Centre for Internet and Society

RTI request to Indian Patents Office for Form 27 (Statement of Working of patents), March 2016

rohini — 2017-10-13T04:35:46Z

The Centre for Internet and Society filed this request under the Right to Information Act in March 2016 as part of research for the paper: Patent Working Requirements and Complex Products: An Empirical Assessment of India's Form 27 Practice and Compliance (July 2017). We sought forms pertaining to 61 of the patents found in our patent landscaping study. These forms were not available on the online public databases, InPASS and IPAIRS, at the time of the filing the RTI request. Research assistance was provided by intern Shreshth Wadhwa.

Patent Working Requirements and Complex Products: An Empirical Assessment of India's Form 27 Practice and Compliance (July 2017)

Patent landscaping study -- Patents and Mobile Devices in India: An Empirical Survey (April 2016)

We filed our first application under the RTI Act with the Controller General of Patents, Designs and Trade Marks in Mumbai in June 2015 for procuring Form 27 not available through their online databases, but received a generic response about how to download Form 27 from the online databases. The IPO also stated, “The desired information relates to about 1700 patents for all the years, to supply and trace out the information physical form requires huge humane resource and need to divert the office staff for some days which would hampers the day-todays- official work therefore, the information is proactively disclosed in the office website for the public”. (View the application and response here)

In view of this response, we filed another RTI application with the same office in March 2016, and restricted the number of patents to 61. The patents represent a cross-section of owners in our landscaping study. (View methodology). We also stated in the RTI request that we had already searched the online databases for the forms and did not find any. The IPO replied in April 2016 that it could provide CIS with forms for eleven of the requested patents. As for the rest of the forms, the IPO stated, “As thousand of Form-27 are filed in this office, it is very difficult to segregate Form-27 for the patent numbers enlisted in your RTI application as it needs diversion of huge official/ staff manpower and it will affect day to day work of this office.”

A few days after CIS received the reply from the IPO, Form 27 pertaining to patents in the landscape happened to start appearing on InPASS and IPAIRS E-register portal.

Text of the application and the IPO’s response

(View a scanned copy of the application here and of the response here)

11 March 2016

Central Public Information Officer

Office of the Controller General of Patents, Designs, and Trade Marks

Boudhik Sampada Bhawan

Near Antop Hill Post Office, S.M. Road,

Antop Hill, Mumbai - 400037

Dear Sir/ Madam,

Subject: Request for information under section 6 of the Right To Information Act, 2005; regarding Form 27 submissions for patents

Full name of the applicant: Ajoy Kumar
Address of the applicant: 194, 2^nd C Cross, Domlur 2^nd stage, Bangalore 560071
Details of the information required: Please consider this an application under Section 6 of the Right To Information Act, 2005. This is an application for three pieces of information.

Firstly, you are requested to provide us with the Form 27 submissions for all the following patents for all the years for which they are available.

Secondly, we also request a record of all the years for which such Form 27 submissions have not been made for each of the patents listed here.

In the event that you do not possess these documents, please transfer this application to the concerned authority within five days of its receipt and inform us of the same; as mandated under Section 6(3) of the Act.

Patent Numbers:

264868
264414
218424
236178
250862
264266
263473
264878
264343
257411
263618
258568
264451
222947
263817
258983
196731
256864
262863
264764
259008
196474
264532
265027
258788
248749
259831
265788
214641
252360
250406
209397
226831
235014
229789
265069
220354
254083
264352
231642
258698
261503
241959
214988
237117
264824
263358
235688
251240
236556
203034
203036
234157
203686
213723
229632
240471
241747
223183
243980
200572

I submit that I have searched for copies of Form 27 filings of the above patents on the online portals of the Indian Patent Office, including the IPAIRS search engine and INPASS. As the search results did not yield the Form 27 documents, I am making this request under the Right To Information Act. Screenshots of three instances in which Form 27 was not found are attached in Annexure I. The respective patent numbers are mentioned along with the screenshots.

[Annexure I]

****************************************************************************************

Response from the IPO (reproduced verbatim)

Government of India

Patent Office, Boudhik Sampada Bhavan

S.M. Road, Near Post Office,

Antop Hill, Mumbai 400037, India

Email: mumbai-patent@nic.in

Website: www.ipindia.nic.in

Letter No: RTI/ 03

06/04/2016

To,

Shri Ajoy Kumar,

194, 2^nd C Cross,

Domlur 2^nd Stage

Bangalore - 560071

Sub: Supply of information sought under RTI Act, 2005 - reg.

Sir,

With reference to your application under the Right to Information Act, 2005 dated 16/03/2016 in this regard the detailed parawise information as follows.

As thousand of Form-27 are filed in this office, it is very difficult to segregate Form-27 for the patent numbers enlisted in your RTI application as it needs diversion of huge official/ staff manpower and it will affect day to day work of this office.
It is difficult to create such a record for the Patent numbers; you have listed for the same reason given above.

However, copies of Form 27 for Patent nos. 222947, 259008, 258788, 250406, 235014, 203034, 203036, 234157, 203686, 213723, 240471 could be made available to you on paying prescribed copying charges of Rs. 480/- (120 x 4 = 480/-)

Yours faithfully,

Dr. Ujjwala Haldankar

Assistant Controller of Patents and Designs & Central Public Information Officer

For more details visit https://cis-india.org/a2k/blogs/rti-request-to-indian-patents-office-for-form-27-statement-of-working-of-patents-march-2016

2016 Works-in-Progress Intellectual Property ("WIPIP") Colloquium

praskrishna — 2016-03-20T05:10:52Z

Prof. Jorge Contreras presented a paper co-authored by Rohini Lakshané on the patent landscape conducted for the Pervasive Technologies project at WPIP. The event was held in Washington D.C. on February 19 and 20, 2016. It was organized by School of Law, University of Washington.

For more details click here

For more details visit https://cis-india.org/a2k/news/2016-works-in-progress-intellectual-property-wipip-colloquium

Workshop on Competition Law and Policy

praskrishna — 2016-10-23T01:51:25Z

National School of Law India University and the Delegation of European Union to India jointly organized a workshop at Competition Commission of India in New Delhi from October 19 - 21, 2016. Anubha Sinha and Rohini Lakshané participated and made presentations.

The workshop was organized under the broader EU-India project titled "Capacity Building Initiative in Competition Area under Trade Development Programme" sponsored jointly by European Union Delegation and National Law School of India University, Bengaluru.

Download

Workshop brochure
Anubha Sinha's presentation on "Investigation into the sub $100 Mobile Device Industry from IPR + Competition law lens"
Rohini Lakshané's presentation on CCI Workshop on Competition Law and Policy Competition Policy and Internet

For more details visit https://cis-india.org/a2k/news/workshop-on-competition-law-and-policy

Report: 5G Technologies Workshop by IEEE

rohini — 2015-09-27T11:45:57Z

A report on the 5G Technologies Workshop organised by the Bangalore Chapter of the IEEE Communication Society at Bangalore on May 22 -23, 2015.

Workshop schedule [PDF]

Why is 5G needed?

The “Internet of Things” (IoT), increasing number of telephone connections, increasing use of data by mobile devices, and an exponential increase in the diversity of wireless applications, all require a backbone network in the form of 5G. At the same time, network operators need a sound business model. According to a white paper released by Cisco, the Visual Networking Index: Global Mobile Data Traffic Forecast Update 2014 [PDF], the number of connected devices will go up from 7 billion in 2014 to 12 billion in 2020. These include smartphones, mobile phones that are not smartphones, laptops, tablets, wearables, devices that support machine to machine communication (telemetry, automotive, smart grid and transaction devices), and other portable devices. Mobile data traffic is projected to have a compound annual growth rate (CAGR) of 61% from 2013 to 2018, and the number of connected wearable devices are projected to increase with a CAGR of 52% in the same duration.

5G is projected to completely roll out by the year 2020.

What are the use cases of 5G?

Driverless automobiles, vehicle-to-vehicle communication for road safety, smart cameras in cities, virtual reality gaming, remotely operated robots, tactile internet applications, applications in the cloud, and networks of sensors placed in home, industry and office environments are some of the use cases of 5G.

5G is expected to contribute to massive connectivity and ubiquitous coverage required for smart manufacturing, smart devices in the consumer electronics and personal electronics domains, smart healthcare, smart retail, smart transportation and so on.

Is there a definition of 5G yet?

There is consensus on the following new requirements for wireless communication systems. Most of these will mature beyond 2020.

Speeds of up to 10 gigabytes per second: 100 times faster than 4G LTE and 10 times faster than LTE-Advanced.
Very low latency, which will support augmented reality and tactile Internet.
Very high mobility: Gigabit Ethernet is a form of LAN (local area network) technology that supports data transfer rates of approximately 1 gigabit per second. 5G would support Gigabit Ethernet (also known as Gigabit Everywhere). The user can experience high levels of mobility.
Low energy consumption in networked mobile devices compared with the current rates of energy consumption in order to make mobility sustainable.
Machine-to-machine (M2M) communication among a large number of devices to support the “Internet of Things”.

Challenges in implementing 5G in India/ Ways in which massive growth in the number of users, connected devices, and network traffic can be handled

5G is expected to provide numerous high quality services to millions of users and to provide connectivity to many heterogeneous networked devices, which may contain multiple multiband radios.

While capacity and data throughput need to increase, the amount of radio spectrum available is limited. New spectrum bands could be released to deal with this additional demand. (Refer “Emerging spectrum licensing options” below.)
Additional base transceiver stations will need be set up.
5G will exist alongside multiple and heterogeneous networks (3G, 4G, WLAN, NFC, and beyond with macro/femto/pico cells) while supporting numerous services all the time, many of which will be data-intensive will severely reduce the battery life of mobile devices and hence devices with greater battery life and very efficient power management will be required.
Also, combining various technologies (LTE with WiFi and/or legacy infrastructure with WiFi) and implementing heterogeneous networks will cater to increased demands. LTE will remain the baseline technology for wide area broadband in the 5G era. Interoperability with 4G will be critical to the adoption of 5G.
The backhaul will need upgrading in order to maximise speed and bandwidth. The National Optical Fibre Backbone is an infrastructural project that could work towards meeting this need.
Spectral efficiency needs to be improved but currently spectral efficiency is as optimum as it can get. In light of this, the solution lies usability of currently available technologies, for instance, LTE Release 8 has not been deployed yet. The concept of Small Cell has been defined in LTE Release 12, which has been optimised as much as technologically possible for the current bands. A potential enhancement being discussed for Release 13 is to make LTE operable with unlicensed spectrum bands as well.
Some amount of traffic can be offloaded using free spectrum (WiFi offloading) as well as the existing cellular spectrum (device to device offloading). [Refer: Licensed-assisted Access below]

--- Offloading can happen via cellular-to-WiFi hotspots (LTE and Advanced LTE)

--- Via Cellular small cells and relays (LTE/Advanced LTE, 3G)

--- Via co-located cellular and WiFi (Advanced LTE)

--- Via proximity services and D2D communication (Advanced LTE)

A unified solution lies in the end user enjoying ubiquitous connectivity and consistent user experience, and the telecom operator being able to operate efficiently with the gradual rollout of 5G and with close integration between heterogeneous technologies, with the use of the cloud and software defined networking (SDN) as underlying principles.

Emerging Spectrum Licensing Options

Static assignments and exclusive licenses of spectrum paved the foundation for reliable services and innovation on technology evolution. Cellular systems have now gained the ability to operate on frequencies of up to 5 GHz and to operate over system bandwidths up to 100 MHz.

To deal with the increased demand for spectrum, new spectrum bands could be released. These bands are likely to be in the higher frequencies with a carrier bandwidth of up to 1 GHz. Initial research shows that such high frequency bands might require the development of a new radio waveform, a new radio technology. It is not known yet if and when the standardisation of the new radio technology will be undertaken. Spectrum is a costly investment, so telcos tend to be very picky about it.

The prevalent scenario in India

India is not seen as an early adopter of new wireless communication technologies.
Indian telcos invest late in ‘new’ technologies, but they invest massive amounts of money and for periods of time comparatively much longer than in early adopter countries. Indian telcos are still starting and/ or expanding their 4G operations and these will stand for a long time to come.
Call tariffs are among the lowest in the world.
New spectrum is unlikely to be released in the near future. World Radio Conference 2019 (WRC 2019) is likely to be the earliest possible time of release.
5G system design is therefore likely to happen over two phrases: Evolution design (up to 5 GHz) by the year 2020 and Revolution design (in bands over 5 GHz) around 2023.

Licensed sharing/ Authorised sharing of spectrum

One way of dealing with the spectrum crunch, could be spectrum sharing. When the holder of spectrum is known to be underutilising it, and there is little possibility of changing the policies governing the quantum of utilisation, spectrum sharing is a preferred solution.

License-exempt use of spectrum with the implementation of policy guidelines could be practiced in cases such as apartment complexes and bus stations handling large amounts of traffic.

Traffic offloading: LTE over unlicensed spectrum

-- Licensed-Assisted Access (LAA)

LAA can be use to opportunistically boost data rate. It works by aggregating a primary cell, operating in licensed spectrum to deliver critical information and guaranteed Quality of Service, with a secondary cell operating in unlicensed spectrum. LAA can be implemented globally in the 5 GHz band. The secondary cell operating in unlicensed spectrum can be configured either as downlink-only cell or contain both uplink and downlink. This also facilitates some degree of co-existence between the operators of LTE and WiFi as well as among LTE operators.

How do the availability of network services and cost efficiency affect network performance?

– In general

Availability of network service is inversely proportional to bit-rate.
Costs pertaining to terminals and networking are inversely proportional to latency.
The length of the battery life of terminals (i.e. mobile devices) is inversely proportional to spectral efficiency.

– 2G

2G technology has an emphasis on voice and SMS with low bit-rate and low spectral efficiency. This leads to high mobility and high availability of the network service at the boundaries of the cell. (The cell boundaries are the furthest from the cell tower in terms of physical distance.)

– 2.5G

2.5G (EDGE and GPRS) provided higher bit-rates and hence lower spectral efficiency and lower availability of the network service at the boundaries of the cell.

– 3G

Targets for 3G performance were not comprehensively defined by the ITU-R in the IMT 2000 set of standards. The target defined peak bit-rates for a single user. Hence, in its early stages 3G did not meet expectations for data transfer speeds.

– 4G

Mobility continued to be low in 4G technology even as the ITU-R provided more comprehensive specifications by including spectral efficiency and latency targets. Like 3G, 4G focussed on single-user peak data rates.

– 5G

Attributes currently proposed for 5G:

High connection density (approx 10^5 users per km^2)
Low latency (less than 10 ms)
High bit-rate (approx 10^8 bits per second)
High capacity density (approx 10^3 bits per second per Hertz per km^2)
High spectral efficiency (approx 3 bits per second per Hertz)

Which would result in:

Very high terminal costs for the operator (between USD 100 and USD 1,000)
Low availability of network service
Low battery life of the user equipment,i.e., mobile devices and fixed devices utilised by the end user (less than 1 day)
Low energy efficiency (approx 10^-6 joules per bit)
Somewhat low mobility (less than 10 km per hour)

However, targets for the Internet-of-Things and for public safety conflict with the above attributes and their consequences, indicating the possible future emergence of more than one technical solution.

Key technologies for 5G wireless communication networks

– Massive MIMO (multiple-input multiple-output)

The number of receiver and transmitter elements as (also transceiver elements) are expected to increase to 100- 1000 low-power antennas per base transceiver station (BTS).

- New antenna technologies

Large scale antenna system (LSAS), 3D-MIMO, Steerable array antennas

Transmitted radio significantly reduces as the number of antenna elements is increases. Hundreds of thousands of antennas could be used together to improve the energy efficiency of wireless communications. Steerable arrays of antennas could be used for dynamic beam-forming patterns.

– Cloud technologies for flexible Radio Access Networks (RAN)

Cloud-based network architecture would include a centralised base station with numerous radio units distributed over the cell and ideally connected by optic fibre in order to reduce latency.

– Advanced Interference Management

New air interfaces under consideration include:

UFMC: Universal Filtered Multi-Carrier
FBMC: Filter-Bank Multi-Carrier
GFDM: Generalized Frequency Division Multiplexing
SCMA: Sparse Code Multiple Access
NOMA: Non-Orthogonal Multiple Access

– Network Densification

The proposed 5G requires new network architecture -- HetNet and Small Cell

– Millimetre wave band

New channels models will need to be developed to deal with different propagation conditions. 5G will work on higher frequencies, that is, in the millimetre wave band which has shorter wavelength (10GHz to 50GHz, 60 GHz, and possibly 70 GHz to 80 GHz) and wider bandwidths (500MHz to 3GHz). Millimetre wave (mmWave) MIMO requires dynamic beamforming at the transmitter and receiver.

More technical assumptions:
-- 5G will require significantly higher albeit low cost backhaul capacity (about 400 Gb/s).
-- 5G will have very low round-trip latency requirements.
– Higher frequencies and higher densities will dictate small cells.

Over-The-Top (OTT) Applications on Mobile User Equipment and IoT Devices

Reproduced with permission from Rohde and Schwarz

Green Communications Using 5G

The joint optimisation of Energy efficiency and spectral efficiency is critical for 5G research. There is still a long way to go to develop a unified framework and a comprehensive understanding of the tradeoff between energy efficiency and spectral efficiency. The latter has been pursued for decades as the top design priority of all major wireless standards, ranging from cellular networks to local and personal area networks. The cellular data rate has been improved from kilobits per second in 2G to gigabits per second in 4G. Spectral efficiency-oriented designs, however, have overlooked the issues of infrastructural power consumption.

The total power consumption of India’s mobile telephony infrastructure was 11.16 billion KWh in 2010. About 15% cell sites in India are either not connected to the electricity grid or receive power for less than eight hours a day; only about 10% receive more than 20 hours of power (Source: Intelligent Energy Limited). Two billion liters of diesel is consumed per year to power these cell sites, contributing to CO2 emission levels and massively adding to the operational costs of telcos.

The Indian Institute of Information Technology-Bangalore has proposed two power saving mechanisms.

Power-Saving Semi-Persistent Scheduler (PS-SPS) for VoLTE traffic in LTE-Advanced: This is a new scheduling algorithm implemented for VoLTE traffic in the downlink of LTE-Advanced cells in order to reduce power consumption in the link level. This proposed solution submitted to the IEEE is claimed to save power without affecting the network’s ability to support a large of VoLTE calls.
Random Access strategies for IoT devices in LTE-Advanced network: This scheme reduced the number of what is called “retransmissions” by Internet-of-Things devices so that these devices may complete the data transmission procedure [Random Access Channel procedure] in a comparatively short time. This scheme does not need the use of additional spectrum or barring mechanisms for IoT devices.

Glossary

Beamforming or spatial filtering is a signal processing technique used in sensor arrays for directional signal transmission or reception. -- Van Veen, B.D.; Buckley, K.M. (1988). "Beamforming: A versatile approach to spatial filtering" (PDF). IEEE ASSP Magazine 5 (2): 4. doi:10.1109/53.665.

Latency is a measure of the time delay that occurs when data packets travel from one networked point to another.

Multiple-input and multiple-output, or MIMO, is a method for multiplying the capacity of a radio link using multiple transmit and receive antennas to exploit multipath propagation. -- Lipfert, Hermann (August 2007). MIMO OFDM Space Time Coding – Spatial Multiplexing, Increasing Performance and Spectral Efficiency in Wireless Systems, Part I Technical Basis (Technical report). Institut für Rundfunktechnik.

Spectral efficiency is a measure of the performance of channel coding methods. It refers to the ability of a given channel encoding method to utilize bandwidth efficiently. It is defined as the average number of bits per unit of time (bit-rate) that can be transmitted per unit of bandwidth (bits per second per Hertz). – Taylor and Francis, Encyclopedia of Wireless and Mobile Communications, http://www.tandfonline.com/doi/pdf/10.1081/E-EWMC-120043448

Throughput is the amount of data transferred from one place to another or processed in a specified amount of time. Data transfer rates for disk drives and networks are measured in terms of throughput. Typically, throughputs are measured in kbps, Mbps and Gbps. – Webopedia, http://www.webopedia.com/TERM/T/throughput.html

For more details visit https://cis-india.org/a2k/blogs/5g-spectrum-ieee-workshop-bangalore

Pervasive Technologies: Access to Knowledge in the Marketplace — CIS’s Upcoming A2K Research Initiative

Jadine Lannon — 2012-10-30T06:23:53Z

Pervasive technologies have flooded the Indian market and are changing the ways in which the average Indian accesses knowledge but very little is understood about these technologies, particularly when it comes to their legality. The Centre for Internet and Society (CIS) plans to begin a research project that aims to understand how pervasive technologies interact with Intellectual Property laws and what can be done to protect these technologies from being labelled “illegal” and eradicated from the Asian market.

Between 2000 and 2012, mobile phone subscriptions in India increased from 3.578 million to 893.86 million — an increase of almost 250 per cent.[1] In fact, mobile device sales were expected to reach 231 million units in 2012, an 8.5 per cent increase from 2011[2] and an incredible leap from the 21 million units sold in India in 2004.[3] While mobile phone penetration has been rising steadily in India,[4] the cost of mobile phones has plummeted, meaning that the ability to purchase and use mobile phones in India is becoming more and more widespread, especially in the marginalized classes. Mobiles are not the only technology that has experienced this phenomenon; indeed, many different types of pervasive technologies (mass-market networked communication technologies) have become increasingly more accessible across the board in Indian society.

When I use the term pervasive, I am referring to those technologies that are the most accessible to and used by the typical Indian. These technologies are characterized by their ability to provide access to media without significant cost to the user through both their low cost and their features. Mobile phones, netbooks and media players, as well as hardware, software and associated content are all considered to be pervasive technologies. For research purposes, CIS will only consider those technologies that cost under USD 100 or about INR 5,400. Considering that in 2011 it was estimated that about 75 per cent of the mobile devices sold in India cost below USD 75,[5] this is not a restrictive figure.

