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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