Standard Essential Patents and FRAND Licensing in India: Essentiality, Rate-Setting, and What Implementers Must Do 

Summary

Standard Essential Patents (“SEPs”) occupy a peculiar position in Indian patent law. A patent holder whose technology is genuinely essential to an industry standard may be required, pursuant to its declaration and licensing commitment to a standard-setting organisation, to license that patent on fair, reasonable, and non-discriminatory (“FRAND”) terms. Yet Indian patent law does not prescribe a statutory formula for determining what constitutes a FRAND royalty or how a court should calculate one. 

The Delhi High Court has therefore played a significant role in developing India’s jurisprudence on SEP licensing and FRAND licensing, culminating in its landmark 2024 judgment in Telefonaktiebolaget LM Ericsson v. Lava International Ltd. This article examines how the Court approached essentiality, claim mapping, FRAND royalty rates, comparable licences, patent exhaustion, and the conduct expected of implementers receiving a SEP licensing demand in India. 

Introduction: Essentiality and Claim Mapping

A patent becomes “standard essential” when it is necessary to implement a particular industry standard. In practical terms, this means that a product complying with the relevant mandatory requirements of the standard cannot implement those requirements without practising the patented invention. Telecommunications standards developed by organisations such as the European Telecommunications Standards Institute (“ETSI”) provide a common example. 

Because a standard-compliant device may need to practise the technology covered by an SEP, the SEP holder can acquire significant licensing leverage. To address this and facilitate access to standardised technology, standard-setting organisations commonly require SEP holders to make licensing commitments on FRAND terms. 

Establishing essentiality in litigation turns substantially on claim mapping, a technical exercise in which the SEP holder demonstrates, patent by patent, how the claims of the asserted patent correspond to mandatory elements of the relevant standard. In the Ericsson-Lava dispute, the Delhi High Court considered claim charts and the technical evidence placed on record in determining essentiality and infringement. The Court found that Ericsson had established essentiality and infringement in respect of seven of the eight asserted patents, while one patent was found invalid. 

The judgment illustrates the practical importance of a detailed claim mapping exercise in SEP litigation in India. An implementer seeking to dispute essentiality cannot necessarily rely merely on a theoretical assertion that alternative implementations exist; the issue must be addressed through credible technical evidence demonstrating that the relevant standard can be implemented without infringing the asserted patent. 

FRAND Rate-Setting: The Comparable Licence Approach

The single most consequential doctrinal contribution of the Ericsson v. Lava litigation lies in the Court’s approach to calculating a FRAND royalty rate, a question on which Indian patent legislation provides no specific formula. 

Two competing methodologies are frequently discussed internationally. The “top-down” approach starts from the aggregate royalty burden that the industry can reasonably bear across all SEPs reading on a standard and then apportions an appropriate share to the specific SEP holder. The “comparable licences” approach, by contrast, examines actual licensing agreements entered into by the SEP holder with similarly situated licensees and uses those transactions as evidence in determining a FRAND rate. 

The Delhi High Court in Ericsson-Lava considered the comparable licensing approach to be the more reliable methodology in the circumstances of that case, while treating the top-down approach as, at most, a useful cross-check. The Court examined comparable licensing arrangements and found that the rates offered by Ericsson to Lava were consistent with rates applicable to similarly situated licensees. 

The Court ultimately determined the applicable FRAND royalty rate for Lava at 1.05% of the net selling price of the relevant devices. The rate was applied for the period from 1 November 2011 to 8 May 2020, and the Court awarded damages of approximately ₹244.08 crore, together with interest at 5% per annum from the date of judgment until realisation. 

This makes the case particularly important for businesses involved in SEP licensing negotiations, because it demonstrates the evidentiary importance that comparable licences can have when a court is required to determine a FRAND royalty rate. 

End-Device Value vs. Smallest Saleable Patent-Practising Unit

The Court also rejected Lava’s proposed approach of calculating royalties solely by reference to the “smallest saleable patent-practising unit” (“SSPPU”), such as the chipset implementing the relevant technology. 

The Court considered the role of cellular connectivity in mobile devices and held that, in the circumstances of the case, calculating royalties at the end-device level was appropriate. The Court therefore used the net selling price of the relevant devices rather than the price of the chipset as the royalty base. 

The decision is significant for businesses negotiating FRAND licensing terms in India, particularly where an implementer seeks to limit the royalty base to a particular component rather than the complete standard-compliant product. However, the judgment should not be read as establishing an inflexible statutory rule that every SEP royalty in every industry must always be calculated on the end-product price. The royalty base remains a matter requiring assessment in the context of the relevant technology, industry, comparable licences and evidence before the court. 

Pro Tem Security: An Interim Mechanism in SEP Litigation

SEP disputes can take several years to reach final adjudication. Indian courts have therefore developed interim mechanisms intended to protect SEP holders from prolonged uncompensated use of patented technology while also avoiding an immediate blanket injunction that could disrupt an implementer’s commercial operations before issues of essentiality, validity and infringement have been finally determined. 

One such mechanism is the pro tem security deposit. In SEP disputes before the Delhi High Court, courts have directed implementers to deposit security amounts pending adjudication, with the amount being determined by reference to the circumstances and material available in the particular case. 

