This May, to address the rapid development of India’s standard-essential patent (SEP) licensing landscape, ACT | The App Association hosted a timely event titled “A Fair Standard-Essential Patent Licensing Process for a Thriving Economy,” in collaboration with Jindal Initiative on Research in IP and Competition (JIRICO) at O.P. Jindal Global University and knowledge partners, Saikrishna and Associates. Hosted at the India Habitat Centre in Delhi, India, the event underscored the increasing importance of SEPs and invited stakeholders and government representatives to discuss and collaborate a balanced approach to SEP governance. As India reaches a pivotal moment in technology innovation, the country can apply the experience of the global standards community in leading Southeast Asia to develop a strong and fair approach to SEP licensing disputes. This event represents a crucial effort to acknowledge the significant challenges that small tech companies and independent app developers face in negotiating fair SEP licenses to bring standardized products to market.

The event provided a practical analysis of standards development and the implementation of SEP holders’ fair, reasonable, and non-discriminatory (FRAND) commitment, outlined important considerations in SEP licensing negotiations, and compared how the developed global landscape has answered key questions being considered by the Delhi High Court.

At the opening of the event, the App Association announced the initiation of a coalition with the India Cellular and Electronics Association (ICEA) to promote SEP licensing advocacy in India. The coalition’s aim is to advance a commitment to maximize the benefits of standardization, and support all parties interested in a healthy, fair and prosperous standard ecosystem. The announcement served as an invitation for Indian manufacturers to work with the coalition to advocate for a landscape that serves their ingenuity and economic growth against foreign entrants.

Keynote Presentation: Standards Development and History of FRAND

David Katz, a competition and licensing attorney at PacTech Law, started the event with a presentation that primed the audience on the process of developing technical standards and how the FRAND construct became an important mechanism to facilitate standardized innovation. David explained that standards are a way for industry to combat high upgrade and switching costs with a single and strong solution. A significant concern in the development of a standard is that not all patents contributed to the standard hold equal weight, yet they are afforded the same enforcement opportunities against innovators seeking a license to use the standard. In other words, like a group project, there is always someone contributing more to the standard and others that contribute significantly less. Katz applied this background to the current state of SEP licensing practices and use of ambiguous FRAND commitments to plague the economic efficiency of a standard that serves as a voluntary means of innovation.

Panel One: Technical Considerations

The first session discussed technical considerations such as claim charts, essentiality, and validity. Alex Moss, executive director of the Public Interest Patent Law Institute, moderated this discussion between panelists Dr. S K Murthy, founder and managing partner of Satatham Kritham Legal Solutions LLP, Enrico Bonadio, professor of law at City St George’s University of London, Dr. Sheetal Chopra, India lead for IPR Advocacy at Ericsson LTD., andKarmanya Singh Sareen, senior partner at Kommit-Techno-Legal LLP. The conversation explored the challenges and opportunities posed by SEPs, such as the policy gaps in standards-development organization (SDO) patent policies, challenges with negotiation and enforcement, and essentiality and validity concerns. The panelists largely addressed the information asymmetries between the SEP holder and licensee regarding basic information about the offered patent(s) and agreed that there is a need for greater transparency. The issues highlight the need for effective mechanisms at the SDO level.

Panel Two: FRAND Terms

This session was moderated by Rory Clarke, a partner at Kirkland & Ellis, with panelists Payal Malik from ICRIER, Rajeev Gupta from Reliance Jio, Singh & Singh Senior Partner Saya Chaudhry, and Taraneh Maghame from Maghame IP. This session featured perspectives from patent holders, standards users, and economists and provided insights into the lack of certainty around FRAND commitment due to a broad definition in SDO policy and the lack of certainty in confidential SEP license negotiation practices. This session advanced the notion that successful FRAND licensing practices require a multifaceted approach, one that allows for equitable knowledge and predictability between the parties to promote the use of standards and consumer benefit. Taraneh suggested that a proactive measure to be taken before disputes reach the courts is regulation that includes soft intervention mechanisms and clarification on core principles of FRAND.

