EIF)v2.0 adopted by the EU Commission during December 20103 already recommends that "technical interoperability should be ensured, whenever possible, via the use of formalized specifications, [which include] either standards [defined] pursuant to EU Directive 98/34 4 [i.e., standard[s] adopted by an international standardisation organization...a European standardisation body...[or]...a national standardisation body"]...or specifications issued by ICT industry fora and consortia" (emphasis added).5 Similarly, Mr. Updegrove seems to have overlooked how the final EIFv2.0 specifically identifies "the World Wide Web Consortium (W3C)" by name as one among several "fora and consortia initiatives for standardization" included within the definition of a "standards developing organization".6 Apparently, the EU had already decided to permit consortia-developed standards to be specified in procurement by the time the UK government had released its proposal; this vital point seems to have escaped the attention of the author.

Incomplete and Misrepresentative Subsidiarity/Federalism Reference More Than Noteworthy

Attorney Updegrove next declaims how the UK Action Note "is a repudiation" at the national level of the European Commission's decision at the regional level to replace the definitional term 'open standards' with 'open specifications' and to prudently abandon the politically-induced notion that government procurement-related 'open specifications' must be 'royalty-free' or even proprietary-free in order to be considered as providing a 'level playing field' for European and EU Member State e-Government contracts.

In what appears to be an effort to put lipstick on a pig, author Updegrove portrays the relationship between the UK and EU governmental institutions as one of generally accepted implicit tension between national and regional sovereigns, and compares such dynamic to that "often seen in the U.S." as existing between U.S. federal and state governments concerning contentious legislative and/or regulatory matters, such as global warming, with potential cross-border and private rights impacts. He refers obviously to the multifaceted notion of constitutional federalism within the United States; yet, Mr. Updegrove discusses neither the legal significance of the many US constitutional issues implicated in his example, nor the established U.S. constitutional principles and mechanisms that can be deployed to evaluate and resolve those disputes, especially where the sanctity of states' rights and guaranteed individual rights (i.e., private property rights) is concerned.7 Similarly, author Updegrove passes over, in that published article, the legal significance of the recently released final EIFv2.0, the still-evolving legal relationship between the EU regional institutions and individual EU Member States, and the possible EU and international law consequences of a legally binding UK government decision to circumvent the final EIF.

Indeed, in his foreword to a report entitled, Achieving European Interoperability,8 released during February 2011 by Openforum Academy (the 'think tank' arm of lobby group Openforum Europe (OFE) whose members include some rather large US companies championing the royalty-free FOSS-based Software as a Service ('Saas') business model), Mr. Updegrove, who is also an OFE Fellow,9 is more revealing. Within that writing he seeks to both reassure and encourage EU Member States interested in retaining national government procurement interoperability framework preferences for royalty-free and/or proprietary-free 'open' ICT standards "modeled on EIFv1.0", despite the EU Commission's determination in final EIFv2.0 that government procurement ICT standards should be technology and business model-neutral.10 In particular, author Updegrove emphasizes how EU Member State governments may take license in interpreting and implementing final EIFv2.0 consistent with their national needs and priorities because, in some respects, EIFv2.0's terms are less prescriptive than those contained within prior EIFv1.0.11 Apparently, his statement comports with at least two views espoused in the OFE report.

One OFE view focuses on the complex European concept of subsidiarity.12 Such view holds that since the two Annexes to the European Communication Towards Interoperability for European Public Services,13 namely, the European Commission's European Interoperability Strategy (EIS)14 and final EIFv2.0 are each essentially non-binding strategy and framework documents, as are the European Commission's related Communications on A Digital Agenda For Europe15 and the European eGovernment Action Plan 2011-201516 (i.e., they are each merely legislative proposals (hortatory instruments) rather than legally binding EU directives or regulations), the issue of interoperability falls squarely within the European Union rule of subsidiarity. Accordingly, subsidiarity limits the European Commission's role to that of only making recommendations to Member States concerning how they are to implement such proposals.17 Consequently, EU Member States which have already adopted government procurement-based national interoperability frameworks that go beyond the final EIFv2.0 – i.e., they include a definition of 'open standards' requiring royalty-free and/or proprietary-free standards-based ICTs - need not "stop or withdraw their NIFs".18

The other OFE view (premised on the previous view) holds that although the terms of Section 5.2.1 of final EIFv2.0 permit specification-related intellectual property right (IPR) licensing on either a FRAND19 or a royalty-free basis "in a way that allows implementation in both proprietary and open source software",20 the FRAND licensing model nevertheless inherently favors large software vendors at the expense of SMEs, perpetuates vendor lock-in, and effectively discriminates against all FOSS licenses.21 According to the OFE, without the assurance of "royalty-free conditions" applying generally to the process of standards development, the effective placement of FRAND "on an equal footing to royalty-free licensing" would disadvantage SMEs which, by virtue of their limited resources, would be unable to guarantee their non-infringement of patents owned by companies participating in the development of a standard.22 Consequently, in order to allegedly ensure a market environment under which both large vendors and SMEs could successfully compete, Mr. Updegrove and the OFE have essentially advised Member States governments that they are legally free (and even justified) to maintain or even adopt anew national interoperability frameworks that express a clear preference for royalty-free or nonproprietary ICT standards that goes beyond the scope and spirit of EIFv2.0 (i.e., EIFv2.0-plus initiatives).23 However, are author Updegrove and the OFE aware that these representations fly in the face of the European Commission's considered determination that government procurement requirements calling for specification-related IPR licensing on either a FRAND or a royalty-free basis actually "foster competition since providers working under various business models may compete to deliver products, technologies and...