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December 1993 issue of IEEE Micro: "Forming, Funding, and Operating Standard-Setting Consortia"

by
Andrew Updegrove, Esquire

The following article appeared in the December, 1993 issue of IEEE Micro, and is copyrighted by that journal

Abstract:  In general, the greater the proprietary, or strategic, motivations for the formation of a consortium, the less likely the consortium will succeed and sustain itself.  In contrast, nonstrategic consortia continue to provide useful de facto standards to the industry at large.  Both types of consortia can benefit from an understanding of how their structures, governance, funding and other attributes contribute to their success or failure.

Computer companies formed so many industry associates in 1988 that several commentators dubbed it the Year of the Consortium.  Few of these organizations intended to develop true de jure standards.  Instead, most were marketing partnerships formed in response to intense competition among the largest companies, each jockeying to dominate or at least maintain its position in volatile market segments such as Unix platform sales.  Despite their overtly commercial purposes, these organizations frequently found the development of de facto standards and specifications crucial to achieving their ends.

Although the formation of these de facto consortia has recently slowed down, some of the earlier ones live on and continue to maintain their specifications and standards.  Often these standards incorporate de jure standards.  For example, the X Window System standard incorporates certain IEEE standards.  In some cases, de jure standards bodies accept de facto standards or link them to their own standards --- for example, Object Management Group's widely recognized Common Object Request Broker (CORBA) specification.  Some consortia, such as X/Open, develop software environments using a mix of de jure and widely supported de facto standards.

Thus, de facto standard-setting organizations play an important role in relation to de jure standard-setting organizations such as ASC X3 (an ANSI subcommittee) and the IEEE.  On the one hand, if a de jure organization is satisfied that a de facto organization is providing a useful standard, it may opt as a practical matter not to develop a competing standard.  As a result, a de facto standard-setting organization effectively acquires control of an important area of technology.  On the other hand, a de facto body's endorsement or incorporation of a de jure standard augments that standard's effectiveness.

An examination of these important effects of de facto consortia can provide insights into today's high-stakes, high-technology wars. This article looks at what these groups set out to achieve and how successful they were. In addition, it explains why and how various types of consortia were formed and outline's the financial, structural, and legal factors involved in setting up and operating a successful consortium.

Why form a consortium?

To some extent, standard-setting consortia are new wine in old bottles.  Trade associations have existed for many years to promote the interests of their members.  In the building trades, for example, associations traditionally engaged in lobbying and other activities primarily intended to protect the members' business and jointly market their wares.  In addition, association activities often involved influencing the development and promotion of building standards for local adoption, again primarily for the benefit of their own members. In the era of high technology, this traditional role has not been abandoned. For example, a new trade association to promote the X Window System technology is forming independently of the X Consortium, which MIT has just spun off to continue developing the X Window System standard. [1]

Of greater interest than traditional trade associations are certain new types of consortia, which focus primarily on the development of standards or new technology, with varying degrees of proprietary importance to their own members.

Research consortia. A number of high-profile consortia, such as Sematech and MCC (Microelectronics and Computer Technology Corporation), emerged largely as a result of heightened national procompetitive concerns. A short-lived research consortium called US Memories, for example, was established to permit semiconductor vendors to cooperate in producing low-cost DRAM chips. Some of these groups succeeded, some failed to coalesce, and some wandered from their original purposes as they sought to sustain themselves. In some cases the problems (loss of dominance in DRAM chip production, for example) that helped launch the enterprises abated. Then smaller groups of companies (sometimes including Japanese or European partners), without the high-profile, highly political trappings of their predecessors, entered into joint ventures to produce specific products.

Specification consortia. Groups such as the VXIbus Consortium (VXI) and the MIDI Manufacturers Association (MMA) are primarily concerned with providing a usable, robust standard for the benefit of an entire industry. Essentially apolitical, they direct most of their efforts to developing and supporting a specification using member (not paid) staff, and they consequently have small budgets. At their best, they successfully avoid proprietary influences and implement the best technology to produce sensible, effective, practical standards.