Although these technologies have become near ubiquitous in India and similar developing markets, very little is actually understood about how they interact with Intellectual Property (IP) laws. The pervasive technology industry exists somewhere between formal and informal and legal and illegal (as Carolyn Nordstrom would put it, these technologies would be il slash legal, or il/legal),[6] and can shift in and out of the legal/formal and illegal/informal realm depending on the stage of production; this is why they are often referred to as “gray market” technologies (though in some cases, it may even be appropriate to call them extra-legal). This lack of compliance with IP laws have made technologies both quite cheap to purchase and a popular platform for software, hardware and content innovation. The result is that these technologies often contain the newest and most interesting features and they provide the most “bang-for-your-buck” for content and value-added services. Thus, a consumer can buy a grey market technology that will have a wide array of features and services for a much lower price than would be paid to one of the larger manufacturers for an equal or even lesser product.

It is the low cost but highly sophisticated state of these pervasive technologies that is changing the way that people across the world access information and media, particularly those individuals and groups that routinely face barriers to mainstream structures of access. For those that were left on the wrong side of the infamous “digital divide”, pervasive technologies have been arguably the most effective means of providing real access to knowledge to the masses within India and across Asia, even more so than directed development initiatives. Indeed, pervasive technologies are not the future solution for access to knowledge; they are the current reality.

Although pervasive technologies are plausibly the most effective tools of access for knowledge in the marketplace in emerging economies like China, Indonesia and India, very little scholarly research has been done on pervasive technologies in the developing world, especially research that acknowledges the significant role that pervasive technologies have had in bridging the digital divide. This absence of appreciation for the significance of pervasive technologies in developing economies, coupled with a lack of understanding around their complex interaction with national and international IP regimes, may lead to a policy vacuum within which the existence of pervasive technologies could be jeopardized. Accordingly, CIS will begin a new access to knowledge research initiative that aims to understand the relationship between pervasive technologies and Intellectual Property. Pervasive Technologies: Access to Knowledge in the Marketplace will span over two-and-a-half calendar years (30 calendar months) and will recruit researchers from China, India, and other parts of Asia. Interaction will also be established with members of like-minded projects in Africa and Latin America. This research will begin as soon as it is approved by the Ministry of Home Affairs. The current project proposal is available for download as a PDF document (299 Kb).

The immediate aim of the research is to understand the legal environment, in which pervasive technologies exist, but simply generating comprehension is not enough; pervasive technologies must be allowed a more formal space in the Indian market. As part of the research project, CIS plans to carry out both an advocacy phase and dissemination phase in order to use the research outputs to create a more widespread understanding of the importance of pervasive technologies as access to knowledge tools. We hope that the research will encourage the formation of IP reforms and norms that recognize the role that pervasive technologies play in providing access to knowledge and enable their continued participation in the Indian market and society.

As the formal research project has yet to commence, I will be working on a small section of the Pervasive Technologies: Access to Knowledge in the Marketplace research on pervasive mobile phone technologies. CIS currently possesses 12 mobile phones that fall into the definition of pervasive technologies, though we will hopefully add to our collection as the research continues. The aim of this research is to document as much information about the life-cycles, hardware, software and content of each phone as possible in order to generate a better understanding of how these phones exist and interact with IP regimes and norms. The blog series on this research should begin in the next couple of weeks.

[1]. Data available on the International Telecommunications Union Data Explorer at http://bit.ly/MIfEYO
[2].Gartner Inc. Gartner Says Indian Mobile Handset Sales to Reach 231 Million Units in 2012, http://bit.ly/tKe7nU(November 22, 2011).
[3].Gartner Inc., ‘Forecast: Mobile Terminals, Worldwide, 2000-2009 report’ (July, 2005), but cited information can be retrieved from http://bit.ly/PTAOFC
[4].International Telecommunications Union, 'The World in 2009: ICT Facts and Figures' available at http://bit.ly/qtwGU
[5].Gartner Inc. Gartner Says Indian Mobile Handset Sales to Reach 231 Million Units in 2012, http://bit.ly/qtwGU (November 22, 2011).
[6].Nordstrom, C. Global Outlaws: Crime, Money, and Power in the Contemporary World (Berkeley: University of California Press, 2007), 256.

For more details visit https://cis-india.org/a2k/pervasive-technologies-access-to-knowledge-in-the-market-place

CIS' Submission to DIPP and CGPDTM at meeting with IP Stakeholders

sinha — 2017-12-13T14:31:54Z

The Office of the Controller General of Patents, Designs and Trademarks held a meeting with IP stakeholders on December 7, 2017, chaired by the Secretary, DIPP, to take suggestions on improving procedures and functioning of the Office. Anubha Sinha attended the meeting and requested the DIPP to improve compliance of uploading Form 27s by patentees and ensure proper enforcement of related provisions within the Indian Patent Act, 1970. Additionally, we sent a detailed submission to the Office, drawing from our recent research. Thanks to Rohini Lakshane and Aman Goyal for their inputs.

Submission to the Department of Industrial Planning and Promotion (DIPP) at Meeting with IP Stakeholders on 07 December, 2017

1. As the DIPP is aware, the Indian mobile device manufacturing industry is mired in issues related to licensing of standard essential patents (SEPs). Disputes have resulted in imposition of heavy interim royalty rates on Indian manufacturers, payable to foreign SEP holders. Section 146(2) of the Patent Act, 1970 mandates patentees to provide information on working of patents, which is crucial for willing licensees to access patent working information in a timely manner. This requirement, that the details of patent working be disclosed by patentees supports the goal of making unworked patents available for compulsory licensing in India, both to promote economic development and public access to patented products. Penalties for failing to furnish such information (via Form 27) are steep, potentially resulting in fines or imprisonment.

2. We note that in 2009, 2013 and 2015 the Controller issued public notices calling on patent owners to comply with their obligations to file statements of working on Form 27. Further, on February 12, 2013, the Indian Patent Office (IPO) announced plans to make Form 27 submissions for the year 2012 available to the public via the IPO website.

3. We commend the efforts of the IPO, however, our empirical research on ICT innovations[i] as well as by Prof. Shamnad Basheer (on ICT and pharmaceutical sector)[ii] reveals that there are serious lapses as far as compliance and enforcement of statutory provisions mandating filing of Form 27 are concerned.

4. In the past year, we studied data available from 2009- 2016 for the mobile device sector, and could only identify and access 4,916 valid Forms 27, corresponding to 3,126 mobile device patents, leaving 1,186 Indian patents for which a Form 27 could have been filed, but was not found.[iii] For a surprising number of Form 27s (3%) the working status of the relevant patent was not designated.

Even among the Form 27s that had been obtained, almost none contained useful information regarding the working of the subject patents or fully complying with the informational requirements of the Indian Patent Rules. Many patentees simply omitted required descriptive information from their forms without any explanation.[iv]

Via our research we also gathered complaints raised by patentees and industry observers regarding the structure of the Form 27 requirement itself. For example, patents covering complex, multi-component products that embody dozens of technical standards and thousands of patents may not necessarily be amenable to the individual-level data requested by Form 27.

5. Regardless, we submit that these technical difficulties should not hinder the critical statutory requirement placed on patent holders to diligently comply with Form 27 compliance. In the context of licensing of SEPs, several stakeholders recently suggested solutions as revealed from our study of the submissions made to the TRAI Consultation on Promoting Local Telecom Manufacturing[v]:

Two industry associations, namely Telecom Equipment Manufacturers Association of India (TEMA) and Telecom Equipment & Services Export Promotion Council (TEPC) and a telecommunication enabler Vihan Network Limited recommended that a modified and longer version of Form 27 (Form 27S) may be designed for SEP holders that should apply right at the filing stage. Section 159 of the Patent Act, 1970 empowers the central government to make such modifications to the form, as necessary.[vi]
Further, Prof. T Ramakrishna (MHRD Chair on Intellectual Property Rights) at NLSIU, specifically recommended that Form 27 may be amended to include a new column, which may require the patent holder to declare if their patent forms a part of any standard and in case of affirmative answer – the name of the Standard Setting Organisation and corresponding standard of which it is a part.

6. Further, we would like to draw attention to how our study was limited by the technical capabilities of the Indian Patent Office’s online Form 27 repository, such as[vii]:

IPAIRS returned either a 404 error or Connection Time Out ("site is taking too long to respond") http://ipindiaonline.gov.in/patentsearch/search/index.aspx. In our opinion, it could be redirected to InPASS as it uses the same search engine as InPASS. Further, http://ipindia.nic.in/patsea.htm returned a 404 error.
Some PDFs of the forms comprise scanned image files without OCR of the text. This makes them inaccessible to the visually impaired, and prevents search and discoverability of their content. This also makes them less usable by preventing copying and selection of text.
In some cases, it was difficult to identify which one in the list of documents associated with a patent is Form 27, because of obscure filenames.

For example, for Patent Number 262228, Form 27 was named 68.262228.pdf, as found on IPAIRS.
For Patent number 260603, the filename for Form 27 was "ipindiaonline.gov.in_epatentfiling_online_frmPreview.asp.pdf" on IPAIRS.

Inconsistency in search results found on IPAIRS. Searching for the peripheral documents of the patents, returned the results, "No PDF found" for one full week. The next week, the documents started showing. Some searches returned results for an entirely different patent number.
Sometimes, Form 27 found on InPASS was not found on IPAIRS and vice versa.
Runtime errors occur due to browser caching.

7. We are thankful to DIPP for the opportunity to make these submissions. It would be our pleasure and privilege to discuss these submissions and recommendations in details with the DIPP. We also offer our assistance on other matters aimed at developing a suitable policy framework for SEPs and FRAND in India, and, working towards sustained innovation, manufacture and availability of mobile technologies in India.

Annexure

Complete Data of CIS’ Study[i]

[i] See Contreras, Jorge L. and Lakshané, Rohini and Lewis, Paxton, Patent Working Requirements and Complex Products (October 1, 2017). NYU Journal of Intellectual Property & Entertainment Law; Available at SSRN: https://ssrn.com/abstract=3004283

[ii] See Shamnad Basheer, Making Patents Work: Of IP Duties and Deficient Disclosures, 7 QUEEN MARY J. INTELL. PROP. 3, 16-17 (2017).

[iii] Supra note 1.

[iv] Refer to Appendix for a breakdown of compliance of Form 27 by patent holders in the mobile device sector.

[v] See TRAI’s Consultation Paper on Promoting Local Telecom Equipment Manufacturing dated 18.09.2017 and the responses, available here: http://trai.gov.in/consultation-paper-promoting-local-telecom-equipment-manufacturing?page=2

[vi] Section 159 of the Patent Act, 1970 empowers the central government to make rules. Accordingly, the Rule 131 of the Patents Rules, 2003 prescribes Form 27 as the manner in which section 146(2) of the Act is to be implemented.

[vii] An email by Rohini Lakshane (CIS) compiling these issues was sent to Dr. K.S. Kardam (Senior Joint Controller of Patents and Designs - ‎Indian Patent Office) on 09.09.2017.

[viii] See Contreras, Jorge L. and Lakshané, Rohini and Lewis, Paxton, Patent Working Requirements and Complex Products (October 1, 2017). NYU Journal of Intellectual Property & Entertainment Law; Available at SSRN: https://ssrn.com/abstract=3004283

For more details visit https://cis-india.org/a2k/blogs/cis-submissions-to-dipp-and-cgptdm-at-meeting-with-ip-stakeholders

Patent Working Requirements and Complex Products

Jorge L. Contreras, Rohini Lakshané and Paxton M. Lewis — 2018-01-23T15:09:30Z

The paper titled "Patent Working Requirements and Complex Products" has been published in the latest issue of the NYU Journal of Intellectual Property and Entertainment Law. It is one of the outputs of the Pervasive Technology project and has been authored by Prof. Jorge L. Contreras, Paxton M. Lewis, and Rohini Lakshané.

Download PDF here. The paper was published by JIPEL NYU Journal of Intellectual Property & Entertainment Law, Vol. 7 - No.1 on January 16, 2018.

Introduction
I. Patent Working Requirements
A. History of Patent Working Requirements
B. The Evolution of India’s Patent Working Requirement
1. Background
2. The Patents Act, 1970
3. India’s Current Working Requirement
C. The Indian Working Requirement and Natco Pharma Limited v. Bayer Corporation
D. Form 27 and India’s Reporting Requirement
E. Theory and Criticism of Form 27
II. Empirical Study of Indian Form 27 Disclosures in the Mobile Device Industry
A. Background: Existing Data and Studies
B. Methodology
C. Limitations
III. Findings
A. Aggregated Data – Forms Found and Missing
B. Working Status
C. Descriptive Responses
1. Working Status Not Disclosed
2. Patents Not Worked
3. Varied Interpretations of Working
4. Changes in Status
IV. Discussion and Analysis
A. Process Weaknesses
B. Non-Enforcement and Non-Compliance
C. Uncertainty Surrounding Working and Complex Products
D. Strategic Behavior
E. Opportunities for Further Study
Conclusion
Appendix

Introduction

In 2012, Natco Pharma Ltd. (“Natco”) petitioned the Indian Patent Office (“IPO”) for a compulsory license to manufacture Bayer’s patented cancer drug, Nexavar. Natco cited numerous grounds in support of its petition, including Nexavar’s high cost and limited availability in India. But along with these relatively common complaints in the global access to medicines debate, Natco raised a less typical theory; Bayer failed to “work” the patent sufficiently in India. In doing so, Natco invoked a seldom-used provision of Indian patent law that allows any person to seek a compulsory license under an Indian patent that is not actively being commercialized by its owner within three years from the issuance of the patent.

Patent working requirements exist in different forms throughout the world. Broadly speaking, to “work” a patent is to practice, in some manner, the patented invention within the country that issued the patent. While patents are seen as a means to create incentives for inventors to share their ideas, working requirements are intended to mitigate the exclusivity of patent monopolies by requiring the patent holder to disseminate its invention into the local market. The patent holder thereby imparts knowledge and skills to the local community, enhances economic growth, supports local manufacturing, and promotes the introduction of innovative new products into the local market.

While patent working requirements have existed in various jurisdictions for more than a century, working requirements have seldom been the subject of vigorous enforcement. The U.S.-Brazil dispute and the Natco case represent a revival of interest in patent working requirements. In particular, the Natco case has reintroduced questions of whether working requirements are, or should be, allowed under the TRIPS Agreement.

In prior work, Contreras and LakshanÈ have analyzed the domestic Indian patent landscape pertaining to mobile device technology. The authors now extend that work to examine the working of those patents. This Article presents a detailed case study of the Indian patent working statutes and their procedures, particularly the requirement that all patent holders file an annual form (Form 27) to demonstrate that their patents are being worked in the country. We collected and reviewed all publicly available Forms 27 in the mobile device sector to assess the completeness and accuracy of the information disclosed. We then analyzed the results to assess the robustness of India’s patent working requirement and its utility for complex information and communication-based products and technologies.

The remainder of this Article proceeds in four principal parts. Part I.A provides a brief history of patent working requirements. Part I.B describes the development of India’s current working requirements and its novel Form 27 filing requirement. Part II describes our empirical study of India’s Form 27 filings in the mobile device sector. Part III discusses our findings and analysis. We conclude with recommendations for further study and policy.

I. Patent Working Requirements

A. History of Patent Working Requirements

The origins of patent working requirements have been traced to the 1300s, when early patent privileges were granted in jurisdictions such as feudal England and the Republic of Venice, with an expectation that foreign innovators would teach the invented art to local industry. The underlying incentive for providing monopoly rights was thus tied to local industrialization. This incentive to share technology was directed not only to local citizens but, even more so, to foreign inventors. Countries issued patent privileges to encourage foreigners to migrate and develop or protect local industry by teaching their art to the local population. Local industrialization was thus considered a central means to economic development and technological advancement.

Despite these early developments, by the late 19th and early 20th centuries, developed countries’ conceptual understanding of a patentee’s obligation and its relevance to national development began to shift away from local manufacturing. As a result, in many developed countries disclosure through importation became sufficient to meet the “informational goal” of patents, particularly patents that represented improvements to existing technologies.

The 1883 Paris Convention for the Protection of Industrial Property prohibited the automatic forfeiture of a patent for a failure to work it locally. While both developed and developing countries disputed the proper remedy for the failure to work a patent, there remained a consensus that failure to work a patent was inconsistent with the patent privilege.

A half-century later, the 1925 Hague Conference, which amended the Paris Convention, recognized the failure to work a patent as an abuse that member states could “take necessary legislative measures to prevent.” As a remedy for non-working, drafters viewed compulsory licensing of non-worked patents as more palatable than outright forfeiture. Nevertheless, forfeiture of patent rights was still permitted under the Convention, though an action for forfeiture could not be brought until two years following the issuance of the first compulsory license covering the non-worked patent.In the 1967 Stockholm amendments to the Convention, further limitations on compulsory licensing for non-working patents were introduced, notably prohibiting member states from permitting the grant of a compulsory license for failure to work until three years after the issuance of the allegedly non-worked patent.

Within the flexibilities allowed by the Convention, developing countries continued to adopt strict working requirements and to resist international requirements that favored developed countries. For example, in the late 1970s and early 1980s, developing countries proposed revisions to the Paris Convention that would have provided that mere importation did not satisfy local working requirements and to permit the expansion of sanctions for non-working beyond compulsory licensing.

The desire of developed countries for stronger international rules relating to intellectual property led to the formation of the World Trade Organization (“WTO”) in 1994, under which the Trade Related Aspects of Intellectual Property Rights (“TRIPS”) Agreement was negotiated. While the TRIPS Agreement does not explicitly address patent working requirements, Article 2.1 incorporates Article 5A of the Paris Convention (i.e. the article related to compulsory licensing and the limitations on granting compulsory licenses discussed above), and Article 2.2 reinforces the existing obligations of members of the Paris Union. Additionally, Article 27.1 of the TRIPS Agreement, which establishes requirements for patentable subject matter, prohibits “discrimination as to the place of invention, the field of technology and whether products are imported or locally produced” raising a question as to whether countries with local working requirements must recognize importation as an acceptable manner of satisfying those requirements.However, Article 30 of the TRIPS Agreement permits a member state to allow exceptions to the exclusive rights of a patent holder, and Article 31 allows a state to issue a “compulsory” license under one or more patents without the authorization of the patent holder “in the case of national emergency or other circumstances of extreme urgency or in cases of public non-commercial use.” Given these mixed signals, commentators are divided on whether, and how, the TRIPS Agreement may affect local working requirements.

To date, the only WTO dispute challenging the validity of national working requirements has been between the United States and Brazil. In 2000, the Clinton administration, responding to concerns raised by the American pharmaceutical industry, initiated a WTO dispute proceeding to challenge Brazil’s local working requirement. The United States argued that Article 68 of Brazil’s 1996 Industrial Property Law violated Articles 27(1) and 28(1) of the TRIPS Agreement for discriminating against U.S. owners of Brazilian patents whose products were imported, but not locally produced, in Brazil.

Despite the pending WTO litigation, the Brazilian Ministry of Health adopted an aggressive stance toward reducing the price of antiretroviral medications and threatened to issue compulsory licenses for the local manufacture of two such drugs, both patented by U.S. companies, if they were not discounted by 50%. In response to political and public pressures, the United States and Brazil settled the dispute before any definitive opinion was issued by the WTO.

As a British colony, India’s pre-independence patent laws were modeled largely on then-prevailing English law. India gained its independence from Great Britain in 1947 and almost immediately began to consider the adoption of patent laws reflecting emerging national goals of industrialization and economic development. Thus, in early 1948, a committee known as the Tek Chand Committee was appointed to review and reconcile India’s patent laws with its national interests. The committee’s efforts resulted in the Chand Report, which recommended the use of compulsory patent licenses to stimulate India’s industrial economy.

A second major report commissioned by the Indian government and prepared primarily by Shri Justice N. Rajagopala Ayyangar, was issued in 1959. The Ayyangar Report suggested that India should deviate from the “unsuitable patent policies of industrialized nations” because patent regimes operate differently in developing versus developed nations. Recognizing that a significant weakness in developing nations “is that foreign patent owners do not work the invention locally,” the Ayyangar Report recommended compulsory licensing as “the remedy to redress the handicap of foreigners not working the invention locally.”

2. The Patents Act, 1970

The India Patents Act, 1970, was enacted in 1972. Among other things, it sought to address the economic repercussions resulting from foreign dominance of the patent landscape in India, as recommended by the Chand Report and the Ayyangar Report. Accordingly, Section 83 of the 1970 Act provides certain policy-driven justifications for India’s working requirements, explaining:

“that patents are granted to encourage inventions and to secure that the inventions are worked in India on a commercial scale and to the fullest extent that is reasonably practicable without undue delay; [and]

that they are not granted merely to enable patentees to enjoy a monopoly for the importation of the patented article[.]”

These provisions make clear that working a patent in India is both an important policy goal and consists of something more than importation of the patented article into India. Some additional knowledge transfer must occur so that manufacturing of other steps necessary for commercialization are carried out in India.

Following the Ayyangar Report’s recommendations, Section 84(1) of the 1970 Act provided for compulsory licensing of patents as follows:

“At any time after the expiration of three years from the date of the sealing of a patent, any person interested may make an application to the Controller alleging that the reasonable requirements of the public with respect to the patented invention have not been satisfied or that the patented invention is not available to the public at a reasonable price and praying for the grant of a compulsory licence to work the patented invention.”

These requirements, particularly the availability of the patented article to the public at a “reasonable price,” seek to address issues raised in the debate over access to medicines, and particularly the high pricing maintained by many Western pharmaceutical firms in developing countries.

However, working of patents more generally is incorporated into the compulsory licensing regime through Section 90, which clarifies when the “reasonable requirements of the public” will be deemed not to have been satisfied. In particular, Section 90(c) specifies that, for purposes of compulsory licensing under Section 84, “the reasonable requirements of the public shall be deemed not to have been satisfied Ö 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[.]” Thus, local working of patents is tied to the public interest and has become express grounds for requesting a compulsory license in India.

