FRAND by Arbitration: Can India Resolve SEP Wars Without Turning Every Case into a Competition Law Battle?

Standard essential patent disputes sit at the intersection of three legal anxieties: monopoly, access and valuation. A standard essential patent, or SEP, is not an ordinary patent. It is a patent that must be used to comply with a technical standard. Once a technology becomes standardised, the implementer does not have the usual commercial freedom to design around it. A smartphone manufacturer, automotive connectivity provider, internet of things company, chipset maker or telecom equipment manufacturer may have no realistic option but to use the standard. That is why SEP holders who have made FRAND commitments are expected to license their patents on terms that are fair, reasonable and non-discriminatory.

The difficulty is that FRAND is not a number. It is a legal standard, an economic inquiry and a commercial discipline. It requires assessment of essentiality, validity, portfolio strength, comparable licences, territorial sales, royalty base, apportionment, hold up, hold out and party conduct during negotiation. If every such dispute is pushed simultaneously into patent infringement litigation, competition complaints, anti-suit injunction proceedings and foreign rate setting actions, the result is not sophistication. It is procedural warfare.

India is now at the point where it must ask whether SEP disputes should continue to become competition law battles by default, or whether a structured FRAND arbitration model can do a substantial part of the work more efficiently.

The international jurisprudence shows why this question matters. In Huawei Technologies Co. Ltd. v. ZTE Corp., Case C 170/13, EU:C:2015:477, the Court of Justice of the European Union did not hold that every SEP injunction is abusive. It created a conduct-based framework under Article 102 TFEU. The SEP holder must first alert the alleged infringer by designating the SEP and specifying how it is said to be infringed. If the alleged infringer expresses willingness to conclude a FRAND licence, the SEP holder must then make a specific written FRAND offer, identifying the royalty and the method of calculation. If the implementer rejects the offer, it must respond diligently, make a concrete counter offer, and provide appropriate security where continued use is sought. The judgment is important because it converted FRAND from a slogan into a disciplined negotiation sequence. 

The United Kingdom moved the discussion further in Unwired Planet International Ltd. v. Huawei Technologies (UK) Co. Ltd., [2020] UKSC 37. The UK Supreme Court held that English courts could determine global FRAND terms for a multinational SEP portfolio and grant an injunction where the implementer refused to take a licence on terms found to be FRAND. The decision reflects the commercial reality that SEP licensing is usually portfolio based and global, even though patents remain territorial. 

In the United States, Microsoft Corp. v. Motorola, Inc., No. C10 1823JLR, 2013 U.S. Dist. LEXIS 60233, W.D. Wash., 25.04.2013, is significant because the court treated the RAND commitment as capable of judicial rate determination and undertook a detailed royalty analysis. It was a breach of contract and RAND valuation case, not an antitrust substitute and not an arbitration case. Its relevance for present purposes lies in showing that FRAND or RAND valuation can be adjudicated through a structured evidentiary process without reducing every dispute to competition enforcement. 

India’s SEP jurisprudence has developed rapidly, but largely inside litigation. In Inter Digital Technology Corporation v. Xiaomi Corporation, I.A. 8772/2020 in CS(COMM) 295/2020, decided on 03.05.2021, the Delhi High Court dealt with the Indian leg of a global SEP battle and restrained enforcement of a Wuhan anti suit order insofar as it interfered with the Indian infringement proceedings. The Court recognised that the Delhi suit concerned infringement of specific Indian SEPs, whereas the Wuhan proceedings concerned global royalty determination. That distinction is critical. Indian patent rights remain territorial, but FRAND disputes frequently travel globally. 

In Intex Technologies (India) Ltd. v. Telefonaktiebolaget LM Ericsson (Publ), FAO(OS)(COMM) 296/2018 and 297/2018, 2023: DHC:2243 DB, decided on 29.03.2023, the Delhi High Court accepted, at the interim stage, that Ericsson had made out a prima facie FRAND case based on comparable licences and industry acceptance, and directed Intex to pay the royalty amount. The Court’s observations were expressly prima facie, but the decision demonstrates the judicial anxiety that an implementer should not use delay as a royalty free period. 

In Nokia Technologies OY v. Guangdong Oppo Mobile Telecommunications Corp. Ltd., FAO(OS)(COMM) 321/2022, 2023:DHC:4465 DB, decided on 03.07.2023, the Delhi High Court’s Division Bench treated pro-tem security as distinct from an injunction. Such security does not stop manufacture or sale. It preserves the court’s ability to grant meaningful relief later, particularly where an ex-licensee continues to use the technology while disputing the new royalty. 

The competition law dimension has undergone a decisive, though not necessarily final, shift. In Telefonaktiebolaget LM Ericsson (Publ) v. Competition Commission of India, LPA 247/2016 and connected matters, including Monsanto Holdings Private Limited v. Competition Commission of India, LPA 150/2020, decided on 13.07.2023, the Delhi High Court held that Chapter XVI of the Patents Act is a complete code on unreasonable conditions in patent licensing, abuse of patentee status, inquiry in respect thereof and relief to be granted, and that the Patents Act must prevail over the Competition Act in that field. 