Vendors established and funded many specification consortia. End users established others, such as the CAD Framework Initiative, to lower acquisition costs of products that would otherwise be based on proprietary, incompatible technologies. Such groups often attempt to fill technical gaps in important niche industries too small to merit the attention of recognized standard-setting bodies such as the IEEE. For example, the MMA's goal was to provide an essential interface standard enabling the electronic music industry to develop in an accelerated and orderly fashion.

Strategic consortia. As used here, the term strategic consortium refers to a group initially formed and funded by a limited number of companies to promote the adoption of a particular technology (such as a chip architecture) as an "open" technology. Often, the primary mechanism for achieving this end is the development and promotion of a standard. The efficacy of this mechanism in helping to establish the underlying technology has varied widely in practice.

Perhaps the greatest and most interesting flowering of strategic consortia occurred in the Unix marketplace. There we find consortia devoted to the operating system itself, such as Unix International and OSF ( Open SystemsFoundation). [2] In addition, we find consortia concerned with chip architectures, including 88open, ACE (Advanced Computing Environment), and Sparc International, and with software environments (X Consortium). These consortia have one or more of the following characteristics and objectives:

  • They were usually formed by hardware vendors or chip manufacturers seeking a market share in either of two ways: 1) by controlling (or preventing a competitor from controlling) the evolution of Unix or 2) by fostering the rapid porting of massive amounts of software to a specific chip environment to encourage adoption of that chip by as many manufacturers as possible.
  • They employed "hard" marketing tactics such as the prevention of the adoption of a proprietary standard. A prominent example of such efforts is the virtually overnight industry adoption of the MIT X Window System standard to parry the spread of Sun Microsystems' NeWS technology. Another example is the formation of the massively funded OSF to counter the benefit that some companies feared Sun might reap from AT&T's ownership of Unix, following AT&Ts purchase of a significant block of Sun stock (later sold). The latter example demonstrates the varied life cycle of some consortia. AT&T eventually conveyed Unix to Unix Systems Labs and formed another consortium, Unix International, to control and promote the operating system more publicly. More recently, Novell acquired Unix Systems Labs and has made the "Unix" trademark widely available. Now, OSF - with a budget in the tens of millions of dollars and license fee income probably covering less than half that amount - is engaged in a process of self-examination to determine what its long-term mission should be.
  • They used "soft" marketing techniques such as claiming (accurately or otherwise) the development of standards, the existence of large amounts of software embodying those standards, and the achievement of real interoperability and open systems status.

In some cases, consortia had roots of one type and grew branches of another. The X Consortium is an example. The X Windows technology had been under development at MIT since 1984, and the industry began adopting it as a standard in 1987. In a sense, the X Consortium began as a strategic consortium, formally established in 1988 out of concern over a Sun Microsystems software product initiative. The organization then enjoyed over five years of relatively ecumenical existence. That is, it evolved into a nonstrategic specification consortium dedicated to the evolution of a usable standard. Today, as the X Consortium leaves its home at MIT to become an independent entity, Microsoft's release of Windows NT gives the organization new significance as a strategic vehicle for maintaining the vitality of Unix and the X Window System standard.

Similarly, OMG (Object Management Group) was founded to develop a family of standards to facilitate the adoption of object-oriented programming methods and products. Today, under its executive director Chris Stone, the organization has broadened its scope to a wide range of activities dedicated to nurturing and promoting the fledgling industry. These activities include annual trade shows in six countries and four continents, training sessions and publishing ventures, and innovative joint marketing and electronic distribution projects. At the same time, OMG has become recognized as the preferred source of many types of object-oriented programming specifications and therefore an industry focal point.

For several consortia, the key to success was that they were "ahead of the curve." OMG, for example, set out to establish a standard before any significant company obtained a vested interest in promoting its proprietary technology. As a result, the industry could follow OMG's lead and cooperate to achieve the best technical result for mutual benefit.

