Centre for Internet and Society

[Open] Innovation and Expertise > Patent Protection & Trolls in a Broken Patent Regime (Interviews with Semiconductor Industry - Part 3)

maggie — 2014-12-26T13:19:46Z

This is the third of a four-part blog series1 highlighting findings from a small sample of interviews with fabless semiconductor industry professionals in Taiwan. These industry insiders was approached for the intent of understanding expert knowledge on the process of integrated circuit design. However, the conversations resulted in leanings far beyond that scope. This post explores some of their views on the current intellectual property system.

The intellectual property framework is meant to provide a temporary monopoly so those taking the risk to invest time, money, and resources into research and development can reap the returns for that investment without having to worry about others undercutting their price and competing for market share. Registration of patents supposedly encourages the dissemination of ideas and overall greater knowledge contribution for public access and eventual public domain. The interviewees were asked about their thoughts on this system of protection, incentivization, and knowledge-share, resulting in five broad themes:

1) Expertise trumps patent ownership

Particularly today in a digital world where innovative ideas and concepts can be easily shared, the first thing many people think about when discussing innovation, is the need to protect via patents. A vast amount of literature attempts to review the implications of patents' on technological innovation and economic development.

However, one interviewee noted that this emphasis on patent protection often overshadows what is much vital to the success of a technology business or industry - the people: the expertise and experience of the companies, their engineers, and their management. A lot of knowledge and 'intellectual property' lies in the procedures and processes which have resulted in effective application of standards and high level of performance for ones' products. The value of these skills and intelligence of human resources far outweigh the importance of protecting and owning patents.

2) Broken patent system

There was a clear consensus that the number one intellectual property concern is the need to revamp the current patent regime, with all interviewees agreeing that "useless patents" were being filed. Some suggestions for improvement included international standardization regarding the definition of a patent, the process of patent applications, and the scope of what a patent should cover. One interviewee believed that currently, the patent system actually prevents technological innovation, because one single patent can cover many ways of achieving something. The Apple patent entitled ' Method for providing human input into computer' which patents nearly every single possible human-computer interaction is an example of this.

"Patents today are trivial, and don't contain information regarding HOW to make something; there are too many process and design patents, and not enough functional patents...merely competitive differentiations rather than fundamental technological changes" .

This quote expressed the perception that only inventions that affect functionality in a fundamental way should be patented. A patent should not be claimed for something you cannot do, or does not show any kind of knowledge for how to solve a problem. One interviewee suggested that if a patent is granted without use for 3 years either by the owner or through licensing, the patent should be considered invalid.

Another industry expert explained that numerous patent applications are entered into the system without enough resources and competencies in the government to review them well. Albeit suggested in a joking manner, there may be truth to his claim that a knowledgeable intellectual property tech expert would opt to work for the more lucrative law firm over the government. He observed over the years a cycle where patents are easily approved, in which if a lawsuit arose, the patents are assessed more carefully again, resulting in massive inefficiencies for the system.

3. Patent Trolls

The poor execution of the patent system has resulted in the phenomenon of 'patent trolls', or what is more neutrally termed as non-practicing entities ("NPEs")[1] or patent assertion entities ("PAEs").[2] As explained by one interviewee, the business models of these entities often begin by conceiving of future technologies which may be necessary or foreseeable in the near future. Then, they seek to patent those ideas with no intention of actually producing producing or manufacturing the product. The main purpose is to profit through litigation and licensing. An example given of a patent trolling company was "Intellectual Ventures", which describes themselves as an "invention capital company" that "owns some of the world's largest and fastest growing intellectual property portfolios"[3]

The difficulty is that patent trolls are virtually indistinguishable from aspiring inventors and engineers, who may seek to manufacture and scale up their products through outsourcing and licensing. In addition, the lack of actual production makes valuation, legislation, and enforcement around this practice extremely difficult.

"The problem is, the guys who have patents think it's worth this much money… and the company that wants to license think it's worth another amount. From a regulatory or legal point of view, it's very difficult to legislate these things… you can't legislate a value right? In the end, it's how much the customer is willing to pay for it. It doesn't matter how many years someone's been working on it, if no one wants to buy it, it's not worth anything."

Robert L Stoll, former USPTO Commissioner of Patents says the most effective way to reduce predatory behavior is to ensure bad patents don't get issued in the first place, highlighting a legislation in the America Invests Act of 2011 which allows third parties to challenge granted patents on basis of former prior art, and non-technical financial or product patent.[4] Increased collaboration shown through standards and cross-licensing

The development of standards is very "fashionable" at the moment, according to one interviewee, who expressed his desire for his own company to be more involved in the process. However, another interviewee stated that more could be done to enhance collaboration within industry so that technologies could be provided free of licensing and ultimately benefit society at large through greater interoperability. Although there are signs of partnerships through cross-licensing agreements, particularly amongst larger firms, there are limitations because not everyone, including small firms, can afford it.

Most interviewees also expressed the need for greater emphasis on knowledge and research, rather than relying on proprietary technologies, which may actually hinder technological innovation. Examples given for companies doing this were Google and IBM, who both have more of a research background, and potentially have more research and development resources to engage in this kind of work.

5) Need for more openness

One interviewee who had extensive experience in the hackerspace community was an advocate for openness within the industry, and believed many companies had the option to become more open and effectively 'outsource' their research and development to the larger community.

Some successful projects he suggested was an open-sourced graphics processing unit ("GPU"), which does not exist even for the largely open Rasberry Pi. Even the development of a lower quality open sourced GPU in the market would result in tremendous demand, in his opinion. The ARM technology, the most popular CPU in the market is also currently semi-closed, and could in his opinion have benefited from more openness.

One interviewee expressed disappointment that all of the chips in his company was proprietary, even those that were no longer in production due to fear that competitors would be able to anticipate future developments from past projects. He suspected that many things were protected simply because the legal department assumed confidential and proprietary, without necessarily a coordinated long-term vision from head management. It is this normalized culture in industry that is, in his opinion a great hindrance to innovation, development, and accessibility of technology.

https://www.patentfreedom.com/about-npes/background/

http://www.ftc.gov/policy/studies/patent-assertion-entities-pae-study

http://www.intellectualventures.com/about

http://www.wipo.int/wipo_magazine/en/2014/02/article_0007.html

For more details visit https://cis-india.org/a2k/blogs/interviews-with-semi-conductor-industry-part-3

Government Intervention in the Marketplace: Policies for Access or Politics? (Interviews with Semiconductor Industry – Part 4)

maggie — 2014-12-26T14:34:26Z

This is the last of a four-part blog series highlighting findings from a small sample of interviews with fabless semiconductor industry professionals in Taiwan. These industry insiders was approached for the intent of understanding expert knowledge on the process of integrated circuit design. However, the conversations resulted in leanings far beyond that scope. This post explores the tension between market forces and governmental intervention in providing access to mobile technology.

Following conversations regarding the trends and changes in computing usage models, process of chip manufacturing, and challenges with the current patent system, CIS wanted to understand these chip manufacturers' thoughts on the smart phone patent wars' implications on access to mobile technology, and how government regulation and intervention could perhaps resolve some the legal battles.

Although it seems there is an overabundance of litigation and patent wars amongst smartphone manufacturers, most recently culminating in India between manufacturers Xiaomi and Ericcsson,[1] it was of one interviewees' perception that these legal battles was simply a natural result of market forces in the technology industry. Although companies do indeed want to protect their intellectual property, the lawsuits are more often motivated by business interests to slow down ones' competitors. Litigation requires a massive investment in time and resources, and ultimately, the courts are just another avenue where market forces are at play. Naturally, with or without patent wars, prices will go down with competition.

The interviewee provided the example of Microsoft and Intel who had drove the computer industry who were making 75-80% of the products with profits only going to them. But as the market grew, prices slowly went down as more companies came out with new products. This was a "natural, organic development", and "perhaps if the industry had dropped prices earlier it would have been slightly better for consumers", but one interviewee "doubt it would have made much of a difference."

In the past there have been instances where governments have regulated markets to prevent anti-competitive behavior and predatory pricing, as exemplified by the antitrust claim filed against Microsoft in the United States, [2] or Intel being sued by the European Union for monopoly control.[3]

In China, Qualcomm has been under investigation, and is risk of being fined up to 10% of their most recent annual revenues because the government believes they are monopolizing the market. More recently, there have been talks of a possible investigation by the European Union for the same.[4] However, the interviewee expressed his disagreement that these really resolved the problem of high costs.

" Everyone always complained about software costs...that Microsoft was too expensive, that PCs were too high. But then with mobile, for years Microsoft was trying to do Windows... but then Google came along and offered Android for next to nothing. Suddenly the market's changed."

What really resolved the problem of high costs of personal computers according to this interviewee was mobile phones, which merely came with a bit of patience with the market. There seemed to be a general lack of faith in government intervention, and a sentiment that government imposed an overly top-down management of the industry.

Another example given of poor government intervention was the Aakash tablet in India, which one interviewee noted was a "disaster" because the government initially announced a retail price of USD $60 without accurately taking into actual costs of production. Having been considered as one of the potential suppliers for the tablet, this interviewee noted a later announcement of a retail price of USD $28, which taking into account the physical cost of hardware would have been impossible to manufacture. The interviewees' company was requested to reduce their prices given an anticipated high stock order, but ultimately the partnership never went through as it would have resulted in a significant loss.

Initially the Aakash tablet was conceived to be 'made-in-India', but our interviewee cited a bit of "naivety" on behalf of the government. At a meeting with the Aakash planners, he explained how the manufacturing of each part - the screen, motherboard, small connectors, supply busts - required billions of dollars in infrastructural investment.

"Suddenly you're not talking about one factory, you're talking about 30 factories. It's just not going to work. It's too complex. And this is why Shenzhen is going to do very well in the next 10 years. Because they have done this."

Given the Pervasive Technologies project covers the territories of China and India, and attempts to evaluate potential policy levers to enhance access for both geographies, this was a useful insight which led to further questioning about the experiences of working within various jurisdictions. In particular, we were interested in the experiences of these companies operating in different geographic markets, and asked specifically about comparative experiences between the United States and Europe which generally has more stringent enforcement, with our countries of focus - India and China.

One of the interviewed companies which provided turnkey chip set solutions explained how their reputation in China had evolved since the ease of use facilitated the manufacturing of counterfeit products, particularly at a time when the Chinese government did not seem to care too much about infringement. Although there has been increased enforcement measures, these company's products are still often found in gray markets and in shanzhai technology through unauthorized resellers despite not knowingly selling chip sets to illegal companies.

Another interviewee perceived that the Chinese and Taiwanese market required much more effort in general for foreign companies to operate in due to lack of transparency and multilingual access, compared with the North American and European market. The indigenous standards China is pushing, like the TD-SDCMA standard within the telecom industry, one interviewee noted that it puts more of a burden on companies to have multiple standards, and felt it was more so a political demonstration of Chinese power.Other analyses cite this as a strategic method to set these standards for enhancing development of local research and development, and use indigenous standards as a bargaining tool to reduce royalty rates. ⁹

Regardless of the motives, another interviewee noted that the Chinese market was big enough with opportunities worth pursuing that developing products according to China's standards made sense as a business.Following the market means pursuing demand, and according to this interviewee, although China requires a bit more investment, it is justified if it is what customers are asking for.

Despite increased foreign investment in the Chinese manufacturing sector, local smartphone manufacturers from China like Lenovo, Huawei, ZTE, and Xiaomi provide smartphones at an extremely affordable cost - for USD $50-60, or about RMB 300-400. Other marketplaces like Taobao also sell cheap smartphones in the mass market. There are difficulties of operating in India due to lack of reliable infrastructural support, which results in a need for increased investment and risk. However, a development of indigenous Indian tech industry can be done, perhaps developing the hardware first in China, setting up some local manufacturing while focusing on software development in the meantime.

This small sample of interviewees seemed to express a general perception that less governmental regulation and intervention in the technology industry was better for access. However, it can be reasonably well-argued that the reason China's mobile market is so successful is due to government-imposed standards which prevented reliance on expensive foreign patents. After explaining in brief the proposal of a compulsory licensed patent pool for standard essential patents, the interviewees responded that it may be something the government is trying to do with good intentions, but could have unintended side effects.

When asked for suggestions on how policy makers could help facilitate access to technology and an overall more innovative market space, answers included increased hardware education through encouraging openness for more sharing and learning within the industry, and outside to hackers and makers which could encourage 'outsourced research and development'. Although other interviewees seemed to disagree that openness would encourage access, the overriding consensus was the need for policy makers to prevent the possibility of behaviour like patent trolling and the unnecessary protection and locking up of innovative technologies from arising in the first place - done via a global standardized restructuring of the patent system.

[1]. http://indianexpress.com/article/technology/mobile-tabs/xiaomi-vs-ericsson-vs-oneplus-vs-micromax-the-winter-of-smartphone-court-battles/

[2].https://www.princeton.edu/~achaney/tmve/wiki100k/docs/United_States_Microsoft_antitrust_case.html

[3]. http://curia.europa.eu/jcms/upload/docs/application/pdf/2014-06/cp140082en.pdf

[4]. http://www.forbes.com/sites/greatspeculations/2014/08/29/possible-eu-investigation-add-to-qualcomms-regulatory-problems/

For more details visit https://cis-india.org/a2k/blogs/interviews-with-semiconductor-industry-part-4

Pervasive Technologies Project Working Document Series: Document 2 Literature Review on Competition Law + IPR + Access to < $100 Mobile Devices

Amulya Purushothama and Nehaa Chaudhari — 2015-09-03T02:02:51Z

This note is the second document in the series of Working Documents that I will be creating for my research under the Pervasive Technologies: Access to Knowledge in the Marketplace (“PT Project”).

View the first document here. Note: The research was for this blog post was done by Amulya Purushothama which wasn't acknowledged earlier.

Preliminary

This note will serve as the literature review for my research paper under this project. This note- to be revised periodically- maps the existing literature around questions of competition law intersecting with intellectual property law on the specific issue of enabling access to sub hundred dollar mobile devices; which might be impaired as a result of intellectual property protections, particularly standard essential patents.

This note will explore the literature around the relationship between intellectual property and competition law; with a specific focus on the antitrust/competition concerns that arise around the licensing of standard essential patents. This note will study the approach adopted in other jurisdictions in the employment of existing mechanisms in competition law as possible solutions to issues with the licensing of standard essential patents.

Literature Review

Smartphones and Access to knowledge.

The Avendus Capital report[1] on mobile data usage in India provides important information about mobile internet users in India. Particularly the striking fact that more than half of the internet users in India use it on their low cost mobile phone and that access to these phones therefore becomes a step toward access to the internet. John Harmen Valk and others [2] have through their report demonstrated how mobile phones with internet access have been used to further educational outcomes in India and Asia and underscores the idea that access to such technology is important.

Competition Law and Intellectual Property

Academic writing around the nexus between intellectual property law and competition law presents varied perspectives; particularly on the question of whether they each acted as incentives for innovation, or whether competition law hindered innovation that intellectual property (seemingly) promoted. This narrative does not question a more fundamental concept; of whether intellectual property protections necessarily incentivized innovation; but takes that as the underlying assumption that they do.

Gitanjali Shankar and Nitika Gupta have noted that antitrust law and intellectual property have in the past seen to diverse and work against each other with different approaches to monopoly and that the two have also been viewed as related to each other in so far as intellectual property has been viewed as one of the tools to regulate competition in the market place. they propose that if the latter approach is taken and the two branches of law are seen to converge, two guidelines must be followed in to balance the various interests and ensure clarity, first that IP laws must only be extended by legislation and not through judicial interpretation, the second that when two interpretations are available during the enforcement of any intellectual property, that interpretation must be chosen which is in line with encourages the free market and promotes fair competition.

They have argued that both antitrust law and intellectual property have separate operational areas and their functions must be kept independent of each other. They argue that the domain of intellectual property concerns the assignment and defense of intellectual property rights and the domain of antitrust deals with the use and exercise of such rights within the market. They argue that competition law does not call into question that basis of IPRs that it doesn't question the exclusivity of legal rights, merely their abuse which results in unfair trade practices. They argue that the distance between economic and legal monopolies should be maintained and these fall within the domains of antitrust law and intellectual property respectively. They further argue that antitrust law exists to ensure that the IPR owner does not abuse his rights and thus bolsters intellectual property rights. [3]

Robert Pitofsky while reviewing a work of Prof. Mark Lemley explains that while anti-trust laws and intellectual property laws have the same long term goals of incentivizing innovation and investment in innovation, they are bound to conflict with each other in the short term as anti-trust law seeks to achieve this goal via limiting the possibilities of a monopoly and further ensuring that monopolies do not abuse the power they enjoy in the market place. Antitrust policies assume that the free market will fairly allocate resources and thereby encourage innovation efficiently. Pitofsky goes on to state that intellectual property on the other hand believes in rewarding innovation and thereby incentivizing investing in innovation, intellectual property is basically a grant of limited monopolies to ensure that costs of innovation are recovered and product quality is maintained. He argues that it is critical to ensure that patents are granted after thorough analysis to ensure a balance between anti-trust policies and intellectual property rights and to ensure that the larger goals of incentivizing innovation are achieved.[4]

Katrina Perehudoff and Sophie Bloemen have argued that anti-competitive strategies such as defensive patenting (the creation of weak and frivolous patents around their main patent) and vexatious litigation (the use of litigation as a threat to smaller and medium enterprises who cannot afford costs of litigation) have ensured that the bestselling originators medicine dominates the market for artificially long periods of time ensuring that the company therefore profits at the expense of public interest and obstructs widespread access, it is argued that such practices go against the aims of the patent system which were to ensure that the innovator could recoup costs of invention and in fact hamper incentives to invent. [5] It is submitted that while in this instance the discussion of defensive patenting as well as holding out is in the context of healthcare, similar trends have been witnessed in the space of technological patents as well. With standard essential patents for instance, there exists a very real danger of frivolous litigation and hold-outs ensuring market dominance by larger players, forcing out smaller and medium sized enterprises.

While acknowledging that intellectual property law and competition law might both seek to achieve a common goal of incentivizing innovation, Daniel Ravicher and Shani Dilloff have argued that the scrutiny of intellectual property exploitation from an antitrust perspective lacks economic and political merit. They argue that governments and courts have time and again preferred to enforce antitrust policy at the expense of enforcing intellectual property rights as evidenced by the cases of International Salt Co. v. United States[6], United States v. Lowe's Inc. [7], and Siegel v. Chicken Delight, Inc.[8] among others. They argue that the law depends on the flawed assumption that intellectual property confers upon the rights holder some kind of market power through creation of monopolies as evidenced by Jefforson Parish Hospital District No.2 v. Hyde[9] and the U.S. Department of Justice Guidelines on licensing of intellectual property[10] and is therefore in the wrong.

They argue that no such power is conferred on the rights holder because intellectual property rights do not confer monopolies so much as they ensure that a certain standard of uniqueness is assured, and that this standard of uniqueness falls short of the uniqueness required to obtain monopoly power within a market. They argue that IPRs do not grant the ability to raise prices above the competitive level and do not grant the right to exclude a rival or to exclude new entrants in the field, they only grant a right to prohibit others from exploiting their creation in an unfair manner and provide for sufficient limitations and exceptions to ensure that fair exploitation of their works is still allowed. And therefore while sound economic theory that ensures free marketplace through government regulation underlies most of antitrust policy, scrutiny of intellectual property through an antitrust point of view is economically flawed.

In a departure from other perspectives, the authors in this paper also argue that the factors affecting the employment of antitrust policies are not entirely legal; and that this preference is often a reflection of non-meritorious factors such as arguable predictions for the future, difference in financial stability of the competing parties, the political persuasion of the decision maker or the posturing of the parties and the courts being simply hostile to intellectual property rights and is unfair to intellectual property owners. They further argue that this preference is politically indefensible as it undermines the intent of the legislature. They argue that because of these things the case law so far that deals with this conflict is unreliable, unpredictable and not credible. They lastly argue that the solution out this conflict is to ensure economic efficiency by exempting intellectual property rights from scrutiny based on antitrust policies.[11]

Robert Anderson argues that IPRs do not inherently confer market power on rights holders and that in many cases restrictions on licensing could encourage competitive behavior and economic efficiency while not losing sight of the fact that IPRs can result in anti-competitive behavior in certain circumstances, particularly in context of network industries and that competition law must respond to these issues. This paper also makes a reference to the Trade Related Agreement on Intellectual Property Rights ("TRIPS Agreement"), and the provision that it makes that allow member countries to curb anticompetitive practices through Article 8.2 and Article 40 and thus catering to the interests of developing nations. The paper also notes that the TRIPS Agreement does not set out a specific list of practices that should be treated as abuses. Further, this paper goes on to analyse intellectual property regimes in the US, Canada, Japan and the EU and concludes that the US has maintained a liberal environment for granting of intellectual property rights while being cautious of abuse of IPRs for anticompetitive purposes, that Canada on the other hand has been suspicious of legislative efforts to curb the proper use of IPRs that the EU has adopted a far stricter approach to the issue to achieve market integration, and that Japan has chosen a somewhat middle path by providing for a case by case evaluation of practices. It is argued that certain restraints on international trade such as the restriction on parallel importation due to IPRs segment markets and is harmful to trade and collective innovation and some mechanism for exhausting of these rights must be considered. [12] This cross jurisdictional analysis is particularly useful, and will be examined in detail in my research paper.

Elieen Mc Dermott, in a discussion on FTC public hearings in December 2008 to discuss the overlap between intellectual property laws and antitrust and competition laws, identifies that Innovation Alliance, an organization that represents technology patent owning companies put forward three principles to govern antitrust policies, the first to define antitrust policy to promote consumer welfare and to limit its role to conduct that has "a demonstrable anticompetitive effect", second to bring on board the diverse range of interests and business models involved and third to ensure that principles behind patent law have evolved before allowing antitrust enforcement agency involvement in patent cases.[13] This submission by Innovation Alliance will now be studied in greater detail while attempting a submission on India's stance on competition law issues in the licensing of standard essential patents.

Herbert Hovenkamp has argued that for most of history, antitrust law and intellectual property law have undermined their own purpose of encouraging innovation by protecting too much, whether it is the shielding of inefficient business from competition or the shielding of IPRs beyond what is necessary to incentivize innovation, in both cases the consumer is harmed and the costs of innovation increases. He argues that while it is good that we have lately come to view patents as a kind of property as opposed to a kind of monopoly, since there is no real proof that patents lead to market power, we haven't extended to patents the same kind of conditions we extend to other kinds of property, like the obligation to define the boundaries of ownership another being the obligation to ensure that notice of the claim to property is rendered in time, neither of these obligations, he says, are imposed upon patent holders. He states that this leads to over protection and wastage of state resources.

He goes on to offer a few principles for antitrust in innovation intensive markets that involve exercise of patent rights; the first being that the purpose of antitrust must not be to fix defects in other regimes, but only to correct private markets, second that any antitrust or intellectual property intervention is justified only when congress or a tribunal has a reason for thinking that such an intervention is necessary to ensure more competition or more innovation, third is that many IP practices do not conflict with antitrust laws and antitrust policies shouldn't intervene in such cases, fourth that innovation provides society with more gains than simple production and trading under constant technology and therefore, when we have to choose between innovation and competition, we must choose innovation, fifth that innovation is more than what is simply defined under intellectual property law and at times, when practices seem clearly anti-competitive and IP statutes do not provide us with answers, we should consider antitrust policies as guidelines, sixth that IP protections can at times protect competition more efficiently than antitrust legislation, seventh that IP law must constantly examine its roots as antitrust legislation has and ensure that any expansion of IPR is well thought out.[14]

John Barton examines antitrust treatment of oligopolies that use IPRs defensively to block new entrants into the market. These oligopolists each have substantial patent portfolios that are infringed by its competitors but never a matter of litigation as there is the fear of counter litigation. Therefore there is an implied licensing of patent portfolios among the oligopolists. It is further argued that under systems like this, while there is an incentive for firms to acquire more patents to build defensive portfolios, there is no incentive to actually carry out new research therefore firms will obtain patents on existing research base and therefore this stunts innovation. Further oligopolists holding cross-infringing patents may put up entry barriers for new entrants and thereby dis-incentivize innovation. Due to all of these reasons, the paper argues for patent law reform and appropriate application of antitrust analysis to ensure that the IP system encourages innovation.[15]

Essential Facilities Doctrine

This section of the note looks at the literature surrounding the Essential Facilities Doctrine- an aspect of antitrust law that is employed in order to adjudge behavior as anticompetitive or the lack thereof.

Essential facilities doctrine is an aspect of antitrust law that imposes a duty upon firms that have patents/ copyrights or trade secrets with regard to an essential facility to ensure that they do not put in place a monopoly and make the facility available to their rivals. In the context of IPRs, an essential facilities doctrine functions in a way that is equivalent to compulsory licensing regimes. Different jurisdictions adopt different standards and approaches to the employment of this doctrine. By tracking the literature around this doctrine, these different approaches across jurisdictions will be studied, including landmark cases, and submissions made in the research paper on whether this doctrine may be employed in India - specifically to adjudge whether there was a case to be made out for anti -competitive behavior in the smartphone wars on standard essential patents.

MCI Communications Corporation v. AT&T[16] is the landmark case with regard to the essential facilities doctrine, in this case MCI argued that AT&T's switching equipment was an essential facility and access to such an essential facility was necessary to conduct telemarketing business. The court in this case laid down the necessary elements to establish a claim to essential facilities:

a) Control of an essential facility by a monopolist

b) Competitors inability practically or reasonably to duplicate the essential facility

c) The denial of the use of the facility to a competitor and

d) The feasibility of providing the facility.[17]

Richard Gilbert and Carl Shapiro have argued that a unilateral refusal to deal (which is often one of the conditions that needs to be met before the essential facilities doctrine is employed) can be justified in the context of profit-maximizing firms in certain cases such as: cases where the owner of the facility wants to ensure a certain level of service quality with his facility, cases where the owner wants to prevent free riding, prevent new entrants into the market, cases where the owner wants to promote price discrimination in the sale of the final product, and cases where the owner is not adequately compensated for licensing out his essential facility. These justifications it is argued increase economic efficiency in the market, ensure quality of services rendered, increase incentives for investment and innovation etc. It is further argued that in the long run, it is more economically efficient for companies to refuse to deal rather than to set higher prices, simply because in a system where one cannot refuse to deal, the incentive for firms to misrepresent their actual costs to obtain licenses etc., and further that an obligation to license can have negative effects on economic welfare, it can reduce welfare in the short run by forcing inefficient licensing, it can also reduce welfare in the long run by reducing incentives for innovation and investment and creation of intellectual property.[18]

Robert Pitofsky, Donna Patterson and Jonathan Hooks on the other hand have argued in support of the essential facilities doctrine and supported the use of this doctrine in cases concerning intellectual property rights, the authors here argued that the harshness of the anticompetitive effects of denial of access take precedence over business justifications, especially when specific animus to injure a rival has been proven. The authors argued that while it was important to ensure that the doctrine was not expanded to include a vague and amorphous set of rights, it was important to ensure that the monopolists arguments against the doctrine should not succeed regardless of the nature of the essential facility, whether it is intellectual property or even if the case did not involve vertically related markets.[19]

Paul Maquardt and Mark Leddy in their response to Pitofsky, Patterson and Hooks argued that it is not anticompetitive behavior if the normal enforcement of an intellectual property right results in market power is getting skewed in favor of the rights holder, and the intellectual property rights should not be limited by compulsory licensing. They have argued that the essential facilities doctrine should only apply in cases where the rights holder attempts to leverage his exclusionary rights from the market in which the innovation competes into a related market or in cases of abuse of those rights because in cases where the rival is competing directly with the facility incorporating the intellectual property protection, the rights holder would not be damaging incentives to innovate as he would in cases of abuse or in cases of leveraging the protection to attain profits in a related field. They argue that to force compulsory licensing in other cases where the rival is in direct competition to the right holder would harm incentives to innovate and create intellectual property, a goal that both intellectual property rights and anti-trust laws are supposed to achieve. [20]

Martin Cave and Peter Crowther have argued that the European Commission seems to have embraced the essential facilities doctrine quite well despite not properly codifying the criteria used to determine whether a facility is essential and access to this facility should be mandatory. They have found that in the U.S., a) the courts have decided the question of whether or not a facility is "essential" on the basis of whether new entrants to the field would be able to duplicate the facility as evidenced by the cases of MCI Communications Corporation v. AT&T[21] and Hecht v. Pro Football Inc It is as yet undecided at what point a refusal to deal in a facility will render the rival without an alternative option. In Camco Inc. v. Providence Fruit & Produce Bldg.[22]it was decided that a facility was essential insofar as alternatives were inferior. There is no requirement of a duplication of the facility to be impossible as evidenced from Otter Tail Power Co. v. United States[23] . They have also found that as per Aspen Skiing Co. v. Aspen Highlands Skiing Corp. [24], there is no general duty to deal on the monopolists. They have also found that liability under the essential facilities doctrine can be found in the presence of the following conditions: a) control of an essential facility by a monopolist, b) a competitor's inability to duplicate the facility, c) the denial of the use of the facility to the rival, and d) the feasibility of providing the facility

Under analysis of the law in Australia, they found that section 46 of the Trade Practices Act, 1974 proscribes taking advantage of a substantial degree of market power for the purpose of a) eliminating or substantially damaging a competitor, b) preventing the entry of a person into a market or c) deterring or preventing a person from engaging in competitive conduct in a market. They found two important cases in Australian law, Queensland Wire, the first Australian case to consider adopting the US essential facilities doctrine which ruled that the monopolistic firm couldn't refuse to sell facilities to the smaller firm if had been subject to competition in the supply of that product while not actually mentioning the essential facilities doctrine, the second case of importance would be Pont Data litigation where Pont Data wanted to supply stock exchange information which the Australian Stock Exchange had a monopoly on, the court on appeal held that ASX should be ordered to supply information but "on terms designed to obtain a broad and substantial justice between parties"

They have further argued that there is even less certainty in respect of the price at which access to an essential facility should be made available. This is evidenced by their study of the laws in New Zealand. They found that in New Zealand the landmark judgment to study would be the Privy Council judgment in Clear Telecommunications Ltd v. Telecom Corporation of New Zealand Ltd. This case arose out of a dispute between the state owned telecom which monopolized the public telecommunication system and Clear a new entrant into the market after Telecomwas privatized. The dispute mainly concerned about the price which Clear should pay Telecom for providing access to the Telecom network, while Clear argued that it should only be required to pay Telecom for the direct costs of providing access, Telecom held that Clear should pay the equivalent of profits which telecom would lose by granting access- the opportunity costs. The Privy Council agreed with Telecom in that insofar as Clear had not proved that it would be forced to pay monopoly prices because it was paying opportunity costs, it had not been proved that there were any entry barriers to the market.