In addition to giving applicants the right to seek a compulsory license under non-worked patents, the 1970 Act also gave the Controller the power to revoke a patent on the grounds that the reasonable requirements of the public were not being satisfied or the patented invention was not available to the public at a reasonable price. Under Section 89(1), any interested person could apply to the Controller for such an order of revocation no earlier than two years following the grant of the first compulsory license under the relevant patent.

3. India’s Current Working Requirement

India became a member of the World Trade Organization on January 1, 1995, also making India a party to the TRIPS Agreement. In order to reconcile the 1970 Act with the TRIPS Agreement, India amended its Patents Act in 1999, 2002, and 2005. Most relevant to this Article, the 2002 amendments modified India’s compulsory licensing and working requirements.

India’s amended Patents Act retains strong working requirements, which permit the Controller to revoke unworked patents. Section 83 of the Act, as amended in 2002, provides several additional justifications for India’s patent working requirement not contemplated in earlier versions of the Act. For example, the 2002 amendments recognize that patents are intended to support the “transfer and dissemination of technology . . . in a manner conducive [sic] to social and economic welfare.” Several of the new justifications emphasize that patents should support, and not impair, the public interest, particularly “in sectors of vital importance for socio-economic and technological development of India.”

Against this backdrop, the amended Act explicitly makes compulsory licenses available for non-worked patents. Section 89 explains that one of the “general purposes” of compulsory licenses is to ensure that “patented inventions are worked on a commercial scale in the territory of India without undue delay and to the fullest extent that is reasonably practicable.” The amended Act expanded Section 84(1), which authorizes third parties to seek compulsory licenses, to include as an express basis for seeking a compulsory license “that the patented invention is not worked in the territory of India.”

Thus, new section 84(1)(c) establishes working of a patent as an independent ground for seeking a compulsory license, in addition to the grounds under sections 84(a) and (b) that the patented technology fails to reasonably meet public needs. This approach contrasts with the original 1970 formulation, discussed above, in which non-working of a patent formed a basis for seeking a compulsory license, but only as an element of the “reasonable requirements of the public,” rather than an independent ground in itself.

Section 84(6) specifies factors that the Controller must take into account when considering an application for a compulsory license, including:

(i) the nature of the 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;

(ii) the ability of the applicant to work the invention to the public advantage;

(iii) the capacity of the applicant to undertake the risk in providing capital and working the invention, if the application were granted;

(iv) as to whether the applicant has made efforts to obtain a licence from the patentee on reasonable terms and conditions and such efforts have not been successful within a reasonable period as the Controller may deem fit [i.e., not ordinarily exceeding a period of six months] . . . .

Section 84(6) appears to represent a concession to patent holders, making clear that compulsory licenses will only be granted to applicants that are able to exploit the licensed patent rights in a manner that is likely to remedy the failure of the patent holder to work the patent.

While a formal definition of working is not provided under the statute, the language of section 83 suggests that the patented invention must be manufactured locally to the extent possible and that importation would be acceptable only if local manufacturing is unreasonable. Additionally, the statutory language suggests that if importation is necessary, only the patent holder or its chosen licensees may import the patented invention. The statute also fails to establish any circumstances that may be excused from India’s patent working requirement. This omission may have been intentional, perhaps suggesting that any technology that is worth patenting in India should also be capable of being worked in India.

In short, India’s patent working requirement is intended to be taken seriously. The penalties for failing to work a patent include the issuance of a compulsory license beginning three years after patent issuance, and if that does not fulfill public requirements for the patented article, possible revocation of the patent. Moreover, there is evidence that Indian courts may be reluctant to grant injunctive relief to patent holders that do not work their patents.

C. The Indian Working Requirement and Natco Pharma Limited v. Bayer Corporation

India’s patent working requirement was featured prominently in Natco’s recent compulsory license request with respect to Bayer’s Indian patent covering sorefanib tosylate, a kidney and liver cancer drug marketed by Bayer as NexavarTM. Bayer obtained an Indian patent covering Nexavar in 2008. Despite Bayer’s estimate that more than 8,800 patients in India were eligible to take the drug, its imports were sufficient to supply only 200 patients. Moreover, Bayer priced a monthly dose of the drug at more than 280,000 Rupees (approximately US$5,608), a price unaffordable to the vast majority of Indians. In response, Natco, an Indian generic drug manufacturer, attempted to negotiate a license with Bayer to manufacture and sell Nexavar in India. However, when negotiations were unsuccessful, Natco applied to the Drug Controller General of India for regulatory approval to manufacture a generic version of Nexavar in India. The approval was granted.

Natco then petitioned the Controller of Patents under section 84 of the Patents Act for a compulsory license to manufacture a generic version of Nexavar. Natco offered several justifications in support of its application for a compulsory license, including Nexavar’s high cost and limited availability in India. In addition, Natco argued that Bayer had failed to work its patent in India within three years of its issuance, as required under section 84(1)(c) of the Patents Act. Specifically, Natco argued that “[t]he patented product is being imported into India and hence the product is not worked in the territory of India to the fullest extent that is reasonably practicable.” Additionally, Natco argued that Bayer faced “no hurdle[s] preventing [it] from working the Patent in India” because Bayer already had “manufacturing facilities in India for several products.”

Bayer responded that it actively imported Nexavar into India, which demonstrated sufficient working, and argued that India’s working requirement did not require manufacture of the patented product in India. In evaluating Natco’s petition, the Controller considered the legislature’s intent, the Paris Convention, the TRIPS Agreement, and India’s Patents Act. In view of these authorities, the Controller interpreted the term “worked” to mean that the patented invention must be manufactured or licensed within India, reasoning that “[u]nless such an opportunity for technological capacity building domestically is provided to the Indian public, they will be at a loss as they will not be empowered to utilise [sic] the patented invention, after the patent right expires.” Under this interpretation, the Controller concluded that Bayer had not worked its patent in India since importation is not sufficient to constitute “working” a patent. Accordingly, in 2012 the Controller issued a compulsory license to Natco under Bayer’s patent covering Nexavar.

Bayer unsuccessfully appealed the Controller’s decision to the Indian Intellectual Property Appellate Board (IPAB). The IPAB affirmed the Controller’s decision, but disagreed with the Controller’s interpretation of the term “worked.” Instead of ruling that working categorically excludes importation of the patented product into India, the IPAB concluded that determining whether a patented invention is worked must be considered on a case-by-case basis. Thus, the term “worked” does not necessarily exclude importation, but it also does not strictly require manufacturing in India.

In affirming the decision of the IPAB, the Bombay High Court opined that “[m]anufacture in all cases may not be necessary to establish working in India[.]” However, the court implied that working a patent without local manufacture could be a high hurdle to clear, reasoning that the patent holder must then “establish those reasons which makes it impossible/prohibitive for it to manufacture the patented drug in India.” It is only when the patent holder satisfies the authorities that “the patented invention could not be manufactured in India” that it can be considered worked by import.

Apart from the working requirement, the Bombay court focused on whether Bayer had reasonably satisfied the requirements of the public, recognizing that those requirements might differ depending on the type of product covered by the patent. Thus, when assessing whether demand for the patented article was met to an “adequate extent,” the considerations pertaining, for example, to a luxury article would vary significantly from those pertaining to a lifesaving medicine. In the case of medicines, the court reasoned, meeting public demand to an adequate extent should be deemed to mean it is available to 100% of the market: “Medicine has to be made available to every patient and this cannot be deprived/sacrificed at the altar of rights of [the] patent holder.”

Following Natco’s successful application for, and defense of, its compulsory license, other generic drug manufacturers sought compulsory licenses to manufacture patented pharmaceutical products in India. For example, in 2013, BDR Pharmaceuticals, Ltd., an Indian manufacturer, filed an application for a compulsory license to manufacture Bristol Myers Squibb’s anti-cancer drug dasatinib (marketed as SprycelTM), and the Indian Ministry of Health recommended that the Department of Industrial Policy and Promotion (DIPP) grant local manufacturers compulsory licenses for trastuzumab, a breast cancer drug marketed by Roche (HerclonTM) and Genentech (HerceptinTM) and ixabepilone (Roche’s IxempraTM). To date, each of these petitions has failed for various reasons other than that pertaining to dasatinib, which remains under consideration by DIPP.

D. Form 27 and India’s Reporting Requirement

The Indian patent working requirement under Section 84 of the Patents Act, as well as the availability of compulsory licenses for non-worked patents, is not unique to India, and other developing countries have adopted similar legal requirements. India has, however, enacted what appears to be a unique reporting structure associated with its patent working requirement. India adopted a form submission requirement as a means to regulate the patent working requirement under the India Patents Act in 1970.Specifically, section 146(2) of the Patents Act provides that:

every patentee and every licensee (whether exclusive or otherwise) shall furnish in such manner and form and at such intervals (not being less than six months) as may be prescribed statements as to the extent to which the patented invention has been worked on a commercial scale in India.

In support of this statutory requirement, the patent rules adopted by the Indian Ministry of Commerce and Industry provide that the required statements of working must be submitted in a prescribed format (Form 27). The rules also provide that such statements must be furnished to the Controller of Patents in respect of every calendar year within three months following the end of such year.

Form 27, a template of which is appended to the 2003 version of the Indian patent rules, requires the patent holder to disclose “the extent to which the patented invention has been worked on a commercial scale in India.” To that end, Form 27 requires that the patent holder complete the following information:

The patented invention:

(i) { } Worked { } Not worked [Tick (✓) mark the relevant box]

a. if not worked: reasons for not working and steps being taken for the working of the invention.

b. if worked: quantum and value (in Rupees), of the patented product:

manufactured in India

imported from other countries (give country wise details)

(ii) the licenses and sub-licenses granted during the year;

(iii) state whether the public requirement has been met partly/adequately/to the fullest extent at reasonable price.

Under Section 122, failing to submit a Form 27 or providing false information on the form may lead to a significant fine, imprisonment, or both.

Though India’s working requirement first appeared in the Patents Act in 1970, it appears to have been ignored until around 2007. In 2007, the Controller first mentioned the local working of patented inventions in his annual report. The reports provided by the Controller between 2007 and 2009 indicate that, on average, less than 15 percent of Indian patents were being worked commercially. In 2009, 2013 and 2015, the Controller issued public notices calling on patent owners to comply with their obligations to file statements of working on Form 27.

While the penalties for failing to furnish information via Form 27 are steep, potentially resulting in fines or imprisonment, local critics claim that many patent holders fail to make the required filings and that the Indian government has never taken meaningful action to penalize this non-compliance.

On February 12 2013, the Indian Patent Office announced plans to make Form 27 submissions for the year 2012 available to the public via the IPO website. As discussed in Part II.A below, that effort has been met with limited success.

E. Theory and Criticism of Form 27

There is little legislative or administrative history explaining the genesis of India’s unique Form 27 requirement. On one hand, a requirement that the details of patent working be disclosed by patent holders supports the goal of making unworked patents available for compulsory licensing in India, both to promote economic development and public access to patented products. A public registry of Forms 27 could also shift enforcement of India’s working requirement from the IPO and Controller to private sector entities with the greatest incentive to monitor the working of patents in their respective industries. This shift could relieve India’s resource-strapped administrative agencies of a potentially significant policing function, one that it does not appear they were actively enforcing in any event.

However, it is not clear that these goals are well served by the current Form 27 framework, which has been criticized by a number of local commentators. For example, the IPAB ruled in Natco that the term worked must be decided on a case-by-case basis. How, then, should patent holders answer the first question posed in Form 27 and its sub-questions? How is a patent holder to know whether importation or licensing in a certain case will qualify as working a patent in India? If the Form is intended to increase transparency and certainty regarding the working of patents in India, it is hindered in so doing by the lack of a formal definition of working. This lack of clarity affects both patent holders, who are less able to order their affairs so as to comply with statutory working requirements, as well as potential compulsory licensees, who lack a clear assurance of when a compulsory license petition will be successful.

Commentators have raised a variety of additional critiques of the Form 27 framework. The U.S.-based Intellectual Property Owners Association, in a formal 2014 submission to the U.S. Trade Representative, has referred to the Form 27 process as “highly burdensome” and warns that the information disclosed in publicly-accessible forms could “result in even greater pressure on Indian authorities to compulsory license [patented] products.”Moreover, the association argues that Form 27 does not adequately recognize that some patents may be practiced by multiple products, or that multiple patents may be practiced by a single product. Thus, it may be unrealistic for patent holders to attribute a “specific commercial value” to specific patented features of complex technologies.

Additionally, a number of Indian practitioners have raised concerns that the public disclosure of confidential plans for working patents through Form 27 may jeopardize or destroy valuable trade secrets and proprietary information. This threat could cause patent holders to disclose as little specific or valuable information as possible in their Form 27 filings, a result that is suggested by the findings discussed in Part III below.

Based on studies of filed Forms 27, Professor Shamnad Basheer, has concluded that India’s local working Form 27 submission requirements are not being taken seriously, particularly by international pharmaceutical companies. As a result, in 2015 Professor Basheer initiated public interest litigation in the High Court of Delhi against the Indian government for failure to comply with India’s patent laws. The suit seeks a judicial order compelling the Indian government “to enforce norms relating to the disclosure of ‘commercial working’ of patents by patentees and licensees” and to take action “against errant patentees and licensees for failure to comply with the mandate.” In 2016 an Indian patent attorney, Narendra Reddy Thappeta, filed an application to intervene in Basheer’s public interest suit, among other things, in order to raise issues regarding the difficulty of complying with Form 27 requirement for information and communication technology providers.

Despite its perceived problems, Form 27 has proven useful in Indian proceedings. Notably, the information disclosed in Bayer’s Form 27 filings played an important role in the Natco case by helping to establish the low number of patients having access to the drug. Basheer refers to the working requirement as “a central pillar of the Indian patent regime” and views the disclosure requirements of Form 27 as essential tools to ensure that needed information is made public.

II. Empirical Study of Indian Form 27 Disclosures in the Mobile Device Industry

In order to gain a better understanding of India’s patent working requirement, particularly patent holders’ compliance with the statutory requirement to declare information about the working of their patents through Form 27, we conducted an empirical study of all available Form 27 submissions for Indian patents in the mobile device sector. In this Part, we describe the objectives, background and methodology of this study.

A. Background: Existing Data and Studies

Every year, the Controller publishes an Annual Report containing statistics relating to patent filings in India. Since 2010, this report has contained data relating to Form 27 filings. This data indicates that a significant number of patent holders fail to file Form 27 as required. Below is a summary of this data as derived from the Controller’s Annual Reports from 2010 to 2016:

Table 1

Indian Controller of Patents Form 27 Filing Data (2010-2016)

Under the Patents Act, a Form 27 must be filed every year with respect to every issued patent in India. Accordingly, the discrepancy between the number of patents in force for a given year and the number of Forms 27 filed likely indicates non-compliance with the filing requirement. Interestingly, it appears that instances of non-compliance dropped noticeably in years immediately after the Controller issued its public reminders to file Form 27 in December 2013, February 2013 and early 2015. Even so, compliance has not been complete even in these years.

As noted above, Professor Shamnad Basheer has conducted two studies of Form 27 compliance in India. The first study, released in April 2011, focused on the pharmaceutical sector. The researchers selected seven pharmaceutical products directed at either cancer or hepatitis, all of which were subject either to Indian litigation or patent office oppositions and were patented in India between 2006 and 2008. They then collected Form 27 filings relating to each of these patents through a series of Right to Information (RTI) petitions to the Indian Patent Office (IPO). Based on the Forms produced by the IPO in response to these requests, the researchers found significant non-compliance with Form 27 filing requirements: some firms failed to file forms in some years, while some forms that were filed were incomplete.

Professor Basheer’s second study had a broader scope, covering a total of 141 patents: 52 patents held by 13 firms in the pharmaceutical sector, 52 patents held by 7 firms in the telecommunications sector, and 37 patents held by 4 institutions which are claimed to have arisen from publicly-financed research. The researchers used series of RTI petitions to collect a total of 263 Forms 27 corresponding to these patents filed between 2009 and 2012.

Based on a total of 141 patents, full compliance with Form 27 filing requirements would have yielded 423 Forms 27 over the three-year period studied. The total of 263 Forms identified indicates a non-compliance ratio of approximately 38%, assuming that all filed forms were produced by the IPO. A review of the reported data indicates that some firms, particularly in the pharmaceutical sector, were assiduous in filing Forms 27. For example, Genentech and Janssen Pharmaceuticals, with two patents each, each filed six Forms 27, suggesting full compliance. Other firms, however, fell far short of this measure. Apple, for example, with four patents, filed only one Form.

In addition to raw filing statistics, Prof. Basheer investigates the quality of the disclosures made in individual Forms 27. He finds that significant numbers of filed Forms “were grossly incomplete, incomprehensible or inaccurate.” For instance, numerous forms failed to indicate how patents were being worked or the quantity, value or place of manufacture of patented products as required by the Form. In addition, of forty-two Forms that disclosed non-working of a patent, twenty-eight (65%) failed to offer any reason for non-working. Though the raw data underlying these conclusions does not appear to be publicly available, choice excerpts from a few Forms are offered.

While the prior studies cited above suggest that there are substantial non-compliance issues with Form 27 practice in India, additional data is required to develop a more complete understanding of this issue. The Controller’s annual report data is provided only at a gross level and lacks any detail regarding compliance. Prof. Basheer’s pioneering studies, while first alerting the public to the problems of non-compliance, cover only small, non-random samples of patents and end prior to the general online availability of Forms 27.

B. Methodology

In this study, we sought to assess annual Form 27 submissions across a comprehensive set of patents and a substantial time frame. To do so, we utilized a set of 4,052 Indian patents identified by Contreras and LakshanÈ as of February 2015 in a prior study of the Indian mobile device patent landscape (Landscape Study). Another 367 patents pertaining to mobile device technology, which were not included in the original Landscape Study, were also identified by an independent contracted search firm. In the aggregate, we analyzed 4,419 Indian patents issued as of February 2015 in the mobile device sector, which we believe to represent the large majority of issued Indian patents in this sector as of the date selected.

We identified Form 27 filings with respect to each such patent through searches of two public online databases maintained by the Indian Patent Office: Indian Patent Advanced Search System (“InPASS”) and Indian Patent Information Retrieval System (“IPAIRS”). We manually eliminated duplicate results obtained from these two databases.

Our initial searches in 2015 yielded Form 27 submissions for only 1,999 out of 4,419 patents. These searches yielded no Forms 27 for some firms known to be significant patent holders in the mobile devices industry. To attempt to locate the missing forms, LakshanÈ, through the Centre for Internet and Society (CIS), submitted two formal requests to the IPO located in Mumbai under the Indian Right to Information (“RTI”) Act of 2005. The first RTI application was submitted on June 10, 2015, requesting Form 27 information for over 800 patents. On June 17, the IPO replied with generic instructions on how to find Form 27 submissions online. A second RTI application was filed on March 11, 2016. The second request sought Form 27 filings pertaining to 61 of the remaining patents. These 61 patents were selected to represent a sample of patents held by the full cross-section of patent holders identified in the Landscape Study. In April 2016, the IPO replied that, due to internal resource constraints, it could only provide CIS with Forms 27 for eleven (11) of the requested patents.

Nevertheless, a few days after IPO’s reply, Form 27 submissions pertaining to patents in the Landscape Study started appearing on InPASS and IPAIRS. We repeated the search for Forms 27 corresponding to all 4,419 patents in our dataset in August 2016 and obtained a total of 4,935 Forms 27 corresponding to a total of 3,126 patents (an increase of 1,127 patents over the initial search).

All Forms 27 that we accessed were downloaded as PDF files or original image files and manually entered into a text-searchable spreadsheet maintained at CIS. All information from the Forms 27 was transcribed into the spreadsheet, including all textual descriptions of patent working and licensing. The results were then analyzed as described in Part III.A below.

C. Limitations

The present study was limited by the technical capabilities of the IPO’s online Form 27 repository. As described above, we found significant gaps in posted Forms 27 in our initial search, and it took a formal RTI application to spur the IPO to upload additional forms. Yet, we still identified 1,400 fewer Forms 27 than issued patents in the mobile devices category. The degree to which these missing forms arise from abandoned or expired patents, or additional failures of the IPO to upload filed forms, is unclear. Other than the IPO web site, there is no practical way to identify or access Forms 27 filed with the IPO. Technical issues with the InPASS and IPAIRS databases were constant challenges during this study. The databases were frequently unavailable, produced conflicting results, and were subject to numerous runtime errors and failures.

Despite these technical challenges, we believe that we have identified a large segment of filed Forms 27 covering Indian patents held by all major patent holders in the mobile device sector. We hope that this study will further encourage the IPO to improve the regularity and reliability of its Form 27 database.

III. Findings

In this Section, we describe the findings of our empirical collection analysis of Forms 27 pertaining to Indian patents in the mobile device sector.

A. Aggregated Data ñ Forms Found and Missing

As noted above, we used a dataset comprising 4,419 Indian patents in the mobile device sector issued as of February 2015. Of these, at least 107 patents were likely expired prior to the date on which a Form 27 would have been filed, leaving 4,312 patents for which at least one Form 27 could have been filed.

We were able to identify and obtain a total of 4,916 valid Forms 27which corresponded to 3,126 of these patents, leaving 1,186 Indian patents for which a Form 27 could have been filed, but was not found. This total represents 27.5% of the patents for which at least one Form 27 could have been filed: a significant portion of the total number of patents in the field, and within the general range of missing Forms identified by both the Controller and Basheer (2015).