Unfortunately, the reverse has also been true. The first RISC chip consortium, 88open, was brilliantly successful on the technical level, achieving the highest degree of true interoperability of any of the competing organizations. But its technical success was insufficient to overcome certain other handicaps. For example, the chip technology upon which 88open was based was introduced in the marketplace too late to achieve a momentum of adoption from which the group might have benefited. The new PowerOpen Consortium (styled in many ways on the 88open Consortium) is virtually assured of avoiding this fate; both IBM and Apple (among others) have already announced the use of Motorola's PowerPC series RISC chips in their products. The sales momentum those companies represent should be more than sufficient to ensure speedy and efficient porting of massive amounts of software, even if the development of standards and test suites is not as effectively achieved . [3]

A consortium's success tends to correlate strongly and inversely to the degree of proprietary advantage that its founders sought to gain (see Figure 1). This phenomenon results from a variety of factors. For one thing, there are always more losers than winners in industries dominated by a small number of large players. Second, the word standard, stretched to the limit of anyone's most liberal commercial definition (such as VCR formats or PC operating systems), cannot usually accommodate more than a few instantiations on a long-term basis. Moreover, many strategic consortia were formed as much for publicity as for definitive purposes, were announced before a-clear plan of action had evolved, or fell apart on the shifting strategic sands upon which they were based. (An example is the ACE consortium, which suffered from other problems as well.) Finally, strategic consortia are more likely to be formed by companies that perceive that they are already at a disadvantage, and the odds are therefore against success from the beginning

I

Figure 1. Correlation of consortiums level of proprietary purpose and successful development of standard or specification

Similarly, a consortium's success correlates highly and directly to the absence of a perceived proprietary advantage to any individual company.  OMG, for example, was formed before more than a handful of products were even in the design stage.  Other successful consortia exploited a high degree of agreement among a critical mass of companies as to the existence of a common enemy. Such was the case in the X Consortium's response to Sun.  Not surprisingly, the most successful and stable consortia are those whose purposes are most beneficial to the industry as a whole (see Figure 2).

Figure 2. Correlation of standard's nonproprietary importance to industry and consortium's success.

How to form a consortium

To succeed, a consortium must carefully address a number of issues. How it handles these issues depends on the goals, competitive positions, and other unique features of the member companies.

Funding.  Frequently, the first reality the consortium must confront is money. When the group's goals are ambitious - including certification as well as standards development, for example - funding needs can be extreme. (See Figure 3; brackets indicate ranges of funding required by groups of each type.) These needs can be met only by enrolling very large memberships (X Consortium, OMG) or requiring very large contributions from individual members (OSF and Power Open). Typically, large-budget consortia are strategic consortia, with proprietary vendors (computer or chip manufacturers) contributing the lion's share of funds (see Figure 4). When funding is of this magnitude, an organizational structure ensuring that funds contributed are tax deductible and not regarded as capital contributions is especially important.

A second funding concern is to ensure that all companies whose participation is essential to success become members. Accordingly, a consortium's dues structure commonly reflects this need, with some classes of members bearing a disproportionate contribution obligation. These members are motivated to take up this burden by the expectation of reaping a disproportionately high economic benefit in the marketplace.  For example, sponsor-level membership in PowerOpen (whose main goal is to foster rapid porting of software to the PowerPC environment) requires $250,000 in annual dues and initiation dues of $750,000.  Independent software vendors (ISVs) however may participate at a limited level for only $100 a year.

Figure 4. Sources of consortium funds.

Indeed, all types of consortia are likely to maximize revenue by offering various levels of membership (as discussed in greater detail later under "Governance"), with higher dues required of membership levels that receive early access to technology and other benefits. Many consortia also charge different rates for companies with different revenue levels, to permit smaller companies to participate (or to charge their larger members more, depending on your point of view). Table 1 shows the typical dues structures of strategic and specification consortia.

Large-budget consortia suffer from a disease peculiar to the species that might be called the cliff syndrome. Simply put, the larger the budget, the greater the likelihood that the organization will hurtle at full-budget speed off a cliff of its own making and into oblivion. This syndrome is particularly prevalent among strategic consortia. The origin of the problem is that such consortia are formed to achieve a specific grand objective, at great expense. While this objective remains the focus of the dues-paying members, the consortia pay little attention to whether their collective investment merits the development of any long-term goals as well. Often, in fact, it does not, and the consortium should promptly and efficiently disband when it has achieved the grand design or failed.

