Centre for Internet and Society

Methodology: Access to Music through the Mobile

maggie — 2014-12-08T16:22:41Z

Like its predecessors the vinyl, the cassette tape, the CD, and the MP3 player, the mobile phone as the most recent musical carrier have been well documented to be a disruptive technology, one which has made earlier carrier technologies virtually obsolete. The mobile phone has transformed the music industry and its supporting infrastructure — dramatically altering the roles of various intermediaries and stakeholders who enable the creation, distribution, and consumption of musical content.

Context

For the first time in 13 years, the music business is growing again, with consumption of musical content at an all time high due to innovations which have provided more affordable and convenient platforms for accessing music than ever before. These include web-based and mobile-based applications which have arisen to compete with piracy through "free", "feels-like-free" and "fermium" business models.[1]

Given the pervasiveness of the mobile phone, especially in India where it is the only mode of access for over 50% of the population [2], these innovations along with expanding broadband and data services seems to be a mark of success in bringing access to music and other media content to those formerly priced out, and geographically excluded from the legal market.

However, Indian web and mobile-based applications such as Gaana and Saavn, and its U.S. counterparts like Spotify and Pandora have continuously operated at a loss, often sustained by venture capitalist funding or a larger corporate backing.[3] Although many online platforms, such as the recently shut down Flyte (funded by Flipkart) cite piracy as the official reason for its closure, industry insiders have allegedly noted exorbitant licensing fees demanded by rights holders as the case.[4]

Research Problems

1. It is uncertain whether legal access to affordable music through the mobile will remain.

As an access issue, this is problematic due to the potential disappearances of these platforms, which have with varying success provided an alternative to unauthorized file sharing while increasing the ease of consumers' access to a larger volume and variety of legal content. Some of these applications provide a "direct-to-fan" platform for musicians to upload their own music online without having to 'break in' to a relatively closed entertainment industry, particularly in the Indian market where the mass majority of music is dominated by the film industry. Access to increased volume and variety is also not a guarantee, particularly in light of some musicians' indignation over the intermediaries' profits from their content, and the little revenue received in return.

2. Numerous stakeholders are entering the technologically advancing, digital music industry resulting in uncertainty of optimal business models and increased complexity of revenue and royalty distribution.
Thus, given evolving business models due to the transitioning physical to digital music industry, no consensus has yet been found on which platforms or revenue models offer an optimal solution for access to, and production of music. The potential for monetization in all levels of the value chain - from production, to content aggregation, to content distribution, and consumption -- has resulted in an increase in the number of intermediaries, further complicating the ecosystem.

All stakeholders fulfill different roles in the industry while expressing the common challenge of 'monetization'.

Web and mobile based content distributors are attempting to find the right price points at which Indian consumers are willing to pay, particularly in a market whose billing model is largely based on mobile credits and cash-on-delivery since only 1% of the population have access to credit. [5] Globally, criticisms for streaming distributors like Spotify are highly publicized, not paying enough royalty to artists despite claims that 70% of their revenue is spent on content licensing.[6]

Content aggregators are attempting to monetize services such as music fingerprinting, meta-data tagging, and other analytics tracking to identify and capitalize on consumer behavior and consumption trends. Meanwhile, telecom companies and mobile phone manufacturers are attempting to provide integrated services and music bundle packages to increase the interoperability of these platforms for a more frictionless experience for consumers.

Content owners - vast majority being music labels -- are attempting to maintain their relevance in the industry through its powerful artist and repertoire marketing role, amidst criticisms that stakeholders like multi-channel networks and self-publishing content distributors (i.e. SoundCloud, Youtube, etc.) will deem it irrelevant. Many distributors globally note the vast ownership of content leading to the potential abuse of bargaining power, as exemplified by the Competition Commission of India's recent ruling that Super Cassette Industries' (or T-Series, who own 70% of Hindi film music) practiced unfair and discriminatory charging practices for a radio broadcasters due to their demand for minimum guarantees.[7]

The content producers -- lyricists, composers, performers, and more are struggling to monetize and finance the production of their music. Down the valuation stream, the contractual agreements between content owners and distributors affect the livelihoods of these artists. India's music industry is particularly unique in that the vast majority of content are film music, which means the common financier of music production are the film industry, rather than music labels or publishing houses. Additionally, given a one-time, work-for-hire agreement was commonplace in the Indian film industry during music production, a contractual agreement stipulating royalty division was slow to materialize.

3. Continued violation of law due to lack of legitimacy of Copyright Board, Copyright societies, and 2012 Copyright Amendment.

The entire music ecosystem is governed by the framework of copyright, which necessitates legal mechanisms to ensure proper regulation and balance between the protection of rights holders and access to content for consumers.

The 2012 Copyright Amendment attempted to address the imbalance of bargaining power through preventing the first author's transfer of right to royalty, amongst others. This amendment was also passed in response to alleged corruption and collusion between the content owners (music labels), various judiciaries, and the former copyright societies (Indian Performing Rights Societies ("IPRS") and the Indian Phonographic Publishing Limited ("PPL")), resulting in an absence of royalty payments to lyricists and composers for many years.[8]

Despite this, the Copyright Amendment have not been as effective in correcting the issues on the ground, and are still allegedly being circumvented via advanced royalties, backdated agreements, and waiver of performance royalty rights.[9] Other inefficiencies cited have been poor transparency of royalty payments, lack of publicly available analytics on web and mobile-based platforms, and untimely responses by the Copyright Board to conduct investigations into the allegations.

Amidst these allegations, some industry analysts also claim the Copyright framework itself needs to catch up with the technological potential that the internet, and these new services provide. This may be an alternative perspective to be explored.

*(Tentative) Research Questions and Methodology

Thus, given uncertainty of the sustainability of affordable, legal access; the increasing complexity of business models and royalty distribution, and the continued violation of Copyright law due to lack of legitimacy, the policy question is:
How can legal and institutional mechanisms ensure an enabling environment for access to, and production of music for all mobile phone users in India?

"Legal mechanisms" - Copyright Act, Copyright Board, licensing mechanisms
"Institutional mechanisms" - Copyright societies, music industry norms, corporate policies
"Access" - equitable, fair, easy access to quality and quantity of music
- Potential barriers to access (to music, through mobile):
- Political: Legal constraints (Goonda Act?), intermediaries prevent copying, licensing bodies
- Economic: Lack of availability of older repertoire, access to mobile device
- Social: Use or access of materials involving loss of privacy, lack of quality production
- Technological: TPMs, compatibility, broadband/data access, payment gateways, geographic barriers, lack of net neutrality

Access necessitates "production" - ability to create content with little entry barriers; balance right of artists to earn, and consumer access

Barriers to production and distribution:
Uncertainty of business models in age of digital music
Ineffectiveness of Copyright regulation: Copyright societies, Copyright board
Controversy surrounding Copyright Act
Lack of finance/income -- intermediaries taking share of pie ?? Inefficiencies in music industry?

"Mobile phone users in India" - smartphone users able to access web and mobile based platforms

How do the stakeholders in the Indian music industry work together to facilitate access to music via the mobile phone?

Who are the stakeholders of the music industry in India?
What are their roles and their objectives?
How have their roles changed given the digital transition of the music industry?

Method: Conduct a stakeholder analysis mapping the physical to digital transition. Secure information via literature review (academic and grey) and expert interviews secured via snowball sampling.

Content Creation

Lyricists/composers (film, non-film)
Performers (film, nom-film)
Film Producer
Sound Producer
Publisher
Self-production (Remix artists, DJs, independents)

Content Aggregation and Distribution
- Content Aggregation:

Music labels (International/film/indie)
Mobile aggregators (VAS companies)
Tech aggregators (back-end for digital platforms: meta-data tagging, analytics, etc.)

Content distribution (digital)

Online stores (e.g. iTunes)

Mobile/Web-based

Webcast/Radio (e.g. MumbaiOne Radio)
Digital Stores (e.g. Amazon, iTunes, eMusic, Google Play, Flyte, OKListen, etc.)
Interactive streaming (e.g. 8tracks, Gaana, Hungama, Raaga, Rdio, Spotify, etc.)
Bundled telco-music stores (formerly Nokia MixMusic)

Copyright Board
Copyright societies (e.g. IPRS (Indian Performing Rights Society), PPL (Phonographics Performance Limited, ISRA (Indian Singers Rights Association))
Associations (e.g. MCAI (Music Composers Association of India), SIMCA (South Indian Music Companies Association), IMI (Indian Music Industry - ass. of producers), etc.)

Financiers:
- Venture capitalists
- Brands/advertisers
- Corporate backing
- Multi-channel networks
  - Technical intermediaries
    - Telecom operators
    - Internet service providers
    - Data providers
    - Payment gateway providers

Mobile phone manufacturers

Consumers

Types of music listeners (Ovum research taxonomy)
- Active fans (lean forward/niche)
- Core enthusiasts (lean forward/mainstream)
- Indie followers (lean back/niche)
- Lean-back listeners (lean back/mainstream)
Class distinction / price sensitivity?