Based on the year of grant of each of the 4,312 patents identified in the mobile device sector as to which a Form 27 could have been filed, we determined that a total of 24,528 Forms 27 should have been filed with respect to these patents. This figure represents the sum of total Forms 27 that could have been filed for each such patent, which ranges from a low of one to a high of eight Forms 27 per patent. In our sample, no single patent was associated with more than five Forms 27. As noted above, we obtained a total of 4,935 Forms 27 filed with respect to 3,126 patents, representing only 20.1% of the total Forms 27 that should have been filed and made available with respect to the 4,312 patents studied. Figure 1 below compares the number of Forms 27 filed in each year since 2009 with the number of Forms 27 that should have been filed each year based on the number of mobile device patents in force from year to year.

Figure 1

Actual vs. Required Form 27 Filings, by year (based on number of mobile device patents in force)

As shown in Figure 1, Form 27 filings have fallen well below the required number every year. In 2009, the first year in which Forms 27 were filed in any numbers, only 36 Forms were filed, representing only 2.8% of the 1,302 Forms that should have been filed based on the number of mobile device patents in force that year. By 2013, the number of Forms filed rose to 2,389, representing 70.7% of the 3,379 Forms that should have been filed. This ratio declined again in 2014 to 1,392 Forms out of a total of 3,639 (38.3%). Data for 2015 and 2016 are likely incomplete given the February 2015 cutoff for patents in our study. We also expect that many of the 1,186 “missing” Forms 27 were filed more recently and have not yet been uploaded by the IPO in a searchable format.

One possible explanation for the beginning of filings in 2009 and the significant jump in filings in 2013 may be the Controller’s public notifications of the need to file Forms 27 in 2009 and 2013.

Figure 2 below illustrates the number of issued patents in the mobile device sector for which Forms 27 were found and missing, categorized by patent holder (assignee). Complete data is contained in the Appendix, Table A1.

Figure 2

Forms 27 (Identified and Missing) Per Assignee

As shown in Figure 2, missing Forms 27 were distributed among most holders of Indian patents in the mobile device sector. Of the 40 firms identified as holding issued mobile device patents, Forms were missing for 37 of these (92.5%). In most cases, more Forms 27 were found than missing. In a few cases, however (most notably Philips), more Forms 27 were missing than found. In the case of four large patent holders (Qualcomm, Siemens, Philips and Samsung), more than 100 Forms 27 were missing. Forms 27 were missing for patents with issuance dates ranging from 2004 to 2015.

There are several possible reasons that Forms 27 may not have been identified for all issued Indian patents. One possibility, is non-compliance by the patent holder. This is likely the case with respect to the early years (2009-2010), when filing requirements were not yet normalized. However, in more recent years, the following factors suggest that patent holder non-compliance is not a significant cause of missing Forms 27 in the IPO database: (1) Forms 27 were missing for nearly all patent holders across the board, (2) large patent holders filed hundreds of Forms 27 and were clearly aware of their filing requirements, (3) the incremental cost of filing Forms 27 is minimal, and (4) in most cases, large patent holders simply copy text from one form to another (not in itself ideal, see below), requiring little incremental effort to file additional forms. Rather, given our experience with IPO during this study (see Methodology, above), we expect that the missing forms are due largely to the IPO’s failure to upload Forms 27 to its web site in a timely and reliable manner, and the dropping of Forms 27 once uploaded.

B. Working Status

As noted above, we reviewed 4,935 Forms 27 filed with respect to 3,126 patents in the mobile device sector. Figure 3 below illustrates the number of patents for which Forms 27 were filed and which the assignee designated that the patent was worked versus not worked (or, in a few cases, made no indication of working status).

Figure 3

Working Status, by Assignee

These results suggest that different patentees have developed significantly different strategies regarding their Form 27 filings. For example, Qualcomm, the largest holder of patents in the mobile device sector (1,298 patents, 993 of which have associated Forms 27), represents that nearly all of its patents (986, 99.3%) are being worked. Samsung, on the other hand, holds the second-highest number of patents (551 patents, 430 of which have associated Forms 27). Yet Samsung claims that it is working only 12 of its patents (2.3%). Clearly, these two patentees are employing different strategies regarding the declaration of working. A glance at Figure 3 suggests that some patentees such as RIM (now renamed Blackberry) follow Qualcomm’s approach of declaring most patents to be worked, while others (Ericsson, LG, Motorola, Panasonic, Philips, Siemens) follow Samsung’s approach and declare most patents not to be worked.

Of course, one might reason that there may be some difference between the patents themselves, and that the patentees’ declarations may simply reflect the fact that some firms’ patents are used more pervasively in India. This conjecture, however, is unlikely. Most of the patentees studied are large multinationals whose patents cover the same products. Many of these patents are declared as essential to the same technical standards. Moreover, given the generally ambiguous evidence proffered by patentees supporting their designated working status (see Part III.C, below), we doubt there are substantial enough differences among the patentees’ portfolios to account for the significant divide in declarations of working status.

C. Descriptive Responses

As noted above, Form 27 requires the patentee to disclose whether or not a patent is being worked in India. If so, the patentee must disclose the number and amount of revenue attributable to products covered by the patent that are manufactured in India and are imported from other countries. If the patent is not being worked, the patentee must explain why and describe what steps are being taken to work the invention. In both cases, the patentee must also identify licenses and sublicenses granted and state how it is meeting public demand for products at a reasonable price.

As first observed by Basheer, there is widespread non-compliance with these reporting and disclosure requirements. We largely confirm this result. Below is a summary of our findings with respect to the descriptive responses for the 4,935 Forms 27 that we reviewed.

1. Working Status Not Disclosed

For a surprising number of Forms 27 (95 or 3%), the working status of the relevant patent was not designated (i.e., neither the box for “worked” nor “not worked” was checked by the patentee). Table 1 below shows the patentees that filed Forms 27 in this manner.

Table 1

Forms 27 Failing to Disclose Working Status

Clearly, these sophisticated multinational firms understood the filing requirements for Form 27 and, in most cases, filed additional Forms 27 that did indicate whether the relevant patent was or was not being worked. Thus, the principal reason for filing a Form 27 without designating its working status appears to be the patentee’s uncertainty regarding the patent’s working status in India.

Illustrating this point, Motorola declares in several of its Forms of this nature that “[i]t is not possible to determine accurately whether the patented invention has been worked in India or not, due to the nature of the invention.” While Motorola fails to explain how “the nature of the invention” makes it impossible to determine whether or not the patent is being worked, it uses this litany in most of its Forms 27 that fail to disclose working status. Ericsson adopts a slightly different approach, stating that while it is actively seeking opportunities to work the patent, there may have been some uses of the patented technology. Thus, again, it is uncertain whether the patent is being worked or not. Presumably, these patentees felt that it was preferable to file an incomplete, rather than incorrect, Form 27.

Interestingly, most patentees never revised their working non-designations over the years. Thus, if a patent was not designated as worked or not worked in the first year a Form 27 was filed, subsequent filings for that patent typically duplicated the language of prior years’ filings. One exception appears to be Google, which acquired Motorola’s patent portfolio in 2012. For Indian Patent No. 243210 issuing in 2010, Motorola filed Forms 27 in 2010 and 2011 without indicating whether or not the patent was worked. However, in 2013, Google/Motorola filed a Form 27 for the same patent indicating that it was not worked.

Google has elected to opt for non-working when it is uncertain of the working status of a patent. For example, the following qualified language is used in several Forms in which Google indicates that a patent is not being worked:

Based on a reasonable investigation, it is Google’s belief that the patent has not been worked in India. The uncertainty arises because Google’s products and services are covered by numerous patents belonging to Google’s very large worldwide patent portfolio, and Google does not routinely keep track of which individual patent is being employed in Google’s products and services. The present statement is being filed on the basis of Google’s current estimation, but Google requests opportunities to revise the statement, should it transpire at a later date that the patent is being worked contrary to their present belief.

2. Patents Not Worked

We examined a total of 2,380 Forms 27 that indicated the relevant patents were not being worked. If a patent is specified as not being worked, the patentee must disclose the reasons for the failure to work the patent, and describe what steps are being taken to work the invention.

In a small number of cases, the patentee offered some plausible explanation for non-working of the patent. The most common of these, claimed by in Ericsson in thirty-six Forms 27, was that the underlying technology was still under development, making working impossible, at least until that development was completed. In a handful of other Forms 27 (6), Ericsson and Nokia have claimed that a patent was not being worked because it covered a technology awaiting approval or endorsement by a standards body. In the vast majority of cases, however, no explanation is offered as to why a particular patent is not being worked.

With respect to disclosure of the patentees’ plans for working a non-worked patent, most simply include stock language stating that they are “actively seeking” or “on the lookout for” commercial working opportunities in the future. Alcatel-Lucent adopted an even more passive and non-specific stance toward its plans to work patents, stating in numerous Forms 27 (applicable to 29 patents) that “as and when there is a specific requirement, the patent will be worked.”

3. Varied Interpretations of Working

We reviewed 2,425 Forms 27 that listed the subject patent as being worked. In such cases, the patentee must disclose the number and amount of revenue attributable to products covered by the patent, whether manufactured in India or imported from other countries. A tiny percentage of the Forms 27 that we reviewed provided this information in the form requested. As we discuss in our conclusions, below, it is likely that the format of the required response is simply unsuitable for complex products such as mobile devices. Below we summarize and classify the types of responses that patentees offered regarding the working of their patents.

a. Specific Information ñ Very few Forms 27 actually provide the specific product volume and value information required by the Form. The only patentee that provided the specific information required by Form 27 was Panasonic, which, with respect to the only two patents that it claimed to work (of a total of 66 Indian patents as to which a Form 27 was found), listed specific product volumes and values.

Other patentees disclosed specifics regarding the technical details of their worked patents, but declined to provide product volume and value information. For example, Ericsson discloses: “the stated patent covers a specific detail of data transmission to a mobile in a GSM or WCDMA mobile network where said transmission of data is not performed if the mobile has not enough battery capacity left for the transfer.” Ericsson goes on, however, to explain that because this patented technology is intended to be used in conjunction with other patented technologies, it is not possible to provide the financial value of the worked patent “in isolation.” Oracle also adopts this approach of offering specific product information, while declining to estimate associated sales volume or revenue.

b. Relevance to a Standard ñ In several cases, a patentee describes its patented invention by reference to an industry standard. For example, Nokia-Siemens utilize the following description for one patent that is allegedly worked: “Invention relevant for IEEE 802.16-2009 and IEEE 802.16-2011 standard.” While the patentee offers no additional information regarding the working of the patent, the desired implication, presumably, is that the patent covers an aspect of the standard, and if the standard is implemented in products sold in India (as it likely is), then the patent is thereby worked.

Some patentees offer less specific information regarding the standards that their patents cover. For example, Ericsson states in one Form that “This patent is essential for a 3rd Generation Partnership Project (3GPP) standard and Ericsson is also, subject to reciprocity, committed to make its standard essential patents available through licensing on fair, reasonable and Non-discriminatory (FRAND) terms.” In this formulation, the patentee appears both to be implying working of the patent by virtue of the implicit inclusion of the standard in Indian products, and also to be making known its willingness to enter into licenses in the future on FRAND terms. This future-looking perspective, however, is not responsive to the information called for by Form 27 for patents that are allegedly being worked, and implies that the patent is not, in fact, being worked yet in India.

c. Indian Licensees ñ Some licensees, Qualcomm in particular, disclose that they have licensed their patents to Indian firms. These licenses are disclosed in Qualcomm’s Forms 27 for various patents. However, it is not clear what manufacturing or other activity is carried out by these Indian licensees. Ericsson, which has been engaged in litigation with numerous Indian and Chinese vendors of mobile devices in India, reports that it is receiving royalties from at least two of these entities under court order, though it stops short of stating that these entities are licensed under Ericsson’s patents.

d. Worldwide Licensees ñ In addition to Indian licensees, Qualcomm discloses that, as of 2014, it had granted worldwide CDMA-related patent licenses to more than 225 licensees around the world, and that CDMA-based devices were imported into India from “countries such as Canada, China, Finland, Germany, Italy, Japan, Korea, Switzerland, Taiwan, and the United States.” While Qualcomm is not specific regarding the linkage, if any, between its worldwide licensees and mobile devices sold in India, it reports that more than 37.7 million CDMA-based mobile devices were sold in India in 2014 at an average price of USD $161.94. And though not express, the implication of these data is that all CDMA-based mobile devices sold in India somehow utilize Qualcomm’s patented technology.

The granting of worldwide licenses raises an interesting question regarding local working of patents. As Ericsson (which claims to have executed more than 100 patent licensing agreements) explains, its global licensees are, by definition, licensed in every country, including India. Because their global license agreements “are operational in India”, the licensees are theoretically authorized to work Ericsson’s patents in India. But it is not clear that this means that the patents are actually being worked in India. Simply granting a worldwide patent license does not mean that the licensed patent is being worked, just as the issuance of a patent in a country does not mean that the patent is being worked in that country.

e. Too Big to Know ñ Some patentees claim that they or their patent portfolios are simply too vast to determine how particular patents are being worked in India, or the number or value of patented products sold in India. Nokia, for example, uses the following language in 82 separate Form 27 filings: “Nokia’s products and services are typically covered by tens or hundreds of the nearly 10,000 patents in Nokia’s worldwide portfolio. Nokia does not keep records of which individual patents are being employed in each of Nokia’s products or services, and is therefore unable to report the quantum and value of its products or services which employ the patented invention.”

In a similar vein, Ericsson notes that its patented technologies are intended to be used in combination with a large number of other technologies patented by Ericsson and others. Accordingly, “it is close to impossible to prove an indication of specific or even close to accurate financial value of the said patent in isolationÖ” This said, Ericsson goes on to disclose its total product sales in India (3.09 billion SEK in 2013) and also notes that it earns revenue from licensing its patents (without disclosing financial data).

f. On the Lookout ñ Curiously, some patentees that claim to be working their patents use the same language regarding their search for working opportunities as they and others use with respect to non-worked patents. For example, Ericsson makes this statement regarding some of the patents that it is allegedly working in India: “The patentee is in the lookout for appropriate working opportunities in a large scale although there may have been some use of the patented technology in conjunction with other patented technologies.” This language is uncertain and does not seem to support a claim that, to the patentee’s knowledge, the patent is actually being worked. At best, it expresses optimism toward the possibility of finding an opportunity to work the patent in the future.

g. Information Provided Upon Request ñ Some patentees decline to provide any information about the working of their patents in Forms 27, but offer to provide this information if requested (presumably by a governmental authority). Some patentees further explain their hesitation to provide this information in Form 27 on the basis that the information is confidential, but commit to provide it if requested.

h. Corporate PR ñ Some patentees, in addition to, or in lieu of, providing information about their patents, offer general corporate information of a kind that would often be found in corporate press releases and annual reports. For example, Research in Motion offers this glowing corporate report in lieu of any information about its allegedly worked patents:

Patentee is a leading designer, manufacturer and marketer of innovative wireless solutions for the worldwide mobile communications market. Through the development of integrated hardware, software and services that support multiple wireless network standards, the patentee provides platforms and solutions for seamless access to time-sensitive information including email, phone, SMS messaging, internet and intranet-based applications. Patentee’s technology also enables a broad array of third party developers and manufacturers to enhance their products and services with wireless connectivity. Patentee’s portfolio of award-winning products, services and embedded technologies are used by thousands of organizations around the world (including in India) and include the Blackberry wireless platform, the RIM Wireless Handheld product line, software development tools, radio-modems and software/hardware licensing agreements.

RIM then goes on to explain that it has so many patents that identifying how the instant patent is worked in India is impossible (see “Too Big to Know” above).

Ericsson likewise offers a bit of self-serving corporate history in twenty-eight different Forms 27 in which it states:

Ericsson’s history in India goes back 112 years during which period Ericsson has contributed immensely to the telecommunication field in India. Ericsson provides, maintains and services network for several major government and private operators in India. At present, Ericsson has more than 20,000 employees across 25 offices in India. Further, Ericsson has established manufacturing units, global service organization and R&D facilities in India…

i. Just Don’t Know ñ Some patentees simply assert that they are unable to determine information regarding working of their patents, without any explanation why. Alcatel-Lucent, for example, offers the following unsatisfying disclosure with respect to the eight patents that it claims to be working in India: “The patentee is unable to particularly determine and provide with reasonable accuracy the quantum and value of the patented invention worked in India, including its manufacture and import from other countries during the year 2014.”

j. No Description ñ Some patentees simply omit to provide any information whatsoever regarding the working of their patents, even when patents are allegedly worked.

4. Changes in Status

While some of the “boilerplate” responses provided by patentees in their filed Forms 27 might suggest that patentees give little thought to the content of Form 27 filings, we identified a small but non-trivial number of patents (4.1%) as to which the patentee changed the working status, either from worked to not worked, or vice versa. Overall, we identified 128 instances in which the working status of a patent was changed from one year to the next. Of these, 51 went from worked to not worked, and 77 went from not worked to worked. Such changes suggest that patentees give at least some thought to the manner in which they work their patents, and seek to correct inaccurate disclosures, though these observed variances could also be attributed to changes in law firm, changes in interpretation of filing requirements or mere clerical errors and inconsistencies in filings from year to year.

In 17 cases, the status of the same patent changed twice over the course of three or more Forms 27. Almost all of these three-stage “flip-flops” moved from worked to not worked to worked, with the aberrant ‘not worked’ year occurring in 2013. In fact, 2013 seems to have been a popular year for changes in working status, whether because of heightened awareness, and therefore greater scrutiny of Form 27 filings due to the Controller General’s public notice of that year, or changes in interpretation of filing requirements occasioned by a widely-attended seminar or article. But whatever the cause, it seems highly unlikely that, over the course of three years, a single patent could go from being worked in India, to not being worked, to being worked again. As a result, we attribute these flip-flop changes primarily to filing errors and inconsistencies rather than genuine attempts to correct inaccurate disclosures.

Corresponding to changes in working status, patentees often changed the textual descriptions of working or non-working contained in their Forms 27. These changes usually involved adding stock language regarding working or non-working to a Form 27 that previously contained no descriptive information. However, in some cases the patentee’s descriptive text bears little relation to the purported working status of the patent. For example, as illustrated in Table 2 below, a single patentee’s disclosures with respect to two different patents across three filings employ the same textual descriptions but for different working status.

Table 2 Comparison of Working Status Descriptions

As illustrated by Table 2, the patentee’s working description (Text A) is identical in 2011 and 2014 for both patents, though in 2014 one patent is allegedly worked and the other is not. Likewise, in 2013, one patent is worked and the other is not, yet the textual description for both is identical (Text B). Putting aside, for a moment, the fact that neither Text A not Text B is particularly responsive to the information requirements of Form 27, it is puzzling why the patentee would use the same stock language to describe both working and non-working of its patents. The only consistency that emerges from this example is across filing years, suggesting, perhaps, that the textual descriptions used in these forms was more dependent on the person or firm making the filing in a particular year than the alleged working status of the patents in question.

IV. Discussion and Analysis

Professor Basheer charges that significant numbers of Forms 27 are “grossly incomplete, incomprehensible or inaccurate,” and has sued the Indian Patent Office to compel it to improve its monitoring and enforcement of Form 27 filings. Our results confirm that there are overall weaknesses in the Indian Form 27 system, several of which reveal deeper problems with the implementation of India’s patent working requirement.

A. Process Weaknesses

Though filings in support of India’s patent working obligation have been required since 1972, and Form 27 has been on the books since 2003, meaningful filings of Form 27 did not begin until the Controller’s first public notice on this topic in 2009. In the following eight years, Form 27 filings have increased, but are still well below required levels (see Part III.A, above). Even at their peak in 2013, we located only 70.7% of required Forms 27 in the mobile device sector, a sector characterized by sophisticated firms that are advised by counsel. Filing ratios were significantly lower in every other year.

There are several possible reasons for these discrepancies. First are possible issues with the IPO’s electronic access to records. As noted in Part II, we experienced significant difficulties obtaining Forms 27 through the IPO’s web site. It was only after two RTI requests that significant numbers of Forms 27 were made accessible online. It is possible that the IPO has additional Forms 27 in its files that have not been made accessible electronically. For a system the purpose of which is to make information about non-worked patents available to the public, such lapses are inexcusable, particularly given that India’s current working requirement is nearing its 50th anniversary. Accordingly, we expect that improvements to the IPO’s electronic filing and access systems may improve the profile of Form 27 filing compliance.

B. Non-Enforcement and Non-Compliance

As noted above, we expect that some portion of the apparent non-compliance with India’s Form 27 requirement is attributable to the inaccessibility of properly filed Forms 27. However, it is also likely that some portion of the deficit in available Forms 27 is due to actual non-compliance by patentees. Though there are stiff penalties on the books for failing to comply with Form 27 filing requirements, including fines and imprisonment, we are unaware of any enforcement action by the IPO or any other Indian governmental authority regarding such non-compliance.

Given that records of all issued Indian patents are available online, and that all filed Forms 27 should also be available online, it would not seem particularly difficult for the IPO to implement an automatic monitoring and alert system warning patentees that they have not filed required Forms 27. Such a system would likely increase compliance substantially. However, we find no evidence that the IPO monitors or otherwise keeps track of Form 27 filings or seeks to contact patentees who fail to meet their filing requirements. As a result, it is not surprising that non-compliance is widespread.

C. Uncertainty Surrounding Working and Complex Products

When Forms 27 are filed, many of them lack any meaningful detail regarding the manner in which patents are worked or the reasons that they are not worked. While the descriptive requirements of Form 27 are quite clear, even the largest and most sophisticated patentees seemingly struggle with determining whether or not a patent is actually worked in India and, if so, how to quantify its working in the manner required by the Form. There are several reasons that this degree of uncertainty exists. First, India has no clear statutory, regulatory or judicial guidelines for interpreting its working requirement. As the court noted in Natco, the working determination must be made on a case by case basis, with attention to the specific details of the patent in question. This open-ended standard offers little guidance to firms regarding the degree to which importation or licensing may qualify as working a patent, or even what degree of assembly, packaging or distribution within India will so qualify.

