Decoding Telecom Standard Essential Patents (SEPs): Legal Implications and Insights for India's Industry

You can access the ruling in its entirety here

You can access the Dashboard here

SEP is a patent which complies with the specifications disclosed in a telecom standard, and all the devices present in the market are developed based on these standard specifications. A Standard Essential Patent (SEP) is a legal weapon when it comes to infringement cases in the telecom sector. If we talk about companies involved in such cases, we will hear the names of telecom giants in the world such as Ericsson, Huawei, Intex, Interdigital, and so on. One such case in India is the Ericsson Vs. Intex case, which started around 2008 when Ericsson approached Intex with the claim that the devices it was importing into and selling in India infringed the patents it held. Following are some highlights of the case:

• Ericsson approached Intex with the claim that the devices it was importing into and selling in India infringed Ericsson's SEPs. (Ericsson Patents: IN203034, IN203036, IN234157, IN203686, IN213723, IN229632, IN240471 and IN241747)

• Ericsson offered Licensing on FRAND terms.

• The parties entered into negotiations despite clear reluctance on the part of Intex.

• Intex filed a complaint against Ericsson in CCI for abuse of dominance and filed petitions for revocation of patents in the IPAB. On the contrary, Intex in Delhi High Court challenged the essentiality of the patents. It further mentioned that multiple serious challenges were pending against Ericsson patents for violations of Section 8 and Section 64 of the Indian Patents Act. Further, Intex also was in disagreement with the way the royalties were calculated by Ericsson.

• The court dismissed all the defendant's arguments and referred that the suit patents were prima facie valid in favour of Ericsson.

• The court ordered Intex to pay 50% of the total royalty amount, as per the total selling price per device, and ordered that the rest of the amount be paid to the Court Registrar. This order was issued on 13th March 2015.

Recently, the Delhi High Court's decision on the cross-appeals filed by each party on the judgment passed on 13th March 2015 is a landmark in view of conducting SEP Litigation cases in India. Following are some highlights of the judgment:

• SEP litigations fall under a different category as SEP holders are deprived of freedom of choosing licensees; need to follow FRAND terms; freedom of claiming injunctive relief without prior negotiations.

• FRAND is certainly not a road that goes only one direction, and similar projects a commitment on both the SEP proprietor and practitioner to arrange and act in conformance with the FRAND convention determined under the CJEU judgment in Huawei v. ZTE.

• Claim charts can be used to indicate infringement in SEP cases.

• Parties' conduct during FRAND negotiations can be considered a relevant parameter to determine its willingness for Licensing.

• The implementer can provide a counteroffer during the negotiations with the SEP holder on FRAND terms. For this, the implementer cannot demand access to the third-party license agreements of the SEP owner. It ought to depend on its concurrences with other SEP proprietors to evaluate what it considers a fitting FRAND rate.

• Safeguarding the SEP holder's interest, an implementer should either accept the FRAND offer of the SEP holder or propose a counteroffer with some security deposit.

• If the negotiation fails, an implementer has no right to continue using the technology of the SEP proprietor without making any payment for such use.

• The finding of the Ld. Single Judge and the four-factor test prescribed in paragraph 77 of the Nokia v. Oppo judgment is contrary to law.

• Under the Patent Rules 2022, courts can direct deposits of some kind of security even on the first date of hearing.

• The judgments or laws of foreign courts are not applicable in Indian courts of law as the practice in India is different.

• There is no restriction on the grant of injunctions against implementers who are unwilling to take a license from the SEP holder.

• Injunctions can be granted on the whole infringing device by demonstrating infringement of 1 SEP only. FRAND terms of the portfolio can be evaluated based on a handful of representative patents.

Claim Chart Provided by Ericsson during the court proceedings to support its claim:

Considering the above challenges and legal issues present in SEP infringement cases, Indian telecom companies need to be aware of the importance of holding an SEP. Further, with the latest advancements in the telecom sector and the introduction of 5G services in India, it is the need of the hour for Indian telecom companies to work in this direction.

To help Indian telecom companies understand the status of SEPs in India, we have analyzed SEPs filed in India and prepared a dashboard. Following are some insights from the dashboard:

• The dashboard covers alive (granted and pending) patent records filed in India and considered as SEPs.

• There has been a steady increase in SEP filings in India since 2015.

• The dashboard provides insights into the top SEP holders, as well as the latest trends and technologies in the communication standards space.

• The top SEP holders in India include Qualcomm, Samsung, Ericsson and Huawei.

• ETSI-3GPP-TS-38-213, ETSI-3GPP-TS-38-331, and ETSI-3GPP-TS-38-214 have the highest number of patents filed in India.

• The dashboard will help Indian telecommunication companies check SEP patents filed in India and identify areas for further research and development.