What are the current business models for web and mobile-based content distributors? How does this impact each stakeholder in the music industry?

What are the new business models of the digital music industry in India?
- How are the new intermediaries/stakeholders in the web/mobile targeted music industry impacting business models?
- Literature review (media, industry reports) and expert interviews

What is the revenue distribution in the music production value chain for the web/mobile-based platforms in India?
- Method: International comparison of new digital music business models worldwide:
- Online MOOC Course & lectures (Coursera - West Virginia University ; YouTube - Future of Music Coalition[11] )
- Literature review (academic, white, grey, media, industry repots, etc.)
- Method: Replicate FMC's study for Indian context: Music and How Money Flows[12]

Who are the consumers that access music via mobile/web-based platforms in India?

Is there a socio-cultural-economic dimension distinguishing those willing and able to pay? Who actually pays and how much?
- Method: Literature review, expert interviews, surveys??
- Are there different levels of musical engagement which translate to consumer behavior (active fans, core enthusiasts, indie follower, lean back listeners) and subsequent willingness to pay? What percentage of listeners fall in each category in India?
  - Method: Questionnaire to current users of web/mobile-based music distributors supplemented by expert interviews
  - What kind of economic good is digital music in India? Inferior, luxury, normal? Complementary, substitute? Public, merit, private, free?
    - Method: Literature review, theoretical economic analysis supplemented by user survey and expert interviews

Considering the stakeholders in the digital music industry, consumer behavior in India, how should music copyrights be regulated to provide optimal access of music through the mobile to consumers and fair renumeration to first authors?

What role do legal mechanisms currently play in the distribution of royalty revenue in the music industry (on the ground)?
- Method: Mapping of copyright processes and agreements (oral, contractual, or otherwise) between stakeholders in the music industry, noting specifically role of Copyright Board, and (former) Copyright societies; expert interviews
What role do codified laws (2012 Copyright Amendment, case law) stipulate should be the legal mechanisms to distribute royalty in the music industry?
- Method: Legal literature review, expert interviews
- How have the 2012 Copyright Amendment impacted the stakeholders in the music industry? Are the laws effectively enforced? Has the Copyright Amendment been designed/defined/articulated in an optimal way for all stakeholders? Why or why not?
- Method: Literature review
- How should copyright be organized? Who should distribute royalty revenues? What process?
  - Method: Consider stakeholder analysis, context of India music/film industry, consumer demand and price-sensitivity, and conduct cross-jurisdictional comparison
  - What industry norms should be set for a more transparent, efficient supply chain to ensure rights holders receive fair compensation?
    - Method: International comparison of industry norms for copyright organization and distribution

[1].Amba Kak, Fighting Free with Free - The Legal Music Market in India as a Response to the Digital Age (Centre for Internet and Society, to be published.)

[2].Avendus Capital, India’s Mobile Internet: The Revolution Has Begun: An Overview of How Mobile Internet Is Touching the Lives of Millions, Industry (Avendus Capital Private Limited, September 2013), http://www.avendus.com/Files/Fund%20Performance%20PDF/Avendus_Report-India’s_Mobile_Internet-2013.pdf.

[3].Amba Kak, Fighting Free with Free - The Legal Music Market in India as a Response to the Digital Age (Centre for Internet and Society, to be published.)

[4].Nikhil Pahwa, “Why Flipkart Shut Down Flyte Music,” News and Analysis of Digital Media in India, MediaNama, (May 29, 2013), http://www.medianama.com/2013/05/223-why-flipkart-shut-flyte-music/.

[5].Reserve Bank of India, as cited in IFPI, India: Nearing an all-time high http://www.ifpi.org/india.php

[6].James Duffett-Smith, Music Licensing Study: Notice and Request for Public Comment (United States Copyright Office 2014).

[7].Ashok Chawla, M.L. Tayal, and S.L. Bunker, HT Media Limited v. Super Cassettes Industries Limited (Competition Commission of India 2014).

[8].Prashant Reddy, “Did the Big Music Companies on IPRS & PPL Collude to Deny Lyricists and Composers Crores of Rupees in ‘ringtone Royalties’ – An Investigation,” http://spicyip.com/2011/02/did-big-music-companies-on-iprs-ppl.html, SpicyIP, (February 14, 2011)

[9].Anonymous, “Ghost Post: The myriad ways in which the Copyright Amendment Act, 2012 is being circumvented” http://spicyip.com/2014/01/ghost-post-the-myriad-ways-in-which-the-copyright-amendment-act-2012-is-being-circumvented.html, SpicyIP, (January 18, 2014)

[10].https://www.coursera.org/course/gpsmusic

[11]. https://www.youtube.com/playlist?list=PL471E012D03E9BA03

[12]. https://futureofmusic.org/blog/2013/06/18/music-and-how-money-flows

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For more details visit https://cis-india.org/a2k/blogs/methodology-access-to-music-through-mobile

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

rohini — 2018-05-06T03:51:49Z

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

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

View paper on SSRN.

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

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

samantha — 2014-08-19T03:51:39Z

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

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

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

Question 2: “How is your IP protected?”

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

How they responded

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

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

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

Reasons for IPR protection

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

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

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

Security not so easily attainable

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

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

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

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

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

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

Nevermind enforcement...

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

Planting the initial seed

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

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

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

Loss of faith in patents for SMEs

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

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

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

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

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

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

Can mobile apps be patented?[2]

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

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

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

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

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

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

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

To recap

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

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

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

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

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

Intellectual Property in Mobile Application Development in India

sinha — 2015-08-31T14:33:06Z

A steady rise in smart phone penetration in India has led to a corresponding growth of the mobile application development industry. Mobile application development like all technological implementations is subject to intellectual property issues. However, very little is understood about the effect of existing patent and copyright law on this niche industry. I aim to develop an understanding of the mobile applications industry, and how it is governed by current Indian patent and copyright regime. I will also use this research to inform the optimal ways in which policymakers may ensure the continual emergence of the mobile applications industry. This blog post lays down a document delineating the research methodology and research questions within the Intellectual Property in Mobile Application Development in India chapter under the Pervasive Technologies Project. The document is a work in progress.

Introduction to the “Intellectual Property in Mobile Application Development” chapter

Software companies in India were traditionally operating on the software as a service (SAAS model). Service contracts signed within this industry ensured that all IPR developed during a project was owned by the client. With the advent of the smart-phone, many software developers left SAAS enterprises in pursuit of developing their own mobile application products (“mobile apps”). Several developers began to aggressively acquire or create patent portfolios around their products.¹ However, it has been observed that mobile apps continue to be increasingly produced in imitation of other products or services or by more discrete means of copying source code or content without the right to do so.

The overall objective of this chapter is to develop a holistic picture of the mobile apps development ecosystem in India in order to portray the decisions developers are making within their practice as a function of how India's intellectual property regime operates within this ecosystem. I will also examine whether existing regimes of intellectual property interact inhibit or accelerate the growth of the mobile applications development ecosystem in India, especially in conjunction with market and cultural forces arising as a result.

Research Questions and Methodology

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

1.1. Who is the primary actor in the mobile applications development cycle in India?

Method: Analysis of the quantitative research conducted by Samantha Cassar across 267 mobile applications developers.²

Create a new survey instrument and supplement with relevant external expert interviews obtained from Samantha Cassar's qualitative research.

The interviews shall be conducted with respondents based out of Mumbai, Pune and Hyderabad
The exercise targets 10 developers in each city

The analysis of the interviews and results of Samantha's web survey shall be verified by an expert well-versed with the analysis of qualitative and quantitative data

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

Method: Literature review

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

Method: Analysis of the quantitative research conducted by Samantha Cassar and supplement with relevent external expert interviews obtained from her qualitative research.

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

Method: Analysis of Indian Patent and Copyright regime to assess the legality of prevailing practices in the ecosystem.

Analysis of the quantitative research conducted by Samantha Cassar and supplement it with relevant external expert interviews obtained from Samantha's qualitative research.

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

Method: Literature review and analysis of the new survey instrument.

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

       Method: Literature review

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

Method: Literature review

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

Method: Literature review to trace the development of copyright law. Copyright was designed to regulate a physical book publishing industry. By extending its application to myriad objects, the design has gone through significant changes. Also, conduct expert interviews in the field to understand the practice and gather qualitative data.

1 See Lava aims for 100 mobile apps, available at http://spicyip.com/2013/01/guest-post-lava-aims-for-100-mobile-app.html

2 Out of 267 respondents, 93 responded in full and 164 responded partially

3See Question 1.2 of this document

For more details visit https://cis-india.org/a2k/blogs/intellectual-property-in-mobile-application-development-in-india-1

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

India at Leisure: Media, Culture and Consumption in the New Economy

praskrishna — 2015-03-30T15:34:30Z

Maggie Huang attended the event and presented a paper titled “The Future of Music Streaming: Business Practices and Copyright Management in India”. The paper was co-authored by Maggie and Amba Kak.