Additionally, some patentees have taken the position in their Forms 27 that merely licensing a patent to an Indian firm qualifies as working the patent in India. Some have even gone so far as to take the position that granting a worldwide patent license qualifies as working the licensed patent in India, given that India is part of the world. These conclusions seem stretched, but they have not, to our knowledge, ever been challenged by the IPO or any private party.

What’s more, several patentees take the position that it is impossible to determine the value attributable to a single patent that covers only one element of a complex standard or product (“too big to know”). While these patentees may disclose the size of their large patent portfolios or total Indian product revenues, these figures do not provide the information required by Form 27 relative to the individual patent that is claimed to be worked.

Given the degree of uncertainty surrounding the Indian working requirement and how it is satisfied, it is not surprising that the disclosures contained in most Forms 27 are meaningless boilerplate that convey little or no useful information about the relevant patents or products. Moreover, it is questionable whether it is even possible for a willing patentee to provide the product and revenue information currently required by Form 27 for complex, multi-patent products such a mobile devices. It may be time for the IPO to revisit the information requirements of Form 27, which were seemingly developed with products covered by one or a handful of patents in mind, to more suitable address complex electronic and communications products that may be covered by hundreds or thousands of patents each.

D. Strategic Behavior

In an environment of extreme uncertainty and low enforcement, it is not surprising that patentees have developed self-serving strategies to achieve their internal goals while arguably complying with the requirements of Form 27. Evidence of strategic behavior can be seen clearly in the divide between those patentees that claim that they are working most of their patents and those that claim that they are not. We can assume that there are not significant differences in the portfolio make-up among these different patentees, so the large difference between their ratios of worked and non-worked patents must be attributable primarily to decisions made to further corporate interests.

For example, it is possible that those patentees claiming significant working of their patents do so in order to avoid requests for compulsory licenses against their patents. Such patentees may wish to exploit the Indian market themselves, or license others to do so on terms of their choosing, so may seek to avoid compulsory licensing on terms dictated by the government. Those patentees claiming significant non-working, on the other hand, may actively be seeking applications for compulsory licensing. Why? Perhaps because these patentees do not plan to sell products in India and see little prospect of entering into commercial license agreements with Indian producers. Thus, their greatest prospect of any financial return on their patents may be a compulsory license. As unlikely as it sounds, they may be using Form 27 as a legally-sanctioned “To Let” sign for otherwise unprofitable patents.

Whatever the underlying reasons are for patentee strategic decisions in the filing of Forms 27, IPO owes the public greater clarity regarding the formal requirements for working patents in India. It is only when disclosures are made in a consistent and understandable format that the public will acquire the knowledge about patent working that the Act intends for them to receive.

E. Opportunities for Further Study

This is the first comprehensive and systematic study of reporting compliance with India’s patent working requirements. It covers only one industry sector: mobile devices. Expanding this study to additional industry sectors, particularly pharmaceuticals and biomedical products, would likely yield additional insights.

It would also be informative to revisit the instant set of patents in a few years time to determine whether increased IPO access to electronic records may alter the somewhat poor compliance landscape revealed by this study. That is, if a significant number of Forms 27 that have been filed are simply unavailable through the IPO’s web site, then hopefully continued information technology improvements at the IPO will improve availability in years to come.

Conclusion

India’s annual Form 27 filing requirement is intended to provide the public with information regarding the working of patents in India so as to enable informed requests to be made for compulsory licenses of non-worked patents. While such a goal is laudable, it is not clear that this system is currently achieving the desired results.

In the first systematic study of all Forms 27 filed with respect to a key industry sector ñ mobile devices ñ we found significant under-reporting of patent working, likely due to some combination of systemic deficiencies and non-compliance by patentees. Thus, from 2009 to 2016, we could identify and access only 20.1% of Forms 27 that should have been filed in this sector, corresponding to 72.5% of all mobile device patents for which Forms 27 should have been filed. Forms 27 were missing for almost all patentees, suggesting that defects in the Indian Patent Office’s online access system may play a role in the unavailability of some forms.

But even among Forms 27 that were accessible, almost none contained useful information regarding the working of the subject patents or fully complying with the informational requirements of the Form and the Indian Patent Rules. Patentees adopted drastically different positions regarding the definition of patent working, some arguing that importation of products into India or licensing of Indian suppliers constituted working, while others even went so far as to argue that the granting of a worldwide license to a non-Indian firm constituted working in India. Several significant patentees claimed that they or their patent portfolios were simply too large to enable the provision of information relating to individual patents, and instead provided gross revenue and product sale figures, together with historical anecdotes about their long histories in India. And many patentees simply omitted required descriptive information from their Forms without explanation.

The Indian government has made little or no effort to monitor or police compliance with Form 27 filings, likely encouraging non-compliance. Moreover, some of the complaints raised by patentees and industry observers regarding the structure of the Form 27 requirement itself have merit. Namely, patents covering complex, multi-component products that embody dozens of technical standards and thousands of patents are not necessarily amenable to the individual-level data requested by Form 27. We hope that this study will contribute to the ongoing conversation in India regarding the most appropriate means for collecting and disseminating information regarding the working of patents.

APPENDIX

TABLE A1

Professor, University of Utah S.J. Quinney College of Law and Senior Fellow, Centre for International Governance Innovation. JD (Harvard Law School), BSEE, BA (Rice University). The authors are grateful for constructive discussion and feedback at the 2016 Works in Progress in Intellectual Property conference at University of Washington, the 2017 International Intellectual Property Roundtable at NYU Law School, the 2017 Intellectual Property Scholars Conference (IPSC) at Cardozo Law School, the Second International Conference on Standardization, Patents and Competition Issues at Jindal Global Law School, and a faculty workshop at the University of Utah S.J. Quinney College of Law. We also thank Anubha Sinha, Shamnad Basheer, Nehaa Chaudhari, Kirti Gupta, Kshitij Kumar Singh, Marketa Trimble and Sai Vinod for their helpful input regarding this article, and Anna Liz Thomas and Nayana Dasgupta for valuable research assistance. The research for this article was conducted as part of the Pervasive Technologies Project at the Centre for Internet and Society, India, and has been supported, in part, by the International Development Research Centre (Canada), the Albert and Elaine Borchard Fund for Faculty Excellence at the University of Utah and Google, Inc. The views expressed in this article are solely those of the authors.

Program Officer, Centre for Internet and Society, India. Bachelor of Instrumentation Engineering (University of Mumbai).

Law Clerk, Supreme Court of Utah. JD (University of Utah S.J. Quinney College of Law), BS, BA (Butler University).

Natco Pharma Ltd. v. Bayer Corp., (2011) I.P.O. Order No. 1, at 6 (India).

See id.

The Natco case is one in a long line of cases in the ongoing “access to medicines” dispute, in which developing countries seek compulsory licenses for local use of lifesaving drugs that are patented by western pharmaceutical firms. See, e.g., Srividhya Ragavan, Patent and Trade Disparities in Developing Countries (2012); Charles R. McManis and Jorge L. Contreras, Compulsory Licensing of Intellectual Property: A Viable Policy Lever for Promoting Access to Critical Technologies?, in TRIPS and Developing Countries ñ Towards a New IP World Order? (Gustavo Ghidini, Rudolph J.R. Peritz & Marco Ricolfi, eds. 2014); Jerome H. Reichman, Comment: Compulsory Licensing of Patented Pharmaceutical Inventions: Evaluating the Options, 37 J. L. Med. & Ethics 247, 250 (2009).

Natco Pharma Ltd. v. Bayer Corp., supra note at 6.

See Patents Act, No. 39 of 1970, India Code (1970), ch. XVI, ß 84(1).

See Rochelle Dreyfuss & Susy Frankel, From Incentive to Commodity to Asset: How International Law Is Reconceptualizing Intellectual Property, 36 Mich. J. Int’l L. 557, 576 (2015); See also Feroz Ali, Picket Patents: Non-Working as an IP Abuse, at *5, https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2732521 (last visited Feb. 6, 2017); see also Bryan Mercurio & Mitali Tyagi, Treaty Interpretation in WTO Dispute Settlement: The Outstanding Question of the Legality of Local Working Requirements, 19 Minn. J. Int’l L. 275, 281 (2010).

Marketa Trimble, Patent Working Requirements: Historical and Comparative Perspectives, 6 U.C. Iʀᴠɪɴᴇ L. Rᴇᴠ. 483, 500-501 (2016).

Id. at 495.

Jorge L. Contreras & Rohini LakshanÈ, Patents and Mobile Devices in India: An Empirical Survey, 50 Vand. Transnat’l L.J. 1 (2017). The data set used in the foregoing study can be found at https://cis-india.org/a2k/blogs/dataset-patent-landscape-of-mobile-device-technologies-in-india.

Trimble, supra note , at 488. In England, royal patents were granted to foreigners who would teach their art to the local population. Id. at 488, 497. Venice provided monopoly rights and tax holidays for foreign inventors to immigrate and improve local industrialization. Ragavan, supra note , at 3.

See Ragavan, supra note , at 3; see also G.B. Reddy & Harunrashid A. Kadri, Local Working of Patents ñ Law and Implementation in India, 18 J. Intell. Prop. Rights 15, 15 (2013).

See Ragavan, supra note , at 3; see also Trimble, supra note , at 488.

See Ragavan, supra note , at 3; see also Reddy & Kadri, supra note , at 16.

See Reddy & Kadri, supra note , at 17; see also Ali, supra note , at *9.

See generally Paul Champ & Amir Attaran, Patent Rights and Local Working Under the WTO TRIPS Agreement: An Analysis of the U.S.-Brazil Patent Dispute, 27 Yale J. Int’l L. 365, 371 (2002).

Trimble, supra note , at 498 (“In the United Kingdom in the 18th century ‘the requirement of compulsory working dropped into desuetude and its place was taken for all practical purposes, in particular in the practice of the law courts, by [the full disclosure] requirement’”) (alterations in original) (internal citations omitted).

Paris Convention for the Protection of Industrial Property, World Intellectual Property Organization, art. 5(A)(1), March 20, 1883.

See Reddy & Kadri, supra note , at 17; see also Champ & Attaran, supra note , at 371; Trimble, supra note , at 493ñ94.

Hague Revision to Paris Convention for the Protection of Industrial Property, World Intellectual Property Organization, art. (5)(A)(2), November 6, 1925.

See Champ & Attaran, supra note , at 372; see also Trimble, supranote , at *490-94 (tracing history of remedies for failure to meet working requirements, including forfeiture).

London Revision to Paris Convention for the Protection of Industrial Property, World Intellectual Property Organization, art. 5(A)(4), June 2, 1934; See Trimble, supra note , at 494.

Stockholm Revision to Paris Convention for the Protection of Industrial Property, World Intellectual Property Organization, art. 5(A)(2), July 14, 1967.

See Trimble, supra note , at 494-95; see also Janice M. Mueller, The Tiger Awakens: The Tumultuous Transformation of India’s Patent System and the Rise of Indian Pharmaceutical Innovation, 68 U. Pitt. L. Rev. 491, 517-18 (2007)..

See Trimble, supra note , at 494.

See Ragavan, supra note , at 65-66. See generally TRIPS: Agreement on Trade-Related Aspects of Intellectual Property Rights, Apr. 15, 1994, Marrakesh Agreement Establishing the World Trade Organization, Annex 1c, 1869 U.N.T.S. 299, 33 I.L.M. 1197 (1994), reprinted in World Trade Organization, The Results of the Uruguay Round of Multilateral Trade Negotiations 365 (1995) [hereinafter “TRIPS Agreement”].

Additionally, those countries that were not members of the Paris Union but are members of the WTO are therefore obligated to comply with the Paris Convention and its revisions under Article 2.2 of the TRIPS Agreement.

TRIPS Agreement, supra note , art. 27.1.

TRIPS Agreement, supra note , art. 30-31; see also Ragavan, supranote ; McManis and Contreras, supra note .

See generally Trimble, supra note , at 496; Shamnad Basheer, Making Patents Work: Of IP Duties and Deficient Disclosures, 7 Queen Mary J. Intell. Prop. 3, 16-17 (2017).

Request for Consultations by the United States, Brazil ñ Measures Affecting Patent Protection, WTO Doc. WT/DS199/1 (June 8, 2000); see also Reddy & Kadri, supra note , at 17; Trimble, supra note , at 496-497.

Champ & Attaran, supra note , at 380.

Article 28(1) of the TRIPS Agreement defines the rights that may be conferred on patent owners.

Champ & Attaran, supra note , at 381-82.

Id. at 381. The two patented drugs that the Brazilian Ministry of Health threatened to grant compulsory licenses on were efavirenz and nelfinavir. These drugs are antiretroviral drugs used to treat AIDS. Geoff Dyer, Brazil Defiant Over Cheap AIDS Drugs, Fin. Times, Feb. 9, 2001, at 10.

Barbara Crossette, U.S. Drops Case Over AIDS Drugs in Brazil, N.Y. Times (June 26, 2001), http://www.nytimes.com/2001/06/26/world/us-drops-case-over-aids-drugs-in-brazil.html.

Kalyan C. Kankanala, Arun K. Narasani & Vinita Radhakrishnan, Indian Patent Law & Practice 1 (2010).

See Mueller, supra note , at 509-511; see also Ragavan, supra note , at 31.

Shri Justice N. Rajagopala Ayyangar, Report on the Revision of the Patents Law (September 1959) [hereinafter “Ayyangar Report”]; Ragavan,supra note , at 31-33.

P. Narayanan, Patent Law 5 (4th ed. 2006).

Ayyangar Report, supra note .

Ragavan, supra note , at 35.

Id. at 39-40.

See generally The Patents Act, No. 39 of 1970, India Code (1970).

See Ragavan, supra note , at 42-45 (summarizing changes effected by the 1970 law).

The Patents Act, 1970 ß 83 (emphasis added).

The Indian Controller General of Patents, Designs & Trade Marks, who will be referred to herein as the Controller for simplicity.

The Patents Act, 1970, ß 84(1) (emphasis added). The three-year time period reflected in the Act is derived from Section 5(A)(4) of the Paris Convention (current numbering). See supra note .

The Patents Act, 1970 ß 84(1).

Id. ß 90(c).

Id.

Id. ß 89(3). While the language of Section 89 is couched in terms of the “reasonable requirements of the public,” it is interesting to note that the caption of the section reads “Revocation of patents by the Controller for non-working,” thus focusing more explicitly on the working requirement.

The Patents Act, 1970 ß 89(1). The two-year time period reflected in the Act is derived from Section 5(A)(3) of the Paris Convention (current numbering). See supra note and accompanying text.

See India and the WTO, Wᴏʀʟᴅ Tʀᴀᴅᴇ Oʀɢ.,http://www.wto.org/english/thewto_e/countries_e/india_e.htm. See generally TRIPS Agreement.

India amended its 1970 Act in three amendments, corresponding to the transition periods permitted by the TRIPS Agreement. India played a significant role in establishing the TRIPS multi-year transition periods. See Mueller, supra note , at 518. For a discussion of India’s political and economic considerations underlying its support of compulsory licensing under TRIPS, see Omar Serrano & Mira Burri, Making Use of TRIPS Flexibilities: Implementation and Diffusion of Compulsory Licensing Regimes in Brazil and India (World Trade Inst. Working Paper No. 1 2016).

The Patents (Amendment) Act, No. 38 of 2002, India Code (2002).

Id. ß 85.

Id. ß 83(c).

Id. ß 83(d)-(f).

Id. ß 89.

Id. ß 84(1) (emphasis added).

Id.

Id. ß 84(6).

See Thomas Cottier, Shaheeza Lalani & Michelangelo Temmerman, Use It or Lose It: Assessing the Compatibility of the Paris Convention and TRIPS Agreement with Respect to Local Working Requirements, 17 J. Int’l Econ. L. 437, 441 (2014).

See The Patents Act, No. 39 of 1970, India Code (1970), ß 90(2) (“No license granted by the Controller shall authorise the licensee to import the patented article or an article or substance made by a patented process from abroad where such importation would, but for such authorisation, constitute an infringement of the rights of the patentee.”).

See Basheer, supra note , at 9.

Natco Pharma Ltd. v. Bayer Corp., (2011) I.P.O. Order No. 1, 5 (India).

Id. at 22.

Id. at 25 (noting that an average Indian government employee would have to work for 3.5 years to afford a single month’s dosage).

Id. at 6.

Id. at 5.

Id.

Id. at 6.

Id.

Id. at 37.

Id.

Id. at 38.

Id. at 40-41.

Id. at 43.

Id. at 45 (“I am therefore convinced that ‘worked in the territory of India’ means ‘manufactured to a reasonable extent in India.’”).

Id. at 60.

Natco Pharma Ltd. v. Bayer Corp., (2013) I.P.A.B. Order No. 45 (India).

Id.

Id. at 43.

Bayer Corp. v. Union of India, Bombay High Ct. at 29 (Jul. 15, 2014).

Id.

Id. at 24.

Id. Bayer subsequently appealed to the Indian Supreme Court, which declined to hear the case. See Samanwaya Rautray, Nexavar License Case: SC Dismisses Bayer’s Appeal Against HC Decision, Economic Times, Dec. 13, 2014, http://economictimes.indiatimes.com/industry/healthcare/biotech/pharmaceuticals/nexavar-licence-case-sc-dismisses-bayers-appeal-against-hc-decision/articleshow/45500051.cms

Harsha Rohatgi, Indian Patent Office Rejects Compulsory Licensing Application: BDR Pharmaceuticals Pvt. Ltd. vs. Bristol Myers Squibb, Khurana & Khurana (last visited Oct. 20, 2017), http://www.khuranaandkhurana.com/2013/11/13/indian-patent-office-rejects-compulsory-licensing-application-bdr-pharmaceuticals-pvt-ltd-vs-bristol-myers-squibb/.

Patralekha Chatterjee, 2013: India Battles for Right to Use Compulsory Licenses to Make Medicines Affordable, Intellectual Property Watch(last visited Oct. 20, 2017), https://www.ip-watch.org/2013/01/22/2013-india-battles-for-right-to-use-compulsory-licences-to-make-medicines-affordable/.

See Pankhuri Agarwal, DIPP Drags the Dasatinib Compulsory License Drama: A Situation of ‘Extreme Urgency’?, SpicyIP blog (Sep. 24, 2016), https://spicyip.com/2016/09/dipp-drags-the-dasatinib-compulsory-license-drama-a-situation-of-extreme-urgency.html. See, e.g., IPO Order No. C.L.A. No.1 of 2015, In the matter of Lee Pharma Ltd v. AstraZeneca AB, dated January 19, 2016 (rejecting application due to lack of evidence presented under all three prongs of Section 84 analysis).

For example, Article 68 of Brazil’s 1996 Industrial Property Law subjects a patentee to compulsory licensing if the patentee does not exploit “the object of the patent within the Brazilian territory for failure to manufacture the product or failure to use a patented process.” 68 C.P.I., Law No. 9,279 (Brazil, May 14, 1996). For additional examples, See Cottier et al., supra note , at 461-71.

While form submissions to show the working of a patent are unique to India’s patent law, a submission requirement to maintain intellectual property rights is similarly used in the United States for trademarks. In the United States, registered trademark owners must submit a declaration of use to avoid cancellation of the registration. See 15 U.S.C. ß 1058.

The Patents Act, No. 39 of 1970, India Code (1970), ß 146(2).

Id.

The Patent Rules, Rule 131, India (2003).

The Patent Rules, Rule 131, India (2003). There is an apparent discrepancy between section 146(2) of the India Patents Act, 1970 and Rule 131 of the Patent Rules, 2003. While section 146 suggests that patentees should file Forms 27 every six months, Rule 131 of the Patent Rules, 2003 requires the statements to be furnished in respect of every calendar year.

The Patents Act, No. 39 of 1970, India Code (1970), ß 146(2).

The public requirement refers to “the reasonable requirements of the public with respect to the patented invention.” The Patents (Amendment) Act, No. 38 of 2002, India Code (2002), ß 84(1)(a). In other words, if the patentee must explain how he has or has not met his duties under section 83 and 84 of the Patents Amendment Act of 2002.

Patents Rules, Form 27, 2003.

The Patents (Amendment) Act, No. 38 of 2002, India Code (2002), ß 122 provides:

“1) If any person refuses or fails to furnish-Ö b) to the controller any information or statement which he is required to furnish by or under section 146,

he shall be punishable with [a] fine which may extend to twenty thousand rupees.

2) If any person, being required to furnish any such information as is referred to in sub-section (1), furnishes information or statement which is false, and which he either knows or has reason to believe to be false or does not believe to be true, he shall be punishable with imprisonment which may extend to six months, or with fine, or with both.”

Annual Report 2007-08, Office of the Controller General of Patents, Designs, and Trade Marks including GIR and PIS/NIIPM (IPTI), at 12; see also Reddy & Kadri, supra note , at 21.

Annual Report 2008-09, Office of the Controller General of Patents, Designs, Trade Marks and Geographical Indications, at 21; Annual Report 2007-08, Office of the Controller General of Patents, Designs, and TradeMarks including GIR and PIS/NIIPM (IPTI), at 12; see also Reddy & Kadri, supra note , at 21-22.

Controller Gen. of Patents, Designs and Trade Marks, Public Notice No. CG/PG/2009/179, Dec. 24, 2009; Controller Gen. of Patents, Designs and Trade Marks, Public Notice No. CG/Public Notice/2013/77, Feb. 12, 2013; Controller Gen. of Patents, Designs and Trade Marks, Public Notice No. CG/Public Notice/2015/95, 2015.

The Patents Act, No. 39 of 1970, India Code (1970), ß 122. (A patentee may be imprisoned for submitting false information).

Reddy & Kadri, supra note , at 22; see also Shamnad Basheer v. Union of India, Writ Petition, at F (Del. 2015) [hereinafter Basheer Writ Petition (2015)] (“[T]he Respondents authorities have never initiated action against any of the errant patentees.”).

