SpicyIP is happy to announce that we will be starting off our very own ‘journal’ section soon! Rather than a periodical, we will (probably) be accepting and publishing entries year round. We are still finalizing details for this and will announce them in the near future – so do keep an eye out! Further, in addition to this, we have decided to publish some longer form notes sent in by our readers in a “SpicyIP Discussion Paper Series” that is being made available under our Resources Section. As we move forward, the distinction, and interplay between the journal section and the discussion paper series will be announced as well.
The first in this discussion paper series is a note titled, “Patents and Standards: FRAND Challenges for India’s ICT Sector”, by John E. Matheson, Director of Legal Policy, Intel Technology Asia Pte Ltd. This succinct note discusses several problems that can and have come up with Standard Essential Patents (SEPs) and related commitments. An brief summary of the note can be found below and the complete note can be downloaded here. We would encourage readers to leave any comments they have on the note in the comments section below.
Summary – Patents and Standards: “FRAND” Challenges for India’s ICT Sector
Standards have become of critical importance in the field of ICT where consumers need to connect to an increasing array of devices with potentially different interface technologies. Thanks to standards, products such as smartphones made by different manufacturers are able to communicate with each other both at home and across national boundaries.
However, the high-technology industry today faces a grave threat from patent owners that make industry-wide commitments to license their patents on fair, reasonable, and nondiscriminatory (“FRAND”) terms, but later renege on their promises. This form of patent abuse threatens to upend a standards system that has played a significant role in promoting innovation but which now poses a significant risk to competition, consumer welfare and economic progress.
Standard-setting organizations (“SSOs”) have developed FRAND commitments to prevent holders of patents on standardized technologies from exploiting the unearned market power that they otherwise would gain as a consequence of the broad adoption of a standard. FRAND commitments ensure that royalties and other terms in SEP licenses will in fact be fair, reasonable, and non-discriminatory.
A review of recent cases reveal an ongoing wave of breaches of FRAND commitments which is increasing the cost of making, selling and using standard compliant products. The impact of these practices is explained in detail in the paper.
Some of the headings dealt with in this paper include Refusal to license SEPs on FRAND terms, Holdups leading to Royalty Gouging, Imposition of other Unreasonable Terms, Royalties based on Price of the Final Product, Threats of Injunction, and finally Lessons for India.
To download the paper, please see below:
SpicyIP Discussion Paper No. 201401: Patents and Standards: FRAND Challenges for India’s ICT Sector
Dear Mr. John
At the outset, your paper does put across some valuable and pregnant ideas. I would like to appreciate you for that. As far as lessons for India is concerned, I am of the view that the Indian Competition Act already incorporates some of your recommendations. I admit, however, that the Competition law jurisprudence in India is still at a nascent stage.
I would like to know your views on the following:
a) What about taking a closer look at the ‘essential facilities’ doctrine in competition law jurisprudence and SEP & FRAND? While the Indian statute implicitly accepts this doctrine, the aforesaid doctrine is well-recognised in US, EU and Australia. I am of the view that the aforesaid doctrine will help us to address this issue from a better vantage point.
b) I am inclined to perceive this issue more as a competition law issue rather than a contractual one. Whats your take on it?