DIPP invites comments on SEPs and their availability on FRAND terms

DIPP Paper SEPs & FRANDThe Department of Industrial Policy & Promotion (DIPP) has published a paper on “Standard Essential Patents, and their availability on FRAND terms”.  The paper can be accessed here.  The last date to respond to it March 31, 2016.

Objective: The Department of Industrial Policy and Promotion has prepared ―Discussion paper on Standard Essential Patents and their availability on FRAND terms, with the objective of inviting views and suggestions from the public at large to develop a suitable policy framework to define the obligations of Essential Patent holders and their licensees. This paper aims to sensitize the stakeholders, concerned organization and citizens towards need and importance of regulating SEPs as well as facilitating their availability at Fair, Reasonable and Non-Discriminatory (FRAND) terms. By igniting the deliberations on this subject, the department hopes to take a step forward towards achieving the national development and technological goals by protecting private Intellectual Property Rights while securing interest of public at large. In this regard, views and suggestions are invited from public at large, specifically on Section XI of the paper entitled “Issues for Resolution‟ apart from any other issues of concern relating to Standard Essential Patents (SEPs). These views/ suggestions, along with any facts, figures and empirical evidence, may be furnished to kapoor[DOT]sumit[@]gov[DOT]in by 31st March, 2016.

For convenience, I am extracting out Section 11 below:

11. Issues for Resolution

In background of above discussion, the Department of Industrial Policy and Promotion invites views from the concerned stakeholders regarding the following issues for resolution:

a) Whether the existing provisions in the various IPR related legislations, especially the Patents Act, 1970 and Anti-Trust legislations, are adequate to address the issues related to SEPs and their availability on FRAND terms? If not, then can these issues be addressed through appropriate amendments to such IPR related legislations? If so, what changes should be affected.

b) What should be the IPR policy of Indian Standard Setting Organizations in developing Standards for Telecommunication sector and other sectors in India where Standard Essential Patents are used?

c) Whether there is a need for prescribing guidelines on working and operation of Standard Setting Organizations by Government of India? If so, what all areas of working of SSOs should they cover?

d) Whether there is a need for prescribing guidelines on setting or fixing the royalties in respect of Standard Essential Patents and defining FRAND terms by Government of India? If not, which would be appropriate authority to issue the guidelines and what could be the possible FRAND terms?

e) On what basis should the royalty rates in SEPs be decided? Should it be based on Smallest Saleable Patent Practicing Component (SSPPC), or on the net price of the Downstream Product, or some other criterion?

f) Whether total payment of royalty in case of various SEPs used in one product should be capped? If so, then should this limit be fixed by Government of India or some other statutory body or left to be decided among the parties?

g) Whether the practice of Non-Disclosure Agreements (NDA) leads to misuse of dominant position and is against the FRAND terms?

h) What should be the appropriate mode and remedy for settlement of disputes in matters related to SEPs, especially while deciding FRAND terms? Whether Injunctions are a suitable remedy in cases pertaining to SEPs and their availability on FRAND terms?

i) What steps can be taken to make the practice of Cross-Licensing transparent so that royalty rates are fair & reasonable?

j) What steps can be taken to make the practice of Patent Pooling transparent so that royalty rates are fair & reasonable?

k) How should it be determined whether a patent declared as SEP is actually an Essential Patent, particularly when bouquets of patents are used in one device?

l) Whether there is a need of setting up of an independent expert body to determine FRAND terms for SEPs and devising methodology for such purpose?

m) If certain Standards can be met without infringing any particular SEP, for instance by use of some alternative technology or because the patent is no longer in force, what should be the process to declassify such a SEP?


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3 thoughts on “DIPP invites comments on SEPs and their availability on FRAND terms”

  1. NDAs severely limit the negotiating ability of a prospective licensee. How will it verify the statement made by a licensor? It has no option but to take it.

  2. This represents an interesting conundrum in the light of the new CRI guidelines. All the ETSI telecom patents will probably fall foul of the guidelines. Standards by definition stick to the abstract. I sit on 3 major world standards bodies and everything that comes our way is a SW patent. In fact one of them (a california based one) , does not even permit patenting ! Apart from the odd patent in areas like optical modules, I am yet to come across any patent that will pass our CRI guidelines. So one can make a case that an SEP by definition has no locus standii in India. I have analysed about a 1000 patents briefly and have asked my students to take a look at 1-2000 more. So I am basing my opinion on analysis. And before yiu get all worked up on my opinion, it would help if someone actually came up with an SEP example that would pass scrutiny. In informal discussions with various folks in the govt., there is merit this stand, which presumably is why the new CRI guidelines have also elicited such venom from patent trolls !

    So this seems to be a case of putting the cart before the horse in the sense that examining the implications of the CRI guidelines on SEPs should be done before talking FRAND.

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