India’s Take on Standard Essential Patents

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History has been evident that the pathways of intellectual property laws and antitrust law have always diverged in light of the inherent and sweet, yet a bitter tussle between the two subjects of law. Even a cursory glance on the cases of Standard Essential Patent (hereinafter “SEP”) can provide one with a better understanding of this feud. SEP is defined by the European Commission as a patent that protects the technology which is necessitous to a standard [European Commission Discussion Paper 8, Standard Essential Patents] In order to acquire a patent over a product under the head of SEP, it is imperative that it should be impossible to manufacture a product without using the technology covered by one or more SEP. For the purpose of SEP, a standard can be inferred as ‘a set of technical specifications that seek to provide a common design for a product or process. ‘Such standards are set by various Standard Setting Organizations (hereinafter “SSOs”) like European Telecommunications Standards Institute (ETSI), Institute of Electrical and Electronics Engineers (IEEE), The International Telecommunication Union (ITU), Telecom Standards Development Society of India, Bureau of Indian Standards (BIS) etc. One of the essential functions of these aforementioned organisations is to avoid a situation of Patent Hold-Up. The term Patent Hold-up as elucidated in the case of Microsoft Corp. v. Motorola Mobility, Inc.(104 U.S.P.Q.2d(2000) is the ability of a SEP holder to demand more than the value of the product’s  patented technology and an attempt to capture the value of the standard itself.

In order to keep a check over the same, SSOs make licences for SEPs available under Fair, Reasonable and Non-Discriminatory (hereinafter “FRAND”) terms. Since a SEP holder is under an obligation to license his patented invention to other players of the market, an exception is thus carved out with respect to other regular patents.

Indian IP Regime has been heavily influenced by the TRIPS agreement and the Indian IP jurisprudence has always continued in concentrating its efforts at striking a balance between IP protection and public interest. Today the Indian legal system stands to be at a budding stage with regard to issues pertaining to SEPs. Several claims have been raised by various companies before the Competition Commission of India (hereinafter “CCI”) for enforcement of their demands under the FRAND terms. It is interesting to observe the findings and reasoning of CCI in the case of Micromax v. Ericsson (Competition Commission of India Case No. 50 OF 2013, Nov. 12, 2013),wherein, the discriminatory attitude as practiced by the owners of SEP during fixing the royalties for licensing has been elaborately discussed In an appeal before the Delhi High Court (Interim Application No. 6735 of 2014 In Civil Suit (OS) No. 1045 of 2014), the state judiciary observed a suo moto interim arrangement between the parties to negotiate a FRAND License Agreement based on FRAND terms. The royalty for the purpose of such license was decided after duly considering the net sale price of device and not individual SEP claim. A closer look at various similar judgments clearly elucidate the diverging yet conflicting approaches adopted by CCI and Delhi High Court.

Therefore, it would not be an error to conclude that in absence of any statutory provision and diverse opinions of judicial forums, there is a pressing need for a legal framework in order to fill this penumbral area of law in the Indian context. In order to fill this gap, an earnest step has been taken by the Department of Industrial Policy & Promotion (hereinafter “DIPP”) by coming up with the publication of a discussion paper on 1st March 2016, seeking views and suggestions from public at large. By discussing it at a public forum, the DIPP aims at determination of a systematic framework related to decisions concerned with royalties and conditions of a license agreement in light of the ambiguities involved in FRAND terms.

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