Definition
FRAND refers to the licensing terms under which the owner of a Standard-Essential Patent (SEP), having made a voluntary commitment to a Standard Setting Organization (SSO), is obligated to make the patented technology available to all willing licensees. A FRAND license must be fair in its treatment of both the licensor and the licensee, reasonable in its economic demands, and non-discriminatory in its application across different licensees.1
Commentary
Evolution of FRAND Jurisprudence in India
The term FRAND is discussed by the Indian courts in the dispute involving Standard Essential Patents (SEPs). Standards play an important role in a modern economy as they promote innovation, increase the quality and viability of products and provide jobs and growth as well as provides support to the global value chain. Standards allow for the early market adoption of innovative products and services and make products economical for firms to produce and more valuable to consumers.2
Competition Commission of India (CCI) has noted that FRAND licences in SEPs are primarily intended to prevent Patent Hold-up and Royalty Stacking3
While deciding a SEP matte, the court stated that a FRAND license should be fair in its treatment of both parties, reasonable in its economic demands as well as non-discriminatory in its application across different licensees. The court further noted that adoption of these principles would be essential to promote innovation in the telecommunications sector while ensuring equitable accessibility and preventing excessive monopolisation. As per the court, FRAND terms prevent patent holders from monopolising a standard, fostering a competitive and dynamic market and at the same time ensure that the essential technologies are accessible to various industry players and leads to broader and more rapid technological adoption and advancement. The FRAND protocol, in SEPs, was established in order to balance equities and the legitimate interests of both the parties i.e. the patent owner and the licensee to ensure that neither party has unjust bargaining power in negotiations.4
Indian courts as also referred to the ETSI IPR policy in this regard. As per the clause 6 of ETSI IPR policy, an IPR owner is required to give irrevocable written undertaking, allowing to grant irrevocable licences on FRAND Terms. The patent owner has to grant irrevocable licence to Manufacture, including the right to make, Sell, lease, or otherwise dispose of equipment so manufactured and to Repair, use, or operate equipment including use methods.
FRAND enforcement trends in India
The division bench of Delhi high court in K K Bansal vs Koninklijke Electronics Nv, while deciding a matter involving SEPs, held that while deciding the question whether the royalty rate offered by the party in dispute are FRAND, must be supported by evidences. Such evidences may be in the form of an agreement with any third party.5 Later, Indian courts also held that Property Rights Policies of SDOs usually impose the obligations on Standard Essential Patent holders to offer licences to all willing licensees on FRAND terms and the SEP holder is therefore, at a disadvantage during the term of the patent itself, as it is deprived of freedom to decide the terms of a licence as it has to be on FRAND terms. As per the courts, a licensor will be considered a willing licensor only if it gives a FRAND offer and in certain situations provides information necessary, subject to confidentiality agreement, for a licensee to evaluate an offer (relevant to 'ND' part of FRAND) and in case, the licensor offers a supra-FRAND offer/exorbitant royalty rate rates, he will not be considered a willing licensor.6
Telefonktiebolaget Lm Ericsson (Publ) vs Lava International Ltd, CS(COMM) 65/2016, para 16.2↩︎
INTEX TECHNOLOGIES (INDIA) LTD v TELEFONAKTIEBOLAGET L M ERICSSON, FAO(OS)(COMM) 296-297/2018↩︎
In Re: Intex Technologies (India) Limited vs Telefonaktiebolaget LM Ericsson (Publ), Case No. 76/2013, CCI, In Re: Micromax Informatics Limited vs Telefonaktiebolaget LM Ericsson (Publ), Case No. 50/2013, CCI↩︎
Telefonktiebolaget Lm Ericsson(Publ) vs Lava International Ltd, CS(COMM) 65/2016↩︎
KK Bansal vs Koninklijke Electronics Nv, RFA(OS)(COMM) 17/2018, CM APPL. 31483/2018, CM APPL. 26137/2023, CM APPL. 38867/2023, CM APPL., 38868/2023 & CM APPL. 66350/2024↩︎
Intex Technologies (India) Ltd vs Telefonaktiebolaget L M Ericsson, CS(COMM) 65/2016↩︎
