1. Intellectual Property Rights

All You Need To Know About Standard Essential Patents

This paper primarily concentrates on Standard Essential Patents and the various spheres that surround its applicability. The goal of the article is to raise awareness among stakeholders, the organization concerned, and people about the need and importance of regulating SEPs as well as facilitating their availability under Fair, Reasonable and Non-Discriminatory terms. This article aims to take a step forward by protecting private intellectual property rights while securing the interest of the public at large to achieve national development and technological goals. The nexus between Standard Essential Patents and conventions are clearly stated in the following article and how useful it is in the Telecom industry. We also get to know how various countries are working on the standard essential patents and how it's applied in their countries through some case laws.

Background

After India acceded to Trade-Related Aspects of Intellectual Property Rights in 1995, The Intellectual Property Rights system in India underwent many changes. In the Patents Act, 1970, and the Trade Marks Act, 1999, several changes were made to make these TRIPS laws compliant.

The Designs Act, 2000, and the Geographical Indications of Good (Registration and Protection) Act, 1999, are enacted in the meantime. The Intellectual Property Rights regime is focusing on consolidating and promoting a fair balance between the security of IP and the public interest. Standard Important Patents are among the issues that need consideration, among others. By setting up standardized protocols that can be widely understood and implemented, standards set to form the basic building blocks for product growth.

It not only helps in compatibility and interoperability but also fuels the development and implementation of technologies that impact and transform the way people live, work, and communicates. With an increasing pervasiveness of standardized technology in virtually all sectors, and particularly telecommunications, in India and worldwide, issues associated with Standard Essential Patents are increasingly agitated.

Overview of Standard Essential Patents

Standard Essential Patents

Although the term term “Standard” has different meanings in simple terms it is defined as “a set of technical specifications that seek to provide a common design for a product or process”. According to the International Organization for Standardization / International Electrotechnical Commission. Standardization and related activities General vocabulary, the term “Standard” is known as a “document, established by consensus and approved by a recognized body, that provides, for common and repeated use, rules, guidelines or characteristics for activities or their results, aimed at the achievement of the optimum degree of order in a given context”

When imposed by law or voluntarily, these requirements may be mandatory. To differentiate between those enforced by law and those for voluntary adoption, the World Trade Organization Agreement on Technical Barriers to Trade has defined such documents as follows:

Technical regulation

A document setting out the characteristics of the product or its associated processes and manufacturing methods, including the administrative requirements in force, under which enforcement is compulsory. It may also include or deal exclusively with the specifications for terms, marks, packaging, marking, or labeling as applicable to a product, process, or manufacturing system.

Standard

A document accepted by a recognized body that lays down rules, guidelines, or characteristics for products or related processes and production methods for regular and repeated use and which are not compulsory to comply is not mandatory. It may also include or deal exclusively with the specifications for terms, marks, packaging, marking, or labeling as applicable to a product, process, or manufacturing system.

Technical requirements exist in two categories

Standard Essential Patents

They are De Facto standards and the De Jure standards. A de facto standard has set when a new technology is widely opted for by the industrial participants and was accepted by the public so that this technology would become a dominant one in the industry even when not approved by a formal standard-setting body. In general, the de jure standards are put by Standard Setting Organizations (SSO) such as the European Institute for Standards in Telecommunications (ETSI), the International Telecommunication Union (ITU), the Institute of Electrical and Electronics Engineers (IEEE), many other Organizations. With the participation of different stakeholders, the function of the Standard Setting Organization is to organize and promote a standard-setting process. Standards can be implemented on a global basis or only on a regional or even national scale.

It is generally in the interest of industrial players to produce standards-compliant goods. Products using non-standardized systems are market failures because customers expect their devices to communicate with other people’s devices. In short, standards today play a role in enhancing the compatibility and quality of the market for goods and services.

Standard Essential Patents & FRANDs

The specification provided by the Standard Setting Organizations gives rise to a body containing essential characteristics. The system is adjusted to comply with a specified requirement. If the system is effective in achieving quality enforcement, it is allowed to carry a mark to warn the public that the product meets the specifications laid down. The use of certain patents is essential to produce a standard-compliant product. To use the said patent, the condition of receiving the license of a patent from the owner of the patent is necessary.

Many SSOs require their members to agree to issue a contractual license for companies if they wish to use the standard in question. The undertaking is not approved through the specific member’s then those standards will not be adopted. Such licenses must be made available under Fair, Equitable, and Non-Discriminatory (FRAND) terms to facilitate the implementation of the standard and to prevent any competition concerns. In this case, the owner of the SEP is obliged to license its proprietary technology, to set industry requirements, and to issue such a license under the terms of the FRAND. Licensing of Standards Essential Patents (SEPs) on Fair, Reasonable, and Non-Discriminatory (FRAND) terms is a foundation of the standards development process.