In their analysis of the European Union, these authors found that Article 86 prohibits the abuse of the dominant position within a common market by under takings that consist in particular of a) directly or indirectly imposing unfair purchase or selling prices or unfair trading conditions, b) limiting production markets… to the prejudice of consumers, c) applying dissimilar conditions to equivalent transactions. The European Court of Justice has already decided that dominance can be assessed by a reference to the dependence of the consumer on the supplier inCommercial Solvents v. Commission. [25] And in Hugin v. Commission[26] The court first mentioned essential facilities in the United Brands case[27] where the ECJ held that the charging of discriminatory prices against and the refusal to supply a longstanding customer and distributor who had taken part in a sales campaign on behalf of a competitor had infringe article 86. Therefore if a firm acts in such a way that it could possibly affect rivals by precluding access to an essential facility, it would be an abuse of intellectual property.[28]

Albertina Albors-Llorens has reported on the recent judgment of the ECJ in Oscar Bronner CmbH and Co. KG v.Mediaprint Zeitungs -und Zeitschriftenverlag CmbH & Co. KG and others[29], the ECJ in this case has defined "essential facilities" as a "facility or infrastructure without access to which competitors cannot provide services to their customers"[30] under the doctrine, any dominant undertaking that owns or controls an essential facility and refuses without an objective justification [31] to make the facility available to its competitors or makes it available under discriminatory terms abuses its position of dominance. The court here distinguished the case from earlier case law including the case of Commercial Solvents and from the Magill case[32] where the court held that copyright holders who published guides of television programmes for their channels refused to license an independent company which wanted to publish a comprehensive television program guide had based their position of dominance and prevented a the emergence of a new beneficial product to the consumer and therefore it was not objectively justified and that it was otherwise impossible for Magill to obtain the information that was essential to carry on its business. She reports that the court in Bronner held that this case was distinguished from the precedent as there were less advantageous methods of distribution available and it wasn't impossible forBronner to set up their own home delivery system.[33]

Gregory Gundlach and Paul Bloom have analyzed the history of the essential facilities doctrine and cases refusals to deal , they have noted the refusal by Microsoft to deal with firms seeking to provide compatible software products and share its knowledge of its key operating systems for IBM compatible computers and its investigation by the Federal Trace Comission (FTC). They trace back the essential facilities doctrine from the case of United States v. Grinnel Corporation[34] which held that monopolization necessarily had to include the possession of monopoly power in the relevant market and the acquisition or maintenance of that power as distinguished from growth or development as a consequence of superior product, business acumen or historic accident. Preventing a rival from accessing an essential facility was held to be evidence suggestive of intent to monopolize and a challenge to the Sherman Act. They argue that this doctrine presents a challenge to marketers as they now have to ensure that they don't compete themselves into antitrust challenges, ensure that rivals don't attempt to free ride on their research and investment, they argue that while forcing firms to enable their rivals to access their essential facilities is at odds with the idea of competitive behavior, prudent application of this doctrine may ensure that welfare is substantially enhance and innovation is encouraged. They propose that the duty to deal be imposed only when commercial viability of the rival is at stake as a measure of protecting the rights of the firms. They also propose that new modes of competition such as strategic alliances, long term partnership be kept in mind before when forming future policy development in the area. [35]

Spencer Weber Waller and William Tasch have compared the law in the US with the law in the European Union and several other countries, and argue that there is a growing international consensus that it is sometimes appropriate to require a regime of nondiscriminatory access to infrastructure and related facilities. They have pointed out that common law countries and civil law countries have responded to the issue in different ways, for example, Germany has dealt with the issue by passing the German Act Against Restraints that contains provisions regarding abuse of dominant position in refusal to allow other undertakings access to essential facilities without proper justification. South Africa, they note has adopted a two pronged approach to unilateral refusal to deals, one through the South African Competition act that prohibits refusals to deal and another through the same legislation that prohibits refusal to supply scarce goods to a competitor when supplying those goods is economically feasible. They argue that since the essential facilities doctrine has become an accepted law in most competition jurisdictions, the US must work to harmonize their laws with the rest of the world to ensure better trade practices. [36]

Daniel E Troy has argued that post the Hecht v. Pro-Football, Inc. case, jurisprudence in competition law shifted from intent to the actions of the monopolists. He argues that there are no clear rules regarding when the essential facilities doctrine should be invoked or a consensus as to what the doctrine requires once invoked. He proposes that the resulting confusion be resolved by ensuring that the essential facilities doctrine cover all arbitrary refusals to deal when such a refusal threatens the commercial viability of the rival party, or when access to the facility is necessary for entry into the market or when duplication of the facility exceeds the standard cost of entry.[37]

Howard Shelanski has argued that unilateral refusal to deal must be susceptible to antitrust scrutiny, he argues that neither economics not IP policy considerations provide a sound basis for exempting refusals to supply IP from antitrust laws on unilateral refusals to deal. He argues that while there may be a case for treating IPRs different on some occasion that should be based on logical links between IP and the considerations that weigh against antitrust mandates to deal in any property: deterrence of innovation, investment or precompetitive conduct.[38]

Royalty Stacking in Smartphone Industry

Ann Armstrong, Joseph J Mueller and Timothy D Syrett[39] have collected and analysed data on the royalty burdens to be faced by a standard smartphone supplier and the adverse effects royalty stacking might have on competition in the smart phone industry. It is an article rich in detail and carefully explains the costs of each of the components that make up a smartphone, in doing so they also trace the mobile phone Standard Essential Patents (SEP) litigation occurring in United States of America (USA). They conclude that royalties demands on a smartphone could exceed the cost of the devices components, and that due to royalty stacking, costs of patent royalties act as an entry barrier for many suppliers thereby limiting competition in the market. They have argued that in calculating the royalty for a component, licensees, advocates and courts should base their conclusions on the price of the component and not on percentage of sales price of the entire smartphone which is the current practice. They have argued that this valuation is even more important for standardized technologies because patent holders usually only have a small slice of the declared patents for a particular standard and where that standard is just one of the many supported by the device. They present data to prove that when royalties are so vigorously calculated, they turn out to be a fraction of what patent-holders claim. This article was used mostly for background information on how royalty stacks work and how FRAND prices must ideally be calculated, and as a source of information on litigation surrounding royalty stacking in USA.

Damien Geradin in his articles[40] on pricing abuses by SEP holders in SSOs in EU and USA documents the evolution of competition law in these courts and the work of the Federal Trade Commission in this regard. He examines the role of the FTC in quite some detail, and this article provided important background information on the question of the potential role of the CCI.

Bouthenia Guermazi and David Satola[41] have argued that in creating a right enabling environment for the ICT, one of the goals of regulation is to create a stable, open and future-proof environment that encourages access and doesn't limit it.

Tracing Mobile Phone SEP Litifation:Treatment by European Commission and Federal Trade Commission

Damien Geradin and Miguel Rato[42] have inquired into the question of whether SSOs provide for an environment of exploitation and abuse due to royalty stacking, weak enforcement of FRAND terms, and hold-ups. They have identified three criteria for the establishment/adoption of an industry standard - first, that it is a set of technical specifications; second, that these technical specifications provide a common design; and third, that the common design provided may be for a product or a process. These criteria have been used in the paper.

Michael A Carrier in his article[43] focuses on the smartphone industry and the ongoing patent and FRAND licensing litigation wars. He traces court rulings on holdups and injunctions granted on SEPs and discusses EC investigations into Motorola and Samsung in detail. This article was useful in that it provided for a good resource on recent judgments surrounding FRAND Licensing and SEP litigations focusing on the smartphone industry.

Mark A Lemley and Carl Shapiro[44] in their article demonstrate that even a threat to obtain a permanent injunction enhances the patent holders negotiating power, leading to royalty rates that exceed a natural benchmark based on the value of the patented technology and the strength of the patent. They argue that such overcharging occurs more noticeably in the case of weak patents covering a minor feature of the product with a sizeable price/cost margin. They present data to show that these holdup problems are reduced if courts regularly grant stays to permanent injunctions. , that they are magnified in the presence of royalty stacking, and that royalty stacking can become a huge problem especially in a standard setting context. This article was useful in understanding the holdup issues with regard to SEPs and the effect of royalty stacking.

Lemley and Shapiro in another article[45] have argued that one method of efficiently settling FRAND disputes would be to impose an obligation on the SEP owner to entire into a binding final offer decided in arbitration with any willing licensee to determine the royalty rate. This article provided important insights into the holdup problem and possible solutions that could be considered.

Phillipe Baechtold in his presentation[46] makes the argument that the central problem with the approach to solving the issue of ensuring Standard Setting organisations achieve interoperability and allow for licensing on FRAND terms is that a problem with patent laws is being solved in a manner that focuses other legal systems such as competition law, health law etc. He argues that there is a need to address these issues within the patent system itself. This article has been used to understand different solutions to the issue that have been proposed so far.

Richard Schmalensee[47] in his article argues that competition policy should not favour patent holders who would use their patents to stop innovation and that SSOs should determine standards based on lower post-standard royalty rates. The claim of interest in his article is that in the absence of a deceptive act, it would be difficult to prove in a case that a differing standard could have been adopted had there been a full disclosure of patent.

Gertjan Kuipers[48] has provided a useful resource on the Apple v Samsung cases in Netherlands and this has been useful to understand non-disclosure of patents as an anti-competitive practice within SSOs. Leon Greenfields article that surveys non-US decisions on SEP disputes also makes for a useful resource in the same regard. [49]

In their article, Damien Neven and Miguel de la Mano[50] discuss the activities of the Directorate General for Competition at the European Commission during the course of one year and discuss cases and policy developments during that time. It served as a useful resource on cases relating to violation of FRAND Commitments and in understanding the functioning of SSOs.

Bjorn Lundgvist[51] has analysed EU and US antitrust/competition law, and argued that Orange Book Standard case where it was held that abuse of dominant position is a valid claim if a patentee refuses to conclude a license agreement on non discriminatory and non-restrictive terms, is problematic as the potential licensee only has the option of paying the customary royalty rate or accepting the rate that the patentee offers by applying "reasonable excercised discretion" and that this doesn't give much leeway for licensees to question the validity of the rate.

James Abell[52] documents cases in the US federal courts regarding standards development organisations, antitrust law and fraud his analysis of the Broadcom Corp v. Qualcomm Inc., was particularly well done and proved to be useful in tracing SEP litigation in the US. Koren W Wong Ervin [53] in her important article traces SEP litigation across the world in various countries. This makes for an important resource on the subject as it serves as a primer on SEP litigation in many jurisdictions including China, Japan, India, EU and the US among others.

Mobile Phone SEP Litigation in India

Ravikant Bharadwaj in his article[54] provides a broad overview of standard setting in India and the competition and IPR issues associated with it. He makes the important argument that once an industry standard has been set, and since the goal is to ensure inter-operability, denial of access to these standards on FRAND terms could become barriers to trade.

Anubha Sinha[55] in her report on Spicy IP traces the Ericsson- Micromax dispute at the Competition Commission of India (CCI), this has been used as a background document to trace the timeline in the dispute while tracing mobile phone SEP litigation in India.

Prashanth Reddy in his article [56] argues against interim injunctions stating that these injunctions should be used as an exception and not as a matter of a rule. He argues that in many cases courts either don't provide reasoning or provide insufficient reasoning behind orders granting injunctions. He argues that protection of IPRs cannot be a convincing reason on its own in this context particularly because patent infringement cases are complicated and can only be decided after a full trial and appreciation of evidence. In this context, he argues that issuing interim injunctions as a matter of course is a harmful practice that must be done away with.Vaibav Choukse makes a very similar argument in his article as well.[57]

John E Matheson in his article[58] seeks to understand how standards must be developed and what best practices can be followed by India in forming its IPR policy. He specifically argues that the litigation costs that invariably occur during hold ups and reverse hold ups ensure that smaller companies and newer start-ups ultimately give in to patentees who enjoy more market power and can bear the litigation costs for as long as it takes.

Pankaj Soni and Satyoki Koundinya in their article[59] outline the questions at the heart of the mobile phone FRAND disputes and focus on the disputes in India including Ericsson-Micromax, Intex, Vringo and Asus and ZTE disputes providing a fairly comprehensive timelines of the same. They argue that the threat of injunctions often bring licensees to the discussion table which otherwise would not have happened and that disallowing this would disincentivise patentees from disclosing their patents. This article makes important arguments in terms of what would incentivize pro-competitive behavior and how policy surrounding holdups could influence anti-competitive behavior.

Abuse of Dominance and Competition Law and Policy in India

The Competition Commission of India Guide to Abuse of Dominance[60] lays out in clear simple terms what constitutes abuse of dominance under competition law in India, while it does not refer to case law on the matter, it does make for a great source for interpreting and understanding Indian competition law and was used for the same purposes.

Samir Gandhi[61] in his article analyses trends in enforcement of competition law in India. He provides data to prove that the CCIs decisions seem to want to establish a greater familiarity with complex tools of assessments like including economic measures etc. He argues that the CCI is eager to make up for lost time and therefore doesn't shy away from issuing judgments quickly and imposing severe penalties. This is useful in understanding whether or not the CCI is the appropriate and competent authority to deal with cases that are likely to come up involving the smartphone industry.

Pratibha Jain and others[62] conduct a fascinating study of how competition law is enforced in the country, in a fairly comprehensive report with individual case studies. They demonstrate quite clearly that the CCI refrains from laying down broad principles and restricts its rulings to the facts of a particular case. It also provides important data on how many cases are dismissed and in how many cases the CCI has found anti-competitive behavior. This data helps understand how effective or otherwise the CCI has been.

Archana Shanker and Shraddha Singh[63] in their article have argued that competition law and IP must both be used in a harmonious manner. In doing so they have analyzed relevant legislation and important cases such as Micromax and Intex, They have analysed how capable the CCI or courts in India are when it comes to determining FRAND terms in the context of SSOs and SEPs. They argue that the CCI has shown a lack of understanding of the IP aspects in these cases and have focused on competition law to their exclusion. While this is a well written and informative article on mobile phone SEP litigation in India, it is important to point out that the article does not deal with how courts in India have failed to appreciate concerns regarding hold-ups while issuing stays or ex-parte orders.

Kanika Chaudhary[64] has written about jurisdictional issues that the CCI might face due to the wording of the Competition Act that states that the act is applicable to anti-competitive behavior notwithstanding other laws and yet another section stating that competition law must be harmonized with existing laws. She argues that there is a need to restructure competition law in this regard to avoid conflicts.

The CUTS International report on the CCI[65] provides for an important resource on comments about the CCI and its judgments and media reactions to the CCI. The report submits that while the CCI is generally seen to be doing well in the media, several academics have argued that the CCI is riddled by legal lacunae, that it lacks teeth and that because most of its orders have been appealed in courts, and it lacks autonomy due to rules of procedure, it is not an effective or efficient forum and needs to be improved by further legislation. The same has been corroborated by a report in the Indian Express that speaks of new bills that were in the offing in 2012 that were aimed at giving the CCI more teeth. [66]

Peter Alexiadis[67] in his outlines general principles of ex post and ex ante intervention and how the two disciplines come into tension with each other when competition law is involved in a dispute along with any other legal regime such as IPR laws. He explores ways in which these two disciplines must be balanced. This article was used to understand how the ex-post decisions involving competition law inevitably are backward looking and adopt a narrow view of the product, looking largely at its demand side-substitutability. This helps explore the argument that a sector specific regulatory body could better address complex technical and economic questions specific to the industry, as opposed to litigation merely being played out in the courts.

George Cary and Mark W Nelson[68] have delved into the question of the role of antitrust in policing abuse by patent holders with royalty stacks in standard setting organisations. They have argued that it is important for a legal tool to police this abuse because while other areas of law may prove capable of addressing these issues, these disputes are, at their core antitrust disputes. And only antitrust law can ensure that private parties and government enforcement authorities can seek redress where there is harm to competition.

Suzanne Michael in her article[69] argues that SEP holders who have their patent incorporated as a standard stand to gain by increasing royalty rates beyond RAND terms and beyond their actual economic value as they hold a monopoly simply because they own the standard. She argues that this will harm consumer interest and slow innovation. She further argues that an ex-ante approach should therefore be taken in ordering remedies in these cases to protect consumer interest. She also looks into the question of holdups and injunctions in cases involving RAND commitment. But her argument about ex ante remedies in RAND cases is an interesting point relevant to the paper.

Anne Layne-Farrar, A Jorge Padilla and Richard Schmalensee[70] in their article delve into the question of what exactly would constitute FRAND terms in the context of licensing terms for essential IP in a standards setting organization. They have also analyzed the Georgia-Pacific guidelines and extending it to a standard setting organization and the numeric proportionality method proposed by courts in EU. They conclude that the Georgia-Pacific guidelines might work in FRAND disputes, that while this would leave FRAND basically undefined, it would be made an enforceable promise with an SSO and that these guidelines would provide sufficient direction and predictability in litigation. This article has been used to understand what kind of guidelines a regulatory body could be expected to codify for patent remedies in India.

Rahul Singh in his article[71] analyses how due to its nature, the CCI is not sector specific and is supposed to look at "anti-competitive behavior" in all sectors most of whom already have their own sector specific regulator. He argues that unlike sector specific regulators, the CCI can privately enforce orders and pursue claims for damages and that this makes the CCI better situated to deal with consumer welfare areas. He further argues that to reduce transaction costs, enhance legal certainty and predictability, enforcement of such disputes must be left in the hands of the CCI. This argument has been extended to argue that courts enforcing IPRs would be less suited to handle these matters and more likely to cause inefficiencies and unpredictability and a re-imagined, empowered CCI would be the best suited judge of these issues.

K.D.Raju in his article[72] analyses broadly the connection between IP laws and competition law in India. He argues that while the jurisprudence behind IPR and competition law has traditionally been viewed as incompatible with each other, in effect, they seek to further the same goals. He argues that the competition laws as they exist in India currently cannot effectively deal with the nexus with IPR and suggests that the CCI come out with IPR specific guidelines to deal with upcoming litigation in the area.

Apoorva and Shreeja Sen[73] in their report trace the stay orders in courts across India holding up CCI investigations and how this is symptomatic of the fact that courts do not understand concerns regarding hold-ups and reverse hold-ups in IP related cases where time is of the essence.

Karthik Jayakumar[74] has written about the Bhatia International case regarding arbitration, we use this to merely draw parallels with IPR laws in that just as in Bhatia the court held that arbitrations having their seat outside India were still within the jurisdiction of Indian courts and this was overruled in the BALCO case , the role of the CCI also has to be made clear through legislative reform or judicial pronouncement for the regulator to address questions of competition law across different sectors without a threat of stay orders from courts.

Nick Robinson in his article[75] speaks of good governance courts, and of how courts in India have used good governance and right to life to become essentially second governments regulating everything from encouraging the use of natural gas to regulated encroachment on preservation of public forests to guidelines for school safety at the expense of government and independent regulators. While Nick Robinson makes a larger argument about good governance courts, it is used only for the limited purpose of supporting the argument made in the paper about judicial interventions allowing for anti-competitive behavior.

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[6] 332 U.S. 392 (1947)

[7] 371 U.S. 38 (1962)

[8] 448 F.2d 43 (9th Cir. 1971).

[9] 466 U.S. 2 (1984).

[10] Antitrust Guidelines for the Licensing of Intellectual Property, U.S. Department of Justice and Federal Trade Commission, Available at: http://www.usdoj.gov/atr.public.guidelines.ipguide.htm (Last Accessed: 1/12/14)

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[13] Eileen Mc Dermot, Managing Intellectual Property, No.187, March 2009

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[16] 708 F.2d 1081(7th Cir.) Cert. Denied. 464 U.S.955 (1983

[17] Id.

[18] Richard J Gilbert & Carl Shapiro, An Economic Analysis of Unilateral Refusals to License Intellectual Property, Proceedings of The National Academy of Sciences of the United States of America, Vo.93, No.23 (Nov.12, 1996), pp.12749-12755.

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[21] 410 U.S. 366 (1973)

[22] 436 U.S. 585 (1985)

[23] 194, F. 2d, 484,487 (1st Cir), cert. denied, 344, U.S. 817 (1952

[24] 326 U.S. 1 (1945).

[25] 472, U.S. 585.

[26] Ref. Case 6 and 7/1973, Commercial Solvents v. Commission 1974 ECR 223.

[27] Case 22/1978 (1979), ECR, 1869.

[28] Ref. C. 27/1976, United Brands v. Commission (1978) , ECR 207.

[29] Martin Cave & Peter Crowther, Competition Law Approaches to Regulating Access to Utilities: The Essential Facilities Doctrine, Rivisita Internazionale Di Scienze Sociali, Anno 103, No.1, Interconnection Pricing Workshop (Milan April 7-8 , 1995), pp. 141-157

[30] Case C-7/97, (1999) 4 CMLR 112

[31] B&I Line plc. V. Sealink harbors Ltd, a Commission of 11 June 1992, (1992), C.M.L.R 255 at paragraph 4.

[32] Objective justifications such as shortage of the product were accepted in Case77/77 Benezine en Petroleum Handlesmaatschappij BV v. British Petroleum (1978) ECR 1513

[33] Case T-69/89 Radio Telefis Eireaan v. Commission (1991) ECR II-485 on appeal Cases C-241P and 242/91P RTE and ITP v. Commission (1995) ECR I-743.

[34] Albertina Albros -Llorens, The Essential Facilities Doctrine in EC Competition Law, the Cambridge Law Journal, Vol.58, No.3 (Nov.,1999) , pp. 490-492.

[35] 1966, p. 570-71

[36] Gregory T Gundlack & Paul N Bloom, The Essential Facility Doctrine: Legal limits and Antitrust Considerations, Journal of Public Policy and Marketing, Vol.12, No.2 (Fall,1993), pp.156-169.

[37] Spencer Weber Waller & William Tasch, Antitrust Law Journal, Vol. 76, No. 3 (201), pp. 741-767.

[38] Daniel E Troy, Unclogging the Bottle neck: A New Essential Facility Doctrine, Columbia Law Review, Vol. 83, No.2, (Mar., 1983), pp.441-487.

[39] Ann Armstrong et al., The Smartphone Royalty Stack: Surveying Royalty Demands for the Components Within Smartphones, available at http://www.wilmerhale.com/uploadedFiles/Shared_Content/Editorial/Publications/Documents/The-Smartphone-Royalty-Stack-Armstrong-Mueller-Syrett.pdf (last accessed 15 May, 2015);

[40] Damien Geradin, Pricing Abuses by Essential Patent Holders in A Standard Setting Context: A View from Europe, Antitrust Law Journal, Vol. 76, No. 1 (2009), 329-357; Damien Geradin, Ten Years of DG Competition Effort to Provide Guidance on the Application of Competition Rules to the Licensing of Standard Essential Patents: Where Do We Stand?, http://www.law.northwestern.edu/faculty/programs/searlecenter/workingpapers/documents/Geradin_DG_Competition.pdf (last accessed 19 May, 2015).

[41] Bouthenia Guermazi and David Satola, Creating the "Right" Enabling Environment for ICT, in ROBERT SCHWARE (ED.), E-DEVELOPMENT: FROM EXCITEMENT TO EFFECTIVENESS (2005, World Bank Publications).

[42] Damien Geradin and Miguel Rato, Can Standard-Setting Lead to Exploitative Abuse? A Dissonant View on Patent Hold-up, Royalty-Stacking and the Meaning of FRAND, 3 Eur. Competition J. 101,103 (2007).

[43] Michael A. Carrier, A Roadmap to the Smartphone Patent Wars and FRAND Licensing, Competition Policy International, CPI Antitrust Chronicle April 2012 (2) at 2.

[44] Mark A Lemley and Carl Shapiro, Patent Holdup and Royalty Stacking, Texas law Review, Vol.85, 2007, 1991-2050.

[45] Mark A Lemley and Carl Shapiro, A Simple Approach to Setting Reasonable Royalties for Standard Essential Patents, Berkeley Technology Law Journal, Vol.28, 2013 at 1136-1137

[46] Phillipe Baechtold, IPRs and Standards Setting: Some Issues, available at http://www.wipo.int/edocs/mdocs/sme/en/wipo_smes_ge_07/wipo_smes_ge_07_www_81604.ppt (last accessed 19 May, 2015) at 1

[47] Richard Schmalensee, Standard-Setting, Innovation Specialists and Competition Policy, 57(3) THE JOURNAL OF INDUSTRIAL ECONOMICS, 526-552 (September, 2009).

[48] Gertjan Kuipers et.al, A Further Perspective on Apple v. Samsung: How to Successfully Enforce Standard Essential Patents in the Netherlands, Berichten Industriele Eigendon, Aug. 2012, available at http://www.debrauw.com/News/Publications/Documents/artikel1_Kuipers-Groeneveld-Lamme.pdf (last accessed 21 May, 2015) at 222

[49] Leon Greenfield, et al., SEP Enforcement Disputes, Beyond the Water's Edge: A Survey of Recent Non US Decisions, Antitrust, Vol.27, No.3, 2013 at 3.

[50] Damien Neven and Miguel de la Mano, Economics at DG Competition, 2009-2010, 37(4) REVIEW OF INDUSTRIAL ORGANISATION, 309-333 (December, 2010).

[51] Björn Lundqvist, Standardisation under EU Competition Rules and US Antitrust Laws, (2014).

[52] James E Abell, Setting the Standard: A Fraud-based approach to Antitrust pleading in standard development, 75(4) UNIVERSITY OF CHICAGO LAW REVIEW 1601-1631 (2008).

[53] Koren W. Wong-Ervin, Standard-Essential Patents: The International Landscape, available at https://www.ftc.gov/system/files/attachments/key-speeches-presentations/standard-essential_patents_the_intl_landscape.pdf (last accessed 22 May, 2015) at 14.

[54] Ravikant Bharadwaj, Standard Setting in India: Competition Law and IP Issues, IMJ, Vol.5, 2013 at.1, 2.

[55] Anubha Sinha, Micromax Files Complaint: CCI Orders Investigation into Ericsson's FRANDLY Licensing, SpicyIP, 29 November 2013, available at http://spicyip.com/2013/11/micromax-files-complaint-cci-orders-investigation-into-ericssons-frandly-licensing.html (last accessed 22 May, 2015).

[56] Prashanth T Reddy, Interim Justice: Troubling Trend, Business Standard, 30 March 2013, available at http://www.business-standard.com/article/opinion/interim-justice-troubling-trend-113033000223_1.html (last accessed 23 May, 2015).

[57] Vaibhav Choukse, The Debate on Essentials, BUSINESS LINE, (March 29, 2015).

[58] John E Matheson, Patents and Standards, FRAND Challenges for India's ICT Sector, SpicyIP Discussion paper series, Paper no. 201401, 2014, available at: http://spicyip.com/wp-content/uploads/2014/09/FRAND-Challenges-for-Indias-ICT-Sector.pdf (last accessed 21 May, 2015) at 7

[59] Pankaj Soni and Satyoki Koundinya, Taking the FRANDLY Approach, a First Look at FRAND Battles in India, Remfry and Sagar, available at http://www.iam-media.com/Intelligence/IAM-Yearbook/2015/Country-by-country/Taking-the-FRAND-ly-approach-a-first-look-at-FRAND-battles-in-India (last accessed 21 May, 2015).

[60] Competition Commission of India, Guide to Abuse of Dominance, available at http://www.cci.gov.in/images/media/Advocacy/Awareness/Abuse_Dominance.pdf (last accessed 21 May, 2015).

[61] Samir Gandhi et al., Enforcement Trends in India under Competition Act 2002, Practical Law, 1 June 2013, available at http://uk.practicallaw.com/2-532-3777?q=&qp=&qo=&qe=#a456237 (last accessed 11 May, 2015).

[62] Pratibha Jain et.al., Competition Law in India, A Report on Jurisprudential Trends, Nishit Desai and Associates, available at http://www.nishithdesai.com/fileadmin/user_upload/pdfs/Research%20Papers/Competition_Law_in_India.pdf

[63] Archana Shanker and Shraddha Singh Chauhan, How to use Patent and Competition Law Effectively in Tandem, 1 September 2014, Managingip, available at http://www.managingip.com/Article/3382427/How-to-use-patent-and-competition-law-effectively-in-tandem.html (last accessed 20 May, 2015).

[64] Kanika Chaudhary Nayar, India: Jurisdiction of the CCI: Navigating Through Muddy Waters, 28 April 2015, Mondaq, Available at: http://www.mondaq.com/india/x/392738/Antitrust+Competition/Jurisdiction+Of+The+CCI+Navigating+Through+Muddy+Waters

[65] CUTS International, Competition Commission of India Through the Eyes of the Media: Doing Well!, 17 September 2012, available at http://www.cuts-ccier.org/pdf/Competition_Commission_of_India_through_the_eyes_of_the_media-Doing_well.pdf (last accessed 13 May, 2015) at 13.