In other cases, however, such organizations could have useful long-term lives as user groups, providers of certification services, and the like. Unfortunately, when the major objective has been realized or abandoned - or if marketplace or technology shifts have made the objective irrelevant - it is often too late to downsize the organization to a sustainable level. At that point, the original strategic proponents are no longer interested in providing the funds necessary to pursue humbler objectives. Organizations that successfully make such a transition are those that have used their high-profile years to quietly backfill their coffers through establishing long-term activities such as publishing and joint marketing programs.

The most stable and longest-lived consortia require modest annual fees (on the order of $5,000 for companies with annual sales under $10 million, $25,000 for companies with sales from $10 million to $500 million, and $50,000 for companies with sales over $500 million). Members of these consortia tend not to send upper-level management (being only human) to meetings or to examine membership benefits as aggressively or frequently as members of consortia with higher dues. Consequently, the consortium management can steer the organization more independently - usually toward a long-term, expanding organization.

Where this process works best, innovative executive directors regularly roll out new programs to keep members happy and renewing. Where the process doesn't work, the organization rightfully withers and dies.

Technological development. Consortia use numerous methods for developing a technology, each with its own advantages. The spectrum includes:

  • Total in-house development (88open designed and built almost all its test suites);
  • The use of contract parties (such as UniSoft or ApTest, an 88open spin-off company),
  • The use of contributed employees (a method used by CAD Framework Initiative), and
  • A request-for-technology (RFT) process (the OSF and OMG method).

Some consortia, such as the X Consortium, use a mix of sources including internal staff, members working outside the consortium, and technology contributions from members.  Table 2 lists methods of technology development used by several consortia.

A number of advantages and disadvantages stand out when we compare these methods. In-house development maximizes control and planning and minimizes time to completion, but it requires the highest levels of funding. Contributed employees are sometimes hard to motivate. They may be preoccupied with what is going on at their home office (if they are on site at the consortium), and often their employers don't give them ample time or credit for properly completing their assigned consortium tasks. Issuing an RFT can reap a rich offering of responses, but working through them to a final acceptance can be a laborious process. It also requires the most scrupulous legal scrutiny to avoid antitrust problems and often invites spirited discussions among members. In one instance, our firm (as legal counsel to a consortium) had to recommend that we open sealed ballots on a final technical decision in secret and announce only the final rally. We took this precaution to free smaller members from concerns over retribution from more powerful vendors, who had broadly hinted that a vote against their submission could have adverse business consequences.

Governance. When our firm first began representing consortia, we examined a wide variety of organizational forms from various jurisdictions. We eventually settled on the Delaware not-for-profit, nonstock membership corporation. This structure permits members to join and leave with ease, provides members (and their counsel) with a convenient and familiar body of corporate law, and provides a high degree of operational flexibility. Most of the largest East Coast-based consortia are now formed on this model, while many West Coast consortia use a similar format under California law. The structure has stood up well in practice.

The by-laws and charter are the heart and soul of a consortium. Although a few important rules may be stated in the membership application, most of the regulations and rights of the organization appear in the by-laws and charter. To a large extent, these legal documents (along with the rules of technical committees) will determine eventual success or failure. They determine whether the organization is easily managed, whether it avoids needless exposure under the antitrust laws, whether its members feel fairly represented and therefore renew their memberships, and whether it is sufficiently flexible to evolve and flourish.

For example, a crucial factor for a stable, sustainable organization is its method of representing members on the board of directors. Organizations we have represented have developed a variety of effective formulas (some organizations have changed from one method to another at several points in their evolution). These include economic models (those who pay the highest dues get the board seats) and arbitrary solutions (the first members to join get the seats, while later members stand in line for an opening). Other models place a premium on democratic values or objectivity. For example, a certain number of seats may be allocated to each type of member-ISVs, hardware manufacturers, and academics to ensure that all interest groups are heard from. Conversely, only nonmembers may be allowed to become directors so that standards adopted are "pure".

