Standard Essential Patents and FRAND Licensing

1. Standards and SEPs

Mobile telephony (2G, 3G, 4G, 5G), Wi-Fi and video compression work only because all devices follow common technical standards. Standard-setting organisations (SSOs) such as ETSI (the European Telecommunications Standards Institute), IEEE and ITU develop them with contributions from member firms. Many contributions are patented; once a standard is adopted, every compliant device necessarily uses those patents. A patent is “essential” if it is not technically possible to comply with the standard without infringing it.

2. FRAND

To prevent SEP owners from exploiting the lock-in, SSOs require members to declare essential patents and to give an irrevocable undertaking to license them on FRAND terms. The ETSI IPR Policy (clause 6.1) is the most litigated: the undertaking is a contract governed by French law, enforceable by implementers as third-party beneficiaries.

Two opposite risks:

• Hold-up: after the industry is locked in, the SEP owner demands royalties reflecting the value of the standard rather than its own patent, backed by injunction threats.
• Hold-out: the implementer uses the patents and delays taking a licence, knowing that at worst it will pay a FRAND royalty later.

The law tries to strike a balance through process obligations on both sides.

3. The EU: Huawei v. ZTE (CJEU, 2015)

The Court of Justice held that a dominant SEP owner who has given a FRAND undertaking does not abuse its dominance under Article 102 TFEU by seeking an injunction if it: (1) alerts the alleged infringer, before suing, identifying the patent and how it is infringed; (2) after the infringer expresses willingness to take a FRAND licence, makes a specific written offer stating the royalty and how it is calculated. The infringer must respond diligently, in good faith and without delaying tactics; if it rejects the offer it must make a prompt FRAND counter-offer and, if that is rejected, provide security for past and future use. An infringer who follows these steps is protected from an injunction; one who does not is an unwilling licensee.

4. The UK: Unwired Planet v. Huawei (UKSC, 2020)

The UK Supreme Court held that: (1) an English court may determine the terms of a global FRAND licence for a worldwide portfolio, and grant an injunction in England if the implementer refuses to take it, since a willing licensor and licensee would deal on a global basis; (2) the non-discrimination limb does not require the SEP owner to offer every licensee the same rate as its most favoured licensee (it is a general, not a “hard-edged”, requirement); (3) Huawei v. ZTE sets a safe harbour, not mandatory steps. Later English decisions (InterDigital v. Lenovo, Court of Appeal, 2024; Panasonic v. Xiaomi, 2024, on interim licences) have set global rates and declared what a willing licensor would offer pending trial.

5. The US

After eBay v. MercExchange (2006) injunctions for SEPs are rare. In Microsoft Corp. v. Motorola Inc. (9th Circuit, 2015) a FRAND rate was set by the court, and seeking injunctions in breach of the FRAND commitment was held capable of breaching contract. Rate-setting methods include comparable licences and the “top-down” approach (an aggregate royalty for the standard, divided by the patentee's share of essential patents). The US agencies' policy statements on SEP remedies have changed several times since 2013.

6. India: the Delhi High Court

Indian SEP litigation has been brought almost entirely in the Delhi High Court, mostly by Ericsson, Nokia, Philips, InterDigital and others against handset makers.

• Ericsson v. Micromax (2013 onwards) and Ericsson v. Intex (single judge, 2015): the court granted interim relief, directing the implementer to pay interim royalties at rates derived from Ericsson's comparable licences. It held that an implementer who uses the patents without negotiating in good faith cannot avoid paying merely by challenging validity or essentiality.
• Pro-tem security. In Nokia v. Oppo (Division Bench, 2023) the court upheld an order requiring Oppo to deposit a substantial sum as pro-tem security, since it had earlier taken a licence on those SEPs and continued using them after expiry. This tool, a deposit pending trial, is the Indian answer to hold-out and avoids the harshness of an interim injunction.
• Ericsson v. Lava International (single judge, 2024): after a full trial, the court held Lava liable for infringing Ericsson's SEPs on AMR and related technologies, rejected Lava's invalidity challenges, found it an unwilling licensee, and awarded substantial damages with costs. It was the first SEP case in India to go to final judgment and damages.
• More recent suits on Wi-Fi and video-coding standards show that SEP litigation in India has extended beyond cellular standards.

7. Patents Act or Competition Act?

Micromax and Intex complained to the Competition Commission of India that Ericsson abused its dominance by demanding excessive, discriminatory royalties. The CCI ordered investigations (2013–14). Ericsson challenged the CCI's jurisdiction. In Telefonaktiebolaget LM Ericsson v. Competition Commission of India (Delhi High Court, Division Bench, 2023), the court held that the Patents Act, being a special and later statute with its own scheme for abuse of patent rights (compulsory licences, s.140, revocation), prevails over the Competition Act as regards the exercise of patent rights, so the CCI could not inquire into Ericsson's conduct. The decision is criticised for leaving no competition regulator for SEP abuse, since the Patents Act remedies are designed for individual patents rather than for market conduct.

8. Policy

The Department of Telecommunications and the Department for Promotion of Industry and Internal Trade have consulted on SEP policy (a DIPP discussion paper on SEPs and their availability on FRAND terms), but India has no specific SEP statute or guidelines. Issues for a national policy: transparency of essentiality declarations, rate-setting methods, the role of the CCI, and the position of Indian manufacturers who are mostly implementers rather than SEP holders. The European Commission proposed an SEP Regulation in 2023, with a register and essentiality checks, but withdrew it in 2025.

How this is examined

A short note on SEPs or FRAND, or a part of an essay on patents and competition. Define SEP and FRAND, explain hold-up and hold-out, give Huawei v. ZTE steps, Unwired Planet on global licences, the Delhi cases, and Ericsson v. CCI.