SEPs are Decorative Acronyms in Indian Innovation Policies

[Ambika Aggarwal]

SEPs are Decorative Acronyms in Indian Innovation Policies

Core SEP issues are missing from new and proposed Indian innovation policies that seem overly fixated on generating indigenous 6G SEPs with little concern on how they may be managed, litigated and leveraged for domestic economic growth. In this post I discuss why it would be well worth the effort to follow a procedure for mapping SEP issues with dedicated impact assessments before further similar policy decisions are made.

Introduction

The rules of the SEP ecosystem are, at the moment, being built on knowledge generated from three sources. First, the IPR policies of Standard Setting Organisations (SSOs) (like this and this) that provide licensing directions for private negotiations on fair, reasonable and non-discriminatory (FRAND) terms. Second, the jurisprudence being built by judicial and non-court authorities in resolving the breakdown of these private negotiations. Third, and a more recent category in this mix, is national policies; either wholly on SEPs, or those which include SEPs within broader domestic innovation mandates. All three sources play into each other to create a unique regulatory dynamic that consistently tries to find a balance between private and public ordering; and, nationalist and globalist economic tendencies.

On matters of what is FRAND, firms generally self-regulate through private ordering. However, amendments to IPR policy like Institute of Electrical and Electronics Engineers (IEEE)’s change have exposed power imbalances and impacted the technology litigation landscape. Controversial updates to this policy redefine ‘reasonable rates’ which changes the available options for members to calculate what could be a FRAND royalty; and emphasise more strongly on good faith negotiations, dictating the availability of injunction against unwilling implementers. Further, the centrality of SEPs to the ICT ecosystem motivates a global governance competition among courts to attract litigants and shape global SEP norms. These efforts to enforce global application of territorial patent laws have also exposed legal inconsistencies in rules of appropriate litigant behavior, FRAND rate setting and grant of injunctions.

A desire for uniformity and predictability in SEP licensing has prompted policymakers to draft SEP policies dictating what could be the ideal strategic behaviour of SEP holders and implementers in their jurisdiction. SEP-based policies aim to offer legal certainty for patent enforcement, strategic decision-making guidance and outline domestic technology and innovation goals. However, it is quickly becoming evident that the drafting of SEP policies is also a political activity, where achieving technological leadership is an evident goal. In this post, I discuss the recent inclusion of SEPs in Indian innovation policies and if a comparative analysis with SEP policy decisions of other jurisdictions may help redirect the Indian perspective towards a more domestically equitable approach.

The closest that an IP regulator came to discussing an SEP policy was a discussion paper by the DPIIT, Ministry of Commerce & Industry in 2016. Newly proposed measures that somewhat revolve around SEPs are the Bharat 6G Alliance and the draft National Telecom Policy, 2025. Unfortunately, there is yet to be any dialogue on the FRAND commitment from the relevant stakeholders – the DPIIT, the CCI and the Indian Patent Office. There seems to be an emergence of a deeply sectoral view instead of a broad policy architecture, a lack of special guidance for SMEs, and consequently, an over-reliance on court decisions even when the judicial ratio may not be practically sound.

Emerging SEP Policies

Policies structured on or around SEPs cover a wide range of issues from pre-litigation behavioural conduct of SEP holders and implementers during private negotiations, to procedural details of SEP litigation and patent enforcement by court and non-court agencies like competition law authorities. They are drafted for protection of national economic interests in the background of a global trade and governance competition. It is not uncommon for SEP-related policies to adopt a mild trade protectionist sentiment. In its extreme form, this sentiment has extended to protecting companies from adverse decisions in parallel proceedings in foreign jurisdictions evidenced by the EU-China WTO proceedings, prompting questions on their compatibility with the TRIPS Agreement.

Strategic guidance for case preparation can be found in these documents. They shape trial procedure rules by outlining legal tests on behaviour and impact the choice of remedy that may be claimed and awarded in trial, especially with respect to injunctions. In the US, a shift in administrative choices has led to the withdrawal of the SEP policy statements. As the administrative shuffle continues, a back and forth between policies has created uncertainty on availability of injunctions, causing a shift in choice of forum from courts to the US ITC.

SEP policies often include specific directions on the how parts of the FRAND commitment can play out in practice. The European Commission’s Horizontal Guidelines are concerned with patent and antitrust liability. They provide a safe harbour from scrutiny under Article 101 of the TFEU to SSOs enforcing the FRAND commitment. The Japanese Good Faith Negotiation Guidelines encourage early dispute settlements with the intention to save time and resources. They describe in minute details all components of a 4-step negotiation process leading from the SEP holder’s offer to the implementer’s acceptance. Notably, China’s SAMR SEP Guidelines introduce SEP-specific provisions in the Chinese Anti-Monopoly Law. It enforces a ‘three letters and one notice’ system permitting the antitrust authority to intervene on receiving information of potential monopolistic licensing. It contains specific ‘disclosure obligations’ for balancing confidentiality with information disclosure that can used to tailor negotiation strategies. The UK SEP Guidance, at the moment, encourages reference to UK SEP judicial decisions for FRAND rate calculation; however, the on-going SEP Consultation proposes a ‘Rate Determination Track (RDT)’ as a specialised measure to predict and calculate royalties during litigation. There is no one-stop solution to draft the contents of policy documents. Every SEP policy seeks to balance ambitious nationalist fervour with the globalised demands of the SEP ecosystem. Policy dialogue on these issues is entirely absent in India. When it begins (and it must begin soon), it could be inspired from China, for moving from a low to prominent leadership status in SEP ecosystem; or, Japan, an SEP-implementer based economy similar to India, adopting a support structure for the private ordering approach; or, the EU for its approach to competition law as well as concerted actions in negotiating the (now, withdrawn) EU SEP Regulation.

