Standard Essential Patent

A ‘standard’ is a set of technical requirements or agreed technical descriptions which cover ideas, products or services and make sure that technologies interact and work together.
A Standard Essential Patent (SEP) is a patent granted for technological invention which is essential for implementation and working of a standard.
Patents which are essential to a standard and have been adopted by a Standard Setting Organisation (SSO) are known as SEPs.
- SSOs are either governmental, quasi-governmental or private groups of independently governed industry associations.
- SSOs set, develop, coordinate, interpret, and maintain standards. Industry participants can collaborate on a single technical solution because of such standards.
When a patent is acknowledged by the SSO and designated as a SEP, manufacturers can only produce their goods in the market after first acquiring a licence under the SEP.

SEPs are widely used in the telecommunications sector as it is a highly standardised industry primarily driven by the requirement for interoperability between communication devices.
Technologies such as CDMA, GSM, LTE are all industry standards in the telecom sector. Such technological standards are especially important to ensure interoperability of different brands of cellular phones manufactured by different companies.
- For example, once GSM was adopted as a standard, all manufacturers had to ensure that the handsets that they manufactured were compatible with GSM. Otherwise there would be no demand for their phones.
In industries like consumer electronics, the automotive industry, and the electricity grid industry, such communication standards are also essential for the growth of the hyperconnected society.
The goal of making standards accessible to everyone for public use may be defeated by the exclusive rights granted to inventors by patents. To address this issue, the majority of SSOs have established IPR policies that require SSO members to agree to licensing their SEPs under "Fair, Reasonable and Nondiscriminatory" (FRAND) terms and conditions.
- These commitments are intended to safeguard technology implementers while making sure that Patent holders are fairly compensated for their research and development expenditures.

SEP protection in India:

The Patent laws in India neither contain a special provision for SEPs nor lays down any specific criteria or terms and conditions to be complied with while licensing a patented technology. However, it does restrain a patentee (proprietor of the patent) from abusing its patent right and engaging in practices that unreasonably restrain trade.
Moreover, the Indian judiciary has been framing laws through court cases for the regulation of the SEPs.
Through its National Telecom Policy (2012), India has aimed to increase standardisation and intellectual property creation. India’s national SSO is the Bureau of Indian Standards.

The Judiciary and the Standard Setting Organisations have mandated licensing of the patents based on FAIR, REASONABLE and NON-DISCRIMINATORY (FRAND) principles.
FRAND terms encourage the adoption of the standard and mitigate any concerns about unfair competition.
SEPs can be protected in India only by registering a patent in India. A SEP holder must agree to licence the SEP to willing licensees at Fair, Reasonable, and Non-Discriminatory (FRAND) rates.

Challenges:

Globally, the process of setting standards in the technology sector is largely privatised and dominated by “standard setting organisations” (SSOs) run largely by private technology companies. Countries such as India with little innovation in the telecom sector, have very little influence over how standards are set or how SEPs are licensed.
Theoretically, the companies which own the SEPs, gain enormously because every manufacturer of cellular phones has to licence the technological standards in question in order to survive in the market. The lack of alternatives also means that owners of SEPs can demand extortionary royalties or licensing terms from manufacturers that block competition.
In theory, the SSOs are supposed to prevent such a scenario by requiring the owners of SEPs to licence their technologies at a fair, reasonable and non-discriminatory (FRAND) rate. In practice, this model of self-regulation by the technology industry has been marked with opacity.

Way Forward:

On the lines of international agreements, the Indian government needs to intervene and put in place the measures to regulate standard essential patents for greater transparency and protect the rights of Indian manufacturers.