How Standard Essential Patents Shape Innovation and Global Technology Access

Overview

In Today’s Dynamic world of technology, many unbelievable products and services are being introduced in the market by innovation for eg- 5g networks and wifi., thereby their role in standardization through SEP’s (Standard Essential Patent), and the balance between exclusive rights for seamless working and fair access through FRAND(Fair Reasonable and Non- Discriminatory) commitments came into the role. Basically SEP Protects the innovation and entitled them to be used as a standard globally. By Standardising the innovation SEP make sure that two different manufacturers/ service providers work by balancing their exclusive rights seamlessly. 

This blog will delve into and cover the importance of SEPs in technologies like 5G and Wi-Fi, their role in standardization, and the balance between exclusive rights and fair access through FRAND commitments. 

What does SEP Mean?

SEP is a patent granted to the innovation which helps to maintain and protect their technical standard usage in the market. These standards are being instructed by the Standard development organizations who put a standard usage in the market where the innovation and services work seamlessly without violating one another rights. Where any innovation is being patented and demands a standard usage in the industry here SEPs comes into role. One of the well- known organization is our telecommunications Standards Development Society, India which sets standards for telecom products and services in India. For eg- 5G network communication, every part which are essential for providing 5G network must be patented for the standard use are known as SEPs.

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Importance Of SEPs In Telecom Industry

Telecom Industry is being known to provide the best communication experiences through various devices and technologies like 5G networks and Wifi. SEP primary and pertinent role is to provide seamless working of the devices with the innovated technologies, from smart phones connecting to a mobile phone to rooter connecting the wifi networks. Some of the “Standard use” in the telecom industry that are supervise by SEPs are:

1. 5G Standard: 5G network is the lates milestone and successor of 4G networks in the telecom Industry. SEP ensures that every device must be patented and compatible to the 5G networks which aligned with the standard usage as like the 5G networks. 5G innovation and 5G compatible devices balances their exclusive rights for seamless working and fair access in the industry all because of the Telecommunication Standards development society.

2. WI-FI Standards: Wi-fi being a part of life nowadays, we can see in every office and home rooters are being installed therefore it becomes important for SEPs to ensure that the rooter must align with the 5G networks for seamless and Standard use. Wi-fi being in high demand checks the Standard development authorities by questioning whether the SEPs helps to protect the innovation from infringement and whether it ensure the balancing exclusive rights among product, services and systems.  

Role of SEP in Standardization   

1. Ensuring compatibility: Imagine a world where to connect with a network like 5G or Wifi a device would extra charge or having different technology to make them compatible thanks to SEPs for standardization in telecom industry by ensuring one smartphone manufacturer can access and connect to the 5G network technology by another operator.

2. Facilitating Market Uptake: SEPs challenges the product manufactures in the market to compete with latest technology to make their devices compatible. SEPs balances rights of device manufacturer and licensee to uptake their functioning to a standard use in the market for seamless working.

3. Innovation: SEP ensure and motivates for the Innovation in the market by balancing between exclusive rights of the product and technology. Any new invention in technology or product motivates devices to adapt and invent compatible devices. For example 5G networks when invented and introduced in the market, devices or smartphones companies upgraded their devices to 5G compatible.

4. Role of Standard Development Organization: The telecommunications Standards Development Society is the principal body for setting standards for telecom product or services. When a technical innovation is proposed for inclusion in a standard use, patent holders are encouraged to declare any potentially essential patents, the Standard development organization  then incorporate these technologies into the standard use.

FRAND Framework 

FRAND ( Fair, Reasonable and Non- Discriminatory) framework ensure that the patent holders did not take any undue advantage against Implementors/licensee in the market by introducing and inventing new technology which being accepted as a standard use. FRAND term is an association of different terms which ensure that the SEP holders licence their patent in the following manner :

• Fair: Licensing terms must ensure that the patent holder does not practice undue advantage and provide fair access to patented technology to all the market participants. The licenses term must  aline to the benefit of the licensee.

• Reasonable: The license must align with the benefit of the licensees by ensuring reasonable price as a royalty to be taken. This reasonable royalty will allow and ensure competition in the market and promotes innovation.

• Non-Discriminatory: The licensing terms must not be discriminatory for implementors. It must not favour one implementor over another. Technology must be access to all licensee, regardless of their size and value in the market.  

Case Studies

Micromax Informatics Limited v. Telefonaktiebolaget L.M. Ericsson

Micromax Informatics Limited in 2013 Filed a Complaint against Telefonaktiebolaget L.M Ericsson with competition commission of India (CCI) alleging that Ericsson was taking undue advantage by using it dominant position in the telecom industry. Further Micromax claimed that Ericsson, as the sole licensor of SEPs necessary for implementing 2G and 3G wireless telecommunication standards set by the European Telecommunications Standards Institute, was charging more than a reasonable royalties based on their sale price. Micromax contended that Licensing terms must ensure that the patent holder does not practice undue advantage and provide fair access to patented technology to all the market participants. The licenses term must  aline to the benefit of the licensee. The CCI's initial findings indicated that Ericsson held a dominant position in the telecom market due to its extensive portfolio of SEPs. The commission noted that there were no viable alternatives to Ericsson's SEPs, which allowed it to impose unfair licensing terms. The CCI concluded that the royalty rates were more than reasonable requested by Ericsson. Competition commission of India ordered further investigation into Ericsson's licensing practices.

Intex Technologies v. Telefonaktiebolaget L.M. Ericsson

Follow up to the Micromax complaint, Intex technology also file a complaint in 2013 against Telefonaktiebolget L.M. Ericsson with competition commission of India alleging that Ericsson was taking undue advantage by using it dominant position in the telecom industry. Intex contended that Micromax contended that Licensing terms must ensure that the patent holder does not practice undue advantage and provide fair access to patented technology to all the market participants. The licenses term must aline to the benefit of the licensee. The license must align with the benefit of the licensees by ensuring reasonable price as a royalty to be taken. This reasonable royalty will allow and ensure competition in the market and promotes innovation. The Competition commission of India, concluded that the royalty rates made by Ericsson were prima facie discriminatory and contrary to FRAND obligations, leading to an order for further investigation.

Closing Remarks

Basically, SEP Protects the innovation and entitled them to be used as a standard globally. By Standardising the innovation SEP make sure that two different manufacturers/ service providers work by balancing their exclusive rights seamlessly. All this can be done under the FRAD Guidelines which ensures Fair, Reasonable and Non-Discriminatory licencing framework It ensures that the patent holders did not take any undue advantage against Implementors/licensee in the market. The case law which being mentioned above shows that, How there is a need to balance patent rights with fair competition. 

Author: Divya Prakash, in case of any queries please contact/write back to us via email to chhavi@khuranaandkhurana.com or at  Khurana & Khurana, Advocates and IP Attorney.