[66] Bureau, Bill Aimed at Giving CCI More Teeth Tabled, Indian Express, 11 December 2012, Available at: http://archive.indianexpress.com/news/bill-aimed-at-giving-cci-more-teeth-tabled/1043320/

[67] Peter Alexiadis, Balancing the application of ex post and ex ante disciplines under community law in electronic communications markets: square pegs in round holes? RIGHTS AND REMEDIES IN A LIBERALISED AND COMPETITIVE INTERNAL MARKET (2012).

[68] George S Cary, Mark W Nelson et al, the case for Antitrust law to police the patent holdup problem in standard setting, 77(3) ANTITRUST LAW JOURNAL 913-945 (2011).

[69] Suzanne Michel, Bargaining for RAND Royalties in the Shadow of Patent Remedies Law, 77(3) ANTITRUST LAW JOURNAL 889-911 (2011).

[70] Anne Layne-Farrar, A Jorge Padilla and Richard Schmalensee, Pricing Patents for Licensing in Standard-Setting Organisations: Making Sense of FRAND Commitments, 74(3) ANTITRUST LAW JOURNAL 671-706 (2007).

[71] Rahul Singh, The Teeter Totter of Regulation and Competition: Balancing the Indian Competition Commission with Sectoral Regulators, Washungton University Global Studies Law Review, Vol.8, Issue 1, January 2009 at 97-102.

[72] K D Raju, The Inevitable Connection Between Intellectual Property and Competition Law: Emerging Jurisprudence and Lessons for India, Journal of Intellectual Property Rights, Vol.18, No.2, 2013, at 111-122.

[73] Apoorva, Shreeja Sen, Multiple Court Stays Hold UP CCI Investigations, Livemint, 28 November 2014, available at http://www.livemint.com/Politics/5Lm7tjIuogbBsm6qRb4exH/Multiple-court-stays-hold-up-CCI-investigations.html (last accessed 23 May, 2015).

[74] Karthik Jayakumar, Bhatia v. Balco, Who Should Stand?, 18 August 2013, available at http://blog.athirtyeight.com/2013/08/bhatia-v-balco-who-should-stand.html (last accessed 22 May, 2015).

[75] Nick Robinson, Expanding Judiciaries: India and the Rise of the Good Governance Court, Washington University Global Studies Law Review, Vol.8, Issue 1, January 2009 at 21.

For more details visit https://cis-india.org/a2k/blogs/pervasive-technologies-project-working-document-series-document-2-literature-review-on-competition-law-ipr-access-to-100-mobile-devices-1

National IPR Policy Series: RTI Requests by CIS to DIPP + DIPP Responses

nehaa — 2015-04-26T08:47:00Z

In earlier blog posts, we have discussed the development of India’s National IPR Policy (“the Policy”); comments by the Centre for Internet and Society (“CIS”) to the IPR Think Tank before the release of the first draft of the Policy and CIS’ comments to the IPR Think Tank in response to the first draft of the Policy. Continuing our National IPR Policy Series, this article documents our requests to the Department of Industrial Policy and Promotion (“DIPP” / “the Department”) under the Right to Information (“RTI”) Act, 2005 and the responses of the Department.

View the PDF here.

Details of RTI Requests Filed by CIS

In February, 2015, CIS had filed three RTI requests with the DIPP. The first request was four-pronged, seeking information related to first, the process followed by the Department in the creation of the IPR Think Tank; second, details and documents of a meeting held to constitute the Think Tank; third, details and documents of all/multiple meetings held to constitute the Think Tank; fourth, details of a directive/directives received from any other Government Ministry/authority directing the constitution of the Think Tank and fifth, the process of shortlisting the members of the Think Tank by the DIPP.

In our second RTI request, first, we requested details of the process followed by the Think Tank in the formulation of the Policy; second, we requested all documents relating to a meeting held for the formulation of the Policy; third, we requested all documents held for multiple meetings for the creation of the Policy and fourth, we requisitioned all suggestions and comments received by the Think Tank from stakeholders before the release of the Policy, that is, those suggestions/comments received in November, 2014.

In our third RTI request, also filed on also filed in February, 2015, we had asked the DIPP to indicate all suggestions and comments received by the IPR Think Tank from different stakeholders in response to the first draft of the National IPR Policy (to have been submitted on or before January 30, 2015 as per DIPP’s Public Notice).

Responses by DIPP to CIS' RTI Requests

The DIPP replied to our three RTI requests in multiple stages. At first, in a letter dated 12 February, 2015, we were directed to resubmit our application , seemingly because we hadn’t addressed the Postal Money Order to the correct authority, and were directed to do the same. Funnily enough, we received three other responses – one for each of our RTI requests (the first of these is not dated; the second one is dated 19 February, 2015 and then revised to 26 February, 2015; and the third is also dated 26 February, 2015).

The First Response: On the Constitution of the Think Tank

In the first of their responses to these requests, the Department has grouped our queries into five questions and provided a point-wise response to these questions, as under:

Please indicate in detail the process followed by the Department of Industrial Policy and Promotion for the constitution for an IPR Think Tank to draft the National Intellectual Property Rights Policy under Public Notice No. 10 (22)/2013 –IPR-III dated November 13, 2014 (sic).

In its response the Department notes that it convened an interactive meeting on IPR issues which was chaired by the Minister for Commerce and Industry (Independent Charge), i.e., Ms. Nirmala Sitharaman. As per the Department’s response, this meeting was held on 22 September, 2014 (“the Meeting”) and was aimed at discussing issues related to IPRs, including finalization of the Terms of Reference for IPR Think-Tank proposed to be established (sic.) The Department also notes that representatives from various Ministries/Departments, Member of various Expert Committees constituted by the Department, besides IP experts and other Legal Practitioners (sic) were invited to the meeting. The Department then states that the composition of the Think Tank was decided on the basis of the discussions held in the department after the said interactive Meeting (sic).

If there was a meeting held to decide on the same, please include all necessary documents including the minutes of the meeting, records, documents, memos, e-mails, opinion, advices, press releases, circulars, orders etc in which the constitution of the aforesaid mentioned IPR Think Tank was decided (sic).

The Department has attached the Minutes of the Meeting held on 22 September, 2014 (“the Minutes”) and states that there were no documents or papers that were circulated at this meeting and that the participants were asked to present their views on various IP issues at this meeting.

Excerpts from the Minutes

The Secretary of the Department (Shri Amitabh Kant) refers to a (then) recent announcement made by the Minister of State for Commerce and Industry (“the Minister”) on the formulation of the National IPR Policy and the establishment of an IPR Think Tank and states that the meeting had been convened to discuss on various IPR issues with IP experts and legal practitioners so that it would provide essential inputs to the policy needs of the department (sic). The Minutes report that Mr. Kant further stated that the objective of the department was to have a world class IP system and that this included a comprehensive National IPR Policy and which takes care of various issues like IP creation, protection, administration and capacity building (sic). He is also reported to have said that such a stakeholder interaction was important for the government to seek inputs.

The Minister is reported to have said that the purpose of the meeting was to constitute an IP Think Tank that would regularly provide inputs to all IP policy needs of this department as well as advice government in disparate legal aspects (sic). The Minutes also report her to have said that the department would finalize an IP policy within ninety days of the Meeting, based on the inputs of the participants.

According to the Minutes, various issues emerged from the discussion. Inter alia, these include first, that the proposal to constitute the Think Tank was a welcome measure, along the lines of similar initiatives taken by Australia, South Kora, the United Kingdom and the United States of America; second, that in order to remove misconceptions held by foreign stakeholders about IP enforcement in India, there was a need to highlight judgments of Indian courts that were favorable to foreign stakeholders and MNCs; third, that the national policies on telecom, manufacturing and IP ought to be integrated; fourth, that the focus of the Policy should be increase in creation of IP including commercialization of IP and strengthening human capital and IP management and fifth, that empirical studies should be conducted to examine the feasibility of Utility Models protection, that there was a need to revise the law on Geographical Indications and that the Policy should include protection for traditional knowledge and guidelines for publicly funded research.

The Minister is then said to have identified six major areas during the discussion, including IP institution, legislation, implementation, public awareness, international aspects and barriers in IP growth as areas to be covered under the Policy.

Who attended the Meeting?

Attached with the Minutes was also a list of participants who attended the Meeting. Out of the thirty six attendees, I have not been able to locate a single individual or organization representing civil society. Participants include representatives from various government departments and ministries, including inter alia, the DIPP, the Department of Commerce, the Ministry of External Affairs, the Ministry of Information and Broadcasting, the Copyright Division from the Department of Higher Education of the Ministry of Human Resources Development, the Office of the Controller General of Patents, Designs and Trademarks and the Ministry of Culture. The Meeting was also attended by representatives of corporations and industry associations, including FICCI, CII and Cadila Pharmaceuticals; in addition to representatives from law firms including Luthra and Luthra, K&S Partners and Inventure IP and academics including, inter alia, faculty from the Asian School of Business, Trivandrum, Indian Law Institute, Delhi, Tezpur University, Assam, National Law University, Delhi, NALSAR University of Law, Hyderabad, the Indian Institute of Technology, Madras and the National Law School of India University, Bangalore.

If there were multiple meetings held for the same please provide all necessary documents including the minutes of all such meetings, records, documents, memos, e-mails, opinions, advices, press releases, circulars, orders etc. for all such meetings held (sic).

The Department answered, “No”; which I’m taking to mean that there weren’t other meetings held for the formulation of the Think Tank or the Policy. This is interesting, because the Minutes (referred to earlier) speak of another inter-ministerial meeting including IP experts and legal practitioners slated to be held around the 10^th of October, 2014, to discuss the framework of the Policy.

If a directive or directives were received by the Department of Industrial Policy and Promotion from any other government body to constitute such a think tank, please provide a copy of such a directive received by the DIPP from any Government authority, to constitute such a Think Tank (sic).

The Department answered, “No”; which I’m taking to mean that there was no communication received by the Department to constitute this Think Tank.

Please indicate in detail the process of shortlisting the members of the IPR Think Tank by the Department of Industrial Policy and Promotion or any other body that was responsible for the same (sic).

The Department replied that the answer to this was the same as that to the first question.

The Second Response: The Drafting of the Policy

The second of the Department's responses to our requests came in the form of separate responses to each of our four questions, as under:

Please indicate in detail the process followed by the IPR Think Tank constituted by the Department of Industrial Policy and Promotion via Public Notice No. 10 (22)/2013-IPR-III dated November 13, 2014 while framing the first draft of the National IPR Policy dated Dec. 19, 2014 (sic).

The Department stated that the IPR Think Tank conducted its meetings independently without any interference from the Department. The Department then stated that the Think Tank had received comments from stakeholders via a dedicated email id and conducted the interactive meeting with stakeholders while framing the draft on the National IPR Policy.

If there was a meeting held to decide on the same, please include all necessary documents including the minutes of the meeting, records, documents, memos, e-mails, opinion, advices, press releases, circulars, orders, suggestions etc. related to drafting of such National IPR Policy Think Tank chaired by Justice Prabha Sridevan (sic).

The Department replied that since the IPR Think Tank had decided its process by themselves (sic), the Department do not have the minutes of the meeting etc. conducted by the IPR Think Tank (sic). It attached with its reply a copy of the press releases announcing the composition of the Think Tank and asking stakeholders to submit comments to the first draft of the Policy.

If there were multiple meetings held for the same, please provide all necessary documents including the minutes of all such meetings, records, documents, memos, e-mails, opinions, advices, press releases, circulars, order suggestions etc. for all such meetings held (sic).

The Department replied that the response to this was the same as that to the earlier question above.

Please provide all the suggestions and comments received by the IPR Think Tank from stakeholders after the DIPP issued Public Notice No. 10/22/2013-IPR-III dated 13.11.2014 asking for suggestions and comments on or before November 30, 2014 (sic).

The Department replied that the comments and suggestions were received by the Think Tank directly and that therefore, the Department was not in a position to provide the same.

The Third Response: Stakeholder Comments

In its third and final response to our requests, the DIPP replied to our query as under:

Please indicate all the suggestions and comments received by the IPR Think Tank by different stakeholders on or before January 30, 2015 on its first draft of the National Intellectual Property Policy submitted by the IPR Think Tank on December 19, 2014.

The Department said that the suggestions and comments on the draft on National IPR Policy have been received by the IPR Think Tank directly. As such this Department is not in a position to provide the same (sic.).

Observation on the DIPP's Responses

Prima facie, the responses by the Department are rather curious, leading to a range of oddities and unanswered questions.

Who Will Watch the IPR Think Tank

In its response to our first RTI request, the Department quite clearly stated that it decided the composition of the IPR Think Tank based on discussions in a meeting that it convened, which was also chaired by the Minister of State for Commerce and Industry, the parent ministry of the DIPP. In the same response, the Department also stated that it had not received any directive from any other ministry/government department directing the constitution of the IPR Think Tank, leading to the conclusion that this decision was taken by the DIPP/the Ministry of Commerce and Industry itself. Subsequently however, the Department justified its refusal to furnish us with documents leading to the development of the first draft of the National IPR Policy (contained in our second RTI request) by stating that the IPR Think Tank conducted its business without any interference from the Department, and that the Department did not have access to any of the submissions made to the IPR Think Tank or any of the internal minutes of the meetings etc. that were a part of the process of drafting the IPR Policy.

Various press releases by the DIPP have stated that it has constituted the IPR Think Tank, and that the purpose of the IPR Think Tank would be to advise the Department on IPR issues. Visibly, the Department intends for the IPR Think Tank to play an active role in shaping India’s IP law and policy, including suggesting amendments to laws wherever necessary. It is concerning therefore that on the question of accountability of the IPR Think Tank, the DIPP remains silent. It may be argued perhaps, that the IPR Think Tank constitutes a ‘public authority’ under Section 2(h)(d) of the Right to Information Act, 2005 (“RTI Act”). In that case, the IPR Think Tank would have to fulfill, inter alia, all of the obligations under Section 4 of the RTI Act as well as designate a Public Information Officer. Alternatively, given that the IPR Think Tank has been constituted by the DIPP and performs functions for the DIPP, the Public Information Officer of the DIPP would have to furnish all relevant information under the RTI Act (including the information that we sought in our requests, which was not provided to us).

Who are the Stakeholders

Even a preliminary look at the list of participants at the Meeting (based on which the Department constituted the IPR Think Tank) reveals that not all stakeholders have been adequately represented. I haven’t been able to spot any representation from civil society and other organizations that might be interested in a more balanced intellectual property framework that is not rights-heavy. The following chart (based on a total sample size of 36 participants, as stated in the list of participants provided to us by the DIPP) will help put things in perspective.

What Could've Been Done?

Setting aside arguments on its necessity, let us for the moment assume that this drafting of the National IPR Policy is an exercise that needed to have been undertaken. We must now examine what might possibly be the best way to go about this.

In 2014, the World Intellectual Property Organization (“WIPO”) (based on whose approach the Policy seems to have been based- at least in part), produced a detailed Methodology for the Development of National Intellectual Property Strategies, outlining a detailed eight step process before a National IP Policy was implemented in a Member State. While this approach is one to be followed by the WIPO and might not be entirely suited to India’s drafting exercise, specific sections on the national consultation process as well as the drafting and implementation of national intellectual property strategies might prove to be a decent starting point.

(More on this in an upcoming article).d

Where Do We Go From Here?

The DIPP’s responses have left me with more questions, probably the subject of more RTI requests. Is the IPR Think Tank a public authority for the purposes of the Right to Information Act, 2005? To whom should questions of informational accountability of the IPR Think Tank be addressed, if there is no information available on the IPR Think Tank, and the DIPP claims to have no access to it? Do we need to re-examine the draft National IPR Policy given that there has been inadequate representation of all stakeholders? What were the suggestions made by different stakeholders, and (how) have these been reflected in the first draft of the Policy? Was there an evaluation exercise conducted before the first draft of the Policy was released in order to better inform the formulation of the Policy?

We will be looking at these and other questions as they arise, and sending some of these to the DIPP in the form of RTI requests. (Watch the blog for more).

For more details visit https://cis-india.org/a2k/blogs/national-ipr-policy-series-rti-requests-by-cis-to-dipp-dipp-responses

Patent Valuation and License Fee Determination in Context of Patent Pools

vikrant — 2014-07-09T09:46:16Z

The focus of this research paper is on an extremely limited though important aspect of patent pools — that of patent valuation and license fee determination. It is important to bear in mind that the concept of patent valuation and license fee determination as it exists independently is modified when it is applied in context of patent pools.

I. Introduction

A patent pool is essentially “An agreement between two or more patent owners to aggregate (pool) their patents and to license them to one another or third parties. Pools usually offer standard licensing terms to licensees and allocate a portion of the licensing fees (royalties) to patent owners according to a pre-set formula or procedure.[1]

A patent pool particularly faces intense scrutiny by way of competition/ antitrust law and each step of structuring of a patent pool has to be done keeping the prevalent norms of antitrust law in context. This article merely brushes with the antitrust aspect, as a discussion on that topic is beyond the scope of this particular article. However, suffice is to say that like other aspects of structuring of a patent pool, patent valuation and licensing fee determination is also subject to antitrust law concerns.

Part II of this research paper is a discussion as regards factors which determine patent value in context of a patent pool. Similarly, Part III is a discussion as regards factors that determine license fee in context of a patent pool. Thereafter, Part IV discusses the methods which are applied for patent valuation and license fee determination. A number of these methods are independent evaluation methods and hence their dynamics when applied in context of patent pools may need to be altered in light of the discussion in Parts II and III. Part V discusses certain aspects of actual patent pools in the technological field to better understand the principles which have been discussed in Parts II-IV. Finally, Part VI concludes this research paper.

II. Determination of Patent Value in a Patent Pool

One of the prominent pillars of a patent pool is an appropriate patent valuation process. Patent valuation is a difficult and subjective task.[2] Moreover, the result of a patent valuation independently outside of a pool might be quite different from when it is part of a pool transaction. A “pool regularizes the valuation of individual patents - making, as the United States Supreme Court put it, ‘a division of royalties according to the value attributed by the parties to their respective patent claims’”.[3] However, this value attribution process is not an arbitrary one but incredibly dynamic, and constantly evolving. This difficulty is furthered by the fact that the term “patent value” itself is subject to interpretation. Patent value essentially comprises of the economic benefit that the patent can bestow.[4]

A number of factors as discuss hereinafter determine the value of a patent. It is not necessary though that all the factors would come into play in context of every exercise of valuation of a patent in a pool. The factors determining patent value can be largely classified into a discussion as regards the types of patents in a patent pool in context of their relative importance and other complementary factors which further affect such importance.

A. Categories of Patents in a Patent Pool

Patents in a pool can be classified based on their necessity and quality. Thus, arises the concept of essential and non-essential patents and strong and weak patents.

Essential and Non-Essential Patents
As the terms indicate, essential patents are those which are imperative for the success of pool creation and thus naturally have considerably more value. Non-essential patents on the other hand are patents which though not imperative may bring efficiency advantages to the pool. However, what exactly comprises an essential patent is a subjective and constantly evolving definition determined by each patent pool according to its commercial needs and capabilities. For example, the number of patents in the MPEG-2 pool, all of which are declared to be essential to the MPEG-2 standard, increased from 27 in 1997 to more than 900 in 2010.[5]

Essential patents naturally have more economic value than non-essential patents.[6] “A pool that includes non-essential patents can increase prices for some consumers, while decreasing prices for other consumers.”[7] Also, inclusion of inessential patents can raise potential concerns about foreclosure of alternative technologies and higher royalties for some licenses than would have occurred if these patents were excluded from the pool.[8] These concerns though should be balanced against the costs of excluding potentially essential patents from the pool.[9] Such concerns were raised in context of the DVD 3C patent pool.[10] Thus, it has to be decided on a case by case scenario as to whether the patent pool will include only essential patents or both essential as well as non-essential patents.

“Whether a patent pool improves a market’s transactional efficiency depends on the competitive characteristics of the patents included within the pool’s offering.”[11] Properly demarcating all required patents for a technology is important during patent pool formation. Otherwise it may create a “hold out” problem where a patent owner will “hold out” for higher royalties, “knowing that the manufacturer has individually negotiated for and already acquired the rest of the necessary … patent licenses, and that the value of all those licenses depends on obtaining a license to its own patent.”[12] Essentiality of a patent can be determined based on certain characteristics of patents:

a. Blocking Patents
Blocking patents comprise of improvement patents on an existing technology. Thus, the improvement patent is deemed to be “subservient” to the earlier, “dominant’ patent”[13] and the subservient and dominant patents are said to block one another.[14] This is so because, the subservient patent cannot be exploited without infringing upon the dominant patent.[15] Likewise, the dominant patent cannot be developed in the improved embodiment without permission from the subservient patentee.[16] For example, the Wright brothers patents for aeroplane wings were improved upon by Glenn Curtiss and Alexander Graham Bell by using a set of wing flaps, or ailerons. The Curtiss patent, however, was found to infringe upon the Wright patent. As a result, Curtiss had no legal right to make, use, or sell his ailerons without a license from the Wright brothers, and the Wright brothers had no legal right to make, use, or sell Curtiss's commercially successful form of the stabilizing device. Their patents mutually infringed and blocked one another and they had to form a patent pool.[17] Similarly, public key encryption method was devised and patented at Stanford University, and licensed to Cylink. Soon thereafter, a team of scientists at the Massachusetts Institute of Technology developed and patented an algorithm, and licensed its use to RSA. The RSA algorithm was successfully commercialized and became an industry standard. Cylink and RSA constituted blocking rival patents and the issue was resolved by formation of a patent pool.[18]

b. Complementary Patents
Complementary patents cover technologies that are largely lacking or inefficient absent a license to a separate patented product.[19] They occur as a consequence of independent invention. Thus, value of complementary patents increases when combined with a separate patented invention; they act synergistically, each increasing the value of the other.[20] “Two products or technologies are complements if an increase in the price of one of them reduces the demand for the other.”[21] For example, production of a light bulb requires patent rights to both the vacuum bulb as well as the filament.[22] A patent pool that only contains complementary patents may have substantial market power if the pool does not face competition from alternative or substitutable technology.[23] This though, could lead to the occurrence of royally stacking i.e. double-marginalization, which can occur when firms sell or license complementary products or technologies and demand is sensitive to price.[24] It refers to the addition of successive mark-ups by suppliers in a vertical relationship.[25]

c. Competing Patents

Competing patents result when there exist totally novel products or processes that provide market substitutes for patented goods, or when inventors sufficiently modify existing patented goods so that the original patent is deemed “invented around” and not infringed.[26] “Two products or technologies are substitutes if an increase in the price of one of them increases the demand for the other.”[27] A patent pool may obtain market power by obtaining control over substitutable patents too.[28] An individual who acquires the rights to a competing patent eliminates or significantly lessens his need for competing patents within or outside of the pool.[29] Thus, the value of a pool consisting of competing patents increases with acquisition of substitute patents.[30]

Strong and Weak Patents
A patent pool can comprise of strong as well as weak patents. The value accorded to the patents would naturally be in accordance with its “strength.” “‘Low patent quality’ is shorthand for such problems as overlapping claims, inappropriately broad claims, slow patent prosecution, and patents on obvious inventions.”[31] Patents are “probabilistic rights”[32] Their scope and extent often remains probabilistic until their claim determination which may often be done only upon adjudication. Similarly in situations of a patent flood,[33] the overall quality of patents may become lower.[34] The additional protection of the pool affords a weak patent enforcement rights that it may not have secured standing alone.[35] Thus, even weak and invalid patents become important and can be used to exclude competitors, for example for litigation threats.[36]

Some patent pools contain explicit agreements to support weak patents, such as covenants not to challenge patents, joint defense agreements, and allocation of patent rights to parties who are best able to defend them.[37] Some patent pools achieve a similar effect not by explicit agreements, but by creating an institutional environment where patentees find that it is mutually advantageous to recognize each other’s patents.[38]

B. Other Factors Determining Patent Value in Context of Patent Pool

Besides the patents themselves, other complementary criteria impact on patent value. These comprise of the holistic environment in which the patents subsist, as discussed hereinafter.

Subject matter of Invention
“Value is highly dependent upon the subject matter of the invention.”[39] Certain subject matter fields or innovations do not have sufficient commercial importance or market demand to warrant investments.

Scope of Invention
A particular subject where there is extensive minefield of patents already in existence is less likely to have considerable patent value due to the limited patent scope as opposed to a field where patents are relatively lacking and there is possibility of a broader patent scope. Analogously, “value of a patent is derived from an ability to preclude others from practicing the unique innovation described by the words of the patent’s claims.”[40] “Generalizing, a patent employing broad claim language is typically more valuable than a patent of narrowly written claims in the same technology arena.”[41]

Size of Patent Pool
The size of a patent pool i.e. the number of its members and their patents is an important facet in determining the value of patents involved. Greater the number more are the governance issues as well as royalty determination issues, which in turn affect the valuation of the patents. This though does not imply that pools should be of a specific size, only that their size should meet efficiency demands.

Value of Patent Pool
The patents under the purview of a patent pool determine the pool’s value which in turn determines the value of the patents within as well as out of the pool. Value of a patent pool may be limited if certain holders of essential patents are not members.[42] This may occur due to various reasons such as if it was perceived that the patent may have more value as an independent entity, or due to strategic interests, or choice of joining different pools.[43] Correspondingly, if the patent pool does not contain all the patents it cannot curtail royalty stacking issues for the users. For example, Alcatel-Lucent pursued infringement claims for patents that it alleged covered the MPEG-2 standard and were not in the pool.[44]

While it is evident that collecting all necessary patents where the end product or standards is determined is extremely difficult, it becomes considerably more difficult where there is no predetermined or identifiable end-product.[45]

Patent Portfolio
Certain academic studies are of the opinion that “the real value of patents lies not in their individual significance, but instead in their aggregation into a patent portfolio: a strategic collection of distinct-but-related individual patents that, when combined, confer an array of important advantages upon the portfolio holder.”[46] This theory has been applied to explain the patent paradox where the patent intensity, i.e. patents obtained per research and development dollar has risen dramatically even as the expected value of individual patents has diminished.[47] Thus, greater the control of an entity over a portfolio of patents, more would be its negotiation power in context of valuation.

Signaling
It has been opined that the value of patents inheres not so much in the exclusivity they confer upon inventors, but rather in their ability to serve as credible signals.[48] Firms use patents to credibly convey information about the invention to the market who otherwise might not be willing to expend the costs necessary to obtain the information.[49]

Defensive Aspect
Patent value is also ascertained based on its use to serve as an insurance, whereby competing firms use them as “bargaining chips” to negotiate and secure certain niches in the marketplace.[50] This is so especially from the negotiation as well as the litigation viewpoint.

Valuation Dynamics
In context of certain subject matters, inability of the patents to be valued or possibility of dynamic changes in value creates problems in structuring the patent pool, or it might lead to issues of according over-value or under-value. For example, in the process of biological research, where hypotheses are often adjusted and experimentation continually refined, it is impossible to anticipate the particular value of a given research tool for an investigative procedure.[51] Similarly, in context of the Human Genome Sciences, the patent for the gene that encodes CCR5 protein, was likely not valued very highly, because of unsurity of its utility, which changed when independent research established its importance in the fight against HIV.[52]

C. Role of Independent Evaluator

Often, independent experts in the relevant technology are employed for patent valuation purposes. Their role includes the responsibility of providing a mechanism for determining the market value of each participating patent for the purpose of setting appropriate royalty rates within the patent pool.[53] Also, they would evaluate the current state of the art and determine which patents are essential and which aren’t.[54] An evaluator’s is a continuing responsibility throughout the existence of the duration of the patent pool to monitor developments in the field so as to ensure each patent’s essentiality and incorporate additional patents if necessary.[55] Concerns though have been expressed as regards the expert’s ability and impartiality.[56]

III. Determination of License Fee for a Patent Pool

Theorists, have suggested criteria to gauge viability of patent pools.[57] The various elements involved in structuring of a patent pool do not function in a vacuum. Each has an impact on the other and ultimately they determine in totum, the licensing fees.

A. Pool Dynamics

The factors catalyzing pool creation impact on the licensing fee that is set. A patent pool may primarily be structured due to government influence,[58] court influence,[59] commercial and business perspective,[60] to achieve or pursuant to standard setting,[61] and social objectives.[62] Accordingly, riders may be placed on creation of the pool and setting of licensing fees.

Analogously, members comprising the patent pool affect royalty determinations. Different perspectives can be observed in commercial entities as opposed to research entities or voluntary organizations. Similarly, the negotiation capabilities are different for established commercial conglomerates as opposed to entrepreneurs, or smaller entities.[63] Similarly, patent pools may distinguish between patent contributing licensees and mere licensees in fixing royalty rates.[64]

Furthermore, pool governance as well as nature of the pool would have an impact on royalty determination. Pools can essentially be of two types based on regulation of members or licensing- open and closed.[65] Correspondingly, the patent holders themselves may have different perspectives or expectations of their rights.