A striking feature of India's ongoing transformations is the runaway success of one sector of its economy. This is India’s leisure economy, often overlapping with the media economy, which entails a range of pursuits from sports to movies, from texting to TV---all of which forming a significant constituent of the country’s social and economic social life. While various activities within this sector were almost entirely neglected by India’s early planners, fuelled by narrow conceptions of media as an instrument of the state, today they remain little understood by national scholars and international analysts. With this background, a bi-national working group of scholars from India and New Zealand emerged in 2013 to reflect on the dynamics of India’s media economy. To build on this, an international conference is being organized, under the inaugural round of the India New Zealand Education Council programme, to broaden reflections on the dynamics of media industries and practices of media-culture constituting India’s leisure economy.

For more see the original published by Jamia Milla Islamia.

For more details visit https://cis-india.org/a2k/news/india-at-leisure

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

maggie — 2014-07-29T08:45:25Z

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

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

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

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

Thus, this paper seeks to answer the following questions:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

[2] WIPO, 6

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

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

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

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

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

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

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

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

[10] TRIPS - Article 31.a)

[11] TRIPS - Article 31.b)

[12] TRIPS - Article 31.b)

[13] TRIPS – Article 31.h)

[14] TRIPS – Article 31.c)

[15] TRIPS – Article 31

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

[17] Correa, 11-12.

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

[19] Correa, 13

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

[45] Miller & Ameling, 2007: 3

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

[47] Reddy, 2010

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

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

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

Fueling the Affordable Smartphone Revolution in India

sinha — 2016-03-16T15:23:43Z

Smartphones have emerged as the exemplar of mankind's quest for shrinking technologies. They embody the realization of a simple premise – that computing devices would do more and cost less. This realization has been responsible for modern society's profound transformations in communication, governance, and knowledge distribution.

The essay was published as part of the The Good Life in Asia's Digital 21st Century essay collection.

The launch of the iPhone in 2007 is often credited with ushering in an era of smartphones. Ever since, the world's best tech R&D has focused on increasing the capabilities of these devices. And as a result, less than a decade later, we have sub-hundred dollar smartphones. The low-cost smartphone has found an enthusiastic and insatiable market in developing countries, especially Asia. India is no exception to the Asian narrative – Micromax, Spice, and Lava (low cost smartphone manufacturers) are household names in the Indian smartphone market, which accounted for 65% of internet traffic in 2014 (Meeker, 2015).

The Indian Prime Minister, carrying the twin aspirations of catalyzing the growth of indigenous manufacturing and bridging the digital divide, launched the “Digital India” and “Make in India” campaigns last year. During his US visit, Google, Apple, Microsoft, Facebook extended their support to the campaigns' vision (Guynn, 2011). The campaigns outline the government's elaborate initiatives to, inter alia, bridge the digital divide and build indigenous manufacturing capacity. While all these developments bode well for the indigenous smartphone, there remain some serious concerns affecting the growth of the industry – for instance, patent infringement litigations and the absence of clear legal and regulatory solutions.

From the state of the industry and its implications, it can be concluded that: first, growing access to smartphones has been influenced by their phenomenal affordability; second, smartphones are an excellent example of technology for development (UNDP, 2001) and a facilitator of access to knowledge; and third, domestic smartphone production has occurred in an imprecise legal and regulatory environment.

This essay attempts to build an appreciation for the role that smartphones are playing in development, specifically, by fostering Access to Knowledge. Conversations around development by public-interest groups and emerging industries often espouse Access to Knowledge to address concerns in international development, communications, technology, education, and intellectual property policy. Whereas the principle can be regarded as in-theworks, two theories inform us about the role of mobile phones in fostering Access to Knowledge. Lea Sheaver's theory classifies mobile as an Access-toKnowledge good. Lea enumerates the five key components of a robust Access to Knowledge framework, viz., education for information literacy, access to the global knowledge commons, access to knowledge goods, an enabling legal framework, and effective innovation systems (Sheaver, 2007). According to her, affordability of the good is the ultimate indicator of its efficacy as an access to knowledge good. Furthermore, inventions in microchip technology, electronics manufacturing, and software need to be supported by enabling legal and policy frameworks coupled with effective innovation systems.

Yochai Benkler's framework classifies mobile-devices as both informationembedded goods and information-embedded tools (Benkler, 2006). He says, “Information-embedded goods are those goods which are ‘better, more plentiful or cheaper because of some technological advance embedded in them or associated with their production,’ such as medicines, movies, and improved crop seed. Information-embedded tools, in turn, are those technologies necessary for research, innovation, and communication of knowledge” (Benkler, 2006). A smartphone qualifies as both because it can be used to obtain knowledge, and it depends on discoveries in microchip technology, electronics manufacturing, and software to function.

To date, there has been no formal, theoretical or evidentiary investigation on the emergence of smartphones as an Access-to-Knowledge good. In the following sections, I will attempt to explain the smartphone’s dependence on an enabling legal framework and effective innovation systems (Lea's components). It must be borne in mind that globally, discussions affecting access to knowledge have aimed at creating balanced and inclusive systems related to intellectual property (Kapczynski & Krikorian, 2010). Therefore, the essay will focus on: first, the relationship between constituent mobile technologies and intellectual property as a function of production/deployment of smartphones in India; and second, the relationship between innovation and access.

Creating an Enabling Legal Framework to Foster Access to Knowledge

The adage “the only lesson you can learn from history is that it repeats itself” is worth bearing in our narrative. The emergence of the smartphones industry in Asia has commonalities with the flourishing Asian piracy trade – which remains an essential access solution for low-income societies constantly barraged by expensive western media goods. The prohibitive cost of acquiring brand-name devices (e.g. Apple, HTC, Samsung, Sony) drove local production to imitate and innovate cheaper substitutes (WIPO, 2010). This occurred within the lenient and flexible intellectual property regimes prevalent in Asian countries, which continue to be constantly criticized for their failure to enact stricter intellectual property law. The hubs of smartphone production – China, Taiwan, and India – have flexible intellectual property protection law and lax enforcement measures (Centre for Internet and Society, 2012).

Concerns of intellectual property center around patent and copyright legislation, which have yet to be fully developed to address intellectual property in high-tech industries (since trademark issues remain unchanged, they will not be discussed in the essay.) As a result, constituent smartphone technologies have been shaped and governed by a blend of formal and informal rules and legal and illegal practices. This is why they are often referred to as “gray market” technologies. A smartphone in terms of constituent intellectual property can be broadly divided into hardware and software technologies. This piece will first deal with hardware, followed by software technologies.

Hardware Technologies and Their Relationship with IP Law

Presently, most Indian manufacturers import hardware from China and Taiwan, and assemble the phones in India. A few key Indian domestic players are Maxx Mobile, Intex, Spice, and Lava, whose dominance have not gone unnoticed by foreign manufacturers. A couple of these domestic manufacturers are now embroiled in patent litigation threats or infringement suits. And as litigation piles up in Indian courts, the judiciary is slowly waking up to mobile patent litigation, but is yet to rule comprehensively. To make matters worse, the jurisdiction of the Indian antitrust regulator remains unclear, and to a certain extent overlaps with the judiciary, adding to the ambiguity. For instance, when an appellate court ruled in favor of the Swedish tech-giant Ericsson, it ordered Micromax to pay a flat 1.25 – 2% of its devices' selling price to Ericsson (Lakshane, 2015). The ruling was devoid of a more rational and reasoned approach developed by courts of other jurisdictions in similar matters, which prescribed that the infringers pay damages based on the price of the patented components only, and not the retail price of the phones. This decision risks causing a significant increase in the price of phones and potentially threatens local innovation.

The Indian government's Make in India and Digital India campaigns aim to fulfill the vision of a digitally empowered India, and the 2015 Indian Union budget also targets boosting the electronics manufacturing industry. Despite these broad initiatives, there needs to be a more focused policy in place to ensure domestic companies do not get weighed down by patent related concerns. The root cause of litigation is the vesting of a majority of critical mobile patents (Standard Essential Patents, or SEPs) by a handful tech-giants. For instance, Qualcomm owns 5700 patents around CDMA technology (qualcomm.com). In another instance, the DVD format constitutes 311 SEPs for DVD players and 272 SEPs for DVD recorders (CIS, 2012). Such a dense concentration of patents around SEPs creates a patent thicket and thereby compels Smartphone manufacturers to acquire multiple licenses, and to pay high transaction costs and huge royalties to the owner. To reduce conflict and protect domestic players from being arm-twisted into paying high royalties, the government can potentially identify critical technologies and initiate the formation of a patent pool of such technologies. The concept of a patent pool mandates that the patent holders issue licenses on fair, reasonable, and nondiscriminatory basis to interested parties. However, a nuanced and cautious approach to setting up such pools is necessary (Shapiro, 2001).

There are interesting lessons in China's steps to encourage local innovation of Smartphone hardware as well, specifically in the form of standardized technologies. The Chinese government has actively supported the development of indigenous standards to shield domestic manufacturers from royalty exposure. In fact, the China Blue High-definition Disc (CBHD) standard was built as an alternative to the Blu-ray disc and was duly adopted by the Chinese government, which reportedly caused the royalty rates for the Blu-ray format to dip. Much later, Warner Bros, Paramount, and other motion picture producers adopted the CBHD standard as well for distribution in China.