Most (but not all) consortia have different membership categories, each category having different rights. These rights may include voting for or nominating directors, participating in committees, early access to technology or standards, and reduced-price or free access to standards, certification, or other services. In some cases, members must pay higher dues to exercise these rights.

To succeed, a consortium must set dues appropriate to its benefits, and organizations sometimes go through some trial and error before arriving at the right formula. Later the consortium may need to make periodic readjustments to maintain member satisfaction; many consortia have gone through periods of declining membership before realizing that a recalibration of dues and services was necessary. Table 3 summarizes some of the more important rights of selected membership classes in several consortia.

Typically, consortium activities are performed by technical committees, work groups, and special-interest groups, as well as by nontechnical governing bodies, such as business, audit, and executive committees.

US tax issues. Many consortia elect to operate as tax-exempt trade associations under Section 501(c)(6) of the Internal Revenue Code. A few also qualify as public charities under Section 501(c)(3), which offers more advantages, but more restrictions (both federal and state) as well. As such, a consortium may carry out most of its activities without payment of income taxes on dues or related income. However, the IRS holds that some activities, such as the inclusion of paid advertising in consortium publications, stand outside the organization's tax-exempt purposes and that income from these activities is "unrelated business taxable income." Taking too much of this taxable income may endanger the consortium's overall tax-exempt status. Accordingly, if these activities are important to the consortium, it is often well advised to carry them out through a separate corporation. Fortunately, the IRS usually regards many common fee-generating activities, such as certification testing and standards publishing, as related to the consortium's purpose and thus falling within tax-exempt parameters.

Although tax minimization (as compared to tax evasion) is legal, and some would consider it a hallowed part of the American psyche, consortium founders should keep in mind that limiting tax cost is not their primary purpose. When a consortium has an admittedly strong proprietary purpose, obtaining tax-exempt status is usually impossible without crippling that very purpose.

Similarly, when an organization intends to embark upon many taxable activities, the tax structuring (such as creating multiple subsidiaries) necessary to avoid taxation of other activities can rise to such a level of artificiality and inconvenience that it ultimately outweighs the benefit of the tax exemption.

On balance, for a true standard-setting organization, seeking tax-exempt status is usually worthwhile. A group with a proprietary purpose or complex plans might better forgo filing or abandon tax-exempt status later, if it can do so without adverse consequences. Organizations without tax-exempt status can minimize or eliminate taxes by operating as closely as possible to a break-even point.

Where feasible, consortia often seek multiyear commitments from members to facilitate long-term planning on issues such as hiring of management and entering into leases. OSF's multimillion-dollar, multiyear commitments - recently renewed by many original members - continue to lead the pack in this regard. Obviously, long-term issues are most troublesome for the "cliff syndrome" consortia mentioned earlier. Long-term planning is easiest for stable consortia with large member bases and smaller annual dues, such as OMG, now the world's largest software consortium with over 320 members. Table 4 lists the tax status of several consortia.

Antitrust issues. By definition, consortia are combinations of competitors. As such, they must operate with careful regard to US federal and state antitrust laws. Individuals and corporations found to have violated these laws face criminal liability as well as the possibility of treble-damage suits from private parties. As this area of law is complex, the following is a brief and superficial review of only a few relevant antitrust issues.

Most consortia can safely operate by being mindful of several rules that are, on reflection, logical and obvious. They include not operating in a manner that might shut nonmembers out of the marketplace, not excluding eligible companies from membership, and not trading price information or seeking to set or influence prices. Sometimes, however, a consortium wants to carry out a new practice for which there are no (or only poorly analogous) precedents. In such cases, the consortium must undertake a careful analysis to ensure that the practice incurs no antitrust risks. For example, the consortium may wish to charge nonmembers high prices for test suites created at great expense by the consortium. If these prices are not a barrier to entry into the marketplace, bear a logical relationship to the development costs of the test suites, and do not compel membership in the consortium (by costing the same, or more, than membership dues), they will usually be upheld. Generally, companies can join consortia without fear of adverse judgments if the consortia are prudently managed and are monitored by legal counsel.