The negotiating entity too has an impact on royalty determination. “Agreements between the members of the patent pool and third parties can be established directly through patentees and licensees or indirectly through an entity specifically created to administer the pool.”[66] There are a considerable number of business models involved in context of a patent pool that define the parameters of the relationship between what are primarily classified as IP creators and IP consumers.[67] These dynamics have considerably altered with the strong and prolific emergence of IP intermediaries; they in turn affect the royalty rate negotiations.[68]

B. Negotiation Dynamics

License negotiations involve complicated factors, such as uncertain outcomes, asymmetric information about the values of technologies and the contributions of licensees to a technology's value, the credibility of disagreements, differential bargaining power and skill, and the individual circumstances of licensors and licensees.[69] Royalty determination depends on “the bargaining skills of patentees, their licensing objectives, the qualities of their patents, opportunity costs that patentees may have if they choose not to license their patents, the likelihood of injunctions, and the methods that courts apply to calculate infringement damages.” [70] Pool members act strategically to maximize their share of the pool’s revenues.[71] “The defining characteristic of patent ownership has been described as the right to extract royalties ‘as high as [one] can negotiate with the leverage’ of exclusivity.”[72] “The patent holder can ask for a high starting price; the potential infringer can counter by pointing to potential substitute technologies; and ultimately the process should yield a price that accurately reflects the marginal advantages of the patented technology.”[73] Again, negotiation strategies include deploying a number of tactics by corporates to whittle down an independent inventor’s patience and his price, thus reducing the licensing fee from the desired amount.[74] Correspondingly, there is no average length of time or amount of money needed for successfully creating a patent pool; it depends on the number of members involved in the negotiations and their commitment and willingness to negotiate an appropriate price.[75]

Timing of the license negotiation too has an impact on determination of the royalty scheme. Licensing can occur in two primary settings: ex ante licensing, i.e. prior to pool formation; and ex post, i.e. post pool formation. In ex ante licensing, the manufacturer has a choice to alter existing products to incorporate the patented features, and can thus perform a rational cost-benefit analysis prior to making any product alterations.[76] Analogously, a holdout who demands royalties prior to the final organization of the pool can only demand a royalty that reflects the additional value that his new patent adds to the collection.[77] If he demands more than this value, the pool will work around the holdout’s patent by adopting a different standard, adjusting the patent pool to cover slightly different technology, or dissolving itself.[78] In ex post licensing, on the other hand, a holdout is in a stronger negotiating position, and can demand not only the marginal value of his patent, but also the switching costs that would be incurred if the established standard or licensing regime were limited by a court injunction.[79] Complicating this situation are licenses that are granted ex ante but negotiated ex post.

Furthermore, patent pools are generally voluntary collaborations; however, it is also possible to compel parties to join the pool or risk losing revenue from a large segment of the industry.[80] Depending on the situation, the negotiation dynamics and hence the royalty scheme would be affected.

Rules governing damages for patent infringement also affect patentees’ decision to join a pool or to license independently, as the threat of injunctive relief can provide a patentee with bargaining power that can be disproportional to the number of patents he owns.[81]

C. Terms of License

The terms of the license considerably influence royalty determination. These include, nature of licensed products,[82] character of license- whether exclusive or non-exclusive,[83] granting clause, geographic scope of the license, field of use governed by the license, provision of sublicensing, grantback provisions, future usage governance, non-assertion clauses, reach-through provisions, termination clause, and licensee’s ability to challenge patents in the pool.

Included herein too would be the treatment of after-acquired patents, which in turn can be classified into two types: (1) improvement patents based on a patented technology licensed by another member of the patent pool; and (2) patents unrelated to patented technologies licensed to the members of the patent pool.[84]

License governance in context of graduated and progressive licensing would also influence royalty determination. This would include “provisions for pool members to license their patents without licensing all the patents in a pool”[85] And the freedom “to license their patents bilaterally, i.e., outside of the pool structure.”[86]

IV. Methods for Patent Valuation and License Fee Determination

There are three basic methods of valuation: the cost method,[87] the market method,[88] and the income method.[89] In context of patent valuation, these methods find varied expressions. “A truly accurate assessment of patent value requires intensive legal and technical evaluation of individual patents.”[90] The economics literature, however, has also proposed several proxies for patent value based on objective and readily available information.[91]

In context of patent pools the dynamics of patent valuation methods is altered and they need to be viewed through the prism of factors discussed in Part II. This doesn’t imply that approaches to objective patent valuation are not relevant.[92] “However, such valuation approaches focus only on characteristics of patents at the time of issue and neglect to consider what happens afterwards.”[93] “Technology developments or price fluctuations, among many factors, may alter the relationship between two patents … In turn, this may decrease the value of any static analysis conducted by experts.”[94]

Determination of the licensing fee of a patent pool is based on the joint affect of certain transactions. Again, as with patent valuation, so also with licensing fee determination, in context of patent pools, the factors discussed in Part III need to be given heed. The transactions influencing licensing fee determination essentially comprise of valuation of the patent, which in turn is used to set a royalty rate pertaining to allocation of various fees received by licensing of the pool patents. Thus, royalty payment is comprised of two components: a royalty rate and a royalty base, upon which the rate is applied.[95]

A. Determining an Appropriate Royalty Base

The scope of the royalty base can be determined in two principal ways- apportionment and entire market value rule.

The apportionment principle implies that when a patent reads on the entirety of an infringing product, the royalty base should be the total value of the sales (or use) of that product.[96] When the patent at issue covers only a component of the infringing product, the value of the sales or uses of that item must be apportioned between the patented invention and the remaining unpatented components.[97] Thus, the principle aims at allocating awards in proportion to contribution, and is not based on any value attributable to the infringer’s or third parties’ inventions.[98] Thus, essentially, a licensor garners a royalty fee in proportion to the number of infringed patents owned by him.

The entire market value rule, recognizes that the economic value added to a product by a patented component may be greater than the value of the component alone.[99] Thus, this rule focuses on whether the patented component drives demand for the entire product, and if it is so, then the patentee may treat all revenue from the infringing product as an appropriate royalty base.[100]

B. Setting Royalty Rates

Royalty rates are typically a percentage rate and thus reflects the proportion of the base value that the patented technology contributes.[101] Various approaches have emerged in determining royalty rates; these could be adapted in context of patent pools.

Rule of Thumb
This approach suggests that the licensor should receive 25 percent of the licensee’s gross profit from the licensed technology.[102]Thus, this rule’s purpose is not the valuation of a technology per se, but rather the apportionment of a technology’s value between the licensor and licensee.[103] The percentage split between the licensor and licensee should be adjusted upwards or downwards to take into account the parties’ respective investment and risk in the licensed technology.[104]

Numerical Proportionality
According to this approach, royalty entitlement of the holder of patents essential to a standard should be calculated in light of the proportional contribution of that patent owner’s essential patents compared to the total contribution of all other essential patents reading on the standard.[105] This method rests on the proposition that every patent is of equal value.[106]

Industry Standards / Market or Comparable Technology Method
Under this approach, the worth of a patent is determined by examining the royalty rates garnered in similar past transactions.[107]

Discounted Cash Flow
This approach proposes that patent price can be expressed as the present value of the future stream of economic benefits derived from ownership, which includes projected sales of products (or components) based on the patent over its expected life or any increased share of sales as compared to competitors, net of any capital requirements of production.[108] To implement it, one must determine (1) the future cash flows generated by the patent in question and (2) an appropriate discount rate.[109]

Ranking
This approach compares the intellectual property asset to be valued to comparable intellectual property assets on a subjective or objective scale.[110] There are five components to a ranking method: (i) scoring criteria; (ii) scoring system; (iii) scoring scale; (iv) weighting factors; and (v) decision table; these components are used to calculate a composite score for an asset, which is then compared to the average score for a comparable intellectual property asset to determine the relative value.[111]

Cost-based Rate Setting
This approach proposes that the patent holder’s cost of obtaining the invention and its patent forms the basis of the royalty rate; a profit margin is simply tacked onto the innovation cost.[112]

Surrogate Measures
Surrogate measures value patents by reference to the patents themselves.[113] They can be largely categorized into: (1) the number of patents issued to a company; (2) payment of patent maintenance fees i.e. patents which are regularly renewed are more valuable; (3) prior art citations i.e. more a patent is cited, more is its value; (4) characteristics of litigated patents i.e. patents which are the subject matter of litigation are more valuable.[114]

Disaggregation Methods
There are two basic types of disaggregation methods - value disaggregation and income disaggregation.[115] The former apportions some fraction of total value to intellectual property assets by setting the value of intangible assets equal to the value of a firm minus the firm’s monetary and tangible assets from to determine the value of the intangible assets.[116] The latter apportions some fraction of total earnings of a firm, based upon various factors, to intellectual property assets.[117]

Option Methods
This approach views an investment in intellectual property as an option to develop the intellectual property further, or to abandon the intellectual property, depending upon future technical and market information.[118]

Competitive Advantage Valuation (R)
The major premise of the CAV method is that intellectual property assets have no inherent value; the value of intellectual property assets resides entirely in the value of the tangible assets which incorporate them.[119] The minor premise of the CAV method is that the value of a given intellectual property asset can best be measured by the competitive advantage which that asset contributes to a product, process, or service.[120] In its most general form, CAV method consists of following six basic steps[121]:

The intellectual property asset to be valued (IPA) is associated with a product and the product’s net present value is calculated.
The product's net present value is apportioned among tangible assets, intangible advantages and intellectual property assets. (There are three groups of intellectual property assets: technical [utility patents, functional software copyrights and technical trade secrets]; reputational [trademarks, service marks and brand names]; and operational [business method patents and proprietary business processes].
The product is associated with competition parameters which can be used to compare the product to substitute products and competition parameter weights are calculated. (There are three groups of competition parameters: technical [price and performance], reputational [recognition and impression], and operational [cost and efficiency]. Weights are calculated for each parameter group and for individual parameters within each group).
The IPA is associated with an individual competition parameter and the IPA's competitive advantage relative to substitute intellectual property assets is calculated. (Substitute intellectual property assets are assets which are incorporated in substitute products and associated with the same competition parameter as the IPA).
The IPA is associated with complementary intellectual property assets and the IPA's competitive advantage relative to complementary intellectual property assets is calculated. (Complementary intellectual property assets are assets which are incorporated in the same product and associated with the same parameter group as the IPA).
The value of the IPA is calculated by apportioning a share of the product's intellectual property asset value to the IPA based upon the IPA's competitive advantage contribution relative to substitute and complementary intellectual property assets. If the IPA is associated with multiple products, the IPA's relative competitive advantage contribution to each product is calculated and these contributions are summed to calculate the total value of the IPA. If the IPA is associated with multiple parameters, the IPA's relative competitive advantage contribution for each parameter is calculated and these contributions are summed to calculate the total value of the IPA.

Georgia Pacific
The fifteen factors enumerated in the Georgia Pacific case, several of which repeat approaches discussed above, are used in royalty rate determination:[122]

The royalties received by the patentee for the licensing of the patent in suit, proving or tending to prove an established royalty.
The rates paid by the licensee for the use of other patents comparable to the patent in suit.
The nature and scope of the license, as exclusive or non-exclusive; or as restricted or non-restricted in terms of territory or with respect to whom the manufactured product may be sold.
The licensor’s established policy and marketing program to maintain its patent monopoly by not licensing others to use the invention or by granting licenses under special conditions designed to preserve that monopoly.
The commercial relationship between the licensor and licensee, such as, whether they are competitors in the same territory in the same line of business; or whether they are inventor and promoter.
The effect of selling the patented specialty in promoting sales of other products of the licensee; the existing value of the invention to the licensor as a generator of sales of its non-patented items; and the extent of such derivative or convoyed sales.
The duration of the patent and the term of the license.
The established profitability of the product made under the patent; its commercial success; and its current popularity.
The utility and advantages of the patent property over the old modes or devices, if any, that had been used for working out similar results.
The nature of the patented invention; the character of the commercial embodiment of it as owned and produced by the licensor; and the benefits to those who have used the invention.
The extent to which the infringer has made use of the invention; and any evidence probative of the value of that use.
The portion of the profit or of the selling price that may be customary in the particular business or in comparable businesses to allow for the use of the invention or analogous inventions.
The portion of the realizable profit that should be credited to the invention as distinguished from non-patented elements, the manufacturing process, business risks, or significant features or improvements added by the infringer.
The opinion testimony of qualified experts.

The amount that a licensor (such as the patentee) and a licensee (such as the infringer) would have agreed upon (at the time the infringement began) if both had been reasonably and voluntarily trying to reach an agreement; that is, the amount which a prudent licensee-which desired, as a business proposition, to obtain a license to manufacture and sell a particular article embodying the patented invention-would have been willing to pay as a royalty and yet be able to make a reasonable profit and which amount would have been acceptable by a prudent patentee who was willing to grant a license.

Academics have prescribed modification to the approach towards these factors analyzing that the relevant questions in calculating a reasonable royalty fall into four basic categories: (1) whether the patentee in fact produces a product in the market; (2) the contribution made by the patented technology compared to the next best alternative; (3) the number and importance of other inputs necessary to make that technology work; and (4) evidence of how the market has actually valued the patent, to the extent it differs from the outcome of (1), (2), and (3).[123]

V. Patent Pool Examples

The following discussion highlights certain aspects of patent pools from real world examples. These examples are restricted to the technological field. Study of these aspects is of value in understanding the concepts discussed hereinbefore.

A. Manufacturers Aircraft Association (MAA)

The MAA was formed in 1917 in U.S.

Apart from the “foundational” patents of Glenn Curtiss and the Wright Brothers, which had substantial royalty rates, most licensing was conducted on a royalty-free basis, with mutual forbearance from infringement suits as the real payment for the exchange.[124]

The MAA was open to anyone who wished to use the Wright-Curtiss designs for a $1000 initiation fee and a licensing fee of $200 per aircraft built; these funds were to be distributed primarily between the Wright and Curtiss interests until each received a sum of $2,000,000 or their key patents expired.[125] MAA retained $ 25 (12.5%) to cover its administrative expenses, $ 135 (67.5%) was paid to the Wright-Martin Aircraft Corporation and $ 40 (20%) was paid to the Curtiss-Burgess Airplane & Motor Corporation.[126]

Patents added to the pool after its formation were divided into two classes- normal patents were licensed into the pool for all to use, with no special royalty payout going to the inventor or firm; exceptional patents earned ongoing royalties, in an amount determined by a formal arbitration procedure.[127]

The MAA also included a grant-back provision that applied to after-acquired patents.[128]

MAA’s members could license their patents to non-members if the terms were no more favorable than to members and any MAA member could withdraw at any time, but its patents in the pool at the time of withdrawal would remain.[129]

B. Moving Picture Experts Group (MPEG)

MPEG technology allows for transmission and storage of digital video and audio signals. It was formed by the Trustees of Columbia University, Fujitsu Limited, General Instrument Corp., Lucent Technologies Inc., Matsushita Electric Industrial Co., Ltd., Mitsubishi Electric Corp., Philips Electronics N.C., Scientific Atlanta, Inc., and Sony Corp. in 1997. The patent pool for the MPEG-2 standard is administered by a common license administrator- MPEG-LA

MPEG-LA is required to grant licenses to any potential licensees, without discrimination and at a reasonable royalty rate.

MPEG LA offers a portfolio of MPEG-2 systems licenses with a fixed royalty for each licensed mobile MPEG-2 systems signal receiver and a different fixed royalty for all other MPEG-2 systems devices.[130] Additional patents, not included in the portfolio, are available for specific implementations.[131]

The pool offers a standardized five-year license to all prospective licensees.[132] The licensing royalties do not change if patents are added to the portfolio during the five-year licensing period, although the royalty rate may increase by up to 25% in a license renewal.[133] Each patent in the pool is valued equally.[134]

The license has a grant-back provision that requires the licensee to grant to the licensor and other portfolio licensees a nonexclusive license, under fair and reasonable terms and conditions, on any essential patent that the licensee has a right to license.[135]

There exists a partial termination right given to licensors, who may request that MPEG-LA terminate the license of that licensor’s IPR to a particular licensee, if that licensee has sued the licensor for infringement of an MPEG-2 essential or “related” patent or refused to license a related patent on fair and reasonable terms.[136]

C. DVD

Sony, Philips and Pioneer organized the DVD3C patent pool in 1998 for the licensing of patents that are “essential” to comply with the DVD-Video or DVD-ROM standard specifications.

Royalty payments are allocated under guidelines set by the Ground Rules for Royalty

Allocation rather than on subjective analysis by an expert.[137] The royalty rate in standard licenses is not related to fluctuations in the market price of a licensed product; also, the royalty rate is not computed on a per-patent basis and does not fluctuate as patents are added or removed, therefore, the same royalty rate is payable when using one essential patent as when using several.[138]

Hitachi, Matsushita, Mitsubishi, Time Warner, Toshiba, and Victor organized the DVD6C patent pool in 1999 again for the licensing of patents that are “essential” to comply with the DVD-Video or DVD-ROM standard specifications.

The DVD6C pool is also governed by the “Ground Rules for Royalty Allocation” guidelines.[139] The royalties are 4% of the net selling price of the product or U.S. $4.00 per product, whichever is higher. Royalties for DVD decoders are 4% of the net selling price of the product or U.S. $1.00 per product, whichever is higher.[140]

The DVD6C agreement contains a grant-back clause, which, requires licensees to grant each of the licensing companies of DVD6C (and their licensees) a non-exclusive license on fair, reasonable and non-discriminatory terms to use any of their patents that are deemed essential for the manufacture, use or sale of DVD Products; this grantback is restricted only to those DVD products actually licensed to the licensee.[141]

D. 3G Mobile Telephony

The 3G Patent Platform Partnership was formed in 1999. The purpose of the 3G Patent Platform Partnership is to allow for “fair, reasonable, and nondiscriminatory” access to rights essential for implementing the W-CDMA 3GPP standard.[142]

There are three form contracts associated with the Platform: the Framework Agreement, the Standard License, and the Interim License.[143] The Framework Agreement gives each member the choice either to license its essential patents according to the Standard License or to negotiate terms directly with a licensee.[144] The Standard License prescribes standardized royalties for licenses, to be determined by an independent commission.[145] If the patent owner foregoes the Standard License and fails to come to terms in bilateral negotiations, the Interim License comes into effect which has the same royalty terms as the Standard License.[146]

E. Bluetooth Special Interest Group (SIG)

The Bluetooth SIG was formed in 1997 to provide a technology for interconnection of mobile phones, computers, laptops, printers, PDAs, and other devices via a short-range radio frequency band; SIG oversees the development of Bluetooth standards and its licensing.[147]

SIG’s member companies are divided into three different classes- (1) promoter company, which are intensely engaged in the strategic and technical development of Bluetooth wireless technology; they include Agere, Ericsson, Intel, Lenovo, Microsoft, Motorola, Nokia, and

Toshiba; (2) associate members, who are licensed to use Bluetooth specifications and trademarks; (3) adopted members, which use published specifications and trademarks, but do not influence the specification process, nor do they have early access to unpublished specifications.[148]

SIG licenses to member companies on a royalty-free basis, but, associate members pay an annual fee based on their company’s annual revenue, with “small” associates (less than $100 million USD/year) paying $7,500 USD/year and “large” associates (more than $100 million USD/year) paying $35,000 USD/year; adopted members are not required to pay an annual fee.[149]

VI. Conclusion

As is evident, patent valuation and license fee determination are extremely subjective and case based. Moreover, their dynamics alter according to the situation, as in the context of patent pools. This dynamism is furthered by the fact that there are no strict or universal formulas or procedures which can be applied in such determinations. Furthermore, such determinations cannot be made in a vacuum but are subject to the cascading effect of a multitude of factors comprised of the holistic technological environment that may not be just restricted to the innovation in question.

[1] Krista L. Cox, The Medicines Patent Pool: Promoting Access and Innovation for Life-Saving Medicines Through Voluntary Licenses 4 Hastings Sci. & Tech. L.J. 293 (Summer, 2012) citing IGWG Briefing Paper on Patent Pools: Collective Management of Intellectual Property--The Use of Patent Pools to Expand Access to Essential Medical Technologies, Knowledge Ecology International, (June 3, 2007) quoting Robert P. Merges, Institutions for Intellectual Property Transactions: The Case of Patent Pools, in Expanding the Boundaries of Intellectual Property, Innovation Policy for the Knowledge Society 123 (Rochelle Cooper Dreyfuss et al. eds., 2001).

[2] Jer Rutton Kavasmaneck v Gharda Chemicals Ltd. and Ors. (Suit No.2932 of 2011; Decided On: 20.03.2012) Bombay H.C. (Intellectual Property Rights (IPRs) including the patent right is valuable right for all the commercial purposes. These intangible assets play important role in any financial assessment of the trade/commercial or the market. It changes from time to time, market to market, person to person based upon the situations. If valuation is always a complex and flexible issue and a matter of discussion and debate in business strategies. The patent valuation involves many described and undescribed elements).

[3]Robert P. Merges, Contracting into Liability Rules: Intellectual Property Rights and Collective Rights Organizations 84 Calif. L. Rev. 1293 (October 1996) citing Standard Oil Co. v. United States, 283 U.S. 163, 171 (1931).

[4] Michael S. Kramer, Valuation and Assessment of Patents and Patent Portfolios Through Analytical Techniques 6 J. Marshall Rev. Intell. Prop. L. 463 (Spring, 2007).

[5] Richard J. Gilbert, Ties That Bind: Policies to Promote (Good) Patent Pools 77 Antitrust L.J. 1 (2010) MPEG LA Business Review Letter from Joel I. Klein, Ass’t Att’y Gen., U.S. Dep’t of Justice, to Garrard R. Beeney, Esq., Sullivan & Cromwell LLP (June 26, 1997), available at http://www.usdoj.gov/atr/public/busreview/215742.pdf; MPEG LA, MPEG-2 Patent Portfolio License Briefing (Aug. 4, 2010).

[6] See Kramer, supra n.4 at 463 (essential patents of technical standards are more valuable, on average, than the general population of patents).

[7] Gilbert, supra n.5.

[8] Id.

[9] Id.

[10] Id.citing DVD 3C Business Review Letter from Joel I. Klein, Ass't Att'y Gen., U.S. Dep't of Justice, to Garrard R. Beeney, Esq., Sullivan & Cromwell LLP (Dec. 16, 1998), available at http://www.usdoj.gov/atr/public/busreview/2121.pdf.

[11]R. Justin Koscher, A Patent Pool's White Knight: Individual Licensing Agreements And The Procompetitive Presumption 20 DePaul J. Art Tech. & Intell. Prop. L. 53 (Fall, 2009).

[12] Daniel Lin, Research versus Development: Patent Pooling, Innovation And Standardization In The Software Industry 1 J. Marshall Rev. Intell. Prop. L. 274 (2002).

[13] Steven C. Carlson, Patent Pools and the Antitrust Dilemma 16 Yale J. on Reg. 359 (Summer, 1999).

[14] Id.

[15] Id.

[16] Id.

[17] Id.

[18] Id.

[19] Id.

[20] Michael A. Sanzo, Antitrust Law And Patent Misconduct In The Proprietary Drug Industry 39 Vill. L. Rev. 1209 (1994).

[21] Gilbert, supra n.5.

[22] Carlson, supra n.13.

[23] Philip B. Nelson, Patent Pools: An Economic Assessment Of Current Law And Policy 38 Rutgers L. J. 539 (Winter, 2007).

[24] Gilbert, supra n.5.

[25] Id.

[26] Carlson, supra n.13.

[27] Gilbert, supra n.5.

[28] Nelson, supra n.23.

[29] David S. Taylor, The Sinking Of The United States Electronics Industry Within Japanese Patent Pools 26 GW J. Int'l L. & Econ. 181 (1992).

[30] Id.

[31] Michael J. Meurer, Business Method Patents and Patent Floods 8 Wash. U. J.L. & Pol'y 309 (2002).

[32] Mark A. Lemley & Carl Shapiro, Frontiers of Intellectual Property: Patent Holdup and Royalty Stacking 85 Tex. L. Rev. 1991 (June, 2007).

[33] Meurer, supra n.31 (A patent flood occurs when many inventors apply for patents on similar inventions during an interval of a few years).

[34] Id.

[35] Robert P. Greenspoon and Catherine M. Cottle, Don't Assume A Can Opener: Confronting Patent Economic Theories With Licensing And Enforcement Reality 12 Colum. Sci. & Tech. L. Rev. 194 (2011).

[36] Meurer, supra n.31.

[37] Gilbert supra n.5 citing the cross-licensing arrangement between the Singer Manufacturing Company and Gegauf, contained provisions by which each of the parties agreed not to bring any infringement action against the other. United States v. Singer Mfg. Co., 374 U.S. 174, 178 (1963).

[38] Gilbert supra n.5.

[39] Kramer, supra n.4.

[40] Id.

[41] Id.

[42] Jorge L. Contreras, Standards, Patents, and the National Smart Grid 32 Pace L. Rev. 641 (Summer Issue, 2012).

[43] Gilbert, supra n.5 (To the extent that a patent pool successfully lowers total royalties relative to independent licensing, this leaves ‘headroom’ available for an independent licensor outside the pool to charge a high royalty for its patent).

[44] Id. citing Multimedia Patent Trust v. Microsoft Corp., et al., 525 F. Supp. 2d 1200 (S.D. Cal. 2007).

[45] Chase A. Marshall, A Comparative Analysis: Current Solutions To The Anticommons Threat 12 J. High Tech. L. 487 (2012); Damien Geradin and Anne Layne-Farrar, Patent Value Apportionment Rules for Complex, Multi-Patent Products 27 Santa Clara Computer & High Tech. L.J. 763 (2010 / 2011) (the typical semiconductor chip likely involves hundreds, perhaps more, patents. In turn, that chip may be intended for use in a laptop computer, the other components of which involve hundreds, or more, patents. Without knowing how many patents actually read on a product, and how many have holders who will actively seek licensing fees, it can be exceedingly difficult to assign the contributed value to those that are known).

[46] Gideon Parchomovsky and R. Polk Wagner, Patent Portfolios 154 U. Pa. L. Rev. 1 (November, 2005); Elizabeth M. Bailey, Gregory K. Leonard and Mario A. Lopez, Making Sense Of “Apportionment” In Patent Damages 12 Colum. Sci. & Tech. L. Rev. 255 (2011) (combining patented technologies typically creates value that is greater than the sum of the parts. For example, patent pools often bring together various technologies that are necessary to create the product in question. The stand-alone value of any one patent in the pool may be low or close to zero unless combined with the other patents in the pool).

[47] Parchomovsky and Wagner, supra n.46.

[48] Id.

[49] Id.

[50] Id.

[51] Scott Iyama, The USPTO's Proposal of a Biological Research Tool Patent Pool Doesn't Hold Water 57 Stan. L. Rev. 1223 (March, 2005).

[52] Bradley J. Levang, Evaluating the Use of Patent Pools For Biotechnology: A Refutation to the USPTO White Paper Concerning Biotechnology Patent Pools 19 Santa Clara Computer & High Tech. L.J. 229 (December, 2002).

[53] Courtney C. Scala, Making the Jump From Gene Pools to Patent Pools: How Patent Pools Can Facilitate the Development of Pharmacogenomics 41 Conn. L. Rev. 1631 (July, 2009).

[54] Id.

[55] Id.

[56] R. Justin Koscher, A Patent Pool's White Knight: Individual Licensing Agreements And The Procompetitive Presumption 20 DePaul J. Art Tech. & Intell. Prop. L. 53 (Fall, 2009) citing DVD-6 Business Review Letter from Joel I. Klein, Assistant Attorney General, to Carey R. Ramos, Esq., of Paul, Weiss, Rifkind, Wharton & Garrison (June 10, 1999), available at http://www.usdoj.gov/atr/public/busreview/2485.htm.

[57] Alexander Lee, Examining the Viability of Patent Pools for the Growing Nanotechnology Patent Thicket, 3 Nanotechnology L. & Bus. 317 (2006) suggests that to determine the viability of using a patent pool in a market, companies should ponder the following list of nine criteria: (1) product development driven by standards; (2) moderate fragmentation of patent landscape; (3) at least five pool members; (4) each member working on specific subcomponent of a product; (5) willingness of patent holders to negotiate; (6) commitment by members to create the pool; (7) an industry that is in the later stages of product development; (8) certainty of patent ownership; and (9) a patent pool clear of potential antitrust violations.

[58] See Gilbert, supra n.5 discussing the Manufacturers Aircraft Association, where the U.S. government used the threat of compulsory licensing to compel the pioneers of the aircraft industry to form a patent pool in 1917. The industry was enmeshed in litigation over the scope and validity of patents, and some patentees, particularly the Wright-Martin Company, were demanding royalties that the government and other aircraft manufacturers deemed excessive. Creation of the Manufacturers Aircraft Association patent pool resolved the litigation chaos. The government negotiated a portfolio license from the pool with a royalty of $ 200 per aircraft, which was a fraction of the royalty that Wright-Martin was demanding for a single patent ($ 1,000 per aircraft).

[59] See Carlson, supra n.13 discussing that pool agreements are frequently employed as a means of settling existing litigation, and citing examples including patent pools in the laser eye surgery, and the public key encryption industries;

also see Lemley & Shapiro, Frontiers of Intellectual Property, supra n.32 discussing that the average royalty rate granted in all reasonable-royalty cases is 13.13% of the price of the infringing product, which is much higher than that of patent licenses negotiated without litigation.

[60] See Greenspoon and Cottle, supra n.35 discussing the value of patents as a form of currency that can be used to further goals unrelated to market creation or entry. Such goals can be to improve a firm's competitive position when trying to acquire start-up funds, to improve negotiating terms when licensing other patents, and to reduce the chance of paying excessive royalties to external patent owners;

also see, Gilbert, supra n.5 discussing how different business strategies can cause firms to pool their patents with some firms, but not with others, citing the example of emergence of two pools to license DVD patents as a consequence of differing approaches to industry standards. One explanation offered for the existence of two separate pools is that the two groups could not reach an accord about their respective shares of joint royalty payments.

[61] See Gilbert, supra n.5 discussing how some pools license their patents royalty-free or at royalties that are deliberately held below profit-maximizing levels in an effort to promote adoption of new technologies covered by their patents, citing the example of the Bluetooth Special Interest Group and the Multimedia Home Platform. The article also discusses patent pools formed to license patents that are necessary to implement a defined standard, such as MPEG encoding, DVDs, or mobile telephony.

