Standard Essential Patents(SEPs)

A standard essential patent (SEP) is a patent that claims an invention that is essential to a standard. These standards frequently refer to technologies which are protected under the patent regime.​

Standards are technical requirements or specifications that seek to provide a common design for a product or process.

Patents which are essential to a standard and have been adopted by a Standard Setting Organization (SSO) are known as SEPs.

In short, A standard essential patent (SEP) is a patent which can be properly mapped onto a mandatory industry standard such that a product which conforms to that standard infringes the patent.​

Examples include USB, Wi-Fi, wireless charging, 5G, LTE, H.265, and JPEG.​

Patents provide incentives for research, development and facilitate knowledge transfers and standards ensure the rapid diffusion of technologies and the interoperability between products.​

A standard essential patent starts out as a typical patent and becomes essential to a given standard usually when it is declared to be essential by one of the contributing participants of the standard.​

Over-declaration happens when a patent owner asserts that patents are essential to a standard, but the standard can be implemented without implicating the patents. This can result in companies negotiating and paying for licenses for which they don’t need to pay, and can have the effect of causing companies to overpay.​

The Bureau of Indian Standards (BIS)​

• Patent holdup​
• Royalty base​
• Royalty stacking​
• Availability of injunctive relief

As part of the standard-setting process, and sometimes as part of the process of declaring a patent to be essential to the standard, the contributors of a technology who own patents on the technology agree to license the patent on fair, reasonable, and non-discriminatory terms pursuant to the policies of a standards-setting organization, sometimes abbreviated as FRAND.​

• Fair: It is usually quite easy to recognize unfair licensing requirements, e.g., it would be considered unfair to demand concessions that are not part of the licensing deal from a licensee, or to tie the grant of the license to unrelated commitments. However, fairness is subjective and more difficult to define.​
• Reasonable: Also a subjective theory, a good benchmark for evaluating reasonableness would be to compare with general industry practice, especially when discussing licensing royalty rates.​
• Non-discriminatory: Licensees that are in similar situations should always receive the same terms and rates. If for some reason this doesn’t happen, there should always be some objective grounds for the difference in treatment.​

Standard-setting organizations (SSOs) are responsible for creating and maintaining technical standards for various industries. They play a critical role in the SEP process by defining what technology is necessary to comply with these standards, including SEPs. SSOs also establish guidelines for how SEPs should be licensed, such as under fair, reasonable, and non-discriminatory (FRAND) terms. 

Yes, companies that hold SEPs may be required to license them to competitors under FRAND terms. This is because SEPs are considered essential to complying with industry standards, and withholding access to them could harm competition and innovation in the market. However, the terms of the license must be fair and reasonable, and non-discriminatory towards all parties seeking to license the technology. 

Determining whether a patent is an SEP can be complex and requires an understanding of the relevant industry standards. Typically, a company should consult with industry experts and legal counsel to determine whether their patent covers technology that is essential to complying with an industry standard. If the patent is found to be essential, the company may need to disclose the patent to the relevant standard-setting organization and offer licenses to competitors under FRAND terms.

Violating FRAND commitments for SEPs can result in legal and financial consequences for a company. In some cases, a company may face antitrust litigation or regulatory action if they engage in anti-competitive behavior by withholding access to their SEPs or charging discriminatory licensing fees. Additionally, breaching FRAND commitments can harm a company's reputation and relationships with industry partners, which can impact their ability to compete in the market.