The Supreme Court order dated 02.09.2025 in Competition Commission of India v. Monsanto Holdings Pvt. Ltd., SLP(C) No. 25026/2023 and connected matters, did not finally pronounce upon the larger statutory conflict. The Court declined interference in the peculiar facts, particularly because the original informants had nothing further to say, and expressly kept questions of law open for an appropriate case. The practical position is therefore nuanced: the Delhi High Court’s patent centric approach presently stands, but the larger architecture of patent and competition overlap remains capable of future contest. 

This is precisely why FRAND arbitration deserves serious consideration. It is not a substitute for patent courts. It is not a substitute for the Controller in matters reserved to patent law. It is certainly not a private tribunal for determining questions with erga-omnes effect. Its utility lies elsewhere. It can determine, inter partes, the terms of a FRAND licence, the royalty payable, the relevant territory, the rate structure, the treatment of past use, confidentiality obligations, audit rights and interim security.

Indian arbitration law supplies a principled foundation for such a model. In Booz Allen & Hamilton Inc. v. SBI Home Finance Ltd., (2011) 5 SCC 532, the Supreme Court distinguished rights in rem from rights in personam and held that disputes concerning rights in personam are generally arbitrable. In Vidya Drolia v. Durga Trading Corporation, (2021) 2 SCC 1, the Supreme Court refined the doctrine and expressly observed that rights under a patent licence may be arbitrated, but the validity of the underlying patent may not be arbitrable. This distinction is crucial. A private tribunal cannot invalidate a patent against the world, but it can decide private licensing obligations between parties who have submitted to arbitration. 

That distinction is almost tailor made for FRAND. The grant of a patent, its revocation, compulsory licensing, rectification of statutory records and declarations binding the world are matters of public law or statutory authority. But the fixing of royalty between two commercial parties under a FRAND commitment is essentially relational. It is a dispute about the terms on which one party may use the technology of another. It is therefore a strong candidate for arbitration, provided the reference is carefully drafted and does not ask the tribunal to invalidate patents or bind strangers.

WIPO has already recognised this institutional possibility. The WIPO Arbitration and Mediation Center makes available tailored model submission agreements through which parties may refer disputes concerning determination of FRAND terms to WIPO Mediation, WIPO Arbitration, WIPO Expedited Arbitration or WIPO Expert Determination. These options are designed to make FRAND determination more cost and time effective and to accommodate the specialist character of SEP licensing disputes. 

For India, a workable FRAND arbitration clause should contain at least eight elements.

First, it must define the scope: whether the tribunal is determining an India only rate, a regional rate or a global portfolio rate.

Secondly, it must identify whether the arbitration covers declared SEPs, selected representative patents, selected patent families or the entire asserted portfolio.

Thirdly, it must preserve the right of either party to challenge validity before the competent court or statutory authority.

Fourthly, it must clarify that essentiality may be examined by the tribunal only for valuation and licensing purposes, without creating an in-rem declaration binding non-parties.

Fifthly, it must provide for confidentiality clubs, because comparable patent licence agreements are often the economic heart of the dispute.

Sixthly, it must permit interim security, escrow or staged deposit, so that arbitration does not become another vehicle for delay.

Seventhly, it must prescribe or at least permit valuation methodologies such as comparable licences, top-down analysis, incremental value and apportionment.

Eighthly, it must clarify the relationship between arbitral proceedings and court proceedings for injunction, infringement, validity and statutory patent remedies.

Such a model would reduce both patents hold up and implementer hold out. The SEP holder would receive a time bound forum for royalty determination. The implementer would receive a neutral process to test whether the demanded rate is truly FRAND. Courts would remain available for infringement, validity and coercive relief. The Controller would remain relevant where the Patents Act assigns jurisdiction. Competition law would remain available where the dispute genuinely transcends bilateral licensing and raises market wide concerns, subject to the evolving Indian position on jurisdiction.

The real merit of FRAND arbitration is that it can separate valuation from theatrics. SEP litigation often becomes a contest over forum, delay, confidentiality, global leverage and interim pressure. Arbitration can narrow the controversy to the commercial question at the heart of the dispute: what is the fair price for access to the standard?

India should not convert every SEP dispute into a competition law battlefield. Nor should it allow patent litigation to become a mechanism for extracting opaque royalties. The better path lies in a calibrated architecture: courts for infringement and validity, statutory authorities for matters assigned by the Patents Act, competition scrutiny where market wide abuse is genuinely implicated, and arbitration for inter partes FRAND determination.

FRAND is, after all, a promise of reasonableness. The procedure that enforces it should be reasonable too.