Prashant Reddy, Patent Office Publishes All ‘Statements of Working’ ñ Finally!, Spicy IP, (June 25, 2013) https://spicyip.com/2013/06/patent-office-publishes-all-statements.html.

See, e.g., Basheer Writ Petition (2015), supra note (raising numerous deficiencies with Form 27); Shamnad Basheer & N. Sai Vinod RTI Applications and ‘Working’ of Foreign Drugs in India, Spicy IP, at 5 (Apr., 2011) (“However, Form 27 in its present format leaves much to be desired and we will be drafting a more optimal Form 27 and forwarding this to the government for consideration, so that the form can be a lot more clearer and can call for a greater range of information.”).

Letter from Philip S. Johnson, President, Intellectual Prop. Owners Assn., to Hon. Michael Froman, U.S. Trade Representative (Feb. 7, 2014).

Id.

Prathiba Singh & Ashutosh Kumar, When in Rome, do as the Romans do, IP Pro Life Sciences at 16, (Mar. 10, 2013)http://ipprolifesciences.com/ipprolifesciences/IPPro%20Life%20Sciences_issue_04.pdf.

Among other things, Prof. Basheer is the founder of the SpicyIP blog, a leading source of intellectual property news and commentary in India. SeePart III.A, infra, for a discussion of the results of his studies of Form 27 compliance.

Basheer & Vinod, supra note , at 6-8.

Basheer Writ Petition (2015), supra note .

Id. at 1, 8.

Shamnad Basheer v. Union of India, Writ Petition No. 5590 (Del. 2015), Application Seeking Permission to Intervene in the Above Public Interest Litigation (2016). Some of the issues raised by Mr. Thappeta are discussed in Part IV below.

Bayer Corp. v. Union of India, Writ Petition No. 1323 of 2013, Judgment at 8ñ10 (Jul. 15, 2014).

Basheer, supra note , at 17.

Indian Patent Office reporting year (Apr. 1 – Mar. 31).

See supra note .

Basheer & Vinod, supra note .

This study pre-dates the electronic availability of Forms 27.

Basheer & Vinod, supra note , at 7-8.

Basheer Writ Petition (2015), supra note , at Annexure P-11, tbl. I. It is not clear how the studied patents were selected. They do not represent the totality of patents in the designated industry sectors. Likewise, it is not clear how “publicly-funded research” is defined nor the amount of such funding behind the selected patents.

It appears that this study covered three “reporting years” at the IPO: 2009-10, 2010-11 and 2011-12. Reporting years run from April 1 to March 31.

This figure is calculated as 1 – 263/421. Prof. Basheer has reported this ratio as approximately 35%. Basheer, supra note , at 18.

Basheer Writ Petition (2015), supra note , at Annexure P-11, tbl. I.

Id. at 10.

Id. at 10-16; Basheer, supra note , at 19.

Basheer, supra note , at 12-13.

See Contreras & LakshanÈ, supra note , at 27-28 (describing electronic search and case harvesting methodology).

Searches were conducted and results were compiled by a contracted Indian service provider selected through a competitive bid process.

While InPASS and IPAIRS retrieve Form 27 submissions from the same URL, we observed that sometimes a submission that was displayed on data base was not displayed on the other. Thus, IPAIRS was used when Form 27 was not found for a queried patent on InPASS. InPASS has two features: Application Status and E-Register. At times, some forms were not available at E-Register that could be found through the Application Status table, and vice versa. Thus, both features were used. A detailed, step-by-step description of the search methodology used can be found at http://cis-india.org/a2k/blogs/methodology-statements-of-working-form-27-of-indian-mobile-device-patents.

Ajoy Kumar, “Request for Information under Section 6 of the Right to Information Act, 2005; regarding Form 27 Submissions for Patents,” The Centre for Internet and Society, (June 10, 2015), https://cis-india.org/a2k/blogs/rti-app-2015.pdf/at_download/file.

Boudhik Bhawan, “Supply of information sought under RTI ñ reg,” The Centre for Internet and Society, (June 17, 2015), https://cis-india.org/a2k/blogs/rti-reply-2015.pdf/at_download/file.

Ajoy Kumar, “Request for Information under Section 6 of the Right to Information Act, 2005; regarding Form 27 Submissions for Patents,” The Centre for Internet and Society, (Mar. 11, 2016), https://cis-india.org/a2k/blogs/rti-app-2016.pdf/at_download/file.

Id.

Ujjwala Haldankar, “Supply of information sought under RTI, 2005 ñ reg,” The Centre for Internet and Society, (Apr. 4, 2016), https://cis-india.org/a2k/blogs/rti-reply-2016.pdf/at_download/file.

Rohini LakshanÈ, Dataset for “Patent Working Requirements and Complex Products: An Empirical Assessment of India’s Form 27 Practice and Compliance,” The Centre for Internet and Society (Aug. 17, 2017), https://cis-india.org/a2k/blogs/dataset-for-patent-working-requirements-and-complex-products-an-empirical-assessment-of-indias-form-27-practice-and-compliance.

Similar deficiencies with the IPO’s online filing facility have been noted by Basheer. See Basheer Writ Petition (2015), supra note , at 17.

Prior to the 2002 Amendments to the Patents Act, 1970 (effective May 20, 2003), the term of product patents in India was 14 years from the date of issuance. Patents Act (2002 Amendments), Sec. 53. Accordingly, any patent issued in 1995 or earlier would be expired by 2009. Based on the data provided by the Controller and Basheer, it appears that few, if any, Forms 27 were filed prior to 2009. Thus, it is unlikely that any patent that expired prior to 2009 would have a corresponding Form 27. As a result, for purposes of counting Forms 27 that were, and should have been filed, we disregarded 107 patents in our dataset that were issued in 1995 or earlier (the vast majority of which were owned by Siemens).

A total of 4,935 Forms 27 were identified by our search. In 2013, Motorola filed 19 Forms 27 that were backdated to 2004 and 2005. These Forms corresponded to patents issued between 2008 and 2010, and apparently reflected the patentee’s incorrect belief that Form 27 must be filed as of the date of the filing of a patent application rather than the issuance of the patent. Because the patentee also filed Forms 27 dated as of 2013 for these patents, we have disregarded these spurious filings.

Based on the data provided by the Controller and Basheer, it appears that few, if any, Forms 27 were filed prior to 2009. Thus, we assumed that Forms 27, if filed, would only have begun to be filed in 2009. As discussed in note , supra, the first patents that could be expected to have a filed Form 27 were issued in 1996 (i.e., one Form filed in 2009, the year of the patent’s expiration). Thus, beginning with patents issued in 1996, we calculated the total number of Forms 27 that could have been filed with respect to such patents beginning in 2009 and ending in 2016 (noting that we ended our study in August 2016). Thus, for patents issued in 1996 and expiring in 2009, one Form 27 could have been filed. For patents issued in 2002 to 2008, and expiring well after 2016, a total of eight Forms 27 could have been filed, in each case beginning in 2009 and ending in 2016. Patents issued in 2015 could have at most one Form 27 filed. Though Form 27 is not required to be filed until the year after a patent has been granted, some patentees have made filings in the year of grant. We counted these filings, but did not count year-of-grant filings in determining the maximum number of filings that could be made for a particular patent.

See supra text accompanying note .

It is not surprising that no forms were available for patents issued prior to 2007, the first year that the Indian Controller of Patents drew attention to the Form 27 requirement. See supra Part I.D.

For patents that had different working designations in Forms 27 filed in different years, we counted a patent to be declared as worked if at least one Form 27 so designated the patent.

See supra text accompanying note .

See Basheer Writ Petition, supra note , at 10.

Motorola, Form 27 for 243220, IɴPASS (Mar. 31, 2014), http://ipindiaonline.gov.in/frm27/2013/243220_2013/243220_2013.pdf.

Ericsson, Form 27 for 241488, IɴPASS (Feb. 3, 2012), http://ipindiaonline.gov.in/frm27/2011/241488_2011/241488_2011.pdf(“The patentee is in the look out for appropriate working opportunities in a large scale although there may have been some use of the patented technology in conjunction with other patented technologies.”).

Google, Form 27 for 243210, IɴPASS (Mar. 27, 2015), http://ipindiaonline.gov.in/frm27/2014/243210_2014/243210_2014.pdf. See infra Part III.D for a discussion of patents as to which the patentee has changed the working status over the years.

See, e.g., Ericsson, Form 27 for 209941, IɴPASS (Mar. 30, 2015), http://ipindiaonline.gov.in/frm27/2014/209941_2014/209941_2014.pdf.

See, e.g., Ericsson, Form 27 for 259809, IɴPASS (Mar. 19, 2015), http://ipindiaonline.gov.in/frm27/2014/259809_2014/259809_2014.pdf.

Ericsson, Form 27 for 227819, IɴPASS (Mar. 13, 2015), http://ipindiaonline.gov.in/frm27/2014/227819_2014/227819_2014.pdf(“The patentee is in the look out for appropriate working opportunities in a large scale”); Motorola, Form 27 for 236128, IɴPASS (Mar. 8, 2013), http://ipindiaonline.gov.in/frm27/2012/236128_2012/236128_2012.pdf(“The Patentee is actively looking for licensees and customers to commercialise the invention in the Indian environment.”).

Alcatel-Lucent, Form 27 for 258507, IɴPASS (Mar. 18, 2015), http://ipindiaonline.gov.in/frm27/2014/258507_2014/258507_2014.pdf.

Panasonic, Form 27 for 239668, IɴPASS (Mar. 21, 2014), http://ipindiaonline.gov.in/frm27/2013/239668_2013/239668_2013.pdf; Panasonic, Form 27 for 208405, IɴPASS (Mar. 21, 2014), http://ipindiaonline.gov.in/frm27/2013/208405_2013/208405_2013.pdf.

Ericsson, Form 27 for 233994, IɴPASS (Mar. 6, 2013), http://ipindiaonline.gov.in/frm27/2012/233994_2012/233994_2012.pdf.

Id.

See Oracle, Form 27 for 230190, IɴPASS (Mar. 24, 2014), http://ipindiaonline.gov.in/frm27/2013/230190_2013/230190_2013.pdf(“The methods/structures of the patent are generally related to "Asynchronous servers". This product has been sold to several businesses in India in the past few years and is believed to be used by them. Additional information will be enquired and provided to the Patent Office upon request.”).

Nokia Siemens, Form 27 for 254894, IɴPASS (Mar. 28, 2014), http://ipindiaonline.gov.in/frm27/2013/254894_2013/254894_2013.pdf.

Ericsson, Form 27 for 249058, IɴPASS (Mar. 03, 2014), http://ipindiaonline.gov.in/frm27/2013/249058_2013/249058_2013.pdf; In other Forms 27, however, Ericsson

provides significant detail regarding the standards/specifications covered by its patents.

See, e.g., Ericsson, Form 27 for 213723, IɴPASS (Mar. 16, 2016), http://ipindiaonline.gov.in/frm27/2015/213723_2015/213723_2015.pdf(citing ETSI TS 126 092 V4.0.0 (2001-03), ETSI TS 126 073 V4.1.0 (2001-12) and ETSI TS 126 093 V4.0.0 (2000-12), all of which are pertinent to the UMTS 3G standard).

See, e.g., Qualcomm, Form 27 for 251876, IɴPASS (Mar. 28, 2015), http://ipindiaonline.gov.in/frm27/2014/251876_2014/251876_2014.pdf(disclosing Indian licensee Innominds Software Pvt. Ltd.).

See Ericsson, Form 27 for 213723, IɴPASS (Mar. 16, 2016), http://ipindiaonline.gov.in/frm27/2015/213723_2015/213723_2015.pdf(referencing royalty payments from Micromax and Gionee).

Qualcomm, Form 27 for 251876, IɴPASS (Mar. 28, 2015), http://ipindiaonline.gov.in/frm27/2014/251876_2014/251876_2014.pdf.

Id.

Nokia, Form 27 for 220072, IɴPASS (Mar. 20, 2014), http://ipindiaonline.gov.in/frm27/2013/220072_2013/220072_2013.pdf.

Ericsson, Form 27 for 251757, IɴPASS (Mar 11, 2014), http://ipindiaonline.gov.in/frm27/2013/251757_2013/251757_2013.pdf.

Id.

See, e.g., Ericsson, Form 27 for 248764, IɴPASS (Mar. 23, 2012)

http://ipindiaonline.gov.in/patentsearch/GrantedSearch/viewdoc.aspx?id=gPYX0WsErIRQR3is4uM1fw%3d%3d&loc=wDBSZCsAt7zoiVrqcFJsRw%3d%3d.

See, e.g., Huawei, Form 27 for 251769, IɴPASS (Mar. 4, 2014), http://ipindiaonline.gov.in/frm27/2013/251769_2013/251769_2013.pdf(“Information not readily available; efforts will be made to collect and submit further Information, if asked for.”).

See, e.g., Hitachi, Form 27 for 226462, IɴPASS (Mar. 28, 2013), http://ipindiaonline.gov.in/frm27/2013/226462_2013/226462_2013.pdf(“Confidential Information will be provided if asked for.”).

Research in Motion, Form 27 for 261068, IɴPASS (Feb. 10, 2015), http://ipindiaonline.gov.in/frm27/2014/261068_2014/261068_2014.pdf.

Ericsson, Form 27 for 254652, IɴPASS (Mar. 21, 2016), http://ipindiaonline.gov.in/frm27/2015/254652_2015/254652_2015.pdf.

See, e.g., Alcatel-Lucent, Form 27 for 202208, IɴPASS (Mar. 27, 2014), http://ipindiaonline.gov.in/frm27/2013/202208_2013/202208_2013.pdf.

See, e.g., Ericsson, Form 27 for 235605, IɴPASS (Feb. 23, 2011), http://ipindiaonline.gov.in/patentsearch/GrantedSearch/viewdoc.aspx?id=ghLLyAj0oCzH9pUf4tY2Kw%3d%3d&loc=wDBSZCsAt7zoiVrqcFJsRw%3d%3d; Ericsson, Form 27 for 235605, IɴPASS (Feb. 6, 2012), http://ipindiaonline.gov.in/patentsearch/GrantedSearch/viewdoc.aspx?id=ghLLyAj0oCzH9pUf4tY2Kw%3d%3d&loc=wDBSZCsAt7zoiVrqcFJsRw%3d%3d; Huawei, Form 27 for

249244, IɴPASS (Mar. 11, 2013), http://ipindiaonline.gov.in/patentsearch/GrantedSearch/viewdoc.aspx?id=9BzV82RULJkFoIPZZZeH9A%3d%3d&loc=+mN2fYxnTC4l0fUd8W4CAA%3d%3d.

Basheer Writ Petition (2015), supra note , at 10.

A patentee may be imprisoned for submitting false information. The Patents Act, No. 39 of 1970, India Code, ß 122 (1970).

See Reddy & Kadri, supra note , at 22; Basheer Writ Petition (2015), supra note , at 10 (“authorities have never initiated action against any of the errant patentees.”).

See supra text accompanying notes -84.

See supra Part III.C.3.c.

See supra Part III.C.3.d.

See supra Part III.C.3.e.

For example, as of 2015, more than 61,000 patent disclosures had been made against ETSI’s 4G LTE standard, and more than 43,000 against ETSI’s 3G UMTS standard, both of which are only one of many standards embodied in a typical mobile device. Justus Baron & Tim Pohlmann, Mapping Standards to Patents Using Databases of Declared Standard-Essential Patents and Systems of Technological Classification at 20, Table 5 (Regulation & Econ. Growth, Working Paper, 2015), http://www.law.northwestern.edu/research-faculty/searlecenter/innovationeconomics/documents/Baron_Pohlmann_Mapping_Standards.pdf.

See supra Part III.B.

We thank Chris Cotropia for this insight.

421 Forms 27 were found for Motorola. This total has been reduced by the 19 Forms filed in 2013 and incorrectly backdated to 2004 and 2005.

101 Siemens patents expired prior to 1996.

For more details visit https://cis-india.org/a2k/blogs/patent-working-requirements-and-complex-products

Pervasive Technologies: Access to Knowledge in the Market Place — A Presentation by Sunil Abraham

sunil — 2013-02-13T07:05:15Z

The 2012 Global Congress on Intellectual Property and the Public Interest was organized in Rio de Janeiro from December 15 to 17, 2012. The Centre for Internet & Society partnered FGV, Washington College of Law, the American Embassy, African Information Research and Training and International Centre for Trade and Sustainable Development in this event. Sunil Abraham made a presentation on Pervasive Technologies on the opening day, December 15, 2012.

Sunil Abraham presented on 13 different smartphones from the Indian market such as: The Classroom in a Box, The Supercharger, The Networker, The Linguist, TV on the Go, The Spy, The Semi-Smartphone, The Trendy, The Boombox, 3D, The Mighty Mini, The Pianist, and the Indian Experience.

Most of the above devices are manufactured in China and imported into India through local companies for domestic consumption and made available for its 900 million mobile subscribers.

Download the presentation [PDF, 4.61 Mb]

For more details visit https://cis-india.org/a2k/blogs/access-to-knowledge-in-market-place

Pervasive Technologies: Patent Pools

nehaa — 2013-07-03T06:57:59Z

In this research paper, Nehaa Chaudhari gives an analysis of patent pools. She discusses the working of a patent pool, study patent pool in other areas of technology, and patenting in telecom and related technology.

Click to download the full research paper here (PDF, 475 Kb)

Introduction

The network landscape over the past few years has been characterized by several battles of supremacy between two or more rival technologies. [1] These battles have included, inter alia, the constant efforts at besting rivals in the arena of patenting innovations in technology, often as a result characterised by the imposition of high royalties on rivals, for the use of one’s patents. However, having realised that such efforts at besting the other could prove detrimental for all parties concerned in the long run, and stall technological advancements which would in turn translate into lower business revenue, mechanisms were devised to ensure a relatively equitable utilization of patents in the market place. One such mechanism that has been developed is that of patent pools.

Patent pools have been developed around most areas of high end technology and research and development. Over the course of this paper, the author has confined herself to a study on patent pools in the area of telecommunications, and the issues to be addressed therein. Specifically, the author will be dealing with patent pools around 3G, 4G, LTE, TD-SCDMA and TD-LTE technologies. Within this framework, the author seeks to examine what are patent pools, whether and what kind of patent pools exist, their associated costs, their licensing arrangements and the structure of the payment of royalty, and the feasibility of these patent pools.

Understanding Patent Pools

Patent pools are agreements among patent owners through which patent owners combine their patents, waiving their exclusive rights to the patent to enable others, or themselves, to obtain rights to license the pooled patents.[2] Therefore, such pools may be focussed either on cross licensing, that is companies mutually making their patents available to each other, or on out licensing, that is, a group of companies making a collection of patents available to companies that do not or might not have patents of their own to contribute to the pool.[3] Typically, modern patent pools combine patents of various companies and are around inventions that are required to implement an established industry standard, are licensed as a whole (on an all or nothing basis) and not as individual licenses for patents owned by various companies within that pool, and are available to any non member for licensing.[4] Such licensing is done under a standard agreement and royalty rates, on a non discriminatory basis. The exception to this rule is that if certain members have contributed patents to the pool, they may receive more favourable terms, in recognition of their cross licensing relationship to the pool.[5] When viewed from a law and economics perspective, patent pools are seen to be an efficient institutional solution to various problems that arise when companies have complementary intellectual property rights, and these rights are essential to new technologies being used and employed. [6] However, this perspective also warns about the antitrust risks that may arise when competitors or potential competitors are involved in the coordination of their intellectual property. For instance, such pools may be used to allocate markets or otherwise chill competition. [7]

The Working of a Patent Pool

Generally, a patent pool may be administered in one of two ways- it may either have an administrative entity, or may also just be a system of cross licensing between two firms.[8] In case of the former, the licensing agency may be one of the patent holders, [9] or may be an independent licensing company (e.g. MPEG).[10]

The ownership of patents within the pool is retained by the owners, who then license them to the operator/administrator on a non exclusive basis, with sub licensing rights. This means that the owners are free to continue to license their patents on an individual basis, and the administrator also has the right to further license the patents to any party who is interested in licensing from the patent pool.[11] The responsibility of managing licensing and licenses is vested in the operator/administrator of the patent pool. Licensees are required to report sales and pay royalties to the pool administrator, who in turn would enforce the conditions of the license.[12] The distribution of royalties between the members of the pool is on the basis of a formula which may, or may not be transparent to non member licensees, with the pool operator retaining a management fee.[13] Typically, pool licenses are also structured in a manner so as to render difficult early termination by the licensee. The nature of the contract, once signed by a licensee, is typically binding in nature. Therefore, this would mean that the administrator of the patent pool could sue the licensee for non performance of the contract.[14] However, unless a pool operator is a member of the pool itself, it cannot sue for the infringement of patents. [15] Therefore, in the event that a patented technology were to be utilised without having taken a license, one or more of the individual patent owners would be required to take legal action. The involvement of the pool operator would be limited to being a part of any settlement discussions, if they were to occur, since one of the options for the alleged infringer could be to obtain a license for the patent pool.[16]

Drawing Parallels with Other Patent Pools

In this section of the paper, the author seeks to study patent pools in other areas of technology in order to better understand the structure and pricing of patent pools.

The ‘3C DVD’ Patent Pool
Established in 1998, the 3C DVD Patent Pool was the brainchild of Philips, Sony and Pioneer, and L.G. was subsequently inducted as a member. Philips acts as a licensing administrator for patents held by all the companies, which are over two hundred in number. These patents include those for the manufacture of the DVD players, and for the manufacture of the DVD disks themselves. [17] The player license per unit royalty was set as 3.5% of the net selling price of each player sold. This was subject to a minimum fee of $7 per unit, which after January 1, 2000 became $5 per unit. The disc license royalty was set as $0.05 per disc sold.[18]

The ‘DVD- 6C’ Patent Pool
Established in June 1999, the members of this pool at the time of its inception were Hitachi, Matsushita, Mitsubishi, Time Warner, Toshiba, and JVC. This pool was also for the DVD-ROM and the DVD- Video formats, with Toshiba acting as the administrator. [19] The royalties were set at $.075 per DVD Disc and 4% of the net sales price of DVD players and DVD decoders, with a minimum royalty of $4.00 per player or decoder, which saw a substantial reduction in 2003.[20] Subsequently, there were various changes that were made to this group, including the inclusion of newer standards, the joining and subsequent departure of IBM and other organizations as a member etc. Hitachi and Panasonic also act as regional agents in certain regions of the world.