Software Technologies and Their Relationship with IP Law

Unlike hardware technology, where India is struggling to build manufacturing capacity, the success of the Indian software industry has already been realized. The software-as-a-service (SaAS) industry is led by Infosys, TCS, and Wipro in software exports. The prevailing trend in the industry since the 1980s was to assign ownership of their products to offshore clients. However, in the past decade, there has been a conscious shift by the Indian software development workforce to build products for Smartphone platforms. This is in response to the shift in local populations to accessing content and services online. Reports indicate that India has the second largest population of mobile applications developers (approx. 3 million) in the world, second only to the US (Livemint, 2015). The Indian government has recognized the potential of mobile application-based ventures and created funds to encourage app development in India (IAMAI, 2015).

Intellectual property protection around software is fairly ambiguous. A piece of code is potentially capable of gaining both patent and copyright protection. In the area of mobile application development, preliminary research findings indicate that coding occurs with an agnostic attitude towards intellectual property laws (Cassar, 2014). One of the reasons is ambiguity on a multitude of issues around the protection of software because Indian legislation on patent and copyright is frustratingly insufficient. There is a growing discontentment about long-term patent protection over software code, which could be detrimental to innovation – particularly, to the start-up segment of software industry. In more technologically advanced economies, software patenting has emerged as a scourge – last year, the US Supreme Court in Alice Corporation Pty Ltd v. CLS Bank International Et Al narrowed the eligibility of software inventions to gain patent protection. The activist discourse has shifted in favor of eliminating software patenting because of the incremental and obsolescent nature of a software invention, inter alia (Lapowsky, 2015). However, in a recent disappointing move, the Indian patent office widened the scope of patent-eligible subject matter for software-related inventions – a move that was decried by free software activists and industry alike. This widening of scope can only benefit tech-giants in building bigger patent portfolios, which is unnecessary and unhealthy for innovation by small and mid-tier entities (Sinha, 2015).

Effective Innovation Systems

Innovation ensures fresh creation of knowledge. A society cannot premise itself on the mere importation of knowledge; it must also strive to use the knowledge to meet its own local needs and environment. Innovation depends on a variety of factors – there is no singular path or factor to build an innovative and enterprising society. The patent system is often incorrectly credited with “promoting” innovation. The discourse around innovation was extremely patent-centric until studies disproved the assumptive correlation between high patenting activity and innovation. Continuing in the same vein, Lea states, “From the A2K perspective, however, relying on patents – which represent the right to exclude others from access to the innovation – is particularly problematic. Patents likely represent the segment of innovation of least value for expanding access to knowledge: improvements in the knowledge stock whose application is limited by exclusive property rights” (Shaver, 2007).

In this framework, it is also important to shed light on the growing movement of openness. Openness as a movement has been captured by various fields - Big data, software, education, media, etc. Free and Open Source Software has emerged as a key agent in information technology policy-making in India, with the Indian government adopting an open standards policy and an open software policy for its own purposes.

In the context of smartphone technologies, preliminary findings also support the shift towards openness (Huang, 2014). Industry participants have observed that openness will lead to greater benefits in private production of hardware technologies. Similarly, mobile applications developers have also voiced support of open source software (Cassar, 2014).

Conclusion

The discussion above identified a limited set of legal and regulatory concerns affecting the state of production/deployment of smartphones in India. These issues and findings are backed by preliminary research, and purport to sustain the emergence of the smartphone as an enabler of access to knowledge. The proposed solutions direct industry and the government alike to take immediate steps to fix problems impeding pervasive access to this knowledge good.

The experience of the smartphone industry with an imprecise legal and regulatory environment, akin to piracy, has thus far been a success story of affordability, quality substitution, and innovation. However, this narrative is now threatened by messy litigation, jurisdictional uncertainties between the anti-trust regulator and judicial system, SEP licensing issues, rise of software patents, inter alia. Despite these issues, the industry continues to grow. The future of access to knowledge is therefore bright, provided that stakeholders make efforts to meet the needs of this emerging industry and the public, including development and consumer interests.

References / Links / Resources

Benkler, Y. (2006). The Wealth Of Networks: How Social Production Transforms Markets And Freedom. Retrieved from http://www.benkler.org/wealth_of_networks/index.php?title=Chapter_9%2C_section_3.
Cassar, S. (2014). Interviews with App Developers: Open Source, Community, and Contradictions – Part III. Retrieved from: http://cis-india.org/a2k/blogs/interviews-with-app-developers-open-sourcecommunity-and-contradictions-iii
Cassar, S. (2014) Ambiguity in the App Store: Understanding India’s emerging IT sector in light of IP. Retrieved from http://cis-india.org/a2k/blogs/ambiguity-in-the-app-store
Centre for Internet and Society, Pervasive Technologies: Access to Knowledge in the Marketplace(2012, September). Retrieved from http://cis-india.org/a2k/pervasive-technologies-research-proposal.pdf/view
Guynn, J. (2015, September 28). Facebook, Silicon Valley like Indian Prime Minister Narendra Modi. Retrieved from http://www.usatoday.com/story/tech/2015/09/27/narendra-modi-india-facebook-markzuckerberg-google-sundar-pichai-silicon-valley/72936544/
Huang, M. (2014). [Open] Innovation and Expertise > Patent Protection & Trolls in a Broken Patent Regime (Interviews with Semiconductor Industry - Part 3). Retrieved from: http://cis-india.org/a2k/blogs/ interviews-with-semi-conductor-industry-part-3
IAMAI (2015). An inquiry into India's app economy.
Kapczynski, A., Krikorian, G., (2010). Access to Knowledge in the Age of Intellectual Property. Retrieved from: https://mitpress.mit.edu/sites/default/files/titles/free_download/9781890951962_Access_to_ Knowledge_in_the_Age_of_Intellectual_Property.pdf
Lakshane, R. (2015, September). FAQ: CIS Proposal for Compulsory Licensing of Critical Mobile Technologies. Retrieved from: http://cis-india.org/a2k/blogs/faq-cis-proposal-for-compulsory-licensing-ofcritical-mobile-technologies
Lakshane, R. (2015, February). Open Letter to Prime Minister Modi. Retrieved from: http://cis-india.org/ a2k/blogs/open-letter-to-prime-minister-modi
Lapowsky, I. (2015, February). If You Want to Fix Software Patents, Eliminate Software Patents. Retrieved from https://www.eff.org/mention/follow-wired-twitter-facebook-rss-eff-if-you-want-fix-software-patentseliminate-software
Meeker, M. (2015). 2015 Internet Trends. Retrieved from http://www.kpcb.com/partner/mary-meeker
PTI (2015). Google aims to make India a hub for app development. Livemint. Retrieved from: http:// www.livemint.com/Industry/rwWUfp30YezONe0WnM1TIO/Google-aims-to-make-India-a-hub-for-appdevelopment.html
Qualcomm Enters Into CDMA Modem Card License Agreement with Seiko Instruments Incorporated. (n.d.). Retrieved November 13, 2015, from https://www.qualcomm.com/news/releases/2000/06/20/ qualcomm-enters-cdma-modem-card-license-agreement-seiko-instruments
Shapiro, C. (2001). Navigating the Patent Thicket: Cross Licenses, Patent Pools, and Standard Setting. Innovation Policy and the Economy, 1, 119-150. Retrieved from: http://www.nber.org/chapters/c10778.pdf
Shaver, L. (2007). Defining and Measuring Access to Knowledge: Towards an A2K Index. Faculty Scholarship Series. Paper 22. retrieved from: http://digitalcommons.law.yale.edu/fss_papers/22
Sinha, A. (2015). Comments on the Guidelines for Examination of Computer Related Inventions (CRIs). Retrieved from http://cis-india.org/a2k/blogs/comments-on-the-guidelines-for-examination-of-computerrelated-inventions-cris
United Nations Development Programme, Human Development Report 2001: Making New Technologies Work for Human Development (2001). Retrieved from http://hdr.undp.org/reports/global/2001/en/
World Intellectual Property Organisation. (2010, Dec 1-2). Media Piracy in Emerging Economies: Price, Market Structure and Consumer Behavior. Retrieved from the WIPO website: http://www.wipo.int/edocs/ mdocs/enforcement/en/wipo_ace_6/wipo_ace_6_5.pdf

For more details visit https://cis-india.org/a2k/blogs/digital-asia-hub-the-good-life-in-asias-21-st-century-anubha-sinha-fueling-the-affordable-smartphone-revolution-in-india

FAQ: CIS' Proposal for Compulsory Licensing of Critical Mobile Technologies

rohini — 2016-02-14T04:40:29Z

Earlier this year, the Centre for Internet & Society (CIS) had proposed that the Government of India (GoI) initiate the formation of a patent pool of critical mobile technologies and mandate a five percent compulsory license. The proposal was made in light of ongoing litigation in India over standard essential patents pertaining to mobile technology, and the government's own “Make in India” and “Digital India” programmes.