Happily, the law presumptively deems standard setting an appropriate joint activity. Engaging in certification services is less explicitly favored, but is permitted so long as proper controls are established to ensure nondiscriminatory pricing and access to testing. Generally, consortia may charge nonmembers higher fees than members for certification testing and other services and products, provided dues already paid by members were spent to establish the services or products in question.

One way a consortium can minimize risk under the antitrust laws is to register under the National Cooperative Research and Production Act (NCRPA) of 1993. The act protects organizations engaged in certain types of activities (such as, arguably, standards development) from the risk of treble damages and liability for a plaintiff's attorney fees. In June 1993, Congress expanded the activities covered by the act. Although the act still does not cover all types of activities a consortium is likely to engage in, it does cover a large enough number of typical activities to make registration worthwhile for many consortia.

However, the NCRPA requires public disclosure of members. Disclosure may not be acceptable for a strategic consortium whose members have not yet announced their commitment to a particular proprietary technology. For these members, the wish to prevent their competitors from discovering their strategic direction may outweigh the benefits of NCRPA registration. Moreover, a number of inartfully conceived or politically influenced aspects of the act make it difficult to reliably predict whether it will protect against liability in a given situation or for a given member. For example, whether some non-US members of a consortium can take advantage of some of the act's protections is probably impossible to determine.

Finally, there is no guarantee that the predominantly laissez faire antitrust policies of the previous two administrations will continue (in fact, the Clinton administration has already indicated that we can expect at least some stiffening of enforcement). Even under the Bush administration, OSF and MicroSoft were the subjects of federal antitrust investigations.

Rumors implied that the government also undertook an investigation of high-technology consortia in general (thus far without public result). Although procompetition activities presumably will continue to receive at least some measure of government sympathy, if not outright legislative encouragement, consortia should not forget the potential activities of private litigants (such as competitors). For example, OSF was sued by private parties concurrently with the commencement of the government investigation, and it is likely that the government inquiry was inspired by private party complaints.

Thus, every consortium should have an active antitrust oversight program, including the distribution of appropriate educational materials to officers, directors, and members. Where the budget permits, legal counsel should attend directors' meetings. Potentially discriminatory activities such as the adoption of technology should be the subject of written policies that are reviewed by counsel and faithfully implemented.

Technology ownership. Consortia may or may not plan to develop technology when they are formed, but nevertheless they often create intellectual property as they evolve. Since members may come and go, and the organization itself may at some point dissolve, consortia must carefully consider the current and eventual ownership of the technology they develop.

The ownership problem also arises when consortia make use of contributed employees (a frequent practice). Usually, those employees are bound by agreements that all results of their work will belong to their employers. Similarly, many consortia accept contributed technology, which, as part of a specification, a standard, or an implementation of a standard, becomes freely available to the world. When technology is developed over time through the contributions of many individuals and corporate members, unscrambling the ownership of that technology and the ultimate liability for any error or infringement can become a nightmare.

The history of the X Window System standard exemplifies how complicated such matters can be. The standard was initially developed at MIT by MIT staff. Later, industry supported the standard with financial contributions to the X Consortium. Member and nonmember technical contributions were often accepted, modified, and incorporated into the standard although actual ownership of the technology contributed was not necessarily transferred. At the same time, the MIT staff was developing further technology within the X Consortium.

The consortium licensed certain software representing the standard to the world at large at a minimal fee, thus releasing actual code to commercial users, who incorporated it in their products. The software distributed by the consortium also included third-party commercial software (such as fonts), which was similarly distributed and reused. To complete this complex picture, MIT is now transferring its ownership rights to the new, independent X Consortium.

When a consortium's espoused goal is to develop and support an open, nonproprietary standard, it must avoid incurring any clouds on ownership and control, even under convoluted developmental conditions like those just described. Similarly, it will wish to avoid incurring any liability to members or third parties who adopt consortia standards or software. Therefore, every consortium should institute a careful program of technology procurement, documentation, protection, labeling, and inclusion of conclusive warranty disclaimers. Usually, such disclaimers can be very broad, since technology is typically made available for no cost or for a very low cost. The nonprofit organization X/Open, for instance, has included unusually broad disclaimers (compared to normal commercial agreements) in its agreements of all types.