Panel Three: Global SEP Landscape Background and Indian SEP Landscape

Julien George, partner at Saikrishna & Associates, moderated this panel, which included David Katz, attorney at PacTech Law PC, B. Abhilasha Nautiyal, partner at Ira Law, Delhi High Court Senior Advocate C. Chander Lall, and Maghame IP Counsel D. John Mulgrew. This session conducted a comparative analysis between developed SEP licensing jurisprudence around the world (i.e., UK, United States, Germany) and the SEP disputes being resolved in India,  and highlighted the realities of litigation in India. Namely, there are few judges and long wait times for these highly complex SEP cases. From this understanding, panelists from other jurisdictions suggested that this issue is great reason for the government to implement soft mechanisms that provide greater transparency to negotiating parties. The conversation also included considerations about rate setting and the global impact of such decisions, even where Indian courts calculate the rate by the percentage of the portfolio that includes Indian patents. This session further advanced the need for predictability in FRAND determinations and concluded that there should be consensus throughout the jurisdictions on the issues of essentiality and FRAND principles.

Panel Four: SEP Litigation in India: The Judicial Perspective

Sneha Jain, partner at Saikrishna & Associates, moderated the final panel which featured prominent judges from the Delhi High Court and Mr Justice Mellor, Judge of the UK High Court, Chancery Division & Patents. The judges of the Delhi High Court included Justice Prathiba M. Singh, Justice Amit Bansal, and retired Justice Rajiv Sahai Endlaw. This panel provided a unique opportunity to allow judges from different jurisdictions to discuss approaches to FRAND disputes. The conversation featured a comparison between India’s pro tem security deposit practice and the UK’s new interim licensing solutions. In effect, both of these practices are implemented when a SEP infringement case is brought to the court and the judge decides to implement an interim solution to protect the interests of both parties. This commercial solution allows the patent holder to continue being paid a fair rate and does not disrupt the manufacturing of the standard user. There are key differences between the pro tem security deposit and the interim license, but this parallel practice suggests an alignment between courts. While the courts in India have key questions that remain to be answered in the SEP licensing space, this dialogue between different jurisdictions is a step toward creating international consensus.

Final Words: A Closing Keynote Message From the App Association

Brian Scarpelli, senior global policy counsel with the App Association, provided some concluding thoughts before inviting our audience to a celebratory reception. He highlighted the significance of this event in pushing the dialogue forward on creating a fair and balanced SEP licensing landscape. Brian offered six core principles of FRAND that the App Association believes will drive this ecosystem:

    1. The FRAND commitment means all can license – A holder of a FRAND-committed SEP must license that SEP to all companies, organizations, and individuals who use or wish to use the standard on FRAND terms.
    2. Prohibitive orders on FRAND-committed SEPs should only be allowed in rare circumstances – Prohibitive orders (federal district court injunctions and U.S. International Trade Commission exclusion orders) should not be sought by SEP holders or allowed for FRAND-committed SEPs except in rare circumstances where monetary remedies are not available.
    3. FRAND Royalties – A reasonable rate for a valid, infringed, and enforceable FRAND-committed SEP should be based on the value of the actual patented invention itself, which is separate from purported value due to its inclusion in the standard, hypothetical uses downstream from the smallest saleable patent practicing unit, or other factors unrelated to the invention’s value.
    4. FRAND-committed SEPs should respect patent territoriality – Patents are creatures of domestic law, and national courts should respect the jurisdiction of foreign patent laws to avoid overreach with respect to SEP remedies. Absent agreement by both parties, no court should impose global licensing terms on pain of a national injunction.
    5. The FRAND commitment prohibits harmful tying practices- While some licensees may wish to get broader licenses, a SEP holder that has made a FRAND commitment cannot require licensees to take or grant licenses to other patents not essential to that standard invalid, unenforceable, and/or not infringed.
    6. The FRAND commitment follows the transfer of a SEP- As many jurisdictions have recognized, if a FRAND-committed SEP is transferred, the FRAND commitments follow the SEP in that and all subsequent transfers.

The App Association looks forward to continuing its support for the growth of Indian technology manufacturers seek to build standardized products to enhance critical industries.

Interested in learning more about membership at the App Association? Reach out to [email protected].