[62] See Gilbert, supra n.5 discussing pools that limit royalties to promote social objectives rather than to profit from new products citing examples of companies, universities, and research organizations such as Syngenta- an agricultural technology company, the Public Intellectual Property Resource for Agriculture, the SARS IP Working Group, and the UNITAID pool for AIDS medications.

[63] Yuichi Watanabe, Patent Licensing And The Emergence Of A New Patent Market 9 Hous. Bus. & Tax L.J. 445 (2009) (The current state of affairs shows that the patent licensing market strongly favors larger corporations over smaller ones, enabling the larger corporations to reap much of the market opportunities and benefits while limiting them to smaller patentees).

[64] Roger B. Andewelt, Practical Problems In Counseling And Litigating: Analysis Of Patent Pools Under The Antitrust Laws 53 Antitrust L.J. 611 (October 11, 1984/October 12, 1984) (Pools typically contain restrictions on those who join the pool by contributing patents and/or those who take licenses under the pooled patents).

[65]Chase A. Marshall, A Comparative Analysis: Current Solutions To The Anticommons Threat 12 J. High Tech. L. 487 (2012).

[66] Ann Weilbaecher, PSY.D., Diseases Endemic in Developing Countries: How to Incentivize Innovation 18 Ann. Health L. 281 (Summer, 2009).

[67] Greenspoon and Cottle, supra n.35 identify five general types of entities that license and enforce patents: (1) Individual inventors with a single patent; (2) Individual serial inventors; (3) Non-Practicing Entities; (4) Operating companies who practice inventions acquired from others; and (5) Operating companies who practice inventions developed in-house.

[68] See, Raymond Millien and Ron Laurie, A Survey Of Established & Emerging IP Business Models 9 Sedona Conf. J. 77 (2008) discussing various models, viz. Patent Licensing and Enforcement Companies, Institutional IP Aggregators/Acquisition Funds, IP/Technology Development Companies, Licensing Agents, Litigation Finance/Investment Firms, IP Brokers, IP-Based M&A Advisory Firms, IP Auction Houses, On-Line IP/Technology Exchanges, Clearinghouses, Bulletin Boards, and Innovation Portals, IP-Backed Lending, Royalty Stream Securitization Firms, Patent Rating Software and Valuation Services, University Technology Transfer Intermediaries, IP Transaction Exchanges & Trading Platforms/IP Transaction Best Practices Development Communities, Defensive Patent Pools, Funds and Alliances, Technology/IP Spinout Financing, and Patent-Based Public Stock Indexes.

[69] Richard J. Gilbert, Deal or No Deal? Licensing Negotiations In Standard-Setting Organizations 77 Antitrust L.J. 855 (2011).

[70] Gilbert, supra n.5

[71] Merges, Contracting into Liability Rules, supra n.3.

[72] Alan Devlin, Standard-Setting And The Failure Of Price Competition 65 N.Y.U. Ann. Surv. Am. L. 217 (2009) citing Brulotte v. Thys Co., 379 U.S. 29, 33 (1964).

[73]Doug Lichtman, Understanding The Rand Commitment 47 Hous. L. Rev. 1023 (2010).

[74] Peter N. Detkin, Leveling The Patent Playing Field 6 J. Marshall Rev. Intell. Prop. L. 636 (Summer, 2007).

[75] Lee, infra n.57.

[76] Kelce Wilson, The Four Phases of Patent Usage 40 Cap. U.L. Rev. 679 (Summer, 2012).

[77]Gavin D. George, What is Hiding in the Bushes? eBay's Effect on Holdout Behavior in Patent Thickets, 13 Mich. Telecomm. Tech. L. Rev. 557 (2007).

[78] Id.

[79] Id

[80]Daniel R. Cahoy and Leland Glenna, Private Ordering and Public Energy Innovation Policy 36 Fla. St. U.L. Rev. 415 (Spring, 2009).

[81] Gilbert, supra n.5; See for example, Merges, Contracting into Liability Rules, supra n.3 describing how in the airplane cross-licensing agreement, it provides that a board of arbitrators may decide in any case what reward should be paid to individual patent owners and this is based not upon the official determination of patentability by the Patent Office, but upon the unofficial determination of the importance of the invention by a board of arbitrators.

[82] See Andewelt, supra n.64 (The scope and variety of patents included vary considerably from pool to pool. Some pools are limited to patents covering a single commercial device. Others contain numerous and diverse patents relating to different devices in different markets).

[83] See, Scala, supra n.53 discussing how the non-exclusive character of a license is particularly important for those firms holding patents whose full utility is unascertainable at the time of the formation of the pool.

[84] Dustin R. Szakalski, Progress In The Aircraft Industry And The Role Of Patent Pools And Cross-Licensing Agreements 2011 UCLA J.L. & Tech. 1 (Spring 2011).

[85] Ed Levy, et. al, Patent Pools And Genomics: Navigating A Course To Open Science? 16 B.U. J. SCI. & TECH. L. 75 (Winter, 2010).

[86] Id.

[87] Ted Hagelin, Technology and Legal Practice Symposium Issue: Valuation of Intellectual Property Assets: An Overview 52 Syracuse L. Rev. 1133 (2002) (The cost method of valuation measures the value of an asset by the cost to replace the asset with an identical or equivalent asset. The assumption underlying the cost method of valuation is that the cost to purchase or develop a new asset is commensurate with the economic value that the asset can provide during its life).

[88] Id. (The market method values an asset based upon comparable transactions between unrelated parties).

[89] Id. (The income method values an asset based upon the present value of the net economic benefit (net future income stream) expected to be received over the life of the asset).

[90] Sannu K. Shrestha, Trolls Or Market-Makers? An Empirical Analysis Of Nonpracticing Entities 110 Colum. L. Rev. 114 (January, 2010).

[91]Id.

[92]Colleen V. Chien, From Arms Race to Marketplace: The Complex Patent Ecosystem and Its Implications for the Patent System 62 Hastings L.J. 297 (December, 2010).

[93] Id.

[94]R. Justin Koscher, A Patent Pool's White Knight: Individual Licensing Agreements And The Procompetitive Presumption 20 DePaul J. Art Tech. & Intell. Prop. L. 53 (Fall, 2009).

[95] Geradin and Layne-Farrar, supra n.45.

[96] Id.

[97] Id.

[98] Id.

[99] Id.

[100] Id.

[101] Id.

[102] Hagelin, supra n.87; also see, Geradin and Layne-Farrar, supra n.45.

[103] Id.

[104] Id.

[105] Geradin and Layne-Farrar, supra n.45.

[106] Id.

[107] Hagelin, supra n.87; also see, Geradin and Layne-Farrar, supra n.45.

[108] Geradin and Layne-Farrar, supra n.45.

[109] Malcolm T. "Ty" Meeks & Charles A. Eldering, PhD, Patent Valuation: Aren’t We Forgetting Something? Making the Case for Claims Analysis in Patent Valuation by Proposing a Patent Valuation Method and a Patent-Specific Discount Rate Using the CAPM 9 Nw. J. Tech. & Intell. Prop. 194 (Fall, 2010).

[110] Hagelin, supra n.87.

[111] Id.

[112] Geradin and Layne-Farrar, supra n.45.

[113] Hagelin, supra n.87.

[114] Id.; Meeks & Eldering, supra n.109.

[115] Hagelin, supra n.87.

[116] Id.

[117] Id.

[118] Id.

[119] Id.

[120] Id.

[121] Id.

[122] Georgia-Pacific Corp. v. U.S. Plywood Corp., 318 F. Supp. 1116 (S.D.N.Y. 1970).

[123] Daralyn J. Durie and Mark A. Lemley, A Structured Approach To Calculating Reasonable Royalties 14 Lewis & Clark L. Rev. 627 (Summer, 2010).

[124] Merges, Contracting into Liability Rules, supra n.3.

[125] Michael Mattioli, Communities Of Innovation 106 Nw. U.L. Rev. 103 (Winter, 2012).

[126] Szakalski, supra n.84.

[127] Merges, Contracting into Liability Rules, supra n.3.

[128] Mattioli, supra n.125.

[129] Szakalski, supra n.84.

[130] Gilbert, supra n.5.

[131] Carlson, supra n.13.

[132] Id.

[133] Id.

[134] Id.

[135] Lin, supra n.12.

[136] Dorothy Gill Raymond, Benefits and Risks Of Patent Pooling For Standard-Setting Organizations 16 Antitrust ABA 41 (Summer, 2002).

[137] David Serafino, Survey of Patent Pools Demonstrates Variety of Purposes and Management Structures, KEI Research Note 2007:6, Knowledge Ecology International, 4 June 2007.

[138] Id.

[139] Id.

[140] Id.

[141] Id.

[142] Id.

[143] Michael R. Franzinger, Latent Dangers in a Patent Pool: The European Commission's Approval of the 3G Wireless Technology Licensing Agreements 91 Calif. L. Rev. 1693 (December, 2003).

[144] Id.

[145] Id.

[146] Id.

[147] David Serafino, Survey of Patent Pools Demonstrates Variety of Purposes and Management Structures, KEI Research Note 2007:6, Knowledge Ecology International, 4 June 2007.

[148] Id.

[149] Id.

For more details visit https://cis-india.org/a2k/blogs/patent-valuation-and-license-fee-determination-in-context-of-patent-pools

Grounds for Compulsory Patent Licensing in United States, Canada, China, and India

maggie — 2014-07-29T08:45:25Z

The research paper seeks to answer questions about the grounds of compulsory licensing in international treaties with specific examples from America and Asia. The grounds for granting compulsory licenses, jurisdictional comparison of compulsory licensing, etc., are examined.

Holding ownership to a patented invention means one has certain exclusive rights: a) the right to decide who may use the invention during the time of protection; b) the right to give licenses to other parties to use the invention on mutually agreed terms; and, c) the right to sell and transfer ownership of the patent to someone else[1]. Once this patent expires, the invention would enter the public domain to be shared freely[2].

However, given certain conditions, a compulsory license can be granted, in which “authorization [is] given by national authority to a person without or against the consent of the titleholder, for the exploitation of a subject matter protected by a patent or other intellectual property rights” [3].

Compulsory licensing has been most contentiously applied for patented pharmaceutical companies who are often looking to recoup research and development costs. Proponents of this instrument are now also growing amongst advocates for climate change mitigation technologies [4]. The Pervasive Technologies: Access to Knowledge in the Marketplace project is broadly assessing access to knowledge through sub-100 dollar devices. The accessibility of these critical technologies, and subsequent access to knowledge, information, and culture through these devices may be implicated by this policy lever[5]

Thus, this paper seeks to answer the following questions:

What are the grounds for compulsory licensing set in international treaties?
How does Canada, United States (i.e. North America), India, and China (i.e. Asia) provide for compulsory licensing within its national laws?

This will be done through first providing an overview of the relevant international treaties to understand the compulsory licensing framework which signatory nations must follow. Then, utilizing Correa (1999)'s study as a foundation, an analysis of the text within the four aforementioned's codified laws will be assessed to understand all the possible grounds compulsory licensing can be provided. This paper will conclude by summarizing any significant distinctions across the four jurisdictions.

Compulsory Patent Licensing in International Law and Regional Trade Agreements
Paris Convention for the Protection of Industrial Property (1883) [6]
Article 5(2) of the Paris Convention provides each country with the right to "grant compulsory licenses to prevent abuses which might result form the exercise of exclusive rights conferred by the patent… " United States, Canada, China, and India are four of the 175 contracting parties to this convention [7]. This can only be done after 4 years of applying for the patent, or 3 years from the date in which the patent was granted. This means, a sufficient amount of time must have elapsed to allow the rights holder to exploit the invention.

North American Free Trade Agreement (1994)[8]
Article 1704 in NAFTA provides that "appropriate measures" can be taken to control abusive or anticompetitive practices. The United States and Canada have utilized this ground of anti-competition to grant numerous compulsory licenses.

Article 1709 notes that there must not be a discrimination of technology – patents may only be revoked when the grant has not remedied lack of exploitation, and that the use of the patent adheres to certain criteria.

In 1993, Canada repealed the compulsory licensing regulations from its Patent Law to comply with the international TRIPS and NAFTA treaties.

Trade Related Aspects of Intellectual Property Rights (1994) [9]
All members of the World Trade Organization is provided the right to use compulsory licenses via Article 31 Other Use Without Authorization of the Right Holder within the Trade Related Aspects of Intellectual Property Rights (TRIPs) agreement. This Article stipulates 12 procedural provisions: compulsory licensing should be granted on 'individual merits'[10], must have shown prior effort to obtain authorization under reasonable commercial terms [11], must be non-exclusive[12], adequate renumeration must be provided[13], and the license must be terminated as soon as the circumstances for which it was granted cease to exist[14].

Suggested, but not obligatory grounds for which compulsory licensing could be granted under the TRIPs agreement are a) emergency and extreme urgency, b) anticompetitive practices, c) public non-commercial use, and the d) use of dependent patents[15].

Doha Declaration on the TRIPS Agreement and Public Health (2001)
The Doha Declaration is a clarification of the earlier TRIPS agreement in response to some countries' public health concerns due to obstacles to accessing patented medicines.[16]

Paragraph 4 of the Doha Declaration expressly allows Members to take measures to protect public health, while paragraph 5b states that "each Member has the right to grant compulsory licenses and the freedom to determine the grounds upon which such licenses are granted". Freedom of each country to define the terms of their intellectual property rights is also further reiterated.

Grounds for granting compulsory licenses
Correa (1999) in his paper Intellectual Property Rights and the Use of Compulsory License: Options for Developing Countries outlines eight common grounds which provided the framework for this comparative analysis between the jurisdictions of the United States, Canada, India, and China. Through analyzing the codified law on compulsory licensing, a few other grounds were added to the list.

Refusal to deal
In principle, the patent owner has an exclusive right to determine whether or not to issue a license to a third party. However, if under reasonable terms, one still refuses to issue a license, national courts may interpret this as an abuse of patent rights, resulting in lack of availability of the product and commercial development. In the United States, this is often raised as an anticompetitive issue.

Non-working and inadequate supply
The "working obligation" was initially understood as the industrial use of an invention, which according to Article 31 of the TRIPs Agreement required working 'predominantly' for local markets. However, many countries have defined 'working' to include commercial use of the invention, in which importation of a product would suffice[17].

Public interest
The public interest needs to be balanced with individuals' rights, and it is the responsibility of the courts or administration in each respective country to determine this. Thus, what actually constitutes as "public interest" varies depending on time and jurisdiction. For example, countries with limited industrial development could consider a compulsory patent to develop its national industries as for public interest [18]. Accessibility of a product at the lowest price have been argued to be in public interest, but some courts have ruled this to be invalid[19]

Anticompetitive practices
A patent is essentially a temporary monopoly meant to provide an economic reward for the inventor's work, as well as additional incentive to continue producing[20]. However, excessive monopolization through unlawful or unfair practices, such as when a patent is overly broad, acquiring and accumulating patent portfolios, and subsequent patent trolling are some acts that be considered anticompetitive patent practices[21]. Compulsory licenses have also been granted through this ground under anti-monopoly, antitrust, and competition laws.

Governmental use
Each country's government decides what is to be considered as governmental use. Occasionally synonymous to government use has also been public, non-commercial use, or as suggested by the TRIPs agreement, for the purposes of national emergency or urgency. This is assuming the government is acting on behalf of public interest; given its lack of an international standardized definition, this ground can be utilized and interpreted in other ways.

Facilitate use of dependent patents
When a new invention (dependent invention) cannot be developed without infringing on the license of an existing patented invention, (principle invention) a compulsory licensing can be granted to facilitate innovation. This ensures the patents of principle inventions would not block technical progress. The TRIPs agreement expressly allows this, provided reasonable compensation is articulated. In some jurisdictions, cross-licensing, (which involves a licensing agreement between two parties to exploit each other's intellectual property[22]) can be negotiated to resolve this issue.

Compulsory licenses for medicines
Numerous countries have issued licenses for increased accessibility to food and medicine. Prior to the Doha Round, TRIPs prohibited this, as Article 27 states "national laws cannot discriminate in exercise of patent rights on the basis of field of technology". However, the Doha Declaration addressed this, allowing pharmaceuticals to have increased accessibility (via pricing, production, and importation) for the sake of public health.

Exclusive Grant Back or Coercive Package Licensing
A grant back can be agreed upon when there is an expectation of an improvement on the licensed technology through increased superiority or method [23]. This allows the licensee to commercialize an improved product without having to file for another patent[24]. Exclusive grant back provides the licensor the exclusive right to use or sublicense improvements, while licensee retains non-exclusive right to practice the improvements.[25] Grant-backs, particularly exclusive ones are sometimes deemed as anticompetitive.

A package license, otherwise known as patent pools is used when the licensing of more than one patent is necessary to commercialize an invention [26] Coercive package licensing can occur when the licensing of other patents within the package is forceful and unnecessary. The defining and interpretation of 'coercion' ultimately depends on each country's respective authorities.

Hindrance from Importation of Abroad[27]
This ground may fall under non-working, but is unique in that it notes a state's ability to grant compulsory license on behalf of a foreign-owned patent. Yang (2012) cites that this as one of the most controversial aspects of compulsory patent licensing, as countries may feel undermined when another state can grant compulsory licenses that are against their own interests[28].

Jurisdictional comparison of Compulsory Licensing
The following table was developed as an exercise to review compulsory licensing within the jurisdictions of the United States, Canada, India, and China. Utilizing Correa (1999)'s findings as a skeletal framework, the four aforementioned countries' codified patent laws were used to determine the grounds for compulsory licensing. The main compairson was done through analyzing the specific text within the laws of the four jurisdiction – one approach to treaty and law interpretation[29] However, for those countries that were lacking general provisions on compulsory licensing (i.e. United States, and eventually Canada in 1993[30]), there was a need to expand to a more comprehensive approach and look through other codified laws beyond patents and intellectual property, as well as through case law to see if the mentioned grounds have been used to provide for compulsory licenses[31].

Grounds		Countries	Law
Refusal to deal and/or abuses of patentees' exclusive rights		U.S	n/a in codified law…refusal to deal is an essential element of intellectual property rights…but can lead to anti-competition in which Antitrust laws can be used
		Canada	Patent Law - Abuse of Rights 65.2(d): "if by reason of refusal of patentee to grant* a license or licenses on reasonable terms…*
		India	Patent Act 1970 S.4(d) *"Refusal to deal"* includes any agreement which restricts, or is likely to restrict, by any method the persons or classes of persons to whom goods are sold or from whom goods are bought Patent Act, 1970 S. 84.7(a) " If by reason of refusal…ii) demand for the patented article has not been met to an adequate extent or on reasonable terms; or iii) a market for the patented article manufactured in India is not being supplied or developed; or iv) the establishment or development of commercial activities in India is not prejudiced Patent Act 1970 S.84 (6) " …Controller shall take into account, - i) nature of invention, the time which has elapsed since the sealing of the patent and the measures already taken by the patentee or any licensee to make full use of the invention; iv) ..whether applicant has made efforts to obtain a license from the patentee on reasonable terms conditions, and such efforts have not been successful within a reasonable period *period not ordinarily exceeding a period of six months* as the Controller may deem fit
		China	Patent Law of the People's Republic of China - Article 48 (1): " When it has been 3 years since the date the patent right is granted, and four years since the date the patent application is submitted, the patentee, without legitimate reasons, fails to have the patent exploited or fully exploited"
Non-working and inadequate supply		U.S.	n/a
		Canada	Patent Act 1935: s.65 a): "… is capable of being worked within Canada but is not being worked within Canada on a commercial scale, and no satisfactory reason can be given for that non-working…" REPEALED in 1993 due to NAFTA and TRIPS
		India	Patents Act, 1970 S. 84 (1): " At any time after expiration of 3 years from the date of the grant of a patent, any person interested may make an application… b)…not available to the public at a reasonably affordable price, or c) that the patented invention is not available to the public at a reasonably affordable price Patent Act 1970 S.84(2): "…reasonable requirements of the public.. not satisfied or that the patented invention is not worked in the territory of India, Patent Act, 1970 S. 84.7(a) "If by reason of refusal…ii) demand for the patented article has not been met to an adequate extent or on reasonable terms; or iii) a market for the patented article manufactured in India is not being supplied or developed; or iv) the establishment or development of commercial activities in India is not prejudiced Patent Act, 1970 S. 84.7(d): " If the patented invention is not being worked in the territory of India on a commercial scale to an adequate extent, or is not being so worked to the fullest extent that is reasonably practicable
		China	Measures for Compulsory licensing of Patent Implementation (2012) - Ch 2 Art. 5: "If without good reason not implemented or fully implemented, their licensing patent within 3 years from the date of grant of patent right..and 4 years from the date of filing patent"
Public interest:		U.S.	"...no general provision allowing authorities to override patents in the larger public interest” [32] Bayh-Dole Act of 1980 - allow government to exercise "march in" rights with regard to government funded research results that universities might otherwise patent But US has granted compulsory licenses when felt public interest was at stake (Atomic Energy Act and Clean Air Act 1970, Federal Non-Nuclear Energy Research and Development Act 1973)
Canada	Patent Law - Abuse of Rights 65.2(d): "if by reason of refusal of patentee to grant a license or licenses on reasonable terms… in public interest that license/licenses should be granted" Patent Act S. 39. (3) License under patent relating to food: " In the case of any patent…of food…shall grant to any person applying…Commissioner shall have regard to the desirability of making the food available to the public at the lowest possible price consistent with giving to the inventor due reward for the research leading to the invention" REPEALED in 1993 due to NAFTA and TRIPS
India	Patent Act 1970, S. 84 (2)…not available to the public at a reasonably affordable price Patent Act 1970 S. 84 (6) " …Controller shall take into account, ii) the ability of the applicant to work the invention to the public advantage Patent Act, 1970 - S. 92 Special provision for compulsory licenses on notifications by Central Government-(1): " If Central Government is satisfied… circumstances of national emergency or in circumstances of extreme urgency, or in case of public non commercial use...
China	Patent Law - Article 49: " Where a national emergency or any extraordinary state of affairs occurs, or public interests so require…" Measures for Compulsory Licensing of Patent Implementation - Article 6: If emergency or irregular event of the state…or for purposes of public interest
Anti-competitive practices		U.S.	Antitrust & Trade Law: Sherman Act 15 U.S. C.S. 2 - Monopolizing trade a felony; penalty: " Every person who shall monopolize, or attempt to monopolize…any part of trade or commerce among several States, or with foreign nations…deemed guilty of a felony, and conviction.."
		Canada	Competition Act (S. 32 RSC 1985): " …where use has been made of exclusive rights and privileges conferred by one or more patents for invention…(a) limit unduly the facilities for transporting, producing, manufacturing, supplying…may be a subject of trade or commerce, (b) restrain or injure, unduly, trade or commerce…(c) prevent, limit, or lessen, unduly, the manufacture or production…or unreasonably enhance the price thereof, or (d) prevent or lessen, unduly, competition in…
India	India Patent Law Chapter 90 (1.ix) Terms and Conditions of compulsory licenses… granted to remedy a practice determined after judicial or administrative process to be anticompetitive…
China	Measures for Compulsory Licensing of Patent Implementation, 2012 - Article 11: " …that actions of patent holder in exercising patent right…deemed to be monopolistic actions" Patent Law of the People's Republic of China - Article 48 (2): " …patentee's exercise of the patent right is in accordance with law, confirmed as monopoly and its negative impact on competition needs to be eliminated or reduced"
Governmental use		United States	28 United States Code 1498: " …when used or manufactured by or for the United States without license of the owner…remedy shall be..Claims for recovery of his reasonable and entire compensation for such use and manufacture…" ie. Government does not have to seek license or negotiate for use, and the only appeal for patent owner is compensation
		Canada	Under the 1993 and 1994 amendments to the Patent Act of 1985, section 19.1: "the Commissioner may, on application by the Government of Canada or the government of a province, authorize the use of a patented invention by that government ."
		India	Patent Act, 1970 - S. 100 Power of Central Government to use inventions for purposes of Government (1): "…at any time…the Central Government and any person authorized in writing… may use the invention for the purposes of Government in accordance with provisions of this chapter" Patent Act, 1970 S. 100 Power of Central Government to use inventions for purposes of Government (2): " Where an invention has, before priority date of relevant claim, been duly recorded in a document, or tested or tried, by or on behalf of the Government or Government undertaking… any use of the invention by the Central Government or any person authorized in writing by it for the purposes of Government may be made free of any royalty or other renumeration to the patentee " Patent Act, 1970 S. 100 Power of Central Government to use inventions for purposes of Government (6): " The right to make, use, exercise, and vend an invention for the purposes of Government under sub-section (1) shall include the right to sell on noncommercial basis, and person c laiming through..as if Central Government or authorized were the patentee of the invention
China	Patent Law of PRC Art. 14: "If an invention patent of a State-owned enterprise or institution is of great significance to national or public interests, upon approval by State Council.. Patent Law PRC Article 49: " Where a national emergency or any extraordinary state of affairs occurs…patent administration department under the State council may grant a compulsory license for exploitation of an inanition patent or utility model patent" Patent Law PRC Article 14: “ If an invention patent of a State-owned enterprise or institution is o f great significance to national or public interests, upon approval by the State Council, the relevant competent department under the State Council ...may decide to have the patent widely applied within an approved scope and allow the designated units to exploit the patent, and the said units shall pay royalties to the patentee in accordance with the regulations of the State.
Facilitate use of dependent patents		United States	N/A - U.S. Does has not formally codified a general provision for Compulsory licensing of Dependent Patents [33]
		Canada	N/A
		India	Patent Act 1970 - Section 88 Power of Controller in Granting Compulsory licenses (3): …if Controller satisfied that the applicant cannot efficiently or satisfactorily work the license granted to him under those patents without infringing the other patents held by the patentee, and if those patents involve important technical advancement of considerable economic significance …may direct grant of a license…
		China	Patent Law - Ch 6 Art 51: " If an invention/utility model…represents major technological advancement of remarkable economic significance, compared with an earlier invention or utility model for which the patent right has already been obtained, and exploitation of former relies on exploitation of latter…may grant it a compulsory license to exploit..."
Compulsory licenses for medicines		United States	N/A but has threatened Bayer for compulsory licensing of Ciproflaxin medicine who subsequently dropped their prices drastically [34]
		Canada	Bill C-9 Amendment to Food and Drugs Act, 2004: "…pharmaceutical products intended for export in accordance with that WTO General Council decision…to comply with…sold on domestic market" Patent Act (4) License under patent relating to medicine - " ..intended or capable of being used for the preparation of production of medicine…Commissioner shall grant.. REPEALED in 1993 due to NAFTA and TRIPS
India	Patent Act 1970 Section 92.A Compulsory license for export of patent pharmaceutical products in certain exceptional circumstances: " …shall be available for manufacture and export of patented pharmaceutical products [35] to any country having insufficient or no manufacturing capacity in the pharmaceutical sector for the concerned product to address public health problems…" Patent Act, 1970 Section 83.(d): "General principles applicable to working of patented inventions… do not impede protection of public health and nutrition…
China	Patent Law of PRC: Article 50: " For the benefit of public health…grant compulsory license for manufacture of the drug, for which a patent right has been obtained, and for its export to the countries or regions that conform to the provisions…" Measures for Compulsory Licensing of Patent Implementation, 2012 - Ch 2 Art 7: " For purposes of public health…able to implement petition for compulsory licensing…for manufacture of patented medicines..and export of, to following countries/regions: 1) The most underdeveloped countries/regions; 2) Developed/developing members of the WTO
Exclusive grant-back and Coercive package licensing		U.S.	Legal in the past – granted in Transparent Wrap Machine Corp v Stokes & Smith Co. but discouraged... interpreted by Rule of Reason doctrine which is an interpretation of Sherman Antitrust (Anti-competition) Act[36] Now Department Of Justice from 2007 has said must be non-exclusive under its Antitrust laws [37]
		Canada	N/A
		India	Patent Act, 1970 Section 84 (7.c): …Reasonable requirements of the public shall be deemed not to have been satisfied [38] - c) if the patentee imposes a condition upon the grant of license under the patent to provide exclusive grant back, prevention to challenges to validity of patent, or coercive package licensing
		China	N/A
Hindered by importation from abroad		U.S.	N/A
		Canada	N/A
		India	Patent Act, 1970 Section 84 (7.e): " if the working of the patented invention in the territory of India on a commercial scale is being prevented or hindered by the importation from abroad of the patented article by…i) patentee..ii) persons purchasing…iii) other persons not taking proceedings for infringement
China	N/A

Summary of Cross-Jurisdictional Comparison
As mentioned previously, this comparison necessitated an expansion into codified law outside of compulsory licensing and patent law into case law, since the United States had never written a general provision for compulsory licensing, and Canada had repealed theirs in 1993 upon the signing of the NAFTA and TRIPS agreement. For Canada, compulsory licenses (CLs) continued to be granted following the repeal through the Foods and Drugs Act, as well as the Competition Act. Despite United States' lack of general provisions, Knowledge Ecology International claims it is the world's leader in the use of CLs, yet hypocritical to developing countries' requests for affordable patented pharmaceuticals.[39]

In general, India and China both have very extensive compulsory licensing laws. China's State Intellectual Property Office even developed additional Measures to account for the execution of compulsory licensing. Despite comprehensive CL provisions, India has had only one compulsory license ever granted in the case of Natco Pharma Ltd v. Bayer Corporation, for the domestic production of cancer-drug Nexavar. [40] China has yet to grant any compulsory license, but the new Measures may signify an increasing willingness to do so, or even to be used as a bargaining tool. However, given its goal of developing domestic intellectual property (i.e. China's 5-year plan), it is unlikely that China will grant compulsory licenses in the masses.[41]

In regards to the specific grounds themselves, some grounds noted particular differences per country.