The Ericsson-Lava litigation itself illustrates this approach. During the proceedings, the Delhi High Court directed Lava to deposit an amount with the Court, which was subsequently modified in appeal. The interim security mechanism allowed the dispute to proceed without requiring the Court to immediately shut down the sale of the implementer’s products through a final-style injunction. 

The practical purpose of pro tem security in SEP disputes is therefore to balance competing interests: protecting the SEP holder against prolonged uncompensated use while allowing the implementer to continue commercial operations pending final determination of the dispute. 

Patent Exhaustion Under Section 107A(b): Why Lava’s Defence Failed

Section 107A(b) of the Patents Act, 1970 addresses certain acts involving the importation of patented products by a person duly authorised by the patentee to sell or distribute the product. The provision formed the basis of Lava’s exhaustion defence in the Ericsson-Lava dispute.  Lava argued, in substance, that because it sourced chipsets from suppliers that were said to have licensing arrangements with Ericsson, Ericsson’s patent rights had already been exhausted and Lava therefore did not require a separate licence at the handset level. 

The Delhi High Court rejected the defence on the facts before it. Among other findings, the Court concluded that Lava had not established that its chipset suppliers held licences from Ericsson covering the specific patents in dispute. The Court also considered the nature of the rights asserted and whether the relevant authorised sale could establish exhaustion in respect of the acts undertaken by Lava. 

The decision therefore illustrates an important point for businesses assessing patent exhaustion in SEP licensing: the mere existence of a licensing relationship somewhere upstream in a supply chain does not automatically establish exhaustion in favour of a downstream implementer. The scope of the relevant licence, the identity of the authorised seller, the patented product involved and the rights covered by the authorised transaction must be examined carefully. 

For implementers relying on Section 107A(b), documentary evidence concerning the relevant supplier licences and the scope of the rights granted can therefore become critical. 

What Implementers Should Do on Receiving a SEP Licensing Demand

The Court’s findings on Lava’s conduct provide important guidance for businesses receiving a SEP licensing demand. The judgment placed considerable emphasis on the conduct of both parties during FRAND negotiations, including whether an implementer meaningfully engaged with the licensing proposal and made a genuine counter-offer. 

The Court found that Lava’s conduct included prolonged delays in the negotiations and a failure to make a meaningful counter-offer to Ericsson’s proposals. These factors were considered in assessing whether Lava had acted as a willing licensee. The Court ultimately characterised Lava as an unwilling licensee in the circumstances of the case. 

For an implementer receiving a genuine FRAND licensing demand in India, the judgment therefore offers several practical lessons.  First, the implementer should engage substantively and promptly with the SEP holder’s essentiality and infringement evidence rather than simply rejecting the demand. Where essentiality is disputed, the implementer should undertake a technical assessment of the relevant patents and standards and identify the specific basis of its objection. 

Second, an implementer disputing a proposed FRAND royalty rate should consider making a reasoned counter-offer. Simply describing a SEP holder’s offer as excessive without articulating an alternative position may create difficulties in demonstrating that negotiations have been conducted constructively. 

Third, the implementer should examine potentially relevant comparable licences and other evidence capable of supporting its proposed royalty methodology. The Ericsson-Lava judgment demonstrates the evidentiary significance of comparable licensing transactions in determining FRAND rates. 

Fourth, businesses should assess whether an interim pro tem security deposit or other interim arrangement may be appropriate where the parties are unable to conclude a licence while litigation is pending. 

Finally, prolonged delay should not be treated as a cost-free negotiation strategy. The Ericsson-Lava judgment demonstrates that an implementer’s conduct during negotiations can have consequences for the court’s assessment of whether it acted as a willing licensee and for the eventual determination of monetary relief. 

Conclusion

Indian SEP jurisprudence has, over the past several years, moved from a body of interim orders addressing injunctions and security deposits towards a more developed framework addressing SEP essentiality, FRAND licensing, royalty determination, patent exhaustion and implementer conduct. 

The Delhi High Court’s 2024 judgment in Telefonaktiebolaget LM Ericsson v. Lava International Ltd. is particularly significant for its treatment of claim mapping, comparable licences, the royalty base and the conduct expected during FRAND negotiations. The Court determined a FRAND royalty rate of 1.05% of the net selling price of Lava’s devices and awarded damages of approximately ₹244 crore in the circumstances of that case. 

However, the judgment should be understood in its factual and evidentiary context. The appeals arising from the judgment continued to be pending before the Delhi High Court in 2026, including proceedings listed in April and May 2026. Accordingly, while Ericsson-Lava is an important reference point for SEP licensing and FRAND disputes in India, its findings should not be treated as a universally applicable formula for every SEP dispute. 

For implementers, the practical message is clear: a SEP licensing demand should be addressed through timely technical and commercial analysis, a reasoned assessment of essentiality and infringement, meaningful engagement on FRAND terms, and documentary evidence supporting the implementer’s position. For SEP holders, the case underscores the importance of maintaining robust claim mapping, licensing evidence and a defensible methodology for establishing that proposed royalty rates fall within the FRAND range. 

Last Updated on 1 October, 2026