Navigating The SEP Ecosystem: Standards, Standard Essential Patents and Standard-Setting Organizations

Abstract

The telecommunication industry is the backbone of modern technology that facilitates connecting people and devices across the globe. In India, the telecom sector has seen massive growth, with the total telephone subscriber vase reaching 1.99 billion in March 2024 and rural teledensity of 59.19%. This connectivity is possible due to standards. Standards provide the technical specifications and guidelines necessary for ensuring that products made by different manufacturers work seamlessly. For instance, an Android phone is able to connect to an iPhone due to certain standardized technologies present in it which enable interoperability. Interoperability is indispensable in any industry, even more so in the telecommunications industry. Standards play a crucial role in facilitating interoperability, creating cost efficiency and fostering innovation and competition. One of the major components in this standards ecosystem is Standard Essential Patents (SEPs). SEPs are patents that are given the status of essentiality due to them being indispensable to implementing a standard. This means that any product or service anticipating to comply with a technical standard such as 5G or 4G must have these SEPs in them. SEPs are vital for the dissemination of standardized technologies and promote innovation. SEPs enable interoperability of devices and networks which is essential in the telecommunication industry. SEPs are considered to be “prized possessions” in a company’s portfolio as they yield high returns through licensing when compared to regular patents. The dissemination and management of SEPs is in the hands of Standard Setting Organizations (SSOs). SSOs develop these standards through collaboration between various stakeholders such as manufacturers, licensees, businesses and regulatory bodies. SSOs maintain and ensure access to standards to licensees on terms that are Fair, Reasonable and Non-Discriminatory (FRAND). SSOs aim to balance the interests of SEP holders to monetize their SEPs and the implementers’ interests to have access to standardized technologies. This paper aims to explore the nature of standards, the importance of SEPs in the telecommunication industry and the role of SSOs in the development of SEPs.