India: Standard Essential Patents


Recent wars between the smartphone giants over the patent issues have brought into focus the importance of Standard Essential Patents (SEPs). SEPs are patents essential to implement a specific industry standard. This implies that to manufacture standard compliant mobile phones, tablets and other electronic devices, such manufacturers will have to use technologies that are covered by one or more SEPs. Standards are technical requirements or specifications that seek to provide a common design for a product or process. Patents which are essential to a standard and have been adopted by a Standard Setting Organization (SSO) are known as SEPs.

The concept of SEPs evolved in India when Ericson in 2011 objected to the importation of handsets by Kingtech Electronics (India), claiming that the handsets infringed several of their SEPs in AMR Codec (Adaptive Multi-Rate) technology. This was the starting point for SEP litigation in India. The Indian Patents Act, 1970 (the "Act") does not contain any special provision for SEPs. Further, the Act does not lay down any specific criteria or terms and conditions to be complied with while licensing a patented technology.

The prospect of licensing of SEPs plays a vital role in a company's incentive to invest in standardization activities, besides other motivations such as directing the standard development towards technological solutions where the respective company is strong and can offer specific services or infrastructure. However, the exclusive rights conferred by patents on inventors may defeat the object of making standards available to all for public use. In order to address this problem, most SSO's have defined IPR policies where SSO members must commit to licensing their SEPs on terms and conditions that are "Fair, Reasonable and Non-Discriminatory" (FRAND). These commitments are meant to protect technology implementers while ensuring that Patent holders receive an appropriate reward for their investment in research and development.

Standard Setting Organization and Standard Essential Patents Framework

SSOs can be governmental, quasi-governmental or private. These are responsible for setting, developing, coordinating, interpreting and maintaining standards. The Bureau of Indian Standards is India's national SSO. In the Information and Communications Technologies sector the Telecom Engineering Centre is the only formally recognized telecom standards/ specification/type approval body in India. Global ICT Standardization Forum for India, Telecommunications Standards Development Society, India (TSDSI), and Development Organization of Standards for Telecommunications in India are private SSOs in the Indian ICT sector.

The Institute of Electrical and Electronic Engineers and International Telecommunication Union are prominent SSOs in the cellular and Wi-Fi space. The TSDSI is the first SSO which was established in India in 2013 with an aim to develop and promote India specific requirements in the field of telecommunications.

The SSO-SEP framework confers considerable power on the SEP holder. An entity that wishes to use a technological standard must obtain permission from an SEP holder, which the latter may choose to withhold by refusing to license its Patent. The FRAND declaration attempts to balance inequalities with the idea that an entity should have the right to obtain a license to desired technology on FRAND terms. However, working out a FRAND-encumbered agreement and determining what constitutes a FRAND practice is controversial. Also, in practice, it is almost impossible to determine what a FRAND royalty actually amounts to.

The important conditions with respect to adoption of SEPs are that,

  • Firstly, the members must disclose, prior to the adoption of a standard, IP rights that would be essential to the implementation of a proposed standard, and
  • Secondly, that members must commit to license their SEPs to third parties at FRAND rates.

These policies have to be adhered to ensure the widespread adoption of standards, the very purpose for which a SSO is made. Therefore, licensing SEP on FRAND terms is a voluntary contract between the SSO and the SEP holder. However, the meaning of FRAND has not been defined by SSOs; it depends upon the nature of the transactions between the SEP holder ("licensor") and the SEP implementer ("licensee").

Major issues involved in SEP litigation

1. Patent holdup:

Once a patent is adopted as a standard and achieves commercial acceptance, it becomes 'locked-in'. It is necessary for a manufacturer to use the same; otherwise his product would be incompatible with other companies' products and hence unmarketable. Such a situation strengthens the SEP holder's bargaining power because the licensee does not have alternatives to the same technology. Patent holdup occurs when a SEP holder takes advantage of a locked-in patent by trying to impose unreasonable royalty rates. Unless constrained by a SSO to comply with FRAND licences, the SEP holder can exploit the locked in position to obtain significantly higher royalties than it would have obtained before the patent was incorporated as a standard. However, even after committing to FRAND such a situation arises due to the vague nature of FRAND.

