Friends with FRAND ?

kids-shaking-hands-1532456As you may recall our post, dated September 10, 2015, the Hon’ble Delhi High Court had refrained iBall from importing mobile handsets and tablets and was under the FRAND scanner for the same.

For the record, FRAND is a legal term that stands for “Fair, Reasonable, and Non-Discriminatory” and is typically used to describe patent licensing terms. The FRAND Agreement enshrines licensing obligations often required by standards organizations for members that participate in the standard-setting process. It ensures that patent holders are suitably recompensed for their role in standards-related innovation while providing FRAND licensing terms to those that use the patented invention to provide state-of-the-art products and amenities to consumers. Further volunteered commitments to provide FRAND licenses are an imperative component of permitting standards in order to contribute to a competitive and dynamic marketplace. Where abuses of FRAND occurs, or where the possibility for them to occur is endured, the capacity of standards to contribute to innovation and economic growth at large is threatened.

Over the past few years, standard essential patents (SEP) litigation concomitant with big shot mobile technologies started in the United States; slowly seeping its way into India as the first missiles in these patent wars was fired in India. This was because the Indian telecom/smartphone products were clandestinely infringing upon the SEP’s of telecom/smartphone gear making giants. Because of this, even iBall was indicted for neglecting to sign a license agreement, with regard to SEP covering wireless technologies. In lieu of same the Hon’ble Delhi High Court held that iBall would not market mobile phones without paying heed to FRAND or paying royalty, which was a huge number. Similarly Gionee, Intex, Xiaomi, Kingtech, ZTE, Asus, Lava, Micromax amongst others have faced the heat for not complying with FRAND terms.[i]

Recently, in what may be termed as a Ninja tackle methodology strategized, to curb the menace of misuse of high end technology as well as royalty mounds, an assemblage of small and large players from the telecoms/smartphones market industry have come together to launch the Fair Standards Alliance (FSA), with big ticket names like Dell, HP, Cisco amongst others, being its members.

The FSA pursues to encourage pellucidity in SEP licensing, and seeks to minimise the problem of royalty mounding and the other problems faced by the telecom/smartphone industry today. This has been set up with the sole purpose of ensuring that:

  • Licenses are available at all junctures in the value chain;
  • Royalty rates are evaluated on the smallest device that gears the patent;
  • Avert threats of injunction or other similar legal action as the last expedient; and
  • Guarantee FRAND commitments even if the patent in dispute passes into other hands.

It is assumed that this development has come at a handy time, a time when IP infringement is at its peak and SEP/FRAND disputes in the telecom/smartphone sector being the essence of the same.[ii]

With this concerted effort, FRAND/SEP matters in the future are to be less obscure and groggy.

[i] Compilation of Mobile Phone Patent Litigation Cases in India, Centre for Internet & Society, Mar. 15, 2015, Available at: http://cis-india.org/a2k/blogs/compilation-of-mobile-phone-patent-litigation-cases-in-india.

[ii] Ibid.

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