The MPEG LA pool
The MPEG-2 is a standard for describing the coding of data inter alia, on DVD discs. For MPEG-2, a patent pool has been established, where the administrator is an independent, external organization known as the MPEG Licensing Authority, that set itself the aim to develop a patent pool for this standard. [21] The MPEG LA invited parties that thought they owned patents essential to this standard to join the program, which took off in 1997. At present, the pool has over a hundred patents and thousands of licensees.[22]

Patenting in Telecom and Related Technology

In this section of the paper, the author examines the working of patenting and patent pools in the telecommunications sector and in areas of related technology.

Early Developments and the Emergence of GSM
Patent pools are slowly developing into a key component of the telecommunications and the technological industry. The technology industry has been said to be an ecosystem, wherein there is a complex correlation between those who develop the technology and those who implement it in the creation and development of products.[23] In the telecommunications industry for instance, each handset manufacturer has declared only a small percentage of the various types of intellectual property assets that are necessary to implement a 3G compatible cellular phone. Therefore, the working in such a context is that various companies develop different technologies, and the same is shared by various manufacturers that seek to make use of this technology.[24]

The revival of patenting in the sector of telecommunications, post a period of decline in the decades of the 19540s to the 1980s, is attributed to the advent of the GSM standard for mobile communications in Europe.[25] In 1988, the main European operators invited equipment suppliers and developed a procedure wherein manufacturers would have to give up their intellectual property rights and to provide free world wide licenses for essential patents.[26] After opposition from the manufacturers, the approach was modified to one wherein the operators required the suppliers to sign a declaration agreeing to serve all of the GSM community on fair, reasonable and non discriminatory conditions.[27] In the early 1990s, Motorola by refusing to grant non discriminatory licenses for its substantial portfolio of essential patents and only agreeing to enter into cross license agreements further intensified the debate over IPRs in telecommunications. The company only lifted these restrictions after various countries across the world expressed a preference for this standard. The experience in this standard has demonstrated that it would not be accurate to expect that all parties holding essential patents would be willing to license them to all interested parties.[28] Companies were only willing to relax their licensing conditions once revenue generating opportunities increased.

The 3G3P and the UMTS
In July 2000 the 3G Patent Platform Partnership (3G3P) and its 18 partners notified various agreements to the end of establishing a worldwide patent platform. The purpose behind this was disclosed to be that of providing a voluntary and cost effective mechanism to evaluate, verify and license patents that were essential for third generation (3G) mobile communication systems.[29] It was also claimed that the said agreements would have pro competitive effects and that the purpose behind this Platform was the facilitation of access to technology and consequent entry into the markets.[30] On the intellectual property front, the purpose was to reduce cost uncertainties and the delays that were accompaniments of licensing numerous essential patents for complex technologies.

While it has often been considered to be a patent pool, this arrangement has been said to be only similar to a patent pool.[31] The 3G3P itself has argued that since it was a mere facilitator of transactions between patent holders and licensees, and that membership was open to both licensors and licensees as opposed to only licensors as in the case of patent pools, it would be fallacious to classify the Platform as a patent pool. Further, it has also been argued that licensing by members is not restricted to the Platform and that there was no bundling or real pooling of the patents per se and those licensees have the opportunity to pick and choose between patents with the licensing being carried out on a bilateral basis. Additionally, unlike in a patent pool, there is no single license between the patent holders as a collective and the licensee, and the parties have a choice between the Standard License of the Platform, and a negotiable individual license.[32] A Standard License provides for Standard Royalty Rate, a Maximum Cumulative Royalty Rate and a Cumulative Royalty Rate.[33] Bilateral transactions on the other hand, are negotiated between the parties where the consideration is to be determined on fair and equitable terms.[34] This Platform also provides for a price cap, which, instead of being absolute and set at a pre-determined royalty rate, is a default five percent maximum (not minimum) cumulative royalty rate for potential licensees per product category.[35] The royalty rate for each individual patent will differ for each of the licensees and this depends on the patent portfolio under each product category that the licensee has chosen.[36]

The concerns and challenges of the GSM experience were well perceived during the determination of the course of action for UMTS. European actors were especially wary of Qualcomm and expected the firm to demand high license fees, with some even fearing them to be in excess of 10%.[37] Subsequently, various attempts at developing licensing schemes failed, until 2004 and the establishment of the W-CDMA Patent Licensing Programme for UMTS FDD patents.[38] At the outset, seven licensors offered their patents as a bundle to prospective licensors, a number which decreased over time.[39]

The Development of LTE Patent Pools
The next stage in the process of innovation in the realm of telecommunications was the development of the Long Term Evolution (LTE) Standard, which while being essential to 4G technology has also seen application in the realm of 3G. Consequently, patent pools or similar structures have been developed in these areas. LTE patents are being viewed as among the most valuable intellectual property resource in the mobile telecommunications industry, with most operators around the world building LTE networks.[40]

As per in a study conducted in 2011, 23% of the patents about this technology were owned by L.G. Electronics, with Qualcomm coming in second with 21%. Motorola Mobility, InterDigital, Nokia and Samsung each owned 9%, China’s ZTE owned about 6%[41] and Nortel owned 4%, which were later sold to a consortium of Apple, EMC, Ericsson, Microsoft, Research in Motion (RIM) and Sony, after Nortel filed for bankruptcy in 2009.[42] Ericsson also independently owns 2% of the patent pool and RIM owns 1%.[43] However, another analysis[44] of IP databases conducted by ZTE in 2011 revealed differing results. As per this analysis, InterDigital was the leader, with its Patent Holdings arm controlling 13% and the Technology arm controlling 11% of LTE essential patents. Qualcomm controlled 13%, Nokia and Samsung 9% each, Ericsson controlled 8%, as did Huawei, ZTE controlled 7%, L.G. controlled 6% and NTT DoCoMo brought up the rear with 5%. The remaining 11% was held by various other firms.[45] It is to be realized that these studies have often come under criticism from different companies, with each of them eager to portray themselves as the market leader.[46] Setting aside criticism driven by corporate egos, the principle of it, that is, the difficulty in assessing and valuing patents cannot be disputed. Valuing patents is far from merely counting the number of patents owned by a company. The complications are especially evident when it comes to determining which of these patents are essential and which of them aren’t. Additionally, the worth of these patents varies depending on the existence or the absence of certain conditions, including transfer restrictions, cross licensing arrangements, ownership and market conditions.[47]

The aforesaid discussion reveals the complexity and the fragmentation of the LTE environment, which further underscored the need to have patent pools in this field. Although the need for a patent pool was realized in 2009-2010, given that the WCDMA patent pool had been met with very limited success,[48] industry watchers were reluctant to be optimistic. This was in part fuelled by the understanding of the attitude of dominant players, wherein they continued to believe that they could derive more monetary, cross licensing and litigation defence value if they did not pool their patents.[49]

The development of LTE patent pools can be traced back to 2009, and the response of Via Licensing¸ Sisvel and MPEG LA to a Request for Information on forming such a patent pool by the Next Generation Mobile Network Alliance (NGMN).[50] Sisvel’s proposal, which it subsequently made at a public conference in 2010 sought to demonstrate that patent pools could prevent excessive costs from royalty stacking.[51] Among various other examples, Roberto Dini, the founder of Sisvel suggested that if patents were to be licensed individually, for instance, 85 patents for MPEG video at 50 cents apiece would cost $42.50. As opposed to this, the patent pool charged $2.50.[52] In 2011, the NGMN reiterated its recommendation to all stakeholders in the mobile industry that were interested in developing patent pools to hasten their development process to avoid further delays in LTE licensing.[53] The NGMN also went on to state that it would be ideal if all the parties were to agree on a single patent pool that promoted reasonable royalties, offered certainty on the availability of the licenses for patents and created a framework for evaluation of their essentiality, where the value of the patents essential to the pool would be established by the industry.[54] These recommendations were not without their fair share of criticism, both, from industry watchers[55] and from vendors.[56] Notwithstanding these reservations, both, Sisvel[57] and Via Licensing have gone on to issue calls for patents for the purposes of creating patent pools in the LTE marketplace.

The Sisvel LTE Patent Pool materialized in late 2012, wherein licenses were offered under a portfolio of patents essential to LTE.[58] The pool includes patents owned by Cassidian, the China Academy of Telecommunication Technology, the Electronics and Telecommunications Research Institute, France Telecom, TDF, and KPN, in addition to some patents that had been originally filed by Nokia but were acquired by Sisvel in 2011.[59] The pool is also open to other organizations that have patents essential to LTE. At present, the current portfolio of these patents is available under standard terms and conditions. The running royalty rate is 0.99 Euros per device.[60]

Having promised a launch within a few months in June, 2012[61] Via Licensing has also developed its own LTE Patent Pool, with the initial companies in this pool being AT&T, Clearwire Corporation, DTVG Licensing, HP, KDDI Corporation, MTT DoCoMo, SK Telecom, Telecom Italia, Telefónica and ZTE.[62] Like Sisvel’s Patent Pool, this pool is also open to other organizations that believe they possess essential LTE patents, and they are encouraged to submit the same for evaluation.[63] The patent pool floated by Via leans heavily towards service providers, but some of the big players in the industry including Nokia, Ericsson, Huawei Technologies and Samsung Electronics are conspicuous by their absence.[64] This absence is felt even in Sisvel’s patent pool, with the reasoning being proposed[65] that these key patent holders may prefer private licensing and subsequent litigation over pooled resources in patent pools.[66] Understandably, the launch of the LTE Patent Pools has been met with approval by the NGMN[67] but given the nascent stages in which both of these pools find themselves, it would be premature to comment (without first observing for a few months) the likelihood of their success or failure and how they would play out against each other.

The TD-SCDMA and the TD-LTE
Reportedly, China has spent several billion dollars on the import of analog and GSM technology,[68] and the country’s mobile communications industry continues to be dominated by foreign players.[69] Therefore, in continuation of a purportedly growing trend[70] in the area of telecommunications as well, domestically developed systems are being preferred and developed over standardized technologies that enjoy strong patent protection outside China.[71] Besides the avoidance of paying royalties to foreigners, the idea is also to use China’s strong market presence and have more participants in China’s home grown technology.[72]

Time Divisional- Synchronous Code Division Multiple Access (TD-SCDMA), developed by the China Academy of Telecommunications Technology (CATT), in collaboration with Datang and Siemens[73] is a Chinese indigenously developed 3G technology standard developed by China to reduce its dependence on western standards.[74] Interestingly however, it has been reported that the Chinese hold core patent technology only about 7% whereas most of the rest of it is taken by other foreign organizations.[75] In 2000, an industry consortium, the TD-SCDMA forum was established. The participants were China Mobile, China Telecom, China Unicom, Huawei, Motorola, Nortel, and Siemens, with the objective of developing and supporting this technology. Government support was received in 2002, following which the TD-SCDMA Industry Alliance was founded by well known market players including Datang, SOUTEC, Holley, Huawei, LENOVO, ZTE, CEC and China Putian. There has also been the creation of various joint ventures with international giants such as Alcatel, Ericsson, Nokia, (erstwhile) Nortel, Philips, Samsung and Siemens have also been created.[76]

Information about the existence of patent pools in this technology has been hard to come by. One of the few to write about patent pools in his 2008 paper,[77] Dazheng Wang proposes patent pools as a solution to the problem of commercialization of TD-SCDMA. He suggests that the framework of this patent pool should be on the industry principles of fair, reasonable and non discriminatory licensing terms for essential patents, with the end result being one of increased innovation and competition and an overall increase in market presence. Interestingly, a few articles[78] on blog posts on the internet speak about the existence of patent pools and their apparent misuse[79] as well.

It is submitted that these inconsistencies regarding the division of patents between various patent holders, where the percentage of patents held by each company have been pegged differently,[80] and about the existence of a patent pool or not raise pressing concerns about the payment of royalties and how licensing works in such a situation. On a very basic level, in order to be able to pay royalties and enter into licensing agreements, the existence of an identified, non disputed patent holder would be the sine qua non, which seems to be missing in the case of patents for TD-SCDMA. This problem is only further compounded by the lack of clarity on the very existence of patent pools. Had there been specified patent pools, the issues of determination of essential patents and the setting of royalties and licensing fees would have been standardized, a situation that cannot be invoked, without dispute, in the present Chinese context.

It is further submitted that despite China being the world’s largest market for mobile communications, and its progress from a mere importer to a developer of some parts of technology,[81] the Chinese experiment with TD-SCDMA seems to have met with limited success, in comparison to what was envisaged. For instance, while an agency had forecast that the number of TD-SCDMA subscribers in 2010 would be 34 million, by April, 2010 there were only 8 million or (even lower) subscribers.[82] One of the reasons for preferring other standards, for instance, the W-CDMA is the number of handsets compatible with the same and the consequent variety that is available to the consumer. To illustrate, one could look at the figures from June, 2010. At this point of time China Unicom had 94 models for W-CDMA from twenty four manufacturers including nine foreign ones, whereas China Mobile had only twenty eight models that were compatible with TD-SCDMA.[83] Interestingly, if one were to measure popularity in terms of sheer numbers, TD-SCDMA would emerge the winner over W-CDMA by a couple of million subscribers, but if the growth rate were to be considered, W-CDMA would come out on top. While TD-SCDMA grew only by 24%, W-CDMA has grown at 32% monthly since the start of its service is October, 2009.[84]

China’s experiments with creating its home grown telecommunication standards have not stopped with the development of the TD-SCDMA, with the country being on track in the development of the TD-LTE. Reports suggest that although the systems are in ‘trial’ mode officially, the 4G spectrum situation remains uncertain.[85] It is submitted that although this is in the nascent stages as compared to the TD-SCDMA, the concerns expressed earlier about TD-SCDMA and the suggestions made therein for the technology to realise its full potential would be equally applicable in this scenario as well.

Therefore, in light of this discussion it would not be fallacious to conclude that while the TD-SCDMA, and now more recently the TD-LTE standard might still be in its nascent stages, on a fundamental level it seems to have not fulfilled the objectives with which it was developed, especially given that a sizeable portion of its patents continue to be owned by foreign corporations. In addition to the challenges of attracting subscribers, it would also need to streamline its system of patents, royalties and licensing, if it wants to have a truly global or even national presence. To this end perhaps patent pools structured along the lines of those being developed or in place for other mobile communication technologies might provide a viable solution meriting consideration.

Concluding Observations

One of the fundamental concerns that plague most downstream organizations in the mobile communications sector is the prevalence of high licensing fees that need to be paid on essential patents, the cost of which often trickles down to the customers. A study on the licensing arrangements prevalent at the moment[86] reveals that as of the moment, the result of royalty rate caps is that they save money for downstream manufacturers, but this is at the expense of upstream licensors. The most significant savers are the ones downstream with no IP to trade, and vertically integrated companies while losing some revenue, are able to save significantly more in reduced expenses.[87]

Therefore, it comes as no surprise that efforts at limiting aggregate licensing fees have been at the forefront over the past couple of years. It is in this scenario that patent pools have developed, with operators such as Via Licensing and Sisvel even promoting themselves as being able to put together patent pools that would greatly limit licensing fees.[88] However, some owners of intellectual property continue to find bilateral licensing and cross licensing to be more profitable as opposed to patent pools.

One of the key concerns when it comes to fore when dealing with how patent pools are structured is about the distribution of income received from royalties within the members of the pool, which ties in with the bigger question of classifying patents as essential and non essential. More often than not, patent pools also have to grapple with the problem of members having conflicting interests. For instance, manufacturers have the incentive to cap aggregate royalties of certain essential patents that they would use in manufacturing, in order to reduce their licensing costs. However, these manufacturers could have also brought their own essential patents to the pool, perhaps of a new way of doing things, and would certainly be averse of having caps imposed on these royalties.

One of the key other considerations that patent pools need to take into account include the royalty rates affixed. In an interview some time ago, the founder of Sisvel, went on to state that while affixing these royalty rates, there could be no discrimination against licensees, since that would be a sure fire way of ensuring the collapse of the patent pool.[89] Additionally, patent pools also need to account for the difference in regulatory mechanism and their execution that exists across jurisdictions. For instance, customs officials in France pay a lot more attention to counterfeit goods than they would to patent infringing products, whereas those in Germany would have a keen eye on the latter.[90]

Various other concerns have also been identified with regard to patent pools over time. One of these is that they could potentially eliminate competition that comes from outside of patent pools.[91]

Additionally, patent pools are not all inclusive, since participation is entirely voluntary. Therefore, patent pools would not even be reasonably expected to cover all essential patents required to make a standardised product. This problem is rendered even more complex as a result of the presence of multiple patent pools around the same technology, as in the case of DVDs and more recently, LTE technology.

In sum, while portfolio cross licenses and patent pools can be helpful in resolving issues created by patent thickets by reducing transaction costs for licensees, while preserving to a definitive extent financial incentives for inventors to commercialize their existing inventions and undertake new research, the significant shortcomings of these pools also need to be taken into account before they can be heralded as the solution to problems presented by complex patent landscapes. While voluntary patent pools might have proved to be beneficial in some respects, the imposition of patent pools would be a fallacious approach to undertake.

[1]. Hui Yan, The 3G Standard Setting Strategy and Indigenous Innovation Policy in China: Is TD-SCDMA a Flagship?, DRUID Working Paper No 07-01, available at http://www2.druid.dk/conferences/viewpaper.php?id=1454&cf=9 (last accessed 07 12 2012)

[2]. Josh Lerner and Jean Tirole, Efficient Patent Pools, 4 Am. Econ. Rev. 691, 691 (2004)

[3]. Patent Pools- Some Not So Frequently Answered Questions, available at http://blog.patentology.com.au/2012/11/patent-pools-some-not-so-frequently.html (last accessed 10 December, 2012)

[4]. Id.

[5]. Id.

[6]. Philip B. Nelson, Patent Pools: An Economic Assessment of Current Law and Policy, Rutgers Law Journal, Volume 38:539, 559 (2007)

[7].

[8]. Roger B. Andewelt, Analysis of Patent Pools Under the Antitrust Laws, 53 ANTITRUST L.J. 611, 611 (1984).

[9]. Philips has been known to have been the licensing agency for patent pools where it was a member

[10]. Supra note 3

[11]. Supra note 3

[12]. Supra note 3

[13]. Supra note 3

[14]. Supra note 3

[15]. Supra note 3

[16]. Supra note 3

[17]. Rudi Bekkers et. al., Patent Pools and Non Assertion Agreements: Coordination Mechanisms for Multi Party IPR Holders in Standardization, available at http://www-i4.informatik.rwth-aachen.de/Interest/EASST_Bekkers_Iversen_Blind.pdf 22 (last accessed 09 December, 2012)

[18]. Id.

[19]. Id.

[20]. Id.

[21]. Supra note 17 at 23.

[22]. Supra note 17 at 23.

[23]. Keith Mallinson, Fixing IP Prices with Royalty Rate Caps and Patent Pools, available at http://ipfinance.blogspot.in/2011/07/fixing-ip-prices-with-royalty-rate-caps.html (last accessed 10 December, 2012)

[24]. Id. See Appendix 1 for a graphical representation of declared intellectual property assets in 2009.

[25]. Supra note 17 at 25

[26]. Supra note 17 at 27

[27]. Supra note 17 at 27

[28]. Supra note 17 at 28

[29]. Dessy Choumelova, Competition Law Analysis of Patent Licensing Agreements- the Particular Case of 3G3P, available at http://ec.europa.eu/competition/publications/cpn/2003_1_41.pdf- 41 (last accessed 10 December, 2012)

[30]. Id.

[31]. Id.

[32]. Id.

[33]. Id at 42.

[34]. Id at 42.

[35]. Id at 42-43.

[36]. Id at 43.

[37]. Supra note 17 at 29.

[38]. Supra note 17 at 39.

[39]. Supra note 17 at 39.

[40]. Elizabeth Woyke, Identifying the Tech Leaders in LTE Wireless Patents, available at http://www.forbes.com/sites/elizabethwoyke/2011/09/21/identifying-the-tech-leaders-in-lte-wireless-patents/ (last accessed 08 December, 2012)

[41]. Id.

[42]. Id.

[43]. Id.

[44]. Caroline Gabriel, ZTE Claims 7% of LTE Essential Patents, available at http://www.rethink-wireless.com/2011/01/11/zte-claims-7-lte-essential-patents.htm (last accessed 09 December, 2012)

[45]. Id.

[46]. Id.

[47]. Supra note 40.

[48]. Keith Mallinson, Mallinson: Uncertain Futures in LTE Patent Pool Licensing, available at http://www.fiercewireless.com/europe/story/mallinson-uncertain-outlook-patent-pool-licensing/2010-08-25 (last accessed 10 December, 2012)

[49]. Id.

[50]. Id.

[51]. Id.

[52]. Id.

[53]. NGMN Board Recommendation on LTE Patent Pool, available at http://4g-portal.com/ngmn-board-recommendation-on-lte-patent-pool (last accessed 10 December, 2012)

[54]. Id.

[55]. Caroline Gabriel, NGMN’s Calls for an LTE Patent Pool Will be Futile in the Current IPR Climate, available at http://www.4gtrends.com/articles/53511/ngmns-calls-for-an-lte-patent-pool-will-be-futile-/ (last accessed 11 December, 2012)

[56]. Michelle Donegan, Vendors Balk at LTE Patent Pool Proposal, available at http://www.lightreading.com/document.asp?doc_id=212362 (last accessed 11 December, 2012).