Read CIS' proposal to the Government of India regarding the formation of a patent pool here. To read about ongoing litigation in India over standard essential patents pertaining to mobile technology, click here.

1. How did CIS arrive upon the figure of 5 percent as the compulsory licensing fee for the patent pool?

As part of foreign technology agreements, the Department of Industrial Development (DID) introduced a ceiling of 5 percent on the royalty rates charged for domestic sale and 8 percent for export of goods pertaining to "high priority industries" in the year 1991. Royalties higher than 5 percent or 8 percent, as the case may be, required securing approval from the government[1]. While 1991 was too early for the mobile device manufacturing industry to be listed among high priority industries, the public announcement by the government covered computer software, consumer electronics, and electrical and electronic appliances for home use[2]. In 2009, another department under the Ministry of Commerce and Industry, the Department for Industrial Policy and Promotion, revoked the cap on royalty rates[3]. Sanjana Govil throws some light on why government regulation on intellectual property was introduced in the early 90s and how it succeeded in reducing the flow of money out of India: Putting a Lid on Royalty Outflows — How the RBI can Help Reduce India 's IP Costs.

The situation in 1991 is somewhat analogous to the current one where most of the patent holders in the mobile device technology domain are multinational corporations, which results in large royalty amounts leaving India. At the same time, litigation over patent infringement in India has thwarted the manufacture and sale of mobile devices of homegrown brands. Additionally, these developments are detrimental to the Modi government’s aim of encouraging local manufacturing as well as strengthening India’s intellectual property regime.

2. How would royalties be distributed among patent holders in a patent pool where a single fee of 5 percent is being charged?

A patent pool formed for the purpose of compulsorily licensing the patents contained in it can be managed by combining government intervention with the governance structure of a voluntary patent pool. Vikrant Narayan Vasudeva enumerates the different approaches to setting royalty rates in a patent pool once a “royalty base” has been established[4]:

● Rule of Thumb

● Numerical Proportionality

● Industry Standards / Market or Comparable Technology Method

● Discounted Cash Flow

● Ranking

● Cost-based Rate Setting

● Surrogate Measures

● Disaggregation Methods

● Option Methods

● Competitive Advantage Valuation (R)

3. The letter implicitly suggests that litigation intended to protect the interests of patent holders could potentially have a chilling effect on government initiatives, local innovation and the interests of consumers. Is there evidence to support this?

Though there is a thin line between legitimate application of legal remedies and chilling effects, the ramifications of the acitivies of non-practising entities (NPEs), of strategic lawsuits against public participation (SLAPP suits), and of frivolous lawsuits provide plenty of evidence to support making such a proposal.

Some indicative examples:

Patent trolling pays: Since 2010, trolls have made 3 times as much money in court as real companies

Kootol (India-based troll with US and European patent applications) sends notices to many companies regarding Twitter/Facebook-style feeds

Alleged troll that sued eBay over PTO reexamination dismisses lawsuit

Patent Troll Lodsys Settles for Nothing to Avoid Trial

Why I’m not paying the Troll Toll

[1] Press Note No. 12 (1991 Series), Procedures in respect of foreign technology agreement, http ://eaindustry .nic .in /handbk /chap 003.pdf, Last accessed September 16, 2015.

[2] Press Note No. 10 (1992 Series), Revised List of Annex-III items, http ://eaindustry .nic .in /handbk /chap 005.pdf, Last accessed September 16, 2015.

[3] Press Note No.8 of 2009, Liberalization of Foreign Technology Agreement policy, http ://dipp .gov .in /English /acts _rules /Press _Notes /pn 8_2009.pdf, Last accessed September 16, 2015.

[4] B. Setting Royalty Rates, Patent Valuation and License Fee Determination in Context of Patent Pools, Vikrant Narayan Vasudeva, http ://cis -india .org /a 2 k /blogs /patent -valuation -and -license -fee -determination -in -context -of -patent -pools, Last accessed September 16, 2015.

For more details visit https://cis-india.org/a2k/blogs/faq-cis-proposal-for-compulsory-licensing-of-critical-mobile-technologies

Fab to Fabless: Understanding the Process of Chip Manufacturing (Interviews with Semiconductor Industry - Part 2)

maggie — 2014-12-26T12:06:48Z

This is the second 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. This post explores the process of chip manufacturing and the foundry business model.

See the first blog post here.

Studies have shown that Taiwan's integrated circuit manufacturing sector have shown spatial and industrial knowledge spillover, resulting in "increased information diffusion, interaction and communication, innovation, and intellectual capital.". Market research company IC Insights found that Taiwanese and Chinese companies represented five of the eight fastest-growing fabless integrated circuit ("IC") suppliers in 2013.

The Pervasive Technologies: Access to Knowledge in the Marketplace project is looking at the accessibility of networked communication technologies in the mass market within the sub-100 dollar range. This has resulted in a narrowing of the research scope to the mobile phone due to the pervasiveness of the mobile for accessing Internet, as understood by exploring the trends in technology usage models as explored in Part I of this blog post series: Trends and Changes in Technology (Part I of IV).

The need to understand the full story of the mobile phone production led CIS to Taiwan to understand the beginnings of the manufacturing process - the development of an integrated chip. The interviewed professionals all represented fabless IC semiconductor design companies which operated via a foundry business model where the actual fabrication is outsourced.

According to one expert whose company earned 50% of its revenue from mobile chipsets alone, the process of the mobile phone manufacturing begins at the fabless design stage, where fabless IC design companies design a chip following consultation with the fabricators to specify the mechanical constraints of the process (the size of the die, the minimum size of the wiring line, etc.) to ensure design requirements are met, and to negotiate the costs of production. Another interviewee highlighted that during this design phase, there are three clear goals: 1) Upgrade performance, 2) Reduce cost by integrating features, and 3) Reduce power consumption.

These particular companies provided insight to some of the commonly licensed technology that went into a smartphone chipset. This included the central processing unit (CPU) from ARM Holdings, who in 2010 held 95% of the CPU marketshare in smartphone technology, and have only increased since then. One of the interviewed companies also uses the graphics processing unit (GPU) intellectual property from Imagination Technologies, which after Qualcomm had the 2nd largest market share of IP for personal devices in 2013. Qualcomm who owns the most patents to the 3G standard with over 250 licenses in its CDMA portfolio has made considerable revenue gains thus far, but some analysts predict due to a transition into 4G technology without the same dominant 3G portfolio, they will lose their dominant market position.

Having taken into account these IP into the design process, the design is then sent to fabricators such as the Taiwan Semiconductor Manufacturing Industry (TSMC) who in 2013 owned at least 50% of the world's global maker share in fabrication, and others like the United Microelectronics Corporation (UMC) and Global Foundries). According to the interviewee, the fabrication process requires about 2-3 months.

This foundry business model is a result of increased efficiency and division of labour. Fabrication plants require large amounts of investments into manufacturing facilities. According to interviewees, one would have to spend an average of 5-10 billion USD to built a fabrication plant now. Since plants like TSMC exists, semiconductor industries can now focus on their area of expertise, which is design and customer relationship, and optimize their synergistic relationship for gains for all.

One of the recent revolutionary developments which have contributed to low-cost smartphone manufacturing has been the turnkey solution chipset, which includes the hardware reference design, the printed circuit board, the software, and instructions for how to create a mobile phone. This turnkey solution, amongst other electronic parts, are sent for white box packaging, then shipped to a distributor like WPG Holdings who are the largest electronics distributor in Asia. WPG and others will then distribute these chips and other related products to their customers, the smartphone manufacturers. This entire production cue takes about 3-4 months.

The turnkey solution as mentioned before vastly contrasts the traditional manufacturing process of a mobile phone, where a chip could be designed, given to the original equipment manufacturer (OEM) who would then design all the remaining parts. There used to be a very clear division of labour. Now, one interviewee explained, manufacturers will "buy a turnkey solution, open a factory, take a chassis (case), screw it all together, and sell it. This is what's driven the demand, and that's what created this low cost-market."

According to our interviewees, the low-cost production of this turnkey chip solution is the reason how so many of the phones in the sub-$100 dollar market exist today.

P.127 of Tsai, Diana H. A. “Knowledge Spillovers and High-Technology Clustering: Evidence from Taiwan’s Hsinchu Science-Based Industrial Park.” Contemporary Economic Policy 23.1 (2005): 116–128. Print.

IC Insights. “Taiwanese and Chinese Companies Represented Five of Eight Fastest Growing Top-25 Fabless IC Suppliers in 2013.” IC Insights. N.p., 7 May 2014. Web. 3 Sept. 2014.

Morgan, Timothy Prickett. “ARM Holdings Eager for PC and Server Expansion.” The Register, Feb. 2011. Web.

Trefis Team. “Why Qualcomm’s Royalty Rate Will Continue To Decline.” Forbes, 10 June 2014. Web.

Wang, Lisa. “TSMC Eyes 50% Global Market Share.” 26 Mar. 2014: 13. Print.