Unfortunately, implementing some elements of such a program can be tedious. Individual member companies and their counsel must be educated as to the importance of ownership issues in the consortium context to understand why members should be expected to vary from standard, and otherwise prudent, internal practices.

A consortium also must decide whether or not to throw its standards into the public domain, or copyright them and make them freely available. Usually, the latter is the better course, since it enables the consortium to maintain better control of the standard.

Trademark protection. To truly control its standards, a consortium should undertake a rigorous program of selecting, registering, and maintaining trademarks. If certification is the group's goal, trademark registration is even more important. Trademark practice, as it applies to certification, is an unusually arcane and complex area of intellectual property law, partly because the number of consortia and other entities that have conducted activities in this area is relatively small. The range of registration choices includes the classic product trademark (for example, for a specification), service marks (for advisory services), collective membership marks (to indicate membership in the consortium), and certification marks (for certified products). There are alternative methods of registration within this spectrum, with differing advantages and strategic justifications. Whatever type of trademark the consortium selects, its use of the mark in its literature, contracts, and certification program must adhere strictly to regulations. Failure to comply can result in loss of rights in the mark.

Consortia must also consider whether or not to seek registrations in other countries - which can become a highly expensive process. For this reason, the practices of actual consortia range from merely relying on common-law first use rights (the practice of many purely standard-setting bodies) to worldwide registration programs (the choice primarily of strategic consortia).

ALTHOUGH THEIR POPULARITY AS STATEGIC VEHICLES may ebb and flow, the effectiveness of at least the less strategic consortia such as OMG and the X Consortium for establishment of useful standards can scarcely be seriously questioned. Otherwise, why would so many of their standards and specifications be recognized by the de jure standard-setting organizations? Nevertheless, their effectiveness is sometimes disputed in the trade press, usually because some strategic consortia have a penchant for hyping standards that are neither complete nor as effective as claimed. Likewise, some standards supported by nonstrategic consortia have lagged in both development and implementation. Finally, the much abused term open has far too often been applied to standards that do not facilitate any level of interoperability significant to the market.

On the other hand, many consortia can claim real work and valuable implementations. To improve upon their predecessors' records, some consortia, such as OMG, require that an implementation be commercially available at the time that a respondent to an RFT tenders a specification for adoption. Others, such as the X Consortium, develop and offer an implementation themselves. These consortia will quite certainly soldier on - to the benefit of the industry - while the flashier strategic groups rise and fall.

Further readings

The consortia discussed in this article are of so recent vintage that little academic analysis of them has been published.  The trade press and literature disseminated by the consortia themselves offer more information.  The following are useful sources:

Clapes, A.L., Softwars :   The Legal Battles for Control of the Global Software Industry. Quorum Books, Westport, Conn., 1993. This interesting and opinionated book has an excellent chapter (pp.261-274) on the open systems debate and the way it has played out in the consortia trenches.

The Evolution of Open Systems , 88open Consortium Ltd., San Jose, Calif., 1992, 166 pp. Good, concise review of the history and evolution of open systems, with emphasis on the current role of binary compatibility standards.

Gomez-Casseres, B., "Computers:  Alliances and Industry Evolution", inBeyond Free Trade: Firms, Governments, and Global Competition , D.B. Yoffie, ed., Harvard Business School Press, Boston, 1993, pp. 79-128.  Analyzes computer industry alliances with specific reference to RISC consortia.

The World of Standards , 88open Consortium Ltd., 2 nd ed., San Jose, Calif., 1991, 243 pp. plus introduction.  Excellent source book, containing detailed descriptions of over 100 important recognized standards and the organizations that sponsor them, as well as descriptions of significant products such as Windows, Motif, PostScript, SVR4 and others.

[1] Subsequent to the publication of this article, that trade association was merged in the X Consortium, which was itself later merged into the The Open Group. (back)

[2] Subsequent to the publication of this article, OSF and X/Open combined under a parent company to form The Open Group. (back)

[3] PowerOpen eventually failed, due to both IBM and Apple decommitting to the initiative after the publication of this article. (back)

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DATE: 12/01/1993

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