Monday, 7 March 2016

India: Department of Industrial Policy and Promotion Releases Discussion Paper on SEPs

The Indian Ministry of Commerce and Industry, through the Department of Industrial Policy and Promotion (DIPP), has published a discussion paper on Standard Essential Patents (SEP) and their availability on fair, reasonable and non-discriminatory (FRAND) terms. The discussion paper can be accessed here.

An essential or standard essential patent (SEP) is any patent claiming an invention that must be used to comply with a standard, that is, a patent that protects a technology that is important to comply with a standard. All SEP owners are under an obligation to license their patented technology, setting a standard for the industry, and such a license must be granted on the FRAND terms. At present, Indian jurisprudence on the concept of FRAND licensing practices for SEPs is just starting to gain momentum. The rationale behind the FRAND terms is that it benefits the inclusion of patented technology in technical standards along with ensuring that the SEP holders do not abuse the dominant market position that they gain from the widespread adoption of a voluntary technical standard. 

The objective of the discussion paper is primarily to invite the views, comments and suggestions from the stakeholders and public in order to develop a suitable policy framework to define the obligations of the essential patent holders and their licensees. The last date to respond to the paper is March 31, 2016. This paper tries to sensitize stakeholders, organizations and citizens regarding the need and significance of regulating SEPs and facilitates their availability on the FRAND terms. It aims at discussing issues like whether the existing provisions of IPR legislations, especially the Patents Act, 1970, and anti-trust legislations are sufficient to address various issues related to SEPs and their availability on FRAND terms and if this is not possible, then whether these issues need to be addressed through appropriate amendments to the IPR related legislations. The paper contemplates the changes that need to be affected thereon. The other questions which the paper has dealt with for the stakeholders' views include what the IPR policy should be of an Indian standard setting organizations in the developing of standards for telecommunication sector and other sectors in India where the SEPs are used. Views are specifically invited for Section XI of the paper, titled ‘Issues for Resolution’, apart from other issues of concern relating to SEPs.

Suggestions are invited on the whether there is a need to prescribe guidelines on the working and operation of the standard setting organizations by the Government of India and what all areas of working should be covered. The paper aims to find out if there is a need to prescribe guidelines on the fixing of royalties for the SEPs and defining FRAND terms by the Government, and if not so, which would be the appropriate authority to issue the guidelines and what could be the possible FRAND terms. It also questions the basis on which the royalty rates should be fixed for SEPs, whether the total payment of royalty for numerous SEPs used in one product should be capped and if this limit should be fixed by the Government or a statutory body or left to the discretion of the parties. The paper then looks into the issue of the practice of non-disclosure agreements leading to the misuse of the dominant position and being against the FRAND terms.

Another point of discussion was what the appropriate mode and remedy for settlement of disputes in SEP matters should be and how it should be determined whether a patent declared as an SEP actually is an essential patent, particularly when bouquets of patents are used in one device. Lastly, it questions whether there is a need for setting up an independent expert body to determine the FRAND terms for SEPs and devising a methodology for this purpose.

An increasing pervasiveness of standardized technology in virtually all sectors, especially telecommunications, whether in India or worldwide, has led to issues associated with SEPs becoming increasingly disturbed. The 28-page discussion paper deliberates upon such issues, particularly in the telecom sector, and seeks the views and comments of all the stakeholders on all such issues. By initiating deliberations on this issue, DIPP aims at moving forward to achieve national development and technological goals by protecting the private intellectual property rights and securing the public interest along the way.

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