For more details visit https://cis-india.org/a2k/blogs/interviews-with-semi-conductor-industry-professionals-in-taiwan-2

Exploring the Internals of Mobile Devices — Report from a One-day Workshop at TERI

jdine — 2012-12-01T05:57:53Z

On October 27, 2012, the Centre for Internet & Society (CIS) organised a one-day workshop on exploring the internals of mobile technologies at the TERI Southern Regional Centre in Bangalore. The workshop received more than 140 registrants, of which approximately 40 attended. In this post, Jadine Lannon explores the discussions and the developments that took place at the workshop.

The event brought together professional and non-professional individuals and communities interested in exploring mobile technologies. The aim of the workshop was the provide participants with the knowledge and tools to better understand the internals of mobile technologies as well as familiarize the attendees with CIS's "Pervasive Technologies" research project.

Anil Kumar Pugalia, Sudar Muthu and Pankaj Bharadiya were the expert speakers. The event was supported by the well-established online security, hardware and software domain communities NULL, SecurityXploaded, Computer Club India and Bangalore Android User Group.

Sudar Muthu: Capabilities of Arduino

Capabilities of Arduino (including Due) from Sudar Muthu	Sudar Muthu began the workshop with a talk on the capabilities of Arduino and the ways in which Arduino can be used to interface with different external devices. He discussed with us different types of Arduino, the technical specifications of Arduino, the ways that Arduino can be used to interface with external boards and the interfacing that he has been able to accomplish using Arduino and various devices. The slides from his Powerpoint presentation are viewable on the left.

Anil Kumar Pugalia: Mobile Hacking using Linux Drivers

Anil Kumar Pugalia followed Sudar's presentation with an exploration of methods of mobile hacking using Linux drivers. He discussed various Linux kernel hacking techniques as well as tools that can be used to perform reverse-engineering on a mobile device. The slides from Anil's presentation can be accessed on the right.	Mobile Hacking using Linux Drivers from Anil Kumar Pugalia

The following two talks were delivered by Pankaj Bharadiya from Texas Instruments. In his first presentation, he explored hardware hacking and board/chips capabilities. His second talk was on porting open software on hardware. In addition to his discussions, he also covered porting Android on open hardware. The slides from his presentations will be posted shortly.

After all the presentations, the participants were invited to handle and open up the 12 mobile devices that CIS purchased for our Pervasive Mobile Technologies research project. The participants worked in teams of two to five members to open up the mobile devices and observe their internals. We asked the participants to record any information about the internals of the mobiles that they were able to find, including the make, model, and serial numbers of the components. Pictures from this part of the workshop will be posted shortly.

All of the collected information was recorded and distributed among the participants so that the group could continue to work on identifying the mobile internals and the various data sheets associated with each component. This data will be added to the specifications of each mobile device as it is collected. CIS hopes to continue to collaborate with the individuals and communities who participated in this workshop as well as other interested individuals who may have been unable to attend the one-day workshop to proceed with this process of identification. We also hope to hold a second event, a one- to two-day hackathon, sometime in December to continue the exploration of our mobile devices.

CIS would like to thank Anil Kumar Pagalia, Sudar Muthu, Pankaj Bharadiya, Khasim Syed Mohammed, Akash Mahajan (NULL representative), Amit Malik (SecurityXploaded representative), the NULL, SecurityXploaded, Bangalore Android User Group and Computer Club India communities, and all of the participants for making the workshop a huge success and aiding us in our ongoing research project!

You can reach participating communities at following links:

For any further information on the past workshop or future events, please connect with us:

Jadine Lannon (jadine@cis-india.org), research intern for the A2K programme
Amarjit Singh (amarjitlife@gmail.com), the Workshop Manager.

Click below for a slideshow of the pictures from the workshop:

Photos

For more details visit https://cis-india.org/a2k/blogs/exploring-the-internals-of-mobile-devices

Dataset: Patent Landscape of Mobile Device Technologies in India

rohini — 2016-05-03T20:06:43Z

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

Dataset: Patent Landscape of Mobile Device Technologies in India

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

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

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

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

Using this dataset:

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

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

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

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

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

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

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

rohini — 2017-09-10T15:11:38Z

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

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

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

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

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

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

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

License terms

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

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

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

Conference on Standards Settings Organizations (SSO) and FRAND, NLSIU

rohini — 2016-04-02T18:12:41Z

Rohini Lakshané attended the Conference on Standards Settings Organizations (SSO) and FRAND held at NLSIU, Bengaluru on March 21 and 22, 2015. It was organised by the MHRD Chair on Intellectual Property Rights, Centre for Intellectual Property Rights and Advocacy (CIPRA), National Law School of India University, Bengaluru in association with Intel Technology India. This post is a compilation of notes from the conference.

Programme Schedule

Significant Takeaways
It is anti-competitive to seek to exclude competitors from the market by seeking injunctions on the basis of SEPs, if the licensee is willing to take a license on FRAND terms. In these circumstances, the seeking of injunctions can distort licensing negotiations and lead to unfair licensing terms, with a negative impact on consumer choice and prices. -- EU Competition Policy Brief, Issue 8, June 2014. This is a very important issue for India as it thinks about how it can attract foreign investments. India has a unique opportunity to learn from these lessons from around the globe and craft India-specific solutions. India has the intellectual capability and the institutions capable of crafting these solutions, and in doing that we can support Make In India. India needs to be mindful about what is happening in the [South Asian] region. China has moved aggressively to try to curb FRAND abuse. The People's Court in China ruled in Huawei vs. InterDigital that for 2G, 3G, and 4G patents, the license fees of royalties should not exceed 0.019% of the actual sale price. Apple also stated that Ericsson was calculating royalties on the sale price of the iPhone or iPad, whereas the royalty should be calculated on the value of the baseband chip that runs this technology in the mobile device. If such litigation occurs in India, what would be India's position? If a building block contains the technology pertaining to a patent, then royalty should be calculated on the smallest possible patent practising unit and not the entire product. The government of India has adopted a royalty free (RF) approach to licensing open standards. Non-essential claims are excluded from disclosure. Pending patent applications are not. Only 16% patents declared as SEPs are actually SEPs, according to a study. The Delhi High Court has passed interim orders restraining the CCI from deciding these cases. Our appeal to the courts is that these patent infringement lawsuits should not be viewed in isolation. They should not be viewed as merely contractual issues between the licensor and the licensee. They should be seen in the context of their economic effects and their adverse effect on competition. The CCI should be enabled to deal with such cases. Matheson: The phrase "compulsory license" sends a shiver down every corporate's spine every time it is used. International experience is that the judicial system has been the only forum where we have been able to have due process to enable us to construct cases properly in order to explain to the judge or to the jurors how the system works. That has produced very sensible solutions to this problem. Handing it off to the government to institute a compulsory license wouldn't be fair to the SEP holders.

SSOs and FRAND: Licensing issues

John Matheson, Director of Legal Policy (Asia Pacific), Intel

The role of licensing policy

Ensuring market access
Standards often depend on patented technology, which is accessed through the Promise to License on FRAND terms.
It is equally critical to ensure that standards can be implemented without unfair legal games.
It is essential to prevent patent hold-up.
Reasonable compensation

Patent holders remain entitled to fair compensation and benefit from the proliferation of their technologies via standardisation.

Why FRAND?

A FRAND commitment embodies certain fundamental principles that have been recognised widely by the courts and regulators.

The fundamental purpose of a FRAND commitment is widespread adoption of the standard.

Because of the peculiar nature of SEPs, the process is open to abuse.

A FRAND commitment is aimed at preventing patent holders from exploiting a hold-up value and extracting unreasonable royalties and concessions that could otherwise follow from being in a very unique position. Often, the holders of the IP have a single solution to an interoperability or connectivity conundrum that technology is facing.

Why are SEP license negotiations different from Non-SEP ones?

In the context of non-SEPs, one may be negotiating to obtain a license to a patent for a particular feature. If the licensor is being difficult, one can discard the feature to include something else. In a competitive market, this negotiation is focused on the value of the invention to be licensed. Thus one can redesign to avoid a particular claim and, in turn, avoid injunction.

On the other hand, it is necessary to either obtain a license for or infringe an SEP to manufacture the mobile device. There is no workable alternative or workaround to obtaining a license for the desired technology. With the threat of an injunction looming over the negotiations, the prospective licensee is under pressure to obtain a license. So the market negotiations for SEPs and non-SEPs are very different. One-way negotiations raise the possibility of a patent hold-up, and abuse of the standard implementer.

IP policies inevitably involve compromise.

Common areas of misunderstanding include:

Valuations or meaning of "reasonable". Valuations of IP under consideration.
Injunctive relief or exclusion orders
Discrimination or refusal to license
Patent transfer (It requires a continuation of the FRAND commitment, and shouldn't get differential treatment in the IP policy.)

Competition authorities in the US and EU have asked SSOs to reconsider policies to reduce ambiguity in the context of these areas of misunderstanding.

The ex-ante or the incremental value of the SEPs before the standard is set needs to be understood. The SSOs look at several different ways to solve a connectivity problem. The patent owners bring their patents into the standards body and claim that theirs is the best way to solve that problem. The market and consumers want an uncomplicated solution which works and is as cheap as possible. In many cases, there is one single winner, simply because we need one solution. In exchange for being the winner, the FRAND discipline is quid pro quo.

European Commission's response to two different patent lawsuits:

In the Samsung and Motorola cases, the Commission clarifies that in the standardisation context where the SEP holders have committed to:

License their SEPs
Do so on FRAND terms

It is anti-competitive to seek to exclude competitors from the market by seeking injunctions on the basis of SEPs, if the licensee is willing to take a license on FRAND terms.

In other words, if there is a bona fide commitment on the part of the licensee to agree to that test, then it is anti-competitive to seek an injunction.

In these circumstances, the seeking of injunctions can distort licensing negotiations and lead to unfair licensing terms, with a negative impact on consumer choice and prices. -- EU Competition Policy Brief, Issue 8, June 2014.

Anyone who needs access to connectivity or needs interoperability requires to get a SEP license, and if that license is required to be obtained within a time limit, it almost -- by definition -- is not going to work. Patent licenses take years to negotiate, and they're incredibly complex. For example, a patent policy may offer up to 12 months to agree on a license, but that is not the way the market works. So we cannot expect policies that put forth time limits to work in the SEP arena. What we can expect is that the implementers make a bona fide commitment to seek a license.

Motorola vs. Microsoft, Germany:

Motorola sought injunctive relief against Microsoft in Germany. Microsoft moved its distribution centre from Germany to the Netherlands. This resulted in loss of jobs, relocation costs ($11.6 million), and annual increased operating costs of $5 million for Microsoft.

Samsung vs. Apple, Germany

Similarly, on the basis of one patent, a temporary injunction was granted on the sale of the Apple iPad and iPhone. Apple was forced to agree to terms it didn't want to agree to, so that the sale of its products would resume.

This is a very important issue for India as it thinks about how it can attract foreign investments. India has a unique opportunity to learn from these lessons from around the globe and craft India-specific solutions. India has the intellectual capability and the institutions capable of crafting these solutions, and in doing that we can support Make In India.

SEP holders that make FRAND commitments should not be allowed to obtain injunctions against alleged infringers, except in limited circumstances. This formula has been adopted by the IEEE, which has solved this problem. India has the opportunity to leapfrog a lot of patent litigation by adopting the IEEE test.

Learn from what happened with Microsoft in Germany. What kind of message do you want to send to the foreign community about investing in India? Do you want to use the scare tactics of injunctions or do you want to adopt a policy that will avoid litigation?

India needs to be mindful about what is happening in the [South Asian] region. China has moved aggressively to try to curb FRAND abuse. The People's Court in China ruled in Huawei vs. InterDigital that for 2G, 3G, and 4G patents, the license fees of royalties should not exceed 0.019% of the actual sale price.

Reasonable Compensation Considerations

Royalty based on the smallest unit that practices the standard.
Technical value of patented technologies vs. alternatives.
Overall royalty that could reasonably charged for all SEPs.

Non-discrimination

A commitment to license every implementer of the relevant standard.

Transfer

FRAND commitments follow the transfer of a patent to subsequent proprietors.

Dr. Krishna Sirohi, Impact Innovator, GISFI, President, I2TB

As per the Make in India programme, we have to achieve zero imports by 2020. Product development in India by Indian companies will happen with collaborative research and development and IPR sharing through licenses. We are looking at national capacity building through product development and patent uses.

Global Information and Communication Technology Forum for India (GISFI) is a standards setting body involved with standardisation and research. It is a telecommunications standards development body (TSDO) set up with the approval of the DoT. It has peer relationships with ITU, OMA, TTC and a bunch of other SDOs. Internet of Things (IoT), mobility and security are its three major research programmes.

GISFI is working towards defining 5G in India. The 5G standardisation theme in India is called WISDOM (Wireless Innovative System for Dynamic Operating Mega Communications). GISFI is considering the perspective of the Indian user, the network capability, the network architecture, network development and the Indian revenue model, strategic and special purpose networks, inclusive growth, and network security.

However, some India-specific aspects such as illiteracy and lack of basic civic infrastructure need to be considered in the standardisation process.

GISFI plans and stages for 5G definition and adoption

Stage 1 (2014-2018): National agenda for strategic research, innovation and experimentation

Focus on Digital India and Make in India programmes.

Stage 2 (2016-2019): Standardisation

Stage 3 (2017-2021): Product Development

Stage 4 (2019-2023): Early Development

Technical understanding required for IPR issues

Enhancement applicable to general scenarios
- Traffic capacity
- Cell coverage
- Edge cell performance
- Intercell interference
- Network congestion
- Mobility
- Energy consumption
Enhancements targeting new use cases
- machine-type communication
- national security
- public safety services
Carrier aggregation
- Higher throughput owing to intra and inter-band transmission bandwidth of more than 20 MHz.
- Reduced network congestion owing to load-balancing across multiple carriers.
- Improvement in mobility and reduction in inter-cell interference.
Enhanced MIMO
- Improved spatial diversity and multiplexing
- Improved beam-forming
- Multiple access with multi-antenna transmission
Coordinated Multi-Point Operation (CoMP)
- Reduction in intercell interference owing to coordinated scheduling or beamforming (CS/CB)
- Transmission from multiple distribution points (base stations, RRH) in a coordinated way (Dynamic point selection, and Joint transmission)

What do SSOs handle IPR in different parts of the world and what are the issues they face?

GISFI has adopted ITU's IPR policy.

In SSOs, the FRAND principle works well only when participating entities have equal or almost equal IPR clout, and can reciprocate with their own patents every time other entities share their patents. It is difficult to create a balance between entities that only own IPR and those that only consume IPR.

Most of the members of SSOs are IPR owners. The entities that develop [technological] solutions without owning the IPRs are usually not a part of SSOs. However, additional strategies need to be implemented for realising the "Make in India" goal. The goal of zero imports by 2020 can only be achieved if a large number of small companies use these standards to develop products locally. So small manufacturers should be represented even at the highest levels of the standards development body. An IPR policy should be defined/ modified to factor in these needs.

Evaluation of LTE essential patents declared by ETSI

Cyber Creative Institute, June 2013: http://www.cybersoken.com/research/pdf/lte03EN.pdf

A large number of LTE patents are held by a handful of companies. There is no Indian owner of any LTE SEP.

Ericsson sued Apple in the US over infringement of its LTE patents. As of January 2015, Apple countersued Ericsson in a federal court in California and claimed that it did not owe any royalties to the latter.

Apple also stated that Ericsson was calculating royalties on the sale price of the iPhone or iPad, whereas the royalty should be calculated on the value of the baseband chip that runs this technology in the mobile device. If such litigation occurs in India, what would be India's position? If a building block contains the technology pertaining to a patent, then royalty should be calculated on the smallest possible patent practising unit and not the entire product.

Dr. Kumar N. Shivarajan, CTO, Tejas Networks

TSDSI's (Telecommunications Standards Development Society of India) IPR policy states that a member's technology will become a part of a standard as long as the member licenses it on FRAND terms to other members.

By 2017, 70% of the global equipment spend will be on LTE.
TD-LTE subscriber base in India has been projected to reach 67 million by 2017.
Most of the data connections in India are still on 2.5G.
Smartphones have become affordable but 3G continues to languish in India; 4G yet to take off.
The number of 3G connections in India grew from 30 million to 33 million from 2013 to 2014.

Is 5G the answer to India's access problems?

The mobile industry is aiming to go beyond traditional 4G LTE in 2015 and there is increasing focus on adding new bells and whistles to 4G and realise 4G+.

LTE Licensed-assisted access (formerly LTE-Unlicensed)
LTE Direct/ Peer-to-peer
LTE-M for machine to machine communication
CoMP

Countries forming 5G groups to take an early lead:

China: IMT-2020 (5G) Promotion Group
Korea: 5G Forum
EU: 5G Public Private Partnership (5G-PPP)

5G in its current form is souped-up 4G.

Key India-specific requirements for 5G standard development

5G must factor in the Indian requirement for DSL-like connectivity: Always ON, low latency, affordable cost
To minimise costs, 5G must minimise the use of BTS sites and focus on spectral efficiency.
5G should allow virtual network operations enabling multiple operators to use the same physical network infrastructure.
5G must work well in Indian propagation environments: concrete buildings blocking signals, dense barriers.
5G infrastructure should be green as electricity shortfall is a problem. India has 400,000 cell towers. 10% of them are not connected to the electricity grid. More than 70% experience power outages longer than 8 hours per day, and work on diesel-powered generators. As a result, 25% of the operational costs of telcos are their energy bills. India imports 3 billion litres of diesel annually to run these cell sites.

India can try to get a headstart in owning the IPR that would eventually go into the 5G standard.

Prof. Ramakrishna, MHRD Chair, NLSIU, Bengaluru

The attitude of an SSO towards patented technology determines the objective of its IPR policy. For example, an SSO may want to:

Promote widespread implementation of a standard without unnecessary IPR implications.
Ensure transparency and certainty about the declaration of patents and patents' claims as SEPs.
Ensure that every patented technology is available at a reasonable fee, comparable to the value of the technology.

What happens when IP ownership is transferred to another owner? It continues to be a part of the SSO but things get complicated.

New owners, third parties, subsidiaries, and affiliates fall under the purview of the IPR policy, by extension.

IP and Disclosure policies of Indian SDOs

BIS (Bureau of Indian Standards) and TEC (Telecommunication Engineering Centre) do not have IP policies of their own. TEC refers to the ISO/IEC IP policies wherever the technology is equivalent or the same.
GISFI disclosure requirement: Each member is required to inform GISFI in a timely manner of essential IPRs. But members are not under any obligation to conduct IP searches. GISFI's IPR policy is based on that of ETSI.
DOSTI (Development Organization of Standards for Telecommunications in India) is not functional.

IPR policy for open standards in e-governance

The government of India has adopted a royalty free (RF) approach to licensing open standards.

Mandatory Characteristics of Open Standards:

The patent claims necessary to implement the standard should be made available royalty free for the lifetime of the standard.
The standard shall be adapted and maintained by a not-for-profit organisation.
The standard shall have a technology-neutral specification.

The RF approach and the maintenance by a non-profit may be a disincentive for IP owners.

IEEE patent policy:

IEEE invites participants to disclose patent claims essential to a standard under development. Upon disclosure, the patent holder needs to submit a letter of assurance that states:

License(s) will be made available without compensation or at a RAND rate.
A commitment to enforce the essential patent claims against any entity complying with the standard.
Or state its unwillingness or inability to license its essential patent claims.

Common patent policy for ITU-T/ ITU-R/ ISO/ IEC

Recommendations/ deliverables are non-binding -- ensure compatibility of technologies and systems on a worldwide basis.

The "code of practice":

It is desirable that the fullest available information should be disclosed although ITU, ISO or IEC are unable to verify the validity of any such information.

Major types of IPR policies:

Participation-based IPR policies

These are common in small, informal bodies such as consortia.
Members are bound by the terms of membership to commit to licensing SEPs on RAND or RF terms.
SEP holders notify the standards body in case RAND or RF licenses are not available after the draft standard has been published.

Commitment-based IPR policies
- These are commonly followed large, standards setting bodies.
- These bodies identify SEPs to a draft standard through disclosure and submission of licensing commitment.
- Parties may seek alternative solutions or work on a withdrawn standard is the the alternative solutions don't work out.

Basic building blocks of commitment-based IPR policies

Disclosure policies:

Disclosure is important for
- sending requests to SEP holders to make licensing commitments
- ensuring that experts' groups make informed decisions on inclusion of patented technologies
- providing information to prospective standards implementers about the SEP owners

Two forms of disclosure:

A call for patents is made at the start of meetings. This is more informational than binding.
Later, the member states its intentions regarding licensing the patent on RAND terms.

How disclosure obligations arise (and commitments are binding):

IEEE has by-laws that are binding on members.
ITU, IEC, and ISO: It is via a resolution or recommendation.

(Indicative list)

General disclosure procedure:

The nature of disclosure rules concerning self-owned patents depends on the status or the role of the entity.

A "submitter" is a participant in the working group making a conscious decision to submit its technology to the SSO for a license or free of royalty.
A participant in a working group may submit its technology to the SSO free of royalty, on RAND terms, on RAND terms with the right to charge a fee, or with a refusal to license it. (A working group participant who discloses technology is usually a technology expert. When someone who does not have adequate knowledge of patents discloses technology, it has complicated implications.)
A non-working group participant (third-party) may also submit its technology.

ANSI has left it to the accredited SSO to decide the terms of disclosure for participants of working groups. It has not laid out a policy in this regard. Other organisations have laid out obligations on the submitter to disclose SEPs.

Nature of disclosure terms for patents owned by third-parties:

ETSI: It is obligatory.

ITU/ ISO: Obligatory only for participants of the working groups.

IEEE: Entirely voluntary

Non-essential claims are excluded from disclosure. Pending patent applications are not.

Working groups prefer early disclosure so that they may adopt or discard the claim as early as possible in the standard setting process.

ITU: Disclosure from the outset

IEEE: During meetings of the working group

ETSI: "Timely manner"

AFSI: At a sufficiently mature level

There is no mandate for updating the disclosure in case a standard evolves.

Most SSOs make disclosed patents public. Failure to disclose patents may result in accusations of abuse of monopoly or anti-trust/ anti-competitive activities.

It is difficult to identify all potentially essential patents due to the complexity of specifications.

Some SSOs don't require IP disclosure at all. The obligations to license on FRAND terms would be sufficient.

Only 16% patents declared as SEPs are actually SEPs, according to a study.

It makes sense for rightsholders to go for blanket disclosures instead of disclosure of specific patents.

Vinod Dhall, ex-chairperson of the Competition Commission of India (CCI):

Our competition law is new, so there aren't any cases pertaining to patent litigation and involving the competition law, which we can treat as precedents. In one of the mobile phone patent litigation cases in India, the implementer has approached the CCI claiming that the licensor has been abusing its dominant position in the market by charging unreasonable royalties.

The Delhi High Court has passed interim orders restraining the CCI from deciding these cases. Our appeal to the courts is that these patent infringement lawsuits should not be viewed in isolation. They should not be viewed as merely contractual issues between the licensor and the licensee. They should be seen in the context of their economic effects and their adverse effect on competition. The CCI should be enabled to deal with such cases.

Questions-answers round:

What are the criteria for declaring a patent an SEP?

T. Ramakrishnan: SSOs have no role in declaring that a patent is an SEP. The SEP holder declares that their patent is essential to a technical standard. Most of the time, the SEP may turn out to be a non-SEP at a later stage. Statistically, 16 out 100 claimed SEPs are actually SEPs. There is no way for SSOs to tell if a patent is an SEP. IP policies of most SSOs state that they don't search [if a patent is an SEP]. The members of SSOs are under no obligation to search.

The commitment to license an SEP on FRAND terms is more important to an SSO [than determining if the patent is indeed an SEP].

Can compulsory licensing be implemented with government intervention in India so that the Central Government can fix a royalty and put an end to patent litigation?

Matheson: The phrase "compulsory license" sends a shiver down every corporate's spine every time it is used. International experience is that the judicial system has been the only forum where we have been able to have due process to enable us to construct cases properly in order to explain to the judge or to the jurors how the system works. That has produced very sensible solutions to this problem. Handing it off to the government to institute a compulsory license wouldn't be fair to the SEP holders.

With respect to the "safe harbour" approach towards SEP-based injunctions, what does the licensee need to do to prove to the courts that it is a willing licensee, in the event that licensing negotiations fail or take a long time?

Matheson: It gets down to the licensee showing its willingness to negotiate. The licensee cannot make a half-hearted attempt and decline to negotiate or decline the licensor's offer and then disappear. They should physically engage in the negotiation. If and when it gets to a judicial environment, the judges know when people are telling stories and when parties are bona fide. They can tell a ruse when they see one, and I think it is one of the things you observe in practice.

Ramakrishnan: The licensee should be able to demonstrate that it is willing to pay the royalty and should deposit an amount towards royalty. One recommendation from AIPP states that instead of using the terms "willing licensee" and "willing licensor", use "good faith response". For "good faith" we have very well established criteria. The entire licensing process should end within 12 months of starting. If the negotiations fail or if the process takes longer, then they should agree upon an arbitrator to fix FRAND terms. These are indicators that demonstrate the licensee being a "willing licensee" or a "good faith" licensee.

Often technology changes before the legal action can be taken or the lawsuit completed, and the patent over which litigation has happened may no longer be relevant to the technology. How do patent holders deal with this situation?

S.K. Murthy, Research Scholar, NLSIU: Even if the technology becomes obsolete, damages can be claimed retrospectively.

Matheson: You have a commitment to a FRAND solution, so that when you enter the protracted negotiation, you know that at the end of it you will get a fair solution. That's not always the case when you are dealing outside the FRAND world. You're dealing with a FRAND incumbent, not with unlicensed patents.

Why is putting a time limit to negotiations not a good idea? Also, IEEE seems to have done well by taking the threat of negotiations out of its way. Is it practical in India, because injunction is still the most potent weapon to protect intellectual property rights in India currently?

Matheson: Licensing is incredibly complex. There can be claims to the validity of the patent, there are claim charts to be drawn, there is expert evidence to be put together. Litigation over patents can take 2 to 3 years. To say that there must be a solution [arrived at] within a smaller framework gives the licensor the opportunity to wait around till the end of that period and assert its patents through an injunction. If you're leaving injunction at the table, you will not have a fair solution. The licensee will always be at a major disadvantage. The IEEE solution is a good one because it has taken the time limit away, but at the same time the policies that would adopt that solution need to include the discipline to ensure that the negotiations are bona fide.

What percentage of the sale price should be provisioned by a product developer for royalties? Can a mechanism be drawn up for this purpose?

Justice Ratnakala: Definitely. Such a mechanism should be drawn up in the near future.

For more details visit https://cis-india.org/a2k/blogs/conference-on-standards-settings-organizations-sso-and-frand-nlsiu