SEPs in Indian Innovation Policies

In March 2016, the DIPP had circulated a “Discussion Paper on Standard Essential Patents and their Availability on FRAND Terms.” It contained several issues for resolution inter alia relating to the need for amending statutes, creating guidelines for Indian SSOs, defining FRAND and fixing royalty calculation methodologies, use of non-disclosure agreements, transparency and patent pooling. This discussion paper had failed to adopt a rigorous policy-centric perspective. The brief mentions of SEPs in new sectoral policy documents suffer the same ailment and leave much to be desired.

The deliberations on the 6G Alliance propose to create 100 specification-dependent 6G SEPs – this would increase India’s visibility from nothing to something; but, other than increasing visibility, there is no policy direction on what our long-term domestic innovation goals are, where we place ourselves in the global SEP ecosystem, and how we want to support our domestic innovators. The proposed Telecom Policy advocates for a Sovereign Patent Fund – a mechanism that has been tried, tested and failed in several other jurisdictions, considered very problematic and an idea that’s possibly outdated.

In the limited discourse that has followed on this topic, several concerns are apparent. First, the blanket mandate of creating more SEPs is disjointed from any discussion on domestic directions on the FRAND commitment. With lack of a background clarification on what meaning basic SEP concepts hold in the Indian innovation ecosystem, the success of targeted sector-specific policies will be very limited. Additionally, a broader question is whether the Indian policy-making regime believes that a separate regulatory framework must define SEP participation rules for every innovation and manufacturing sector? It is not the requirement, nor the need, of an SEP policy to identify every domain sub-structure and dictate its behaviour. For a policy on SEPs to bring a sense of certainty, rules of conduct need to be defined broadly for the entire innovation ecosystem.

The expansion of SEPs within the IoT infrastructure will bring new market entrants into an existing SEP space, which will create new supply chain hierarchies. The policies should decide how much of an innovation-wise collaboration would be left to private ordering, while a broader regulatory assistance can be the domain of public ordering. The proof of a well-drafted innovation policy will be how adequately it strikes a balance between the two while also staying true to the technological capability and legal tradition of the country.

Another rather troubling concern is the attitude towards SMEs. If policymakers are led to believe, such as this article recommends, that SMEs do not have the capacity to participate in technical standardisation, then the need for an empirical impact assessment becomes even more urgent. This is a damaging perspective that is out of tune with market realities. Policymakers are cognisant of SME participation in technical standardisation in all SEP-active jurisdictions. In India this area might be where our untapped innovation potential lies.  With the right policy structure, SME innovation status can be improved. In the policy consultations in the EU and UK, SMEs have voiced concerns over lack of transparency, power disparity and high litigious nature of negotiations. Indian regulatory assistance may have to go beyond policy and perhaps offer some hand-holding support for SMEs willing to navigate the FRAND commitment.

SEP enforcement is a large part of the SEP landscape. At the moment, the Delhi High Court has inadvertently taken the exclusive charge of creating Indian SEP jurisprudence on this matter. Complete reliance on the courts has not worked well on the issue of Indian competition law overlap with SEPs. A policy solution to this issue, as well as to define an enforcement strategy that defines how we plan to enhance domestic technological capability while participating equitably globally, is now needed.

Reading List

1. Clemens Fiedler, Maria Larrain and Jens Prufer, Membership, governance, and lobbying in standard-setting organizations, 52(6) Research Policy (2023), https://doi.org/10.1016/j.respol.2023.104761
2. Wentong Zheng, Jurisdictional Competition on Standard-Essential Patents, 14(1) JIPEL 1 (2024), https://jipel.law.nyu.edu/jurisdictional-competition-on-standard-essential-patents/ 
3. Damien Geradin, Anatomy of a Car Crash: The European Commission’s Decision to Withdraw its Big Tech Friendly Proposed SEP Regulation (2025), https://papers.ssrn.com/sol3/papers.cfm?abstract_id=5144816
4. Harris Tsilikas and Dr. Claudia Tapia, SMEs And Standard Essential Patents: Licensing Efficiently In The Internet Of Things, LES: Internet of Things (2017), https://lesi.org/smes-and-standard-essential-patents-licensing-efficiently-in-the-internet-of-things/
5. Bowman Heidem and Justus Baron, A Policy Governance Framework for SEP Licensing: Assessing Private Versus Public Market Interventions (2021), https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3872493
6. Maximilian von Laer, Knut Blind, Florian Ramel, Standard essential patents and global ICT value chains with a focus on the catching-up of China, 46(2) Telecommunications Policy 102110 (2022), https://doi.org/10.1016/j.telpol.2021.102110

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