In the cases of Micromax and Intex the CCI1 noted, "hold-up can subvert the competitive process of choosing among technologies and undermine the integrity of standard-setting activities. Ultimately, the high costs of such patents get transferred to the final consumers."

Further, in such cases the licensor binds the licensee by a non-disclosure/confidentiality agreement with respect to the terms of the license which restrains the other licensees from acquiring knowledge of the royalty rates imposed on such previous licenses. This acts as an impediment in the conduct of licensing negotiations between the parties and thus leads to major competition concern in FRAND litigations.

2. Royalty base

The reasonableness of a royalty amount depends on the correct selection of the royalty base. The SEP holders tend to impose the royalty rate on the net sale price of the final product rather than only on the component which comprises the infringed patent. This means even if SEP is used in a single component of a multi component product, the implementer would be liable to pay the royalty on the components which do not include the SEP. In such cases, the whole idea of FRAND diminishes as calculating a royalty on the entire product carries a considerable risk that the patentee will be improperly compensated for non-infringing components of that product.

In Virnetx Inc. v. Cisco Systems2, the US Court of Appeals for the Federal Circuit held that the royalty base must be closely tied to the claimed invention rather than the entire value of the product.

3. Royalty Stacking

Royalty stacking is the situation where royalties are layered upon each other leading to a higher aggregate royalty. This happens when different SEP holders impose similar royalties on different components of same multi component product, leading the royalties to exceed the total product price.

This concern was raised by the CCI in the cases of Micromax and Intex3 wherein the Delhi High Court had ordered Micromax to pay royalty to Ericsson on the basis of net sale price of the phone rather than the value of technology used in the chipset incorporated in the phone which was said to be infringed. CCI noted that "For the use of GSM chip in a phone costing Rs. 100, royalty would be Rs. 1.25 but if this GSM chip is used in a phone of Rs. 1000, royalty would be Rs. 12.5. Thus increase in the royalty for patent holder is without any contribution to the product of the licensee. Higher cost of a smartphone is due to various other softwares/technical facilities and applications provided by the manufacturer/licensee for which he had to pay royalties/charges to other patent holders/patent developers. Charging of two different license fees per unit phone for use of the same technology prima facie is discriminatory and also reflects excessive pricing vis-a-vis high cost phones."

4. Availability of Injunctive relief

Threat of injunction becomes a powerful weapon when used by a SEP holder for enforcing its royalty rates, as in such a case an SEP implementer would think that accepting an unreasonable royalty would be less risky than curbing an action of infringement. The use of injunctive relief against willing licensees is prima facie breach of FRAND commitment as the FRAND royalty rates by itself are an adequate remuneration to the SEP. Such an action is also considered to be abusive of dominant position and hence a violation of competition laws. Therefore, an injunction should only be claimed when the licensee is unwilling to pay the judicially determined FRAND royalty or where monetary compensation is not an adequate remedy.

The underlining principle behind granting of injunction is that a party must suffer an irreparable damage if the same is not granted. The law on injunction in India is based on the principles of equity. In the said case, the remedy available to the SEP holder is in the form of royalty. The only thing which is to be determined is whether the quantum of the same is adequate. Further, a SEP holder indulging in setting up a SSO, inevitably accents to license the technology on FRAND terms. In such a case, even if the royalty is low, injunction should not be granted unless there is irreparable injury caused to the SEP holder.


The law with respect to SEP is unclear and judgements with respect to the same have differed from territory to territory. It has to be realised that SEPs are not used by the licensees due to a lack of choice of alternatives, but the same is done in order to maintain operability and compatibility between the symbiotic technologies. It has to be realised that a country such as India cannot afford to lose its global image on the basis of lack of development of IPR jurisprudence. While companies must be mandated to pass their technology on the basis of FRAND commitments, it is also pertinent to note that rights of the patent holder are also to be safeguarded. Therefore, in the disputes related to SEP it would be prudent if adequate trial is given to both the parties and rates are determined by the Court without prejudice to any party and keeping in mind the interests of the end consumers at large.


1. Micromax v Ericsson, Case No. 50/2013, Competition Commission of India, (November 12, 2013)

2. No.13-1489 (Fed. Cir. 2014).

3. Ericsson v Micromax, CS(OS) 442/2013 (12 November 2014).

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Similar Articles
Relevancy Powered by MondaqAI
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of

To Use you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions