Introduction
In the rapidly evolving landscape of technology and innovation, intellectual property rights (IPR) play a crucial role in fostering creativity and ensuring that inventors can benefit from their invention. Among the various forms of IPR, Standard Essential Patents (SEPs) and patent pooling stand out as significant mechanism that influence the development and distribution of technological standards. The importance of SEPs is evident in industries such as telecommunication, where they are critical for ensuring compatibility across different products and services. The licensing of SEPs must adhere to the principles that promote fairness and accessibility, ensuring that essential technologies can be widely adopted without hindering competition. Patent pooling, on the other hand, represents a collaborative approach of licensing patents. By consolidating patents of different patent holders into a single pool, this practice simplifies the licensing process, reduces the litigation cost and transaction cost. This practice is beneficial in industries where innovation is rapid and interdependent. It enables the companies to have access to broad range of technologies, thereby fostering an environment of cooperation. Together the SEPs and patent pooling play a pivotal role in shaping the innovation strategies within high-tech sectors. They facilitate the efficient use and widespread adoption of essential technologies. This article delve into what are standard essential patents, what are standard setting organization, SEPs in the Indian Scenario and benefits of SEPs pooling.
What are Standard Essential Patents?
Standard Essential Patents are the patents that grant protection to the technology that is essential to implementing a standard. These standards are necessary for ensuring compatibility across different products and services. The SEPs are usually set by the Standard Setting Organization (SSO)/ Standard Development Organization. For more information refer to Ericsson Scores Big Win in FRAND Ruling in Patent Infringement.
Some examples of standard essential patents include 4G, 5G, Wi-Fi, Bluetooth etc.
What are Standard Setting Organization/ Standard Development Organization?
Standard Setting Organization/Standard Development Organization can be a governmental, quasi-governmental or private entities responsible for establishing, developing and maintaining standards. In India, the Bureau of Indian Standards is SSO/SDO. Similarly, for the information and communication technologies sector, the Telecom Engineering Center is the SSO/SDO. For more information refer to Role of Standard Setting Organization (SSO) in Standard Essential Patents.
SEP and Fair, Reasonable and Non-Discriminatory (FRAND) Principles
The near monopolistic power granted by SEPs can lead companies to engage in anti-competitive practices such as charging excessive royalty fee or imposing unreasonable licensing terms. To curb such anti-competitive practices, the FRAND principles were established. These principles require SEP holder to adhere to fair and reasonable licensing terms, when offering the SEP to other companies. It ensure that:
- The technology protected by the SEP is accessible to other manufacturers of standard compliant products at reasonable fees.
- The SEP holder receives fair royalty for their inventions.
Standard Essential Patents: Indian Scenario
The concept of SEPs was introduced in India in 2011 in the case of Telefonaktiebolaget LM Ericsson vs Union of India1, wherein the Ericsson objected to Kingtech Electronics (India) importing handsets that allegedly infringed several of Ericsson's SEPs related to Adaptive Multi Rate Technology (AMR Code). While the Indian Patent Act, 1970, do not have specific provisions relating to SEPs, but it prohibits patent holder from abusing their rights and engaging in activities that unreasonably restraint trade.2 In India, the SEPs are protected only if they are registered as patents. SEPs holders must license their SEPs to the willing licensees on Fair, Reasonable and Non-Discriminatory (FRAND) terms.
The Indian judiciary has played a pivotal role in protecting the SEPs as seen in the cases of Telefonaktiebolaget LM Ericsson (PUBL) vs Intex Technologies (India) Ltd.3, wherein the Delhi High Court directed the Intex to pay royalty to the Ericsson for using the SEPs of the Ericsson without seeking their permission and Nokia Technologies Oy vs Guangdong Oppo Mobile Telecommunication Corp. Ltd. & Ors.4, wherein the division bench of Delhi High Court held that the court has the power to issue "Pro-term security" orders against the infringer to pay a specified security amount in order to safeguard the interest of the SEP holder.
Benefits of SEPs Pooling
Standard Essential Patent Pools offer a collaborative framework where patent holders combine their patents essential to a particular technology standards. This approach yields several benefits, some of them are as follows:
- Simplified Licensing: SEP pooling simplifies the licensing process by allowing implementers to obtain licenses for multiple SEPs from different patent holders through a single negotiation and agreement.
- Comprehensive Coverage: SEP pooling offers prospective patent holders access to comprehensive portfolio of essential patents, ensuring access to all industry standards for implementing industry standards.
- Standardization and Interoperability: SEP pooling contributes to the development and adoption of industry standards, promoting interoperability among different products and services.
- Efficient Dispute Resolution: By serving as a central point of contact for patent related disputes, SEP pooling facilitate efficient dispute resolution, minimizing the litigation cost and promoting collaborative solutions.
- Fair Licensing Terms: SEP pools are committed to FRAND principles, ensuring that licensees can have access to essential technologies without facing unreasonable fees or restrictive conditions.
- Non-Discriminatory Prices: All the licensees are treated equally under the FRAND terms, preventing favoritism or discriminatory practices that could distort market competition.
Conclusion
In conclusion, standard essential patents (SEPs) and patent pooling are critical mechanisms in the landscape of modern technology and innovation. SEPs ensure that essential technologies are accessible, promoting widespread adoption and interoperability across industries. Patent pooling, on the other hand, simplifies the licensing process, reduces transaction cost and minimizes the litigation risk by providing a collaborative framework for managing multiple patents. Despite the absence of specific legal provisions, the Indian judiciary has played a pivotal role in shaping the regulatory framework, and protecting the rights of the SEPs holders. Understanding and effectively managing SEPs and patent pools is essential for stakeholders in high tech industries. As technology continue to evolve, these mechanism will play a crucial role in balancing the interest of all the concerned stakeholders, thereby ensuring that technology continue to thrive while maintaining fair access to essential technologies.
Ritvik Kashyap, Intern at S.S. Rana & Co. has assisted in the research of this article.
Footnotes
1 LPA 1104 of 2011/
2 Section 83(f) of the Patents Act, 1970 – General Principles applicable to working of patented inventions, available at: https://ipindia.gov.in/writereaddata/Portal/ev/sections/ps83.html
3 FAO(OS) (COMM) 297/2018
4 FAO(OS) (COMM) 321/2022
https://ssrana.in/articles/lava-ericsson-scores-frand-ruling-patent-infringement-damages/ Ericsson Scores Big Win in FRAND Ruling in Patent Infringement
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