Under U.S. Intellectual Property Law, refusal to deal is actually is considered a right, thus does not provide for compulsory licensing; depending on the degree however, it could lead to anti-competition[42]. According to the Paris Convention, one can only request consideration for a CLs 3 years from the granting of a patent, or 4 years from application, allowing said time for provision of dealing. However, India seems to have a more stringent period of not exceeding a period of six months, while China noted specifically not 'without legitimate reasons'.

The non-working and inadequate supply was again not present in U.S. Law, yet Canada did include it in its former compulsory licensing provision prior to repeal. Canada had defined 'working' specifically referring to a commercial scale when compulsory licensing was in effect. India's 'working' means being available at a reasonably affordable price, and supplied or developed, through the establishment of commercial activities, worked to the fullest extent that is fully practicable, while China mentioned non-working 'if without good reason, it is not implemented or fully implemented'.

The United States does not have any provision providing explicitly for public interest. However, under the Bayh-Dole Act, government-funding for research during the economic crisis in the 1970s was granted as long as the inventors agreed to allow petition for 'march-in rights', in which the government or a third party “shall have the right...to require the contractor...to grant a nonexclusive, partially exclusive, or exclusive license” (35 U.S. Code S203(a)) if it meets one of four requirements - one being to “...alleviate health and safety needs which are not reasonably satisfied...” (35 U.S. Code Section 203). Canada's public interest clause had existed, but was repealed. India now states that CLs can be granted to make available to the public “at a reasonably affordable price, to public advantage, and for public non-commercial use”. In China, public interest is provided in conditions of 'national emergency or extraordinary state of affairs, for the purpose of public interest'.

The United States does however strongly uphold and value competition, and have granted CLs to remedy anticompetitive practices under its Antitrust laws, prohibiting any 'attempt to monopolize any part of trade or commerce'. China also uses the language of 'monopolistic actions' and allows compulsory licensing if its “negative impact on competition needs to be eliminated or reduced.” Canada's Competition Act allows for compulsory licensing if one 'limits unduly, the facilities for transporting, producing, manufacturing... restrain or injure unduly, trade or commercial etc..' .preventing fair competition. India also notes the remedying of anticompetitive acts in its patent laws.

Governmental use in the United States have been granted for use by the Department of Defense and as mentioned previously for the Bayh-Dole Act. However, unlike the other countries of focus, there is no way to appeal a CL for the purposes of government-use. The only way to remedy this as a patent owner is compensation. In Canada, the Commissioner may on application by the Government of Canada or province authorize a CL. Indian patent law also allows CLs for the purposes of the Government, with the explicit possibility of being made free of any royalty or renumeration. It also expressly notes within S103 that one can petition to the Government if this occurs. The Chinese Patent Law notes governmental use through the language of 'great significance to national or public interests', and 'national emergency or extraordinary state of affairs. The possibility of appeal is also expressly noted in Article 58.

Neither United States or Canada have formally codified any mention of compulsory licensing for the use of dependent patents, though it does exist in the TRIPs agreement they both comply to. In India patent law, CLs is granted through this ground “only if it involves important technical advancement of considerable economic significance, and... only if it cannot be accomplished without infringing other patents.” In China, the law states that if an “invention/utility model represents major technological advancement...compared with earlier invention or utility model...and the exploitation of former relies on exploitation of the latter...”, a compulsory license may be granted.

Compulsory licensing for medicine in the United States again have never been codified, but have been used to encourage Bayer to reduce their prices under the possibility of being issued compulsory liceninsg. Home to many of the pharmaceutical industries who own patents to medicines, the United States has been called hypocritical due to its common lack of providing affordable pharmaceuticals. Canada allows for CLs under the Food and Drugs Act which points to the World Trade Organization guidelines. Prior to the repeal of its compulsory licensing act, Canada also had specific provisions relating to medicines, and was actually the first country to authorize the compulsory licensing of an AIDS drug for Rwanda for export.[43] In India, the only compulsory license that has ever been granted was for cancer drug Nexavar. In its compulsory licensing provision, it states that CLs are “available for manufacture and export of patented pharmaceutical products...to any country having insufficient or no manufacturing” abilities. Similar to the TRIPs agreement, it also states that none of the principles should impede the protection of public health and nutrition. China's patent laws state that CLs can be used for the benefit of public health. The Measures for Implementation specifies more specifically which countries and regions are allowed, which includes WTO members, or the 'underdeveloped' nations.

Only in the Indian Patent Law does it explicitly allow for CL in the event of exclusive grant backs due to anti-competition and/or not being reasonable to the public. On the contrary, the United States actually had allowed exclusive grant back in the Transparent Wrap Machine Corp v Stokes & Smith Co. case[44]. However, the FTC now strongly recommends against it as it is considered anticompetitive when a grant-back is exclusive[45]. Canada and China does not seem to have this condition in their laws.

Similarly, only in the Indian patent law does coercive package licensing provide for compulsory licensing. This clause may have implications on standard-essential patent pools when attempting to determine which patents are indeed 'essential', and if they comply with fair, reasonable, and non discriminatory regulations[46].

Indian Patent Law also expressly allows for compulsory licensing on the ground that a product is hindered by importation from abroad. It must be proven the lack of accessibility is soley due to the process of it being imported, perhaps affected by natural disasters, socioeconomic reasons, political instability, sanctions, or more – ultimately affecting the cost and availability of this product. [47]

Conclusion and Further Reflections on Compulsory Licensing
Ultimately, there seems to be no correlation between the detail and scope of compulsory licensing (and other codified) law, and the number of compulsory licenses granted. However, it must be noted that the Eastern countries of focus in this review have had much less time developing its intellectual property landscape. In addition, the comprehensiveness of India and China's patent laws also reflect the incorporation of valuable lessons learned from poor implementation of other countries.

The prevalence of broadly defined patents, patent trolling, and the increasing need to navigate patent thickets all act as barriers to innovation and production to a commercial scale in which these technologies can actually be disseminated. The Pervasive Technologies project looks ultimately at bridging the digital divide through providing access to low-cost technology, and subsequently access to information, culture, and knowledge.

Compulsory licenses can be used to decrease the cost burden of production, and reduce barriers to innovation, ultimately providing greater accessibility to these tools for all of society. The Centre for Internet and Society has proposed and continues to advocate the establishment of patent pools for low-access devices through the use of compulsory licenses to achieve this goal[48].

[1] WIPO. What Is Intellectual Property. World Intellectual Property Organization, 2012. Print. 5

[2] WIPO, 6

[3] Correa, Carlos M. “Intellectual Property Rights and the.” Trade Related Agenda Development and Equity (1999): 3

[4] Contreras, Jorge L., and Charles R. McManis. “Compulsory Licensing of Intellectual Property: A Viable Policy Lever for Promoting Access to Critical Technologies?” TRIPS and Developing Countries – Towards a New World Order? (Gustavo Ghidini, Rudolph J.R. Peritz & Marco Ricolfi, eds., 2014 (Edward Elgar)) (2014): 112 Print.

[5] Abraham, Sunil. Letter for Establishment of Patent Pool for Low-Cost Access Devices through Compulsory Licenses. 27 June 2013. Accessed: http://cis-india.org/a2k/blog/letter-for-establishment-of-patent-pool-for-low-cost-access-devices

[6] The Paris Convention is an intellectual property treaty covering industrial property: patents, trademarks, industrial designs, utility models, service marks, trade names, and geographical indicators.

WIPO. “Summary of the Paris Convention for the Protection of Industrial Property (1883).” World Intellectual Property Organization. Website. http://www.wipo.int/treaties/en/ip/paris/summary_paris.html

[7] WIPO. “WIPO-Administered Treaties: Contracting Parties.” World Intellectual Property Organization. Website. http://www.wipo.int/treaties/en/ShowResults.jsp?treaty_id=2

[8] The North American Free Trade Agreement (NAFTA) is the largest free trade agreement in the world, with members Canada, United States, and Mexico.
USTR. “North American Free Trade Agreement (NAFTA).” Office of the United States Representative. Website. http://www.ustr.gov/trade-agreements/free-trade-agreements/north-american-free-trade-agreement-nafta

[9] The Trade Related Aspects of Intellectual Property RIghts (TRIPS) agreement is a treaty which provides basic intellectual property provisions for international law, and stipulates that members shall be free to determine methods of implementing the provisions, in addition to enact more specific measures provided it coincides with the rest of the agreement.
World Trade Organization. “Agreement on Trade Related Aspects of Intellectual Property Rights, Including Trade in Counterfeit Goods.”WTO Legal Texts - A Summary of the Final Act of the Uruguay Round. Website. http://www.wto.org/english/docs_e/legal_e/ursum_e.htm#nAgreement

[10] TRIPS - Article 31.a)

[11] TRIPS - Article 31.b)

[12] TRIPS - Article 31.b)

[13] TRIPS – Article 31.h)

[14] TRIPS – Article 31.c)

[15] TRIPS – Article 31

[16] fWHO. “The Doha Declaration on the TRIPs Agreement and Public Health.” World Health Organization. http://www.who.int/medicines/areas/policy/doha_declaration/en/

[17] Correa, 11-12.

[18] Fauver, Cole M. “Compulsory Patent Licensing in the United States: An Idea Whose Time Has Come.” Northwestern Journal of International Law and Business 8.3 (1988): 666–685. Print. p671

[19] Correa, 13

[20] Ferrell, John. Patent Pro Se: The Entrepreneur’s Guide to Provisional Patent Applications. BayWater Publishing, 2010. Print.

[21] Milchenko, Oleg. “Contemporary Anti-Competetive Practices of Patents Usage.” Journal of International Commercial Law and Technology 8.3 (2013): 1-13. Print.

[22] Shapiro, Carl. “Navigating the Patent Thicket: Cross Licneses, Patent Pools, and Standard Setting.” Innovation Policy and the Economy 1 (2001): 119–150. Print.

[23] McGurk, Thomas B. “The Grant-Back Clause in Your Technology License.” Biodiesel Magazine 17 Jan. 2013.

[24] Origin IP Academy. “Exclusive Grant Back License.” Origiin IP Academy 15 Nov. 2009. Blog. Accessed: http://origiinipae.blogspot.in/2009/11/exclusive-grant-back-license.html

[25] Dykeman, David J. “When Licensing out Patents, Make Sure Improvements Are Granted Back.” Boston Business Journal 8 Mar. 2006. Blog retrieved from: http://www.bizjournals.com/boston/blog/mass-high-tech/2006/03/when-licensing-out-patents-make-sure.html?page=all

[26] Origiin IP Academy. “Coercive Package Licensing.” Origiin IP Academy 11 Nov. 2009. Accessed: http://origiinipae.blogspot.in/2009/11/coercive-package-licensing.html

[27] Reddy, Prashant. “‘Working’ a Patent under the Indian Patent Act, 970 - Does Importation of a Patented Invention Count?” Spicy IP - Decoding Indian Intellectual Property Law. 22 Apr. 2010. Retrieved: http://spicyip.com/2010/04/working-patent-under-indian-patent-act.html

[28] Yang, Deli. “Compulsory Licesning: For Better or for Worse, the Done Deal Lies in the Balance.” Journal of Intellectual Property Rights 17 (2012): 76–81; p80 Print. Global IP Debates

[29] Shaw, Malcom N. International Law 7th Edition. 5th ed. Cambridge University Press, 2003. Print.

[30] Canada had repealed its section on Compulsory Licensing in order to comply with the TRIPS and NAFTA agreements

[31] A more comprehensive approach could be to assess broadly ALL the compulsory licensing cases rather than just a select few ….particularly for United States and Canada...

[32] http://www.aals.org/documents/2006intprop/JeromeReichmanOutline.pdf

[33] Reichman, Jerome. “Compulsory Licensing of Patented Inventions: Comparing United States Law and Practice with Options under the TRIPS Agreement.” Vancouver, Canada: Duke University School of Law, 2006.

[34] Reichman, Jerome H. “Comment: Compulsory Licensing of Patented Pharmaceutical Inventions: Evaluating the Options.” The Journal of Law, Medicine, and Ethics 37.2 (2009): 247–263. Print.

[35] Pharmaceutical products' means any patented product, or product manufactured through a patented process, of the pharmaceutical sector needed to address public health problems and shall be inclusive of ingredients necessary for their manufacture and diagnostic kits required for their use"

[36] Dratler, Jay. Licensing of Intellectual Property. New York: Law Journal Press, 2005: 7.89 Print.

[37] Miller, Mark E., and David S. Almeling. “DOJ, FTC Redefine Antitrust Rules on Patent Pools.” National Law Journal. 29 Oct. 2007.

[38] Therefore compulsory licensing can be granted given Controller agrees

[39] Raja, Kanaga. “US Leads the World in Use of Compulsory Licenses, Says KEI.” Third World Network. N.p., 18 Mar. 2014.

[40] Bakhru, Rachna. “India Grants First Compulsory Licence under Patents Act.” Intellectual Property Magazine June 2012: 46–47. Print.

[41] Miller Canfield. “China Allows Compulsory Licensing.” Law FIrm of Miller Canfield. Dec. 2012. Retreived: http://www.millercanfield.com/resources-321.html

[42] Genevaz, Simon. “Against Immunity for Unilateral Refusal to Deal in Intellectual Property: Why Antitrust Law Should Not Distingusih between IP and Other Property Rights.” Berkeley Technology Law Journal 19.2 (2014): 742–784. Print.

[43] World Trade Organization. “Canada Is First to Notify Compulsory License to Export Generic Drug.” WTO | 2007 News Items. N.p., 4 Oct. 2007.

[44] sSchmalbeck, Richard L. “The Validity of Grant-Back Clauses in Patent Licensing Agreements.” University of Chicago Law Review 42 (1975): 733–748.

[45] Miller & Ameling, 2007: 3

[46] Lerner, Josh, and Jean Tirole. “Standard-Essential Patents.” Working Paper 43.

[47] Reddy, 2010

[48] See Executive Director of CIS' letter to the government here: http://cis-india.org/a2k/blog/letter-for-establishment-of-patent-pool-for-low-cost-access-devices

For more details visit https://cis-india.org/a2k/blogs/grounds-for-compulsory-patent-licensing-in-us-canada-china-and-india

Interviews with App Developers: [dis]regard towards IPR vs. Patent Hype – Part II

samantha — 2014-08-19T03:51:39Z

The following is a second post within a series reporting on interviews conducted with 10 of Bangalore's mobile app developers and other industry stakeholders. Within this research, CIS attempts to understand how they engage with the law within their practice, particularly with respect to IP. Here we examine how these developers responded to a question on legal protection for their works.

Before one can identify the solution, one must first identify the problem. Yet, in order to understand the problem, we must first understand the individuals involved and the how the problem affects these individuals. We hope that the findings of this preliminary research initiative will provide sufficient groundwork to understand the problems that exist and the different ways of approaching them before determining the most suitable prospective option in changes at the policy level. In this case, the individuals under study are the key contributors to the mobile app space within India; and the problem, being those faced by them as they attempt to navigate an emerging and ambiguous ecosystem.

Previously, we looked at responses that were given across these mobile app developers interviewed which revealed how they orient notions of intellectual property within their practice and own products, specifically. Findings that were made included deductions that the majority of those interviewed developed mobile app products for clients, and in turn assigned ownership of their products to their clients. Just as well, they commonly shared an interest in leaving the services sector to create products of their own, with some of them already having made the transition within their business model.

Question 2: “How is your IP protected?”

Next, we asked how they go about protecting their intellectual property to get a feel of who is protecting their apps and who is not. In asking this question, we hoped to learn how they go about protecting their work via legal means. Across their various responses, we observed many patterns and contradictions which are conveyed here with reference to comments made across interviews. It is important to note, however, that no causal relations intend for be argued for, only suggested correlations.

How they responded

When asked, those interviewed responded with a variance in answers. Some simply stated that their work is not protected, while a few mentioned that they acquired trademark or intend to apply for trademark protection. One interviewee had a patent pending in India and the US, as well. In many of our conversations, developers mentioned that their code for their apps is under open source licenses, and a couple others entailed sharing that the content is under creative commons licenses, “individual licenses,” or joint copyright. Additionally, within one interview, one mentioned the use of encryption tools as a technical means of protection for their work.

“The concept of securing IP is relatively new within the Indian context... it becomes a question of priority between innovation and protection" — Aravind Krishnaswamy, Levitum

Of the developers interviewed, many exhibited some sort of confusion or misunderstanding related to the protection of their works by means of intellectual property rights (IPR). Those interviewed seemed to either express an interest to acquire IPR in the future for their products in the forms of patent or trademark protection, or expressed their appreciation for openness source licensing—or both! Beneath these immediate responses, however, many repeated patterns, as well as contradictions, are revealed. Conversations that followed within these interviewed entailed the opportunity to hear from personal experiences and opinions on different areas within their practice intersecting IPR.

Reasons for IPR protection

If a startup or SME is bootstrapped with very little cash flow to begin with, what would provoke or inspire one to pursue the process of acquiring patent protection then? Aravind Krishnaswamy of startup, Levitum, considers “the concept of securing IP is relatively new within the Indian context.” So if this is the case, why did so many developers interviewed express an interest in IPR?

For those who did express interest in acquiring IPR as protection for their mobile app products, most seemed to express an interest in proving ownership over their work, or preventing problems in the future. One developer's commented on how the mobile app market is a “new and potentially volatile area for software development.” For this reason, it was imperative that he and his team attempted to avoid trouble in the future, and ensure that they going about mobile app development the right and moral way.

Within another interview, developer, John Paul of mobile app SME, Plackal, explains his motives for seeking to acquire patent protection, the application for which is currently pending in India and the US: "For us, applying for a patent is primarily defensive. And if it does get infringed upon, it would give us a good opportunity to generate revenue from it." For the company's trademark, they sought to be able to enforce their ownership over their product's brand: “As a precautionary, we've trademarked the app so that should there be a situation where the app is pirated, we can claim ownership for that app.”

Security not so easily attainable

“To some extent, IPR law is only accessible after moving away from the startup phase."—John Paul, Plackal

However, for the startup especially, such protection does not come without a cost. For this reason, IPR is generally perceived as a gamble or tradeoff. It becomes a “question of priority between innovation and protection,” says Krishnaswamy. He continues in saying that, "I feel like even if it’s a great idea if someone else copies it, that’s some level of validation, but as a small company I’d rather be nimble in terms of how we build it up and get it to a certain point. We're trying to move fast and get something going, and then figure it out.” For Krishnaswamy and his team, securing a patent on an area where they feel they feel they have unique work is on their list of things to do, “It's something for us to revisit in the future.”

Paul explains that he and his team didn't always have IPR within reach: “To some extent, IPR law is only accessible after moving away from the startup phase.” So what discourages startups from acquiring IPR, or simply seeking it out?

Patent attorney and IP consultant, Arjun Bala explains that “there is a lot to figure out. One aspect is filling it out, the other is how you write it so that it is easily granted and gives you the right sort of patent protection you are looking for. It is a very complex process that requires a lot of technical and legal expertise.” But even if one successfully manoeuvres the IPR system, is protection guaranteed?

Business Financial Strategist of Out Sourced CFO & Business Advisory Services, Jayant Tewari, illustrates the lack of security for the SME in the patent system, specifically, in saying, “Since a patent becomes public domain on filing, it can be effectively infringed based on the filing, even before it is granted.” Tewari continues in stressing the irrelevance of patents for SMEs due to the difficulty of enforcement: “the infringement will be adjudicated after 2 years at an immense cost to the SME patent-holder, who will go commercially belly-up due to the infringement. The regime does not protect the SME at all.”

“It is easy to say 'this is the method and no once can copy', but unless the look and feel is the same, it is very hard to demonstrate that you have been infringed on.”
—Samuel Mani, Mani Chengappa & Mathur

Nevermind enforcement...

Not only did our interviews shed light on the difficulty for a startup developer to apply for and be granted protection for their intellectual property, but also for the enforcement of such. Partnering Lawyer, Samuel Mani, of technology-focused law firm, Mani Chengappa & Mathur, speaks to us about the extensive procedure required to prove one's ownership over their IP: “To demonstrate copyright infringement, it requires going into millions of lines of code—unless it is the interface that is copied, which is easily visible.” Mani continues on the enforcement of patent protection by saying, “For a patent, the scope is even wider. It is easy to say 'this is the method and no once can copy', but unless the look and feel is the same, it is very hard to demonstrate that you have been infringed on.”

Planting the initial seed

If there is arguably so much risk associated with applying for IPR protection, as well with enforcement, what specifically gets startups thinking about IPR initially within their practice? What experiences help them formulate their opinions on the matter, and which forms of IPR do they seek out?

Across interviews conducted, one particular observation entailed the tendency for developers to have worked in the past for corporate employers that have dealt with cases of infringement or have acquired IP protection. Almost half of those interviewed shared the fact that they worked for a corporate employer and became better familiar with different notions of intellectual property through that experience. It may not be too farfetched to suggest, then, that for the developer the idea of acquiring IPR protection is one that may be reinforced from previous employers or other successful development companies with IPR of their own.

Cofounder and developer for a medium-sized software development enterprise, Anoop[1] explained that it wasn't until after the success of his enterprise's first application with $1 million in sales, that they started thinking about intellectual property and began to understand the value of it. This newly attained understanding, however, had not been enough to sufficiently equip his team with the knowledge to properly secure protection. For them, going after patent protection turned out to be a pursuit in vain.

Loss of faith in patents for SMEs

Anoop shares his disappointing experience after attempting to secure a patent for one of their mobile apps:

“We burned our fingers with patents. We spent a lot of money for a game we invented about 3 years ago. We had a law firm in the US to help us. We applied for it, and it went through 3-4 revisions, costing us $25-30,000. We finally closed the file when we could not get it due to an existing patent. We were really surprised."

After much disappointment from not being successful in their attempts to acquire patent protection, however, Anoop came out of the experience with a new outlook on patents and their role for SMEs:

“They're meant for large companies as means to bully your competitor. Only big players with the capacity to file for a patent as soon as it takes off benefit. The existing system doesn’t really work for startup companies. In India and anywhere. It’s an expensive process. If you’re a startup who’s just bootstrapping, there’s no guarantee that you will get it. It’s going to take you years.”

Patent hype
Anoop is a prime example of developers in the startup space that fall victim to the promises of the patent system—only to be spat back out having exhausted their time and earnings. Already being aware of the probability for failure, Mani strongly discourages going after patent protection as a means of staying in the race. “With people spending millions on litigation, it is a recipe for disaster, especially considering the inherent delay of the Indian system.” For this reason, Mani stresses the importance of applying for the right protection.

Mani also suggests that the patent debate is driven by self-interest—people who simply make money off of application filing, regardless of whether or not the case succeeds. As a lawyer in the IT space, Mani claims to have turned away several prospective clients looking to patent their products when he insisted that such means of protection was not suitable for their product and interests...which brings us to an additional area of heated debate: the patentability of mobile apps.

Can mobile apps be patented?[2]

One concept that seemed to receive contested responses across interviews is that of the patentability of mobile apps in the first place. When asked if mobile apps could be patented, former lawyer and startup founder, Vivek Durai, of HumblePaper, put it blatantly in responding, “absolutely not.” Others offered explanations of the Indian Patent Law nuances regarding when a mobile app is patentable and when one is not.

While consulting a SME with their own patent application, Bala explains their approach to ensure the mobile app's eligibility for patent protection, while providing some insight into the Indian patent system:

“One approach that we've taken to getting a patent in India is it's not just a pure software, but a software plus a hardware—as in it requires a specific hardware to function. If [the software] makes the hardware perform better, then it has a technical effect... In which case, we have a better chance of getting a patent in India. If your software is agnostic to hardware, however, it is much more difficult to receive a patent in India.”

To patent or not to patent? (or any IPR for that matter)
To Tewari, on the other hand, the question of whether a mobile app can be patented is one entirely irrelevant. The question Tewari introduces into the developer's market strategy is not 'can I patent my app?' but instead, 'should I do so?' In response to which; he would predominantly reply: No.

“How [startup] mobile app developers regard IP laws—or better yet, disregard—is fine for their sake,” argues Tewari. Alternatively, he suggests developers learn how to maneuver the laws, to prevent themselves from arriving at any sticky situations after unknowingly using another's code. To his clients who have mobile apps of their own, he advises to use an open source equivalent of a piece of code if they do not have the rights to it. Doing so will help keep infringement upon others at a minimal and prevent litigation against oneself.

“How [startup] mobile app developers regard IP laws—or better yet, disregard—is fine for their sake."—Jayant Tewari, Out Sourced CFO & Business Advisory Services

Not all developers interviewed, however, aspired to acquiring patent protection. In fact, some strongly opposed software patents, while expressing their appreciation for openness across the developer community. The other side to the IPR-Open Source dichotomy will be examined in the blog post to follow, after which, we will then look at accounts of infringement and threats of litigation across mobile app developers interviewed.

To recap

By looking closely at the individual experiences across mobile app developers interviewed, we hope to begin to map out the mobile app ecosystem and the ways in which industry players engage with each other regarding their IPR. We also hope to begin to shed light on the different attitudes towards the law within one's practice, and how they shape their decisions related to their work. Only after doing so, may we be able to sufficiently assess how India's current IP laws govern this landscape.

Stay tuned for the next in this blog series! We hope that you may benefit from our findings in your own practice as a mobile app industry player or enthusiast, as well.

Notes:
[1] Name changed to protect the interviewee's identity

[2] In conducting interviews, our goal was not to test the legitimacy of responses, but instead, to map them out across various industry stakeholders. For this reason, this blog series will not be able to sufficiently respond to legal question, such as whether or not mobile apps are patentable to begin with. We intend to, however, undergo legal analysis of the Indian IPR system at its intersection with the mobile app space in India at a later stage in this project.

For more details visit https://cis-india.org/a2k/blogs/interviews-with-app-developers-dis-regard-towards-ipr-vs-patent-hype-2013-part-ii

Dataset: Patent Landscape of Mobile Device Technologies in India

rohini — 2016-05-03T20:06:43Z

Patent landscape of mobile technology patents and patent applications held by 50 companies operating in India. Licensed CC-BY-SA 4.0.

Dataset: Patent Landscape of Mobile Device Technologies in India

This dataset contains a landscape of 23,569 patents and patent applications registered in India and relevant to the domain of mobile technology. These patents and patent applications are held by 50 Indian and non-Indian companies operating in the country. The patent landscape has been released under the Creative Commons-Attribution-Share Alike 4.0 (CC-BY-SA 4.0) License as a part of the ongoing Pervasive Technologies research project.

For the detailed methdology used for drawing up this landscape, read: Methodology: Patent Landscaping in the Indian Mobile Device Marketplace

A paper titled "Patents and Mobile Devices in India: An Empirical Survey" published on SSRN in March 2016 presents an analyis of this patent landscape.

For queries regarding the dataset or its reuse, write to rohini@cis-india.org.

Using this dataset:

Assignee: The assignee is one of 50 companies specified in Annexure 4 of the methodology document. Where two assignees are mentioned, the patent was transferred from the second assignee to the first on account of sale of the patent, company merger, etc. For example, "Huawei|NEC" indicates that a patent that belonged to NEC was transferred to Huawei.

Patent Number: This column contains the patent number in the case of granted patents and the application number in case of patent applications. Patent numbers have been coded in the Thomson Reuters database as IN<6 digit number>B. For example, the patent number 247760 in the Indian Patent Office database is coded as IN247760B in this dataset. The application number is coded as well. However, there is a separate column (Column R) for the application number as given in the Indian Patent Office database.

Level 1: Patents and patent applications in the landscape have been categorised into: Body Design, Communication, Connectable Interfaces, Display, Energy Storage, Memory, Operational Blocks, Sensors, Software, and Sound, image and video.

Level 2: Almost all categories have further been divided into sub-categories, i.e., Level 2 categories.

Infrastructure/ UE: Refers to whether the patent pertains to infrastructure and the user equipment (IUE) or only the user equipment (UE).

For more details visit https://cis-india.org/a2k/blogs/dataset-patent-landscape-of-mobile-device-technologies-in-india

Pervasive Technologies Project Working Document Series: Literature Review on IPR in Mobile app development

sinha — 2015-08-31T13:48:02Z

This post is literature survey of material exploring and analysing the role of Application Platforms in the Mobile Applications Development ecosystem, albeit from an intellectual property perspective. The document is a work in progress.

1. What are the decisions developers are making within their practice in terms of location of their enterprise and clients, scale of audience, funding, business models and mobile apps marketplace (app stores)? Who is the primary actor in the mobile applications development cycle in India?

1.1. Is the mobile apps marketplace organically developing into a Bazaar model, or a Cathedral model?

1.2. What are the contractual terms between the enterprise and the employee? What is the typical nature of agreements in the mobile apps development industry between enterprise- employee and enterprise- client?

The role of Mobile application developers (“developers”) is critical in the app market, especially when such markets are regarded as the key entry and dissemination point for mobile content. Developers are seen as innovation engines and the fastest route to innovation, so understanding factors that attract and retain third party mobile application developers is of importance to mobile platform providers in order to survive.

Who are the primary actors in the mobile applications development cycle in India?

This chapter of the Pervasive Technologies Project (“Project”) aims to study developers who are key contributors to the mobile applications space within India; and the problems, those being faced by them as they attempt to navigate an emerging and ambiguous ecosystem. The results of our qualitative research give us insight into the characteristics of this new tribe. A majority of the developers do not own the products they innovate and instead assign ownership of their IP over to their clients. Innovating for the purpose of creating and retaining ownership is a key motivation and is reflected in the tendency of developers to move away from the services sector to develop their own products.[1]

As one developer puts it, “unless you're a 1000 man enterprise, there's no economic benefit in services; as competition has driven pricing so low, everyone's struggling to deliver $12-14 per hour.”

