A standard essential patent (SEP) is a patent that claims / protects an invention that must comply with an industry standard, or in simple terms, patents protecting innovations that are crucial for respective industries are called standard essential patents. Generally, industry bodies that define and set such industry standards are known as SSOs or Standard Setting Organizations. The role of SSOs is to coordinate and facilitate a standard setting process with the involvement of various stakeholders. Standards can be adopted at a worldwide scale, or only at a regional scale or even national scale. It is usually in the interest of industrial players to create products that comply with standards. Products that use non-standardized technologies are generally commercial failures because consumers want their devices to interact with those of other people. Examples of Standard Essential Patents Patents covering 3G, WiFi, Bluetooth and USB standards can be termed as standard essential patents. It is not uncommon for SEP owners to demand excessive royalties and hold-up the technologies by making them inaccessible. To prevent such hold-ups, SSOs make it mandatory to disclose SEPs and commit sharing / licensing of such patents at fair, reasonable and non-discriminatory terms. FRAND Patent Licensing Terms In India, no dedicated provisions are provided in the Indian Patents Act that define either SEPs or the FRAND terms. Hence, determination of FRAND is subjective to the interpretation of concerned parties and is usually driven by the market demand for patented technology. Situation becomes complicated when patented technology becomes industry standard and is essential for market growth. Patentee or the patent owner is required to license the patented technology on FRAND terms to ensure fair competition and prevent abuse in the market due to its dominant position. Competitors or the Patent Licensees mostly object to exorbitant patent royalty demands by patent owners alleging exploitation of patentee’s dominant position in the market. SEP Patents and FRAND Litigation Many disputes pertaining to SEPs and FRAND reach court and the court’s role during litigation is to ensure that patent owners don’t abuse dominant market position but get reasonable royalty at FRAND licensing terms. Standard Essential Patents and FRAND in India The department of industrial policy and promotion, DIPP, published a discussion paper on STANDARD ESSENTIAL PATENTS AND THEIR AVAILABILITY ON FRAND TERMS, which can be seen here.

1. SEP - Standard Essential
Patents
FRAND - Fair, Reasonable and Non-
Discriminatory Patent Licensing terms

2. SEP
Patent that claims /
protects an invention
that must comply
with an industry
standard
Standard Essential
Patent
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3. SEP
Patents covering 3G,
WiFi, Bluetooth and
USB standardsExamples
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4. How do standard essential patents work?
FRAND

5. Fair, Reasonable and
Non-Discriminatory
Patent Licensing
terms
No dedicated
provisions in Indian
Patents Act
Determination of
FRAND is subjective
and driven by market
demand
FRAND
Get in touch

6. FRAND
+
SEP
Situation becomes
complicated when
patented technology
becomes industry
standard
Issues - 1
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7. FRAND
+
SEP
Patentee (patent
owner) is required to
license the patented
technology on
FRAND terms
Issues - 2
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8. FRAND
+
SEP
Competitors (Patent
Licensees) mostly
object to patent
royalty demands by
patent owners
alleging exploitation
of patentee’s
dominant position
Issues - 3
Get in touch

9. FRAND
+
SEP
Court’s role during
litigation is to ensure
that patent owners
don’t abuse dominant
market position and
get reasonable
royalty at FRAND
licensing terms
Issues - 4
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10. Connect with the
Author:
Rahul Dev
Patent Attorney &
Technology Lawyer