Standard Essential Patents and Competition Laws

Standard Essential Patents

In general, it’s well known that the exclusionary right to intellectual property (IPR) does not conflict with the antitrust regime. While innovation is necessary for increased competition, competition laws do not issue a ‘duty to deal’ once an organization secures IPR security over its disruptive technology. Yet standard-setting poses several antitrust / competition concerns at times. Standard Setting Organizations include competitors deciding on these product requirements that are relevant to competitive challenges and IPRs that they intend to sell.

Patents that are deemed necessary for the implementation of the selected industry standard cannot, like any other patent, be violated, and certainly not to the exclusion of other market participants. To ensure those standard-setting remains to be beneficial and it is to be ensured that in situations where the implementation of a standard inevitably requires the introduction of a patent into the industry standard, the patent holder concerned is not in a position to unlawfully leverage its newly accrued market power to the detriment of that standard.

One of how this can be done is by the withdrawal of FRAND obligations, where the owners of essential patents undertake to make their essential patents available to third parties under FRAND conditions. Although this seems to be a mutually beneficial approach, FRAND’s success is largely dictated by its enforceability, with the patent owner benefiting from its patent being widely used by the industry, and the remaining stakeholders being shielded from paying exorbitant royalty rates.

The judicial approach towards Standard Essential Patents in various Countries

Standard Essential Patents

A legislative definition is not yet available for Standard Necessary Patents. In the meantime, the courts around the world have played a major role in establishing the jurisprudence of the SEPs. In cases of infringement of Standard Critical Patents, most of the conflicts are focused on the issuance of an injunction order. In brief, this section highlights a few important litigation and judicial responses worldwide to it, especially in the granting of injunction orders. In brief, this section highlights a few important litigation and judicial responses worldwide to it, especially in the granting of injunction orders.

United States of America

In the United States of America, infringement actions are brought under the Patent law in federal district court. In all such cases, courts may grant injunctions by the principles of equity to prevent the violation of any right secured by patent, on such terms, as the court deems reasonable.

eBay Inc. v. Merc Exchange, L.L.C

Before the U.S., In the decision of the Supreme Court in eBay Inc. v. Merc Exchange, L.L.C37., the Federal Circuit Court introduced a mandatory injunction rule that required district courts to grant an injunction after the claimed patent(s) had been declared legitimate and infringed. The Supreme Court reversed the mandatory injunction rule of the Federal Circuit in the eBay Inc. case and explained that there is no special patent statute that allows for granting injunctions in cases of patent infringement.

France and the United Kingdom

Defendants in patent infringement cases in France and the UK have also posed a FRAND protection, but the courts have yet to rule on the issue.

Samsung v. Apple

Before the Paris Court of First Instance, Apple argued that the assertion by Samsung would constitute a misuse of a dominant position. However, the Paris Court dismissed the case on other grounds and did not deal with this issue.

China

Courts in China can, but should not, grant injunctive relief for infringement of a patent. An advisory opinion released in 2008 by the Chinese Supreme Court indicated that a court will not find a patent infringement if a patentee participates in the setting of standards or otherwise decides that the proprietary technology may be integrated into a standard and then files a complaint seeking injunctive relief for a patent infringement.

India

There is a relatively nascent stage in Indian jurisprudence on equal, equitable, and non-discriminatory (FRAND) licensing practices for standard-essential patents (SEPs). As the Competition Commission of India and the Hon’ble Delhi High Court has approached stakeholders, jurisprudence on SEPs will gradually develop in India.

Some Standard-Setting Organizations, which formulate standards in different sectors, have also emerged over some time in India. Many of these SSOs have also changed their IPR policies, requiring SEPs to be reported by patent holders, along with a provision to adhere to FRAND licensing terms. This section briefly addresses certain SSOs in the telecommunications sector and the judicial approach to SEPs and their availability in India under FRAND terms.

Micromax Informatics Ltd v Telefonaktiebolaget LM Ericsson

Micromax Informatics Limited filed a complaint with the CCI, claiming that by imposing exorbitant fees for the use of its SEPs, Ericsson violated its allegedly dominant position, thereby breaching the Competition Act, 2002. 

Also, Micromax claimed that the use of the downstream product’s purchase price as the royalty base constitutes the exploitation of SEPs that would potentially benefit consumers. Micromax argued that, because no alternative technology is usable, Ericsson paid exorbitant royalties, and Ericsson is the sole licensor for the SEPs inevitably introduced in the 2 G and 3 G Wireless Telecommunication Standards.

Conclusion

Standard Essential Patents

As political language species, interpretive deference has to give to various meanings of essentiality. However, as research and case law in this field expands, many common trends arise in the interpretation of conditions of essentiality. The economic equation of essentiality with non-substitutability, which has emerged in the sense of patent pools, is one such theme. The blurred divide between commercial and technological essentials is another.

When hundreds of potentially essential patent claims are at issue, a third is a functional requirement to determine essentiality. These problems, coupled with the recognized over-declaration phenomenon, indicate that it is possible to call for more efficient, rapid, and cost-effective methods for evaluating essentiality. Also, it is possible that purely the legal interpretation of the policy language would produce ludicrous results.

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