[57]. SISVEL: Patent Pool for 3G Long Term Evolution (LTE), available at http://www.thefreelibrary.com/SISVEL%3A+Patent+Pool+for+3G+Long+Term+Evolution+(LTE).-a0199544458 (last accessed 08 December, 2012)

[58]. LTE Patent Pool from Sisvel, available at http://4g-portal.com/lte-patent-pool-from-sisvel (last accessed 09 December, 2012)

[59]. Id.

[60]. Id.

[61]. Mike Dano, Via Promises LTE Patent Pool Launch Within Months, available at http://www.fiercewireless.com/story/licensing-promises-lte-patent-pool-launch-within-months/2012-06-15 (last accessed 07 December, 2012)

[62]. LTE Patent Pool Available Through Via’s Licensing Program, available at http://4g-portal.com/lte-patent-pool-available-through-vias-licensing-program (last accessed 10 December, 2012).

[63]. Id.

[64]. Stephen Lawson, Lte Patent Pool Brings Together Technologies From At&T, Zte, Hp And Others, available at http://www.computerworld.com/s/article/9232043/LTE_patent_pool_brings_together_technologies_from_AT_amp_T_ZTE_HP_and_others (last accessed 09 December, 2012)

[65]. Peter White, Sisvel LTE Patent Pool Emerges After All- Majors Still Hold Back from Committing, available at http://www.rethink-wireless.com/2012/11/05/sisvel-lte-patent-pool-emerges-all-majors-hold-committing.htm (last accessed 09 December, 2012)

[66]. Shankar Pandiath, Sisvel Launches Patent Pool for 3G Long Term Evolution (LTE), available at http://next-generation-communications.tmcnet.com/topics/nextgen-voice/articles/314957-sisvel-launches-patent-pool-3g-long-term-evolution.htm (last accessed 09 December, 2012).

[67].NGMN Board Welcomes Launch of LTE Patent Pool, available at http://4g-portal.com/ngmn-board-welcomes-launch-of-lte-patent-pool (last accessed 09 December, 2012).

[68]. ELSPETH THOMSON AND JON SIGURDSON (EDS.), CHINA’S SCIENCE AND TECHNOLOGY SECTOR AND THE FORCES OF GLOBALIZATION 17 (2008, World Scientific Publishing Company, Singapore).

[69]. Cong Cao, Challenges for Technological Development in China’s Industry, available at http://chinaperspectives.revues.org/924 (last accessed 11 December, 2012)

[70]. Peter Zura, China Launches TD-SCDMA Telecom Standard¸ available at http://271patent.blogspot.in/2006/01/china-launches-td-scdma-telecom.html (last accessed 10 December, 2012)

[71]. Id.

[72]. Id.

[73]. TD-SCDMA (time division synchronous code division multiple access), available at http://searchmobilecomputing.techtarget.com/definition/TD-SCDMA (last accessed 07 December, 2012).

[74]. SHAHD AKHTAR AND PATRICIA ARINTO (EDS.), DIGITAL REVIEW OF ASIA PACIFIC : 2009-2010 8 (2010, Sage Publications, New Delhi).

[75]. Supra note 1 at 2. See Appendix 2 for the breakup of patent holding. However, see details on Infra note 78 for a contradictory view, wherein China claims to own 30% of all TD-SCDMA patents.

[76]. Pierre Vialle, On the relevance of Indigenous Standard Setting Policy: the Case of TD-SCDMA in China, 2^nd International Conference on Economics, Trade and Development, (2012) 36 IPEDR 184-185 (IACSIT Press, Singapore).

[77]. Dazheng Wang, Patent Pool: A Solution to the Problem of TD-SCDMA’s Commercialization, http://ieeexplore.ieee.org/xpl/login.jsp?tp=&arnumber=5076744&url=http%3A%2F%2Fieeexplore.ieee.org%2Fiel5%2F5076660%2F5076661%2F05076744.pdf%3Farnumber%3D5076744 (last accessed 11 December, 2012).

[78]. China Owns 30% of TD-SCDMA Related Patents, available at http://www.cn-c114.net/582/a310685.html (last accessed 11 December, 2012).

[79]. The Legal Regulation on Patent Pool Misuse, available at http://www.socpaper.com/the-legal-regulation-on-patent-pool-misuse.html (last accessed 11 December, 2012).

[80]. Supra notes 75 and 78.

[81]. Tomoo Marukawa, Chinese Innovations in Mobile Telecommunications: Third Generation vs. “Guerrilla Handsets”, Paper presented at the IGCC Conference: Chinese Approaches to National Innovation, La Jolla, California, June 28-29, 2010 at 1.

[82]. Id at 8.

[83]. Id at 9.

[84]. Id at 9.

[85]. China to Speed Up TD-LTE Process, available at http://www.tdscdma-forum.org/en/news/see.asp?id=11998&uptime=2012-11-29 (last accessed 08 December, 2012)

[86]. Supra note 23.

[87]. Id.

[88]. Supra note 23.

[89]. Sisvel’s Patent Strategy, available at http://www.managingip.com/Article/2400452/Sisvels-patent-strategy.html (last accessed 12 December, 2012).

[90]. Id.

[91]. Supra note 23.

For more details visit https://cis-india.org/a2k/blogs/patent-pools

India's Obligations under Bilateral Investment Treaties (Part A): “Bilateral Inhibiting Treaty?” — Investigating the Challenges that Bilateral Investment Treaties pose to the Compulsory Licensing of Pervasive Technology Patent Pools

gavin — 2013-09-02T14:45:08Z

In this blog post, the first of a series of three, Gavin Pereira attempts to address the challenges that India's obligations under Bilateral Investment Treaties may pose to the establishment of a patent pool in the country. The author thanks Puneeth Nagaraj for his guidance and inputs on this paper.

"And finally, many states, unfortunately, see investment treaties as a diplomatic photo opportunity without being fully aware of the actual legal implications."
Nathalie Bernasconi-Osterwalder[1]

Introduction
Continuing from the Indian government’s Economic Reform Program, which had started in 1991,[2] are India’s Bilateral Investment Promotion and Protection Agreements. Generally referred to as Bilateral Investment Treaties or "BITs," these agreements seek to provide for conditions that are “favourable for greater investment by investors of one State in the territory of the other State”[3] in hopes that this would lead to "stimulation of business initiatives and increase in prosperity."[4]

Since 1996, India has signed a total of 82 BITs, of which 72 have come into force.[5] At the time of signing them, BITs were generally hailed as a means to increase foreign investor confidence during the liberalisation of India’s economy.[6]

Recently however, several notices of disputes were filed or threatened to be filed under these treaties by companies such as Vodafone B.V.[7], Telenor[8] and Sistema.[9] These filings lead to the review of all the BITs signed by India, a procedure that was called upon by the Indian government’s Department for Industrial Policy and Promotion,[10] as well as the composition of an amended model BIT by the Ministry of Finance to increase the threshold requirements for an investor to initiate arbitration.[11]

Such discord between thestate and investors protected under BITs is not unique to India. There has been a steady rise in the number of investment disputes brought to international arbitration with the highest number of known treaty-based disputes filed in 2012. This has been revealed through a review of the claims filed in the International Center for Settlement of Investment Disputes (ICSID) and an inspection of United Nations Conference on Trade and Development (UNCTAD).[12] In the history of investor-state dispute resolution, the highest reward to the tune of $1.77 billion in Occidental v Ecuador[13] was awarded last year.

In order to better contextualize this background of increasingly assertive investor claims, my essay will first attempt to ascertain the meaning of intellectual property (IP) rights as defined as investments within BITs and explore their effect on the compulsory licensing of information and communication technology patent pools. I will then discuss the relation between covenants that India is a signatory to, Indian copyright law and BITs with an aim to propose measures by which BITs should be suitably amended to allow for India’s burgeoning growth in the budget smartphone market.

BIT Claims Against India
There are a total of 12 known and 17 estimated[14] treaty claims against India, the 11th highest number of claims in the world.[15] Given the strict confidentiality thatcovers these proceedings, this is merely the tip of the iceberg, as there may be several other claims against India that are not available in the public domain.[16]

The tribunal in White Industries v Republic of India [17] — the first investment treaty award against India — held India liable for breaching its obligation to provide “effective means of asserting claims and enforcing rights” pursuant to 4(2) of the India-Australia BIT, read with 4(5) of the India-Kuwait BIT. India was ordered to compensate White Industries a total amount of approximately four million Australian dollars plus interest.[18]

The tribunal attributed the inordinate delay by Indian courts, especially the Indian Supreme Court in enforcing an arbitral award in favour of White Industries as a denial of effective means to enforce their right to their investment.[19]

In 2012, Vodafone B.V. filed a notice of dispute, a prerequisite to commence arbitration under the India-Netherlands BIT, claiming that the Indian government’s decision to enact the Indian Finance Bill 2012 would be a failure to accord ‘fair and equitable treatment;’ the reason being that the amendment sought to retroactively tax the 2007 share-purchase agreement between Hutchinson Telecommunications International Ltd. and Vodafone[20] despite the Supreme Court ruling in favour of Vodafone on that issue.[21]

Telenor and Sistema have filed or threatened to file notices of dispute under BITs Following the cancellation of 122 2G spectrum telecom licenses by the Supreme Court.[22] Within these filings was the alleging that the act of the Supreme Court undermined the license allocation process and was a form of indirect expropriation of their investments.[23]

In March 2012, the Children’s Investment Fund (CIF) filed a notice of dispute in a letter addressed to the Minister of Finance, invoking both the India-UK BIT and the India-Cyprus BIT in response to the “seriously impaired business activities and operations of the company” by virtue of their investment in Coal India.[24] They alleged that Coal India’s sale of assets to private companies at below-market price, on the directive of the Government, has caused a huge loss to the Coal India and in effect, to the company’s share value. This claim is unprecedented as CIF is a minority shareholder essentially suing Coal India for greater dividends.[25] CIF has since soldalmost 20% of their shareholding in Coal India.[26]

Intellectual Property and BIT
The Indian model text of BIT’s, and therefore all 82 BITs that have been drafted based on the model text, define "investment" inter alia as "intellectual property rights, in accordance with the laws of the contracting party."[27] This enables investors protected to file BIT claims against India for any action that directly or indirectly adversely affects their IPR, subject to certain other conditions. It was only a matter of time before the full extent of the scope of claims that may be brought forward against India under the numerous BITs had begun to unravel. Two distinct but equally important IP-related court judgments have signaled the possibility of the intervention of investment treaties on India’s IP regime, and in the context of this paper, on affordable smartphones.

The first is the interim injunction passed by the Delhi High Court in Ericsson v Micromax[28] that acknowledged that the plaintiff (Ericsson) has "made out a prima facie case in its favour and balance of convenience…also entirely in its favour." Accordingly, if interim compensation in accordance with a temporary Fair Reasonable and Non-Discriminatory (FRAND) license between Micromax and Ericsson were not granted, "irreparable harm would be caused to the plaintiff."[29]

The resulting interim arrangement included the execution of a FRAND license, based on FRAND terms, with Micromax agreeing to pay Ericsson between 1.25% and 2% of the sale price of their phone models to Ericsson.[30]

The second of the two court judgments to be looked at is comprised of a series of pharmaceutical patent disputes between global pharmaceutical companies and Indian generic drug producers regarding the compulsory licensing of critical drugs related to cancer and HIV. In March 2012, the Controller General of Patents, Designs and Trademarks relied on the patentability clause of the Patents Act, 1970[31] to authorise an Indian generic drug producer, Natco Pharma,to manufacture and sell copies of Nexavar, a patented drug sold globally by Bayer.[32]

In April 2013, the Supreme Court allowed Indian generic drug manufacturers to manufacture a version of the cancer drug, Glivec (also known as “Gleevec”), referring to the same patentability clause of the Patents Act in coming to the conclusion that it did not have a feature that qualified it as a true invention.The court emphasised the importance of referring to the evolution of India’s patent regime, specifically the influence of what they term “important milestones,” such as the Justice Bakshi Tek Chand Committee Report, the Justice Ayyangar Committee Report, the growth of India’s domestic pharmaceutical industry after the enactment of the 1970 Patents Act, and the signing of the TRIPS agreement in determining whether a compulsory license should be granted.[33]

Interestingly enough, an immediate reaction to these regulatory and court decisions in the area of pharmaceutical patents included press releases from large law firms discussing the benefits for multinational pharmaceutical companies in seeking dispute resolution under Bilateral Investment Treaties.[34] While there is a WTO Dispute Resolution Mechanism under TRIPS, where contracting parties may request for consultation under Article XXII or initiate dispute resolution under Article XXIII of the GATT, there are a number of reasons why investors chose to file claims under BITs,[35] an aspect that will be discussed in the next post.

Internationally as well, the intertwining of issues of Intellectual Property with BIT claimsis a new development, at the forefront of which is the Australian tobacco plain packaging international arbitration. Australia enacted the Tobacco Plain Packaging Act that increased the Graphic Health Warnings on the front of the packaging from 30% to 75%, and which prescribes every aspect of the appearance, size and shape of tobacco packaging and prohibits the use of trademarks, symbols or graphics other than the brand and variant name in plain font. Philip Morris Asia Limited (PMAL) filed a notice of arbitration under the Hong Kong-Australia BIT arguing that their intellectual property and goodwill were infringed by the Plain Packaging Act.[36]

Pervasive Technology and India’s Growth
The Report of the Special Rapporteur of the Human Rights Council on the Promotion and Protection of the Right to Freedom of Opinion and Expression emphasised the importance of the internet, not only to enable individuals to exercise their right to freedom of expression but to promote the progress of society as a whole. The report called upon member states to make the internet widely available, accessible and affordable to all segments of society.The cutting off of users from Internet access, including on grounds of violation of IP,was described as disproportionate and in violation of the reasonable limitations to freedom of expression clause of the International Convention on Civil and Political Rights.[38]

It is in light of these international developments and global arbitral awards in the area of IP that the compulsory licensing of budget smartphone patents in India needs to be evaluated.

[1]. Latha Jishnu, India’s many investment treaties make it vulnerable, Down To Earth, Jan 31, 2012.

[2]. For a commentary on the slew of FDI measures taken as part of India’s liberalisation, see M.S. Ahluwalia, Economic Reforms in India since 1991: Has Gradualism worked?,16(3) J. Econ. Perspectives 67, 73 (2002).

[3]. See e.g. Preamble to, Agreement for the Promotion and Reciprocal Protection of Investments, India-Arg., Aug. 20, 1999, Ministry of Finance-Government of India, http://finmin.nic.in/bipa/Argentina.pdf; Preamble to Agreement for the Promotion and Reciprocal Protection of Investments, India-China, Nov. 21, 2006, Ministry of Finance-Government of India, http://finmin.nic.in/bipa/China.pdf.

[4]. Id.

[5]. Ministry of Finance-Government of India, Bilateral Investment Promotion and Protection Agreements, http://finmin.nic.in/bipa/bipa_index.asp?pageid=1 (last visited July 17, 2013); ICSID Database of Bilateral Investment Treaties, International Centre for Settlement of Investment Disputes, https://icsid.worldbank.org/ICSID/FrontServlet (last visited July 18, 2013).

[6]. Id;India-Germany sign bilateral investment pact, INDIAN EXPRESS, July 16, 1998; YashwantSinha, Foreword to Agreement for the Promotion and Reciprocal Protection of Investments, India-Ger., July 10, 1995, Ministry of Finance-Government of India, http://finmin.nic.in/bipa/Germany.pdf.

[7]. Vodafone.com, News Release: Vodafone serves Notice Against Indian Government Under International Bilateral Investment Treaty, http://www.vodafone.com/content/index/media/group_press_releases/2012/bit.html (last visited July 23, 2013).

[8]. Siddharth, Telenor seeks arbitration, claims $14 bn from govt in 2G case, Times of India, Mar. 27, 2012.

[9]. ShauvikGhosh, Sistema asks why India wants to delay arbitration proceedings, Live Mint, Oct. 1, 2012.

[10]. S. Bhushan & Puneeth Nagaraj, Need to align Bilateral Investment Treaty regime with Global Reality, THE HINDU, Jan. 6, 2013; Surabhi, Govt. to review bilateral ties to avoid legal battle with telcos, Indian Express, Apr. 13, 2012.

[11]. Deepshikha Sikarwar, Government to draft model treaty on MNC’s mediation rush, Economic Times, Jul. 9, 2013.

[12]. UNCTAD, INTERNATIONAL INVESTMENT ARBITRATION ISSUE NOTE: RECENT DEVELOPMENTS IN INVESTOR-STATE DISPUTE SETTLEMENT (2013).

[13]. UNCTAD, UNCTAD publishes its review of investor-state dispute settlement, http://unctad.org/en/pages/newsdetails.aspx?OriginalVersionID=453&Sitemap_x0020_Taxonomy=Investment%20and%20Enterprise;#607;#International Investment Agreements (IIA);#20;#UNCTAD Home (last visited Aug. 2, 2013).

[14]. Sikarwar, supra note 11.

[15]. Id. at 29.

[16]. Latha Jishnu, A treaty too many, DOWN TO EARTH, May 15, 2013 (few details are available of the Enron-Dabhol Investment Arbitration under the India-Mauritius Bilateral Investment Treaty).

[17]. White Industries Australia Ltd. v Republic of India, UNCITRAL, Final Award, Nov. 30, 2011.

[18]. Id. at ¶ 16.

[19]. Id. at ¶ 14.3.5. For an understanding of the implications that the White Industries case has for India’s Investment Treaty program, see Prabhash Ranjan, The White Industries Arbitration: Implications for India’s Investment Treaty Program, INVESTMENT TREATY NEWS, Apr. 13, 2012 available at http://www.iisd.org/itn/2012/04/13/the-white-industries-arbitration-implications-for-indias-investment-treaty-program/.

[20]. Vodafone.com, supra note 7. For an analysis of Vodafone and India’s investment arbitration claims, see RAAG YADAVA ET. AL., VODAFONE AND INDIA: A REVIEW OF CLAIMS IN INVESTMENT ARBITRATION (2012).

[21]. Vodafone International Holdings B.V. v. Union of India & Anr., Civil Appeal No. 733 of 2012, arising out of S.L.P. (C) No. 26529 of 2010, Supreme Court of India.

[22]. Dr. Subramaniam Swamy v. Union of India & Ors., W.P. (Civil) No: 423 of 2010 with W.P. (Civil) No: 10 of 2011. Supreme Court verdict on 2G spectrum allocation, The Hindu, Feb. 2, 2012.

[23]. Siddarth, supra note 8; Ghosh, supra note 9.

[24]. Sam Jones, TCI initiates legal action against India, Financial Times, Mar. 27, 2013.

[25]. Debjoy Sengupta, UK-based The Children's Fund demands higher dividend from Coal India, The Economic Times, Feb 19,2013.

[26]. See, http://www.vccircle.com/news/commodities/2013/06/25/childrens-investment-fund-sells-fifth-its-holding-coal-india.

[27]. Department of Economic Affairs – Ministry of Finance, Indian Model Text of Bilateral Investment Promotion and Protection Agreements (BIPA), available at http://finmin.nic.in/the_ministry/dept_eco_affairs/icsection/ Indian%20Model%20Text%20BIPA.asp?pageid=1.

[28]. Telefonaktiebolaget LM Ericsson v. Mercury Electronics & Anr, I.A. No. 3825/2013 in CS(OS) 442/2013, Delhi High Court.

[29]. Id.

[30]. Telefonaktiebolaget LM Ericsson v. Mercury Electronics & Anr, I.A. No. 4694/2013 in CS(OS) 442/2013, Delhi High Court.

[31]. Section 3(d) - the mere discovery of a new form of a known substance which does not result in the enhancement of the known efficacy of that substance or the mere discovery of any new property or new use for a known substance or of the mere use of a known process, machine or apparatus unless such known process results in a new product or employs at least one new reactant.

[32]. Vikas Bajaj & Andrew Pollack, India orders Bayer to license a Patented Drug, NYT, March 12, 2012.

[33]. Novartis AG v Union of India &Ors., CIVIL APPEAL Nos. 2706-2716 OF 2013 with Natco Pharma Ltd. v. Union of India & Ors. CIVIL APPEAL No. 2728 OF 2013 with M/s. Cancer Patients Aid Association v. Union of India & Ors. CIVIL APPEAL Nos. 2717-2727 OF 2013, Supreme Court of India (2013).

[34]. See e.g. TREATY PROTECTION FOR GLOBAL PATENTS: A RESPONSE TO A GROWING PROBLEM FOR MULTINATIONAL PHARMACEUTICAL COMPANIES, JONES DAY (October 2012).

[35]. GENERAL AGREEMENT ON TRADE AND TARIFFS , XXII and XIII (1994).

[36]. NOTICE OF ARBITRATION, BETWEEN PHILIP MORRIS ASIA LIMITED AND THE COMMONWEALTH OF AUSTRALIA (2011).

[37]. U.N.G.A. - Report of the Special Rapporteur of the Human Rights Council on the Promotion and Protection of the Right to Freedom of Opinion and Expression, U.N. Doc A/HRC/17/27.

[38]. Id. at 21-22. Article 19 (3) of the ICCPR - The exercise of the rights provided for in paragraph 2 of this article carries with it special duties and responsibilities. It may therefore be subject to certain restrictions, but these shall only be such as are provided by law and are necessary:(a) For respect of the rights or reputations of others; (b) For the protection of national security or of public order (ordre public), or of public health or morals.

For more details visit https://cis-india.org/a2k/blogs/bilateral-inhibiting-treaty-investigating-challenges-that-bilateral-investment-treaties-pose-to-compulsory-licensing-of-pervasive-technology-patent-pools

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

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

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[17] Id.

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[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.

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[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.

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[35] 1966, p. 570-71

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[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.

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