Every startup in mobile development, especially, is doing services to stay afloat and would like to move toward a product model.

Further, IAMAI conducted a survey[2] in 2013 and the report presents an analysis in four sections:

a) Who? The App Developer in India

b) What? The Preference of Users and Developers in India

c) Why? The Business of Apps in India

d) How? The Future of Apps in India

The Report states:

“The vast majority of app developers in India are male. In their survey of 454 developers, only 35 respondents were female reflecting the gender bias. On the demand side 80 percent of smartphone users in India are male reinforcing the male dominance. Geographically the respondents were all based in India except one developer of Indian origin residing in Malaysia. The well known and established IT cities in India are attractive for app developers because they provide with easy access to infrastructure, skill and a ready market for products. The survey shows the concentration of app developers in the cities of Bangalore, Mumbai, Delhi NCR, Hyderabad and Ahmedabad. A larger percentage of developers in such IT cities make apps on a full-time basis as compared to developers in other cities. The survey data also shows that Bangalore, Mumbai and NCR have the maximum number of companies (organized business operations) engaged in app development. Cities like Ahmedabad, Hyderabad and Chennai host many small teams of app developersas well as self-employed app professionals. In most of the other cities such as Bhubaneshwar, Cochin, Coimbatore, Gandhinagar and Kota, app development is done primarily on a part-time basis and is not the primary source of income. This could be the result of limited monetization options that make app development an unsustainable livelihood for many.

The popularity of international apps was evident in the survey data. The average download of ‘Indian’ apps was very low. Only 14 of the 454 developers has crossed the hundred thousand download mark, of which only 5 surpassed the one million milestone. These numbers do not pertain to a single app, but to the cumulative number of downloads across all the apps created by each developer, supporting the thesis of low visibility of apps developed domestically.

In their sample of 454 developers, entertainment apps including gaming and social networking are the dominant categories reflecting demand side preference. Utilities, health and education are the other important categories. The survey also below provided the number of apps developed under each category. The list does not include lifestyle and enterprise apps which are exceptions. One forceful result of their survey is the focus of app developers on foreign app demand in preference to producing locally-relevant content - as the latter is less profitable. Each respondent in their sample had developed an average of 38 apps. Of these 13 have developed 100 or more apps and these are the larger professional app companies. After excluding extreme values, the average number of apps developed by each respondent fell to 17.

Skewed revenue sharing models biased against content providers was one of the main reasons why Indian app developers focus on international app stores such as Apple App Store or Google PlayStore that offer a flat 70 percent of the total revenue to developers. This adversely affected development of India-specific apps and even popular apps such as Saavn and Zomato have expanded abroad because of this very reason.

Survey results indicated an Android dominated future for the app economy in India for two apparent reasons. One, Android devices are more affordable and two, the Android ecosystem is open allowing OEMs such as Samsung and HTC to manufacture mobile devices that use the Android OS. The drawback turns out to be the resulting fragmentation in screen sizes, resolution limits and hardware traits. Because of this, “developing apps that work across the whole range of Android devices can be extremely challenging and time-consuming.” Moreover, Indian app developers need to recognise the existence of an active market for used phones and thus the appeal of ‘backward compatibility’ i.e. an app that can work across old devices as well as new ones and also function across both old and new versions of operating systems will stand a better chance of success.

On the whole, app development was not considered to be a remunerative business opportunity. 17 percent of respondents who answered the question on choice of revenue model indicated that they did not have a specific revenue generation plan. While some developers are engaged in contractual development, there are few developers who self finance their project and do not actively market or promote their app. The business of app development in India seems to be at a stage in which it could be characterised as one based on a ‘hit and trial’ philosophy. Self financing is common in the industry. Only 7 and 13 developers approached banks or venture capitalists for financing. Funding an app developer was not an investor’s primary choice. Recognising the market failure and the utility of apps, the Department of Electronics and IT and Department of Telecommunication have both instituted funds to encourage mobile technology ventures

and app development in India.[3] One can argue on the efficacy of the use of limited public resources for app development, but not the fact that app development in India needs a boost. The industry is still very young and ‘unorganized’ and is largely dependent on own and informal sources for financing. The study presents presents the source of financing for app developers.”

Understanding of IP

There is a lack of understanding of IP amongst the developers. During the course of interviews, IP was often thought of as mere content or code. There was also confusion between the terms IP and IPR. The few developers who understood the nuances of IP better, voiced a need for the developer community to deepen their understanding of what parts of their work are IP. Samuel Mani, Founding Partner of Mani Chengappa & Mathur, stressed that developers should recognize the value within not just the product or software itself, but the background business processes. According to Mani, the execution of the idea is the true source of innovation; how one accesses the market, and maybe who the market is as well.[4]

The IAMAI report[5] had some observations on the impact of IP on the apps industry. According to the report, “since the industry thrived on innovation, protection of intellectual property was important to developers. The balance between protection and sharing of innovation was part of a larger and often tendentious debate on open source versus proprietary software development.[6] The survey did not attempt to deconstruct that debate; merely reported that 70 percent of respondents were of the view that intellectual property protection was a concern for app developers. However, not all had taken steps to protect intellectual property. The lack of seriousness could be associated with poor revenue potential from apps. Among those who had, some obtained copyrights/patents, while others worked with individual checks on in-app piracy using code morphing, copy protection, server–based checks, or both etc (The study provides data on different IP protection measures).”

Nature of their clients

Out-sourced 'mobile app services' is marginal as a business model here in India.[7]

Ownership of their product/service:

Often, the lack in understanding can be traced to the developers working in isolation from the legalities involved in assigning the product to the client. Majority of those interviewed developed mobile app products for clients, and in turn assigned ownership of their products to their clients. As previously mentioned, they commonly shared an interest in leaving the services sector to create products of their own, with some of them already having made the transition within their business model.[8]

Contractual clauses most important to mobile app developers: Delving deeper into the aspect of assigning ownership to clients, the most common practice is for developers to enter into a work-for-hire agreement with the client. Typically, a work-for-hire agreement mandates that if a worker is paid to carry out a particular project, whatever is created within the project belongs to the client.[9]

For startups where team players are small in number, it is likely that all will have access to any contract agreements entered into with clients. For larger corporate software developer firms, there may be a specialized department for legal-related matters. In such cases, the mobile app developers themselves would seldom lay eyes on the legalese of contracts, for the primary reason being that it doesn't concern them. Instead, the terms of agreement more familiar to them would be those that they obliged to upon working for their employer. The interviews revealed that the importance of contract agreements was actually underestimated in the country.[10]

Within a work-for-hire agreement, it is commonplace for developers to enter into restrictive agreements that obstruct the freedoms of what they can do with the code created for the client. Problematic areas proved to be those related to the time periods in which the developer was not allowed to take up future work for competing clients (i.e. the non-compete clause), or could not talk about their work for the client at all (the “quiet period”).[11]

Developers are unable to license their work to other interested clients when one client retains ownership. “Clients typically do not want a perpetual license, but complete ownership”, says a website developer. He further explains that, “this means they could make a derivative work or use it for another project. Depending on how bad we want the project, we'll work out some middle ground.” But it does not seem to be so easy for he and his SME to do so: “The thing about contracts is it’s all about a sort of differential bargaining power that the two parties have... you’ll have very little control about what happens once you’ve got paid.”[12]

To have any sort of bargaining power within a work-for-hire arrangement requires a lot of time for negotiating, and the space for communication to begin with. In many cases, contracts may not even be introduced into a work agreement, leaving a lot of intricacies to the unknown.

The problems are further compounded by contract illiteracy, more so in second tier cities.[13]

2. What is the nature of innovation emerging from the mobile app industry? What is the awareness of the "mobile applications developer and its enterprise on rules concerning code, content and design? How does re-use and sharing of code, content and design occur in the mobile application developer ecosystem ? What is the perceived impact of the Indian IPR regime on the aforementioned aspects? Finally, do the emerging trends in re-use and sharing of code run afoul of Indian IP law?

There is a marked shift towards using open source software amongst developers. According to a Gartner study, most software makers will have some open source applications or code in their portfolio by 2016. The study also reaches the conclusion that 99% of Forbes’ Global 2000 companies will be using some form of open source software.[14]

Awareness

The interviews revealed different personal understandings of the meaning of IP. The most common responses were the following[15]:

A : When questioned about IP to developers, they did not know what it meant, because it didn’t have anything to do with what they were doing.

B : Developers often did not know what part of their app was IP... there is was gap in understanding with respect to IP.

For the most part, it seems, IP was considered to refer to content or code across interviews, and was even confused at one point with IPR (IP Rights) within a response referring to an SME's trademark and pending application.

For those who appeared to be better versed in matters related to IP, they emphasised on the need for developers to be better acquainted with what parts of their work are IP. One interviewee stressed on the importance of developers to recognize the value of background business processes, apart from software and the product itself. [16]

In certain cases, it took $1 million in sales for a medium-sized software development enterprise to start paying attention to IP. The enterprise tried to obtain patent protection for their application, but the effort turned out to be futile.[17]

Protection of work (Speaks to awareness also)

When asked, those interviewed responded with a variance in answers. Some simply stated that their work is not protected, while a few mentioned that they acquired trademark or intend to apply for trademark protection. One interviewee had a patent pending in India and the US, as well. In many conversations, developers mentioned that their code for their apps is under open source licenses, and a couple others entailed sharing that the content is under creative commons licenses, “individual licenses,” or joint copyright. Additionally, within one interview, one mentioned the use of encryption tools as a technical means of protection for their work.[18]

“The concept of securing IP is relatively new within the Indian context... it becomes a question of priority between innovation and protection" — Aravind Krishnaswamy, Levitum.

Across interviews conducted, one particular observation entailed the tendency for developers to have worked in the past for corporate employers that have dealt with cases of infringement or have acquired IP protection. Almost half of those interviewed shared the fact that they worked for a corporate employer and became better familiar with different notions of intellectual property through that experience. It may not be too far-fetched to suggest, then, that for the developer the idea of acquiring IPR protection is one that may be reinforced from previous employers or other successful development companies with IPR of their own.[20]

Impact of law & reasons for IPR Protection

One would assume that if a startup was bootstrapped with minimal cash flow, then it would place a low priority on getting IP protection for its products. Aravind Krishnaswamy of startup, Levitum, also stated that “the concept of securing IP was relatively new within the Indian context.” [21]

Yet, many developers who were interviewed did express an interest in IPR. The main concerns developers believed IP protection would address, were proving ownership over their work or preventing problems in the future. One developer's commented on how the mobile app market is a “new and potentially volatile area for software development.” For this reason, it was imperative that he and his team attempted to avoid trouble in the future, and ensure that they going about mobile app development the right and moral way.[22]

Within another interview, developer, John Paul of mobile app SME, Plackal, explained his motives for seeking to acquire patent protection, the application for which back then was pending in India and the US: "For us, applying for a patent is primarily defensive. And if it does get infringed upon, it would give us a good opportunity to generate revenue from it." For the company's trademark, they sought to be able to enforce their ownership over their product's brand: “As a precautionary, we've trademarked the app so that should there be a situation where the app is pirated, we can claim ownership for that app.”[23]

Do the emerging trends run afoul of Indian law?

Yes. This was evident from the legal practices of mobile app developers and the resulting cases of infringement.

Some instances of infringement (limited to Mobile app content (i.e. logos, pictures, etc.)) are[24]:

• Pirated apps in app stores

• “Dummy apps” or imitations of another's app

• Breaching app stores user agreement

• Violation of License agreements of code created by another

• Violation of Open source licenses

• Breaching of terms of agreement for by commissioning clients

• Breaching of terms of agreement for by those hired

Some of the developers indicated that they weren't a fish big enough to be pursued for infringement. “The big companies do not go after small developers; it depends on how much money they're making.” said a developer. He added,“Patent lawsuits can cost something like millions of dollars, so unless they're going to get more back, they wouldn't go through the trouble of doing so... but that is true even in the US.”

Some added that others who may have been apparently copying you, may have been working on the same content independently. Corporate players are in non-compliance knowingly than not, whereas more SMEs infringe upon others without being aware that they are. Just as well, the degree to which infringement takes place may differ between the two types of industry players: “At the corporate level, where they know they are not in compliance, the degree of non-compliance might be very small or specific, but it still exists.” On the other hand, for startup developers, a substantial amount of their code may not comply with the licenses and agreements they are obliged to—something that could pose problems for them later down the road if left unfixed. [25]

3. The apps marketplace is extremely important since they are the gatekeepers enabling access to apps. What is the nature of the apps marketplace? What are the limitations associated with it ? How do the existing regulatory models intersect with this relatively new marketplace? What is the enforcement carried out by these app stores in terms of IP?

“The app platform is a gatekeeper which provides the consumer and developer a virtual space to buy and sell products (mobile apps). What is the nature of the app platform? What are the limitations associated with it?

An app dealing in pirated content or infringing intellectual property faces the risk of getting barred by the app platform. What is the enforcement carried out by app platforms to protect intellectual property?”

Firstly, what is an app platform?

Iansteti and Levien[26] state that at the core of each innovation network is a focal organization known as platform owner (or keystone) that provides the platform to facilitate contribution by other members in the network.

Hagiu[27] defines a platform as a product, service or technology that provides a foundation for other parties to develop complementary products.

Specifically, I Kouris[28] defines an app platform as a special kind of electronic market which enable software developers to distribute their software applications(apps) among users of mobile devices like smartphones or tablets. An app platform owner dictates the entire infrastructure(like user interface, server space, etc.) and determines the rules for the interaction between the developers and users. They usually provide information about apps and developers and serve as a trusted third party by controlling app quality. Fransman M[29] characterised the app platform as an 'innovation ecosystem incorporating app developers effectively.'

Innovation can happen within the enterprise, or can take a more open route and benefit from external innovation. In order to gain the benefit of external innovation, platform owners must open their platforms up beyond their internal base of developers and provide resources to third party developers.[30]

What is the platform concept in software?

Broadly, Noori[31], discusses the issues about the platform concept in software and attempts to address the subject of platform strategy. Tsai, Phal & Robert[32] further the discussion by stating principles for an effective platform strategy.

In mobile ecosystems building a developer community is one of the niches to attract the developers to join the ecosystem. However, health can mean differing things for different ecosystem members. In order to stimulate innovation[33] the keystone company is often forced to relinquish much of their control over the platform to the development community. This involves a careful balancing act in relinquishing enough control to create a healthy environment for developers, and not stifling innovation while retaining a necessary and desired degree of control.[34]

Baskin[35] examines the problems concerning software patent under the mobile applications platform environment. The scope of the analysis is limited to two mobile applications platforms: Apple's iOS and Google's Android. The analysis throws light on the problems of innovation in software systems like iOS and Android. The note also proposes several changes to both antitrust and patent laws that will make it more difficult for established market players to prevent new competitors from entering high tech markets, thereby promoting greater openness and innovation. The part on software patents discusses the effects of enforcement of patent rights on open and closed systems. The note observes that the US Federal Circuit's decisions (Fonar Corp. v. Gen. Elec. Co., io7 F.3d 1543, 1549 (Fed. Cir. 1997)) have severely curtailed both the enablement and best mode requirements for successful software patents., thereby limiting the disclosure and preventing many of the invention's useful elements from reaching the public domain. Patentability issues have affected open systems such as Android more than Apple, owing to a greater dependency on third parties to run android systems, leading to more patent infringement issues. It recommends, that, intellectual property law should promote open systems above patent protection in high tech fields, allow reverse engineering of software and introduce an 'independent invention' defence in the law for innovators.

A certain paper addresses rejection of apps in the AppStore on three grounds: rejection on content grounds (including some competition-driven restrictions), rejection on development grounds, and the regulation of transactions.

Apple's and Google's foray into building a mobile development platform

Coming from the music and personal computer industry, Apple disrupted the mobile industry by making its mobile development platform available to third party developers and eliminating the barriers between those developers and customers. The main goal of Apple in the mobile world is to increase the cross-sales of its high-margin products by providing a continuous experience roaming (iPhone, iPad, Mac, and Apple TV) using complements such as mobile applications, content, services, and accessories.[36] Google, on the other hand, is an online advertising company which provides an open source mobile operating system, in the shape of Android, on which mobile handset manufacturers can develop smartphones without paying software licensing fees. By commoditizing mobile device production under its unique governance structure and building a large developer community, Google secured a means of reducing the barriers to new users accessing their advertising through smartphones. Microsoft through its Windows Phone is the most recent addition to the leading mobile platform providers. Its motivations lie in trying to protect its core business of software licensing which has been disrupted by falling PC sales linked to the emergence of mobile technology and free cloud technology services provided by companies such as Google which have impacted respectively on its licensing fees for Windows OS and Microsoft Office[37].

Luis H Hestres[38] analyzes Apple’s guidelines and approval process on the App Store, discusses content-based rejections of apps, and outlines the consequences of this process for developers’ and consumers’ freedom of expression. It outlines a set of principles to ensure “app-neutrality” whilie ensuring device quality and safety. The article illustrates challenges faced by app developers working on the iOS platform. Criticisms have come forth about Apple's arbitrary and opaque review process. Apple has a rejection rate of 30% of the 26,000 apps submitted to the app store each week[39]. Van Grove[40] comments that the ambiguity, opaqueness, and susceptibility to outside pressures that seems to characterize Apple’s approval process do a disservice to a democratic online culture. With more than 400 million iOS devices sold worldwide since 2007[41], Apple’s devices and app store have become important online intermediaries for Internet users. The article proposes a few basic guidelines, anchored on widely accepted international laws and treaties, such as the Universal Declaration of Human Rights and the International Covenant on Civil and Political Rights.

Statistics

A Report[42] presents us with some important insights into the growth of Google Play. Following are the highlights of the report: There are now well over 1 million apps available on Google Play App downloads and revenue from Google Play increased dramatically over the past year; Markets such as Brazil, Russia, Mexico, Turkey and Indonesia are driving growth in app downloads from Google Play; Google Play is experiencing rapid expansion of monetization in established markets such as Japan, the United States and South Korea; Games played a major role in the acceleration of Google Play revenue growth, but almost all app categories experienced expansion and accounted for almost 90% of revenue in Q1 2014; The freemium business model advanced its domination of Google Play app revenue, and represents a growing proportion of downloads; Asian markets lead the way in generating freemium revenue. Another report8 reiterates the explosion of gaming apps.

4. How does Indian copyright law and patent law apply to the mobile applications development ecosystem, in respect of the various business models operating in the industry?

4.1. The patent regime is grounded on a laboratory model of innovation. What does the niche mobile applications development industry (working on a micro-creativity model of innovation) require differently from the patent regime to foster growth?

4.2. Similarly, copyright law has a distinct design for digital objects. Examine the design and its suitability to regulate a mobile application.

A. The interviews reveal a dichotomy existing in the mobile app developer space. While some developers argued for strong IPR protections, several of app developers opposed strict IPR protection (patents, especially) and advocated use of open source software.[43]

Open source for future protection (Applicable as literature to Research question 2)

Sometimes developers license for community values primarily, however, the assumption is that dominant reason is to retain the ability to use their own work across clients. A designer from a services enterprise gave a different reason for doing so: to guarantee their ability to use their work again. “Since we use a bunch of templates and things like that, those we license using a non-exclusive license, because we reuse those elements on different bits of code in different projects,” he explains, “so there are bits of it which is used over multiple projects and there are stuff that is built exclusively for the client.”[44]

Here one can gather some insight, that perhaps developers do not necessarily license for community values primarily, but for the ability to use their own work across clients. That being said, we begin to wonder what the possibility that open source code may serve as a loophole for work-for-hire contracts, which require the developer to assign all written intellectual property to whoever is commissioning the project. If the code happened to “already be available by open source,” a developer may still be honouring any restrictive agreements with clients, and ensuring their ability to use their code in this future again.[45]

As a developer suggests, that startups should first and foremost protect themselves by making wiser choices related to code in order to prevent being litigated against by others—such as using an open source equivalent to a piece of code that one does not have the rights to, or instead putting the extra time in to develop it from scratch.[46]

Of those who expressed an interest in the open source movement, not all had said that their products were to be open licensed as well. One developer explicitly stated: “I like the idea of open source, and building upon others' work...but our app is not open source, it's proprietary.” It may be a given, then, that all or most developers within our interview sample rely on open source code within their practice, but not all may contribute their resulting product's source code back.[47]

Vivek Durai, from Humble Paper said that despite the fact that “open source has really taken route... on the smaller levels, people will come to a point when philosophies begin to change the moment you start seeing commercial.”[48]

B. A certain paper[49] examines from various angles the complex relationship between intellectual-property rights and technological innovation. Following are the conclusions:

1) Intellectual property rights are most likely to foster innovation when the following conditions converge in a particular industry: (a) high research-and-development costs; (b) a high degree of uncertainty concerning whether specific lines of research will prove fruitful; (c) the content of technological advances can be ascertained easily by competitors through “reverse engineering”; and (d) technological advances can be mimicked by competitors rapidly and inexpensively.

2) The likelihood that intellectual-property rights will impede more than stimulate innovation increases as more and more of the following factors obtain in a particular field: (a) trade-secret protection or lead-time advantages reduce the ability of competitors to take advantage of technological advances; (b) innovation in the field tends to be highly cumulative; (c) researchers in the field are motivated primarily by non-monetary incentives; (d) the field is characterized by strong network externalities. The last three of these circumstances were all present during the development of the technical infrastructure of the Internet; it is thus not surprising that that development proceeded rapidly and effectively with little reliance upon intellectual-property systems.

3) The following techniques may be employed to mitigate the economic side-effects of intellectual-property systems: (a) compulsory licenses; (b) facilitation of price discrimination; (c) strict enforcement of the “utility” requirement; (d) encouragement of appropriate cross-licensing agreements (provided that cartel behavior can be simultaneously discouraged); (e) narrow interpretations of “similarity”; (f) strict enforcement of “enablement” and “best-mode” requirements; and (g) the affirmative defenses of patent and copyright misuse.

4) In contexts in which reliance upon these mitigating devices is not feasible, the following alternative ways of solving the public-goods problem may be superior to intellectual-property rights as ways of stimulating innovation:government research; government funding for private research; or post-hoc government rewards for private technological advances.

C. In a paper[50], the authors study the determinants of patent quality and volume of patent applications when inventors care about perceived patent quality. They analyze the effects of various policy reforms, specifically, a proposal to establish a two‐tiered patent system. In the two‐tiered system, applicants can choose between a regular patent and a more costly, possibly more thoroughly examined, ‘gold‐plate’ patent. Introducing a second patent‐tier can reduce patent applications, reduce the incidence of bad patents, and sometimes increase social welfare. The gold‐plate tier attracts inventors with high ex‐ante probability of validity, but not necessarily applicants with innovations of high economic value.

D. Copyrights related to apps are still being hashed out in the courts. Oracle, for example, sued Google[51] for copyright infringement regarding the structure of Java APIs in its Android operating system[52], and the case was decided by the U.S. Supreme Court.

E. Policy Levers in Patent Law[53]

The paper argues that some industries should be the subject of patent tailoring – which can make them illustrative of certain policy levers. Use of obviousness and disclosure doctrines to modulate the scope and frequency of patents, as might be necessary where anti-commons to patent thicket theories are applicable.

Nature of software vis-a-vis biological/chemical inventions

Software inventions tend to have a quick, cheap, and fairly straightforward post- invention development cycle. Most of the work in software development occurs in the initial coding, not in development or production. The lead time to market in the software industry tends to be short. Because innovation is less uncertain in software than in industries like biotechnology, Merges’ economic framework suggests that the non-obviousness bar should be rather high.

Implementing a rational software policy obviously requires some significant changes to existing case law. A number of policy levers might be brought to bear on this problem. First, obviousness doctrine needs to be reformed, preferably by way of a more informed application of the level of skill in the art or alternatively by application of new secondary considerations of non-obviousness.

Poor handling of software patents by the Federal Circuit

The paper argued that broad software patents were indeed what the existing Federal Circuit jurisprudence will likely produce. By relaxing the enablement requirement and permitting software inventions defined in broad terms, supported by very little in the way of detailed disclosure, the Federal Circuit has encouraged software patents to be drafted broadly and to be applied to allegedly infringing devices that are far removed from the original patented invention.

By implication, the Federal Circuit’s standard also seems to suggest that many narrower software patents on low- level incremental improvements will be invalid for obviousness in view of earlier, more general disclosures. They may also be invalidated under the on- sale bar, because the Supreme Court’s view that a software invention is “ready for patenting” when it is the subject of a commercial order and when the inventor has described its broad functions, even if it is not clear how the code will be written or that it will work for its intended purpose, means that any patentee who waits until the code is written to file a patent application risks being time-barred for not filing earlier. Unfortunately, the Federal Circuit’s current standard seems to be precisely backwards. Software is an industry characterized by at least to a limited extent by competition theory and to a greater extent by cumulative innovation. Cumulative innovation theory suggests that patent protection for incremental software inventions should be relatively easy to acquire in order to reward incremental improvements, implying a somewhat lower obviousness threshold. It also suggests that the resulting patents should be narrow and, in particular, that they should not generally extend across several product generations for fear of stifling subsequent incremental improvements. This suggests that software patents should be limited in scope.

Second, a higher disclosure requirement and restrictions on the doctrine of equivalents will help reduce patent scope. Additionally, the authors think software patents are the ideal candidate for a new policy lever: reverse engineering. Many commentators have explained the importance of permitting competitors to reverse engineer a product in order to see how it works and to figure out ways to design around it. In the case of copyright, courts have adapted the doctrine of fair use, together sometimes with copyright misuse, to allow competitors to engage in reverse engineering of computer software. Patent law includes no express provision allowing reverse engineering, nor is there any judicially developed exception akin to copyright’s fair use doctrine that might permit it. Indeed, patent law generally lacks provisions akin to fair use or other exceptions that might readily be pressed into the service of reverse engineering, although commentators have suggested that patent law may need such exceptions for precisely this reason.

This does not mean that reverse engineering a patented product is necessarily illegal patent law. Some inventions, such as the paper clip, are readily apparent once embodied in a product. Improvers do not need to reverse engineer the paper clip and figure out how it works in order to improve it; they just need to look at it. Additionally, in many cases, the patentee has done all the work necessary for reverse engineering patented inventions by virtue of disclosing how to make and use the claimed invention in the patent specification. In theory, an express provision authorizing reverse engineering would be superfluous if the enabling disclosures required to secure a patent were sufficiently strong – someone who wanted to learn how a patented device worked would only need to read the patent specification. Patentable inventions in software, however, generally do not have these characteristics. Software devices typically cannot be readily understood by casual inspection, and particularly not without access to human-readable source code or other documentation. Examination of the patent itself is unlikely to yield information equivalent to a reverse engineered inspection because the Federal Circuit does not require would-be patentees of software inventions to disclose the implementing source code or, for that matter, very much at all about their inventions. Accordingly, software patents present unique obstacles to consummation of the patent law’s traditional rights-for-disclosure bargain with the public. The specific reverse engineering techniques commonly used for software, in turn, may raise some infringement problems that are unique to software. The definition of infringement in the patent statute is extremely broad, encompassing anyone who “makes, uses, offers to sell, ... sells..., or imports” a patented product. Reverse engineering a patented computer program by decompiling it likely fits within this broad category of prohibited conduct, at least where the program itself is claimed as an apparatus. Reverse engineering clearly constitutes a “use” of the patented software, though owners of a particular copy of the program surely have the right to use it. More significantly, decompilation may also constitute “making” the patented program by generating a temporary yet functional copy of it in RAM memory and, in certain instances, a longer-term (though still “intermediate”) copy in more permanent memory. Those copies probably constitute patent infringement unless protected by some defense. The result of all of this is that the nominally neutral patent law rule – no defense for reverse engineering – affects software more than other industries.

The need for a reverse engineering exception in patent law militates in favor of adapting the existing doctrines of exhaustion or experimental use to that end. Patent misuse might also be adapted, as it has been in the copyright arena, to prevent patent holders from deterring or prohibiting reverse engineering related to their inventions. The exception might even be created out of whole cloth by reinterpreting the infringement provisions of section 271(a). The resulting patent doctrine would constitute a macro policy lever. As Cohen and Lemley observe, in most industries there is either no need to reverse engineer an invention or reverse engineering can be done without infringing the patent.

The paper concludes by stating, “Only in software is there a need for a particular doctrine to protect the right to reverse engineer —and therefore the ability of improvers to innovate. Thus, a judicially created reverse engineering defense would make sense across the board in software cases but not in other patent cases.”

[1]Samantha Cassar, "App Developers Series: Products-Services Dichotomy & IP (Part I)”, last accessed July 21, 2015

[2]IAMAI, “An inquiry into the impact of India's App economy”, 2015

[3]DoT has set up a 1000 crore app development centre called Application Development Infrastructure and 700 crores under the National E-Governance Plan have been allocated for mobile technology ventures

[4]Supra note 1

[5]Supra note 2

[6]Hippel, Eric von, and Georg von Krogh. "Open source software and the “private-collective” innovation model: Issues for organization science." Organization science 14.2 (2003): 209-223.

[7]Supra note 1

[8]Ibid

[9] Samantha Cassar, “Mobile App Developer Series: Terms of Agreement – Part IV”, last accessed July 21

[10]Ibid

[11]Ibid

[12]Ibid

[13]Ibid

[14]Gartner Data

[15]Supra note 1

[16]Ibid

[17]Samantha Cassar, “Interviews with App Developers: [dis]regard towards IPR vs. Patent Hype – Part II”, last accesed July 21, 2015

[18]Ibid

[19]Ibid

[20]Ibid

[21]Ibid

[22]Ibid

[23]Ibid

[24]Samantha Cassar, “Interviews with App Developers: Name of the Game (Part IV)”, last accessed July 21, 2015

[25]Ibid

[26]"Strategy as Ecology," Harvard Business Review, Vol. 82, No. 3, March 2004.

