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Standard Essential Patents (SEPs)

Facts for Prelims (FFP)

 

Source: TH

 Context: The judiciary’s involvement in standard essential patents (SEPs) poses challenges for India’s telecom manufacturing sector.

 

What are Standard Essential Patents (SEPs)?

Standard Essential Patents (SEPs) are patents that cover technologies adopted as industry standards, crucial for ensuring interoperability among different products and systems. These patents are essential for implementing a particular standard, and companies that own SEPs commit to licensing them to others on fair, reasonable, and non-discriminatory (FRAND) terms.

 

For example, in the telecom sector, technologies like CDMA, GSM, and LTE are industry standards. Any company manufacturing products compliant with these standards must use technologies covered by SEPs. This ensures that devices from different manufacturers can work together seamlessly, benefiting consumers and promoting innovation in the industry.

 

Issues with SEPs?

The significance of Standard Essential Patents (SEPs) in the telecom sector lies in ensuring compatibility among different cellular phone brands. However, private Standard Setting Organisations (SSOs) largely control the standard-setting process, limiting India’s influence. Consequently, SEP owners can demand high royalties, leading to the “patent holdup” problem.

 

How judiciary is dealing with it?

Despite competition law enforcement efforts initiated by the Competition Commission of India (CCI) in 2013, legal battles, particularly against Ericsson, have led to prolonged litigation. Meanwhile, the Delhi High Court’s judicial activism in patent infringement cases has resulted in unprecedented “deposit” orders, burdening manufacturers and raising questions about procedural fairness.

These prolonged legal battles and judicial interventions have eroded investor confidence and market stability, hindering India’s manufacturing dreams.