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Standards Play a Vital Role in Fueling Innovation

On Tuesday morning I was honored to represent Cisco in a roundtable discussion sponsored by the National Institute of Standards and Technology (NIST) about the role of the federal government in standards.  (Watch the webcast here.)

Standards play a vital role in fueling innovation, promoting competition, lowering technology costs and accelerating market growth – particularly when they are the result of an industry-led, consensus-based open, and transparent process, and voluntarily-adopted in the market.

Secretary of Commerce Gary Locke opened  the event, reminding us of “…the tremendous impact standards can have on U.S. competitiveness, innovation, job creation, and – ultimately – our standard of living.” U.S. Chief Technology Officer Aneesh Chopra then inspired attendees by stressing the importance of open dialogue and public participation in government.  Phil Weiser, White House National Economic Council Senior Advisor on Technology and Innovation, moderated the panel discussion on what role the U.S. Government should and shouldn’t play in the domestic and international standards arenas.  And Commerce Undersecretary and NIST leader Pat Gallagher reiterated NIST’s commitment to driving effective standards development for Smart Grid and other initiatives.

I focused on three main areas where the U.S. Government has a vital role to play and supporting and defending U.S. interests in standards:

The US Government can serve as convenor of industry-led standards efforts, as currently demonstrated by the leadership that the NIST has provided in the Smart Grid Interoperability Panel process. By creating an open platform for participation of over 1,500 entities – from utilities, academia, regulatory agencies, ICT solutions providers and the like – NIST serves an invaluable role in shepherding and accelerating the identification of interoperability standards that are essential in building a secure, robust smart grid capable of meeting this country’s current and future energy needs. As part of that effort, we believe that NIST could go even further in giving preference to standards that are developed in standards-development organizations that meet four key tests:

  • Allowing negotiation of royalty rates at the time a standard is being adopted, rather than after everyone has accepted it;
  • Setting the value of IP based on the centrality of its contribution to the standard;
  • Valuing intellectual property based on the available alternatives at the time the standard is adopted, and;
  • Not utilizing injunctions except where a prospective licensee refuses to a pay an objectively- determined reasonable and nondiscriminatory (RAND) royalty.

To be clear, we’re not suggesting that NIST would mandate a standard itself, rather that it would set a framework of transparency in the standards-development process.

After nearly 12 years since its last revision, the USG could also consider updating OMB Circular No. A-119, which establishes policies on Federal use and development of voluntary consensus standards and on conformity assessment activities. The Circular could be revised further to give preference to the federal government’s use of products and solutions that are standardized in SDOs which observe the four-part test: ex ante negotiation, value based on centrality of contribution, valuation prior to adoption and avoidance of injunctions.

The US Government may also want to consider its role as defender of U.S. competitive interests abroad. While certain U.S. trading partners appear to use standards and the standards development process to create technical barriers to trade that favor domestic industries and jeopardize American intellectual property rights, the US Government should consider using all of its available policy and political tools to promote and safeguard U.S. interests, including the launch of legal proceedings in the World Trade Organization.

President Obama has said that American industry does best when the is a level playing field, and on Tuesday night he spoke of the importance of innovation in his State of the Union address. Cisco will work in partnership with the U.S. and other supportive governments to facilitate and ensure a level playing field by encouraging industry-led, open, transparent standards development processes, and their voluntary adoption.

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