[27] Evans, D. S., A. Hagiu and R. Schmalensee, 2006, Invisible Engines: How Software Platforms

Drive Innovation and Transform Industries, Cambridge, MA: The MIT Press.

[28]Kouris, Iana and Kleer, Rob, "BUSINESS MODELS IN TWO-SIDED MARKETS: AN ASSESSMENT OF STRATEGIES FOR APP PLATFORMS" (2012). 2012 International Conference on Mobile Business. Paper 22.
http://aisel.aisnet.org/icmb2012/22

[29]Fransman, M. (2014) Models of Innovation in Global ICT Firms: The Emerging Global Innovation Ecosystems. JRC Scientific and Policy Reports –EUR 26774 EN. Seville: JRC-IPTS

[30] Deniz and Kehoe, Factors that attract and retain third party developers in mobile ecosystems, June 2013

[31]Nadea Saad Noori (2009) Managing External Innovation: The case of platform extension, available at http://www3.carleton.ca/tim/theses/2009/Noori2009.pdf

[32]Tsai, Phal & Robert, Industry Platform Construction and Development in a changing environment: Evidence from the ICT Industry, available at http://druid8.sit.aau.dk/acc_papers/6s5aqckmne7ggybu0vfxryrynuog.pdf

[33] Supra note 9

[34] Ibid.

[35]John Baskin, Competitive Regulation of Mobile Software Systems: Promoting Innovation Through Reform of Antitrust and Patent Laws (2013)

[36] Constantinou, 2012b

[37]Ibid.

[38]Luis H Hestres (2013) App Neutrality: Apple’s App Store and Freedom of Expression Online , American University , International Journal of Communication 7 (2013), 1265–1280

[39]Supra note 9

[40]Ibid.

[41] Supra note 9

[42]App Annie Data

[43]Supra note 1

[44]Samantha Cassar, “Interviews with App Developers: Open Source, Community, and Contradictions – Part III”, last accessed July 21

[45]Ibid

[46]Ibid

[47]Ibid

[48]Ibid

[49] William Fisher, INTELLECTUAL PROPERTY AND INNOVATION: THEORETICAL, EMPIRICAL, AND HISTORICAL PERSPECTIVES

[50]Patent Quality and a Two‐Tiered Patent System (Vidya Atal and Talia Brar, 2014)

[51]http://copyrightalliance.org/2014/05/federal_circuit_releases_decision_oracle_v_google

[52]http://copyrightalliance.org/2014/05/federal_circuit_releases_decision_oracle_v_google#.VYf0i9Z5MxB

[53]http://escholarship.org/uc/item/4qr081sg

For more details visit https://cis-india.org/a2k/blogs/pervasive-technologies-project-working-document-series-literature-review-on-ipr-in-mobile-app-development

Pervasive Technologies Project Presentations at the 4th Global Congress, 2015

nehaa — 2016-01-21T16:33:41Z

These are the presentations made by the members of the PT Project team at the 4th Global Congress on Intellectual Property and the Public Interest, 2015 at National Law University, New Delhi.

Nehaa Chaudhari: The Curious Case of the CCI: Competition Law and SEP Regulation in India
Amba Uttara Kak and Maggie Huang: Rethinking Music Copyright Management in the Age of Digital Distribution: Business Models, Licensing Practices and Copyright Institutions in India
Rohini Lakshané: Patent Landscaping in the sub-$100 Mobile Device Market in India
Anubha Sinha: IP in Mobile Applications Development in India

For more details visit https://cis-india.org/a2k/blogs/pervasive-technologies-project-presentations-at-the-4th-global-congress-2015

Pervasive Technologies: Working Document Series - Research Questions and a Literature Review on the Actor-Network Theory

nehaa — 2015-09-05T04:56:03Z

This document is divided into two parts - the first part lays out a series of research questions, potentially seeking to apply actor-network theory as a research methodology. The second part seeks to map literature around the Actor-Network Theory ("ANT") as a research methodology.

Part 1: Research Questions

The aim of this exercise is to delineate the contours of the paper, and provide some insight into the demarcation of the various sections.

The overall context to this paper will be determined by a globalized form of intellectual property ownership, and the various instances in which this narrative finds a place (either overtly or covertly) in the regulation of standard essential patents in India. In our paper, the globalized form of IP ownership is probably most clearly indicated in the standard setting process, where participants are International Standard Setting Organizations determining, in a manner of speaking - the rules of the game - that is - licensing on Fair Reasonable and Non Discriminatory Basis. The other important player to our understanding of global ownership would be multilateral organizations such as Ericsson, involved in many of the disputes before the Delhi High Court and the Competition Commission of India ("CCI"). Perhaps international actors/actants would also be international legal principles as well as international regulators such as the FTC or the ECC themselves. This phase of the paper will also trace India's specific location in global competition. In doing so, not only will the market positions of some of the players be examined, but also some comparisons will be made to illustrate how the relationship of international jurisdictions (mainly the USA and the EU) with international multinational corporations that are a party to litigation differs from that of India. This phase of the chapter will most likely apply the doctrinal method of research, study academic texts as sources as well as study some decisions by international regulators and courts to understand the tools and sites available for regulation as well as the nature of the regulatory process itself.

The second phase of this chapter will seek to map the overall context to specific cases - that is, pending legal processes in India. This includes both, ongoing litigation on patent infringement at the Delhi High Court as well as ongoing disputes before the CCI as well. The characters in this litigation also trace back to the broader context; some of them more directly than others. The multinational corporations are directly involved in both contexts, whereas the domestic regulators may seek to draw inferences or apply commonly understood international legal principles, thus invoking more international actants.

This phase of the chapter will study three key litigations in India - Ericsson and Micromax, Ericsson and Intex, and a third that is yet to be defined. Legal traditions and institutions in India will be used to understand what legal possibilities are available for using competition regulation to regulate SEPs. This includes specifically the levers in competition law such as abuse of dominance as well as the nature of the competition regulator and the role that it identifies for itself. One might also consider the relative 'youth' of the competition regulator as a factor in laying down legal principles, the constraints it imposes on itself as well as a tension between the market regulator and the courts. Perhaps this might also be an actant, in the context of the actor network theory. This phase of the chapter will most likely apply the doctrinal method of research, study academic texts as sources as well as study legal instruments and judicial decisions as sources.

The third phase of this chapter will now ask the question of standard essential patent (SEP) regulation, located within this broader matrix of intellectual property ownership and fluidity of actants. The specific question to be asked will be what is the competition regulation challenge for SEPs in India? This phase will attempt to distill the uniqueness of India in the narrative of global IP ownership around SEP litigation. It will be observed that the nature of the players in international litigation as well as in India is rather different. This phase will also attempt to make a case for IP regulation within India's existing culture of engaging with the public interest in intellectual property regulation.

It is in this phase that one must also examine the usefulness of the actor-network theory as a research methodology to study SEP regulation in India. It must be noted that while SEP regulation so used is used to refer to competition regulation specifically, and not to other levers, such as mechanisms within intellectual property law itself. The focus of this exercise will be competition regulation, with an engagement with other areas of the law and the judicial process only in as much as it informs our understanding of competition regulation of SEPs or impedes it. If one were to apply the actor network theory to this phase of the exercise, one would view courts, parties involved in the litigation, the CCI, international legal principles, international market regulators, international SSOs, competition law as well as issues raised in the litigation as 'actants', both human and non human, who are to be treated on par with each other, with a study of the networks that these actants create, or are a part of.

Part 2: Literature Review on the Actor-Network Theory

The aim of this exercise is to first, understand the ANT as a research methodology; second, to study its components and third, to ascertain its suitability as a research method for exploring the challenge of regulating SEP litigation through completion law mechanisms in India.

What is the Actor-Network Theory?

David Banks, in a 2011 blog post, contextualized in trying to trace a relationship between our offline and online behavior presents an overview of the ANT.[1] Banks describes ANT as an ongoing project that seeks to radically transform how social scientists talk about society's relationship to technology and other non human actors ; and identifies Bruno Latour, John Law and Michael Callon as the major authors in this space. (It is observed that there might have been additions or deletions to this core list of thinkers - not to self for further reading).

In his paper[2] reflecting on the ANT, Bruno Latour refers to himself as a 'fellow traveler' of the various network 'revolutions', and says that in the network, he has found a powerful way of rephrasing basic issues of social theory, epistemology and philosophy. Latour says that in its simplest and deepest sense, the notion of the network is of use whenever action has to be redistributed.[3] In a different paper, Latour argues that the purpose of the ANT is not to provide explanations for the behaviour and reasons of actors, but only to map procedures which enable actors to relate to each other and each others' world building capacity. My discomfort with this reading is trying to locate what these procedures would be in an SEP regulation environment.

Identifying the components of the ANT

Latour presents an actant - or an actor - as something that acts, or to which some sort of activity is assigned by others. [4] There is no special motivation of humans or human actors. "An actant," says Latour, "can literally be anything provided it is granted to be the source of the action."[5] The conception of an actant, Latour further articulates, should be not as fixed entities, but as fluid, circulating objects, whose stability and continuity depends on other actions. [6]

So what is on its agenda? The attribution of human, unhuman, nonhuman, inhuman, characteristics; the distribution of properties among these entities; the connections established between them; the circulation entailed by these attributions, distributions and connections; the transformation of those attributions, distributions and connections, of the many elements that circulates and of the few ways through which they are sent.[7]

Banks[8] identifies actants to be of two types - human and non human, further explaining that 'actors' is typically used to refer to humans. These actants have equal amounts of agency within the actor-network. Banks proceeds to demonstrate this applicability of equal agency with an illustration of getting wi-fi connectivity in Albany. In his narrative [9] (and as he notes later himself), Banks uses the same language (read as according agency to the inanimate) to describe both, the human and non human actants. Says Banks, that the actants are merely nodes that facilitate a larger functioning. It is submitted that the 'larger functioning' being referred to is probably something that would be determined on a case to case basis - depending on what was being studied.

In a 1999 paper On Recalling ANT[10], Latour articulates a problem with the usage of the word 'network' as a result of its usage having changed over time - from using it to refer to a series of transformations incapable of being captured by prevalent social theory at the time, to an unmediated access to every piece of information (to my understanding within the context of the World Wide Web). Latour explains that his new understanding is exactly the opposite of what they meant and that it ought not to be used to mean the transformations they were initially articulating.

Another of Latour's papers is helpful in arriving at an understanding of the 'network', where he argues that it would be fallacious to consider it in a technical sense, as one would a sewage, a train or a telephone network.[11] Unlike a technical network, Latour argues, an actor-network may have no compulsory paths, no nodes and might be quite local in nature. Latour further argues that thinking in terms of a network helps us overcome the tyranny of distance, citing a range of examples including standing one metre away from somebody in a telephone booth and yet being more closely connected to his mother, thousands of miles away, among others[12]. In each of his illustrations, however, Latour articulates closeness or distance in terms of geography or presence in a physical sense, which might not be entirely applicable to the research question we're seeking to study. What might be more useful perhaps, is the articulation of the network where he argues that instead of tracing an individual to the collective or the agency, one could only at the number of connections an element has and gauge the importance of the element in light of these connections . The greater the number of connections, the more important an element and vice versa. [13]

ANT Criticism and Applicability of the ANT to our research question?

Before delving into specifics of the ANT that lend themselves to a critique, I submit a broader reservation with the application of the ANT to studying legal and regulatory processes. From my reading and understanding of the ANT so far, a cornerstone appears to be the exclusion normative ideologies, with a focus on studying processes and networks as is, without formulating a value-judgment on their larger place in the society being studied. In so far as defending this claim, Latour and other supporters of this theory have relied on scientific examples (for instance, the reference to the Colombia Shuttle - NASA and its complex organizational structure)[14] or illustrations from the social sciences or social phenomena. I'm still attempting to locate a paper that utilizes the ANT to study law or regulation. Prima facie, the challenge being posed is to study inherently normative structures and processes with clear power structures.

Banks[15] describes the efficacy of the ANT in describing the processes by which inventions and technological systems come into being, or fail to do so. Perhaps in studying the legal regulation of SEP litigation in India, the efficacy of the ANT would like in describing the processes by which legal regulation and legal systems in India (specifically to regulate SEPs) come into being, or fail to do so. By extension, for our research question, non human actants as identified by Banks[16] would probably be legal institutions and the parties to the litigation themselves. What is unclear at the moment is whether policy and legal instruments or levers themselves would be actors.

Banks, in his article also articulates criticisms[17] to the ANT propounded by Sandra Harding, David Bloor and Sal Restivo, on the grounds of being blind towards other social factors such as race or patriarchy. If one were to extend this to the research question at hand, an argument could be made that the ANT seeks to equate dissimilarly situated institutions. Corollaries to race and patriarchy might be found in the market power of parties (an Ericsson v. a Micromax), or even within regulatory set up itself, where, based on the facts so far, an argument could be made out that different regulators are situated differently, where the Delhi High Court could pass an order restraining another regulator - the Competition Commission of India, from passing its own order.

A reference to the 'agency' critique of the ANT is made by Latour himself, in his 1999 paper. Latour goes on to acknowledges the critiques of the ANT, but says that most have (mistakenly) centered either around the actor or around the network; and that the idea was to never occupy a position in the agency/structure debate.[18] Later in the paper, Latour further clarifies that actants are not to be perceived as playing the role of agency, and network is not to be seen as playing the role of the structure. Instead, says he, they represent two sides of the same phenomenon. Latour further explains that the ANT merely tried to learn from the actors (what was sought to be learnt was difficult to grasp), without attempting to be an explanation of societal pressures (and the reasons for such pressures) on actors. The difficulty in reading this paper for me was that it was rather dense in many respects, with various concepts - including, for instance, the idea of the 'social', which he refers to constantly, not being clearly articulated. Further, what is uncertain to me is how this question of agency will play out if applied to a legal or regulatory context. If, for instance, a legal principle was to be a non human actant, how would this have an agency independent of the human actor (the judge) that would be the one applying the legal principle in the first place? Can we truly exclude the question of agency from the ANT if the very exclusion of agency means a recognition of the existence of agency in the first place? How does one exclude the question of agency in seemingly unequally situated actors with an inherent power dynamic? Is the ANT, then even a useful research methodology? In his 1999 paper, Latour argues that the aim of the ANT is to study actors without the imposition of an a priori definition of their world building capacities.[19] The question now arises for me, is how to divest regulators of their 'world building capacities'.

Explaining the rationale[20] for the ANT (in social science research), Latour articulates a dissatisfaction that social scientists have with both, micro (local sites) and macro levels (more abstract ideas like culture, patriarchy etc.) of research. This dissatisfaction, he argues, results in a back and forth between these sites ad infinitum. The ANT, argues Latour, is a way of tracing these dissatisfactions, not for the purposes of finding a solution, but to follow them elsewhere and explore the very conditions that make these two disappointments possible. Latour further clarifies that one must not understand 'network' in ANT to mean a larger society that would help make sense of local interactions or as an anonymous field of forces. Instead, he says, it refers to summing up various interactions through various devices, inscriptions, forms and formulae into a very local, very practical, very tiny locus. My key takeaway from this articulation was that ANT could be used to study various interactions between various key stakeholders, with a very specific research question. Given that the locus could also be tiny, perhaps if the research question was narrowed further, the key stakeholders, or the 'network' and the 'actants' would reduce as well.

Latour has also argued that the ANT makes no assumptions about how an actor should behave and assumes infinite pliability and absolute freedom of actors. [21] In itself AT is not a theory of action no more than cartography is a theory on the shape of coasts lines and deep sea ridges; it just qualify what the observer should suppose in order for the coast lines to be recorded in their fine fractal patterns. Any shape is possible provided it is obsessively coded as longitude and latitude. Similarly any association is possible provided it is obsessively coded as heterogeneous associations through translations.

there is no difficulty in seeing that AT is not about traced networks by about a network-tracing activity. As I said above there is not a net and an actor laying down the net, but there is an actor whose definition of the world outlines, traces, delineate, limn, describe, shadow forth, inscroll, file, list, record, mark, or tag a trajectory that is called a network. No net exists independently of the very act of tracing it, and no tracing is done by an actor exterior to the net. A network is not a thing but the recorded movement of a thing. The questions AT addresses have now changed. It is not longer whether a net is representation or a thing, a part of society or a part of discourse or a part of nature, but what moves and how this movement is recorded. [22]

A useful articulation of the application of ANT emerges out of Jonathan Murdoch's 1997 paper.[23]He submits that the human gaze is being increasingly considered as an unreliable source of knowledge, being in a constant state of flux. Citing the example of the environment/biosphere to demonstrate the futility of the separations we make between nature and society, Murdoch argues that any solution to the environmental crisis will involve a profound re-thinking of how we link these two domains.[24]Extending this argument to our research question, one might ponder for instance that any solution to the SEP litigation and regulation conundrum will involve a profound re-thinking of how we link the courts and the CCI. What is unclear is what method we will use to arrive at this re-thinking, or what the re-thought out version would look like.

Murdoch does, however, articulate concerns with the 'non dualistic' framework (which the ANT positions itself as) and argues, relying on others before him, that such an adoption could have far reaching consequences; that the very basis of the development of social science is such a binary division. Murdoch argues that the nature-society divide has enabled social scientists to break the hegemony of the natural scientists. Murdoch further submits his reading of Latour, where he states that the power of laboratories arises as a result of their ability to tie together actors that are beyond the lab into networks that are then used to disseminate scientific facts.[25] Murdoch's paper largely focuses on blurring the distance between 'natural' and 'social' actors, and identifies the difficulties in attempting to compare the two. Murdoch questions if natural actors whose identity emerge from nature itself are malleable as social actors, who are by definition, a product of society. What is unclear, however, is how malleable are two dissimilarly situated social actors; and whether 'social actors' is broad enough to encompass all institutions born out of or with a human/societal interaction component. Specifically, for our paper, would courts and the CCI both qualify as social actors? Would legal principles? Would the decision making process by the courts itself? Latour's very example for proposing the ANT was that of pasteurization in France. Murdoch also questions whether it's possible to in fact treat various actants as each other. In order to address another critique of ANT, that where we exclude notions of power, Mudoch says Law's articulation - of focusing on 'victims' instead of 'heroes' might prove to be useful. This has not been discussed in detail, leaving the reader to make their own inferences.

In other words, can ANT, with its seamless webs, forever crisscrossing the human-nonhuman divide, provide a secure platform for critique, for the expression of a profound dissatisfaction with the activities of powerful social actors and the attribution of responsibility to those actors? Can it, in other words, ever do anything more than describe, in a prosaic fashion, the dangerous imbroglios that enmesh us?
Does this emphasis on description necessarily represent "an insuperable obstacle to effective and convincing social criticism

[1] David Banks, A Brief Summary of Actor Network Theory, available at http://thesocietypages.org/cyborgology/2011/12/02/a-brief-summary-of-actor-network-theory/ (last accessed 29 August, 2015).

[2] Bruno Latour - Networks, Societies, Spheres : Reflections of an Actor - Network Theorist, International Journal of Communication 5 (2011), 796- 810, available at http://ijoc.org/index.php/ijoc/article/viewArticle/1094 (last accessed 31 August, 2015).

[3] Id at 797.

[4] Bruno Latour - complications paper - at internal page 7.

[5] Id.

[6] Id at internal page 8.

[7] Id at internal page 7.

[8] Id.

[9] Id.

[10] Bruno Latour, On Recalling ANT, available at http://www.bruno-latour.fr/sites/default/files/P-77-RECALLING-ANT-GBpdf.pdf (last accessed 28 August, 2015).

[11] Bruno Latour, On actor-network theory. A few clarifications plus more than a few complications, available at http://www.bruno-latour.fr/sites/default/files/P-67%20ACTOR-NETWORK.pdf (last accessed 30 August, 2015) at internal page 2.

[12] Id at internal page 4

[13] Id at internal page 6.i

[14] Latour, the networks, societies, spheres paper

[15] Id.

[16] Id.

[17] Id.

[18] Latour, recalling the ANT paper.

[19] Recalling ANT paper, page 20

[20] Bruno Latour, On Recalling ANT, available at http://www.bruno-latour.fr/sites/default/files/P-77-RECALLING-ANT-GBpdf.pdf (last accessed 28 August, 2015).

[21] Latour, the complications paper, page 9.

[22] Id at 14.

[23] Jonathan Murdoch, Inhuman/nonhuman/: actor-network theory and the prospects for a nondualistic and symmetrical perspective on nature and society, Environment and Planning D: Society and Space, 1997, Volume 15, 731-576

[24] Murdoch at page 732.

[25] Murdoch at page 737.

For more details visit https://cis-india.org/a2k/blogs/pervasive-technologies-working-document-series-research-questions-and-a-literature-review-on-actor-network-theory

Patents and Mobile Devices in India: An Empirical Survey

rohini — 2017-03-29T04:03:03Z

Though India has the second-largest wireless subscriber base in the world, with more than 150 mobile device vendors, it has, until recently, remained relatively unaffected by the global smartphone wars. Over the past three years, however, a growing number of patent enforcement actions have been brought by multinational firms against domestic Indian producers. These actions, which have largely resulted in judgments favoring foreign patent holders, have given rise to a variety of proposals for addressing this situation.

In order to assess the potential impact of patents on the mobile device market in India, and to assist policy makers in formulating and implementing regulations affecting this market, we have conducted a comprehensive patent landscape analysis of the mobile device sector in India using public data relating to Indian patent ownership by technology type, nationality, and industry classification. Our results illuminate a number of important features of the Indian mobile device market, including the overwhelming prevalence of foreign patent holders, the rate at which foreign and domestic firms are obtaining patents, and how these patent holdings are likely to shape industrial dynamics in the Indian market for mobile devices, as well as the availability of low-cost mobile devices that can significantly enhance public health, agriculture, safety and economic development throughout India.

Download the full paper here

This paper was published by the Vanderbilt Journal of Transnational Law on February 9, 2017.

For more details visit https://cis-india.org/a2k/blogs/patents-and-mobile-devices-in-india-an-empirical-survey

Dataset for "Patent Working Requirements and Complex Products: An Empirical Assessment of India's Form 27 Practice and Compliance"

rohini — 2017-09-10T15:11:38Z

Dataset of the first comprehensive and systematic analysis of 4,916 valid Statements of Working (Form 27) corresponding to 3,126 patents pertaining to mobile technology in India. Licensed CC-BY-SA 4.0.

Dataset for "Patent Working Requirements and Complex Products: An Empirical Assessment of India's Form 27 Practice and Compliance" (.xlsx)

Dataset for "Patent Working Requirements and Complex Products: An Empirical Assessment of India's Form 27 Practice and Compliance" (.ods)

The dataset has been released under the Creative Commons-Attribution-Share Alike 4.0 License (CC-BY-SA 4.0) as a part of the Pervasive Technologies project.

For the detailed methdology used for this study, refer to Methodology: Statements of Working (Form 27) of Indian Mobile Device Patents. For information on how to read this dataset, refer to the section "Detailed legend and process of logging the results" in the methodology.

A paper titled Patent Working Requirements and Complex Products: An Empirical Assessment of India's Form 27 Practice and Compliance authored by Prof. Jorge Contreras and Rohini Lakshané, published in July 2017 presents an analysis of the dataset.

The patents chosen to be included in this dataset are a subset of the patents found in another study by the same authors, Patents and Mobile Devices in India: An Empirical Survey [PDF]. The dataset for the patent landscaping study is available under the CC-BY-SA 4.0 license.

License terms

Data is provided AS-IS, without warranty as to accuracy or completeness.

All uses of the accompanying data and modifications and derivatives thereof must contain the following attribution: "Data provided by Jorge L. Contreras and Rohini Lakshané (2017)"

For more details visit https://cis-india.org/a2k/blogs/dataset-for-patent-working-requirements-and-complex-products-an-empirical-assessment-of-indias-form-27-practice-and-compliance

[Updated] Exclusive: OnePlus 5T’s Face Unlock feature may have infringed upon SensibleVision’s face recognition patents

Admin — 2018-01-17T01:07:51Z

The blog post by Nachiket Mhatre was published by mysmartprice on December 22, 2017.

Update

We had reached out to OnePlus early in the morning yesterday (that is, December 22) for an official statement prior to publishing the post later in the evening. Even a day later, as of this update, OnePlus hasn’t issued any clarifying statement either confirming or denying the patent infringement claim made by SensibleVision.

We had also contacted George Brostoff, the CEO and Co-Founder of SensibleVision, regarding the legal ramifications of his claim and if SensibleVision is contemplating legal action against OnePlus. Brostoff issued the following statement in response:

“Actually the comment by the patent expert quoted in the linked article is spot on,” noted Brostoff before issuing additional clarifying statement. “Legal process is always SensibleVision’s last resort. We pursue legal patent infringement only with companies that we have approached first through non-legal means and if they choose to then use our patented technology in the markets that our patents cover. Some of our patents are US only. We see companies like OnePlus as our possible customers. Our technology, both patented and proprietary, provides them with the possibility of better performance and more secure solutions. When companies license our solutions, they get the benefits of our broad patent portfolio and SensibleVision’s early entry into the market, something that helps minimize other companies claiming patent infringement against them. Unlike India, OnePlus currently has little to no US sales presence. So while they are on our partnership ‘radar’, they are not on our ‘legal’ radar for infringement.”

The gist of SensibleVision’s statement is that it probably won’t file a patent infringement lawsuit, but instead approach OnePlus to settle the matter amicably — say, by forging a Global Patent License Agreement (GPLA) — wherein OnePlus could be expected to pay to licence SensibleVision patents that are allegedly being employed in the OnePlus 5T’s Face Unlock system.

What’s interesting is Brostoff admitting that some of SensibleVision’s patents are valid only in the US, with him further insinuating that OnePlus’s sales volumes in the USA cannot justify prohibitive patent litigation costs.

We asked our resident patent expert, Rohini Lakshane, for her opinion on this statement and she confirmed that, in some cases, patent infringement settlements awarded by the US courts are in proportion to sales value and volume of the infringing products. In short, SensibleVision might not be too keen on taking the legal route against OnePlus, because the potential settlement payout might not be enough to cover the excessive cost of litigation in US patent courts.

The original story continues…

The OnePlus 5T’s Face Unlock technology has been critically acclaimed across the board, with our personal experience too pegging the biometric security system as one of the fastest face recognition implementations available in the market today, while being seemingly secure and impenetrable to simple workarounds. Even as technology critics and consumers wonder if this piece of biometric security is too good to be true, there could be a patent war brewing on the horizon for OnePlus.

Speaking in an interview with MySmartPrice, the CEO and Co-Founder of SensibleVision, George Brostoff, claimed that OnePlus might have infringed upon at least one of the patents belonging to the biometric security solutions provider. He also revealed that, in addition to other unspecified face recognition patents, OnePlus may have employed SensibleVision’s patent pertaining to the use of the screen as an illuminator. In fact, Brostoff claims to have notified “several companies” about their infringement of that particular patent.

“This is nothing new. We have been doing this for years. It even appears that they may be using several patented technologies,” said George Brostoff when asked what he made of OnePlus 5T’s Face Unlock implementation. “We have not licensed our patents to OnePlus or their supplier. From the video on Forbes, they are likely infringing at the very least on our illumination patent.”

Analysis from a patent and IP expert

Brostoff refused to divulge further details citing that SensibleVision has since handed the matter over to its legal firm, which probably means that we might hear more about this in the near future. Patent infringement claims in particular are extremely difficult to verify, so we spoke with Rohini Lakshane, who’s a Public Policy Researcher with extensive experience on patent and intellectual property regulation for more insight into the matter and an expert analysis on what this potential patent spat could entail.

“SensibleVision is a US company. Patents are valid only in the jurisdiction where they have been granted. Unless the company has registered a patent application or was awarded one for face recognition in China, there is no infringement. That is with respect to sale of the devices in China. With respect to sale in India, again, SensibleVision needs to have registered the patents in India,” explains Lakshane. “The way licensing works is the companies that hold many patents for a particular technology often license entire patent portfolios for use anywhere in the world. This is called Global Patent Licence Agreement (GPLA). This is usually confidential. What patents and how many are in the portfolio and what are the licensing terms [Editor’s note: in other words, how much money changes hands, among other things] is also confidential.”

From what Brostoff has revealed to us during the course of the interview, there seems to be no patent sharing agreement between OnePlus and SensibleVision to our knowledge. While it’s not easy to file and win patent lawsuits against Chinese companies in China, Lakshane suggests that SensibleVision can at least potentially begin patent infringement proceedings in the USA, where it has filed for the aforementioned patent.

However, all of this is conjecture from an expert in the field, as there’s no concrete corroborating proof legitimising SensibleVision’s patent infringement claims against OnePlus either. We have contacted OnePlus for its response on the matter, and will update this article with the official statement, so keep watching this space.

Read the original story here

For more details visit https://cis-india.org/a2k/news/nachiket-mhatre-december-22-2017-exclusive-oneplus-5ts-face-unlock-feature-may-infringed-upon-sensiblevisions-face-recognition-patents

Joining the Dots in India's Big-Ticket Mobile Phone Patent Litigation (Updated)

rohini — 2018-05-06T03:51:49Z

An analysis of the significant commonalities and differences in various big-ticket lawsuits in India over the alleged infringement of mobile device patents.

This blog post has been merged with another on the same topic and published as a paper. The paper was last updated in October 2017.

View paper on SSRN.

For more details visit https://cis-india.org/a2k/blogs/joining-the-dots-in-indias-big-ticket-mobile-phone-patent-litigation