Business productivity across nations has grown significantly due to ICT (Information and Communication technology) revolution. In essence, ICT represents intersection of multiple technologies in a manner to revolutionize the communication across the globe. With such rapid growth, ICT growth has resulted in commercial as well as legal implications.
ICT companies routinely face complex issues pertaining to corporate laws and intellectual property rights (IPR), specifically ICT patents. Since ICT patents are bound to play a crucial role in shaping up the digital future of the world, the patent expertise required to solve the ICT patent issues involves thorough understanding of communication technology, hardware devices and components, digital technology, Software as a Service (SaaS), eCommerce, Data Processing innovations, Education Technology (EdTech), Semiconductors, Antennas, Microprocessors, Microcontrollers, Financial Technology (FinTech) and Digital Content based innovations.
As the citizens of the digital age, information technology has become an integral part of our lives. From catching up on the latest news to reading the new bestseller, there is hardly anything that can be done without the crutches of technology. In a nutshell, information technology is truly our second skin.
IT and ICT: Are they different?
While information technology (IT) refers to the whole gamut of computing systems aimed at the collection and dissemination of information, information and communication technology, commonly known as ICT, expands the scope of IT. In other words, one can say that ICT is an extension of IT with its focus on ‘connective communicative technologies’[i]. This is best illustrated by the definition assigned by UNESCO. As per UNESCO, ICT can be defined as a “diverse set of technological tools and resources used to transmit, store, create, share or exchange information. These technological tools and resources include computers, the Internet (websites, blogs and emails), live broadcasting technologies (radio, television and webcasting), recorded broadcasting technologies (podcasting, audio and video players and storage devices) and telephony (fixed or mobile, satellite, video-conferencing, etc.).”[ii] Given the subtleties of differences between IT and ICT, it is not very surprising that these terms are often used interchangeably.
ICT: The Building Block of the ‘Innovation Economy’
Given the dynamic nature of ICT, constant innovation is the life blood to make the ICT industry more sustainable. The growth of the ICT industry in the past few years has led to the development of what is called as the ‘innovation economy’. The report published by the New South Wales, Australia Innovation and Productivity Council describes innovation economy as a system where any innovative “changes emerge at large scale and come to dominate or disrupt pre-existing sectors, and commerce or trade, to foster advanced and high-growth industries.”[iii] The report further states that the growth of internet and digital systems has led to a globalised innovation economy and the future of nations have recognized that the sustainable growth is heavily dependent on how innovative the said economy is.[iv] The European Commission has also in its report stated that a smart growth of the economy lies in strengthening the knowledge and innovation.[v]
The ‘Reward’ in Innovation Economy: Granting Protection through patents
For an industry such as ICT that is entirely driven by innovation, providing adequate and appropriate incentives to the innovators becomes extremely essential. One of the ways in which incentives can be provided is by ensuring a strong framework to protect the interests of the innovators and allow them to reap the commercial benefits of their invention. This is where protection through patents comes in. Foremost, granting patent protection ensures that an inventor can control the commercial use of their invention[vi]. Secondly, patent protection also contributes to the development of the technology further as the revenues generated by the innovators are used towards extensive R&D.[vii]
Key Issues with Patent Protection in ICT Industry
Of the many concerns regarding patents awarded in the ICT industry, this article focuses on the two key issues of patent thickets and SEPs.
The complex technological process and the surge in the volume of patent applications has led to a fragmentation of patent rights and led to patent thickets[viii]. The only formal definition of a patent thicket has been provided by Carl Shapiro in his paper[ix] and he has described patent thickets as a “dense web of overlapping intellectual property rights that a company must hack its way through in order to actually commercialize new technology”. The reason for the growth of patent thickets in the ICT industry is due to the simple reason that protections are required for several technologies which will be then utilized for the manufacture of a new product. Some commentators have argued that this leads to a large volume of patent thickets can ultimately lead to lesser innovation and higher costs for the R&D[x]. Patent thickets are also furthering competition in the industry as companies are vying to acquire and boast of the biggest patent portfolio.[xi]
Standard Essential Patents and FRAND:
Standard Essential Patents or SEPs refer to the patents which have been granted in order to implement a specific industry standard. Access to such patents is crucial in the ICT industry in order to further and promote innovation. Accordingly, the Standard Setting Organization of a nation have committed license the SEPs on such terms and conditions which are ‘Fair, Reasonable and Non-Discriminatory” (FRAND).[xii]
The FRAND terms ensures that the patent holders receive an appropriate reward for their investment in research and development and at the same time there is access to these specific patents.[xiii] Commentators have also noted that lack of a standard procedure to determine FRAND leads to disputes in cases of SEP licensing which in turn hampers the widespread use of the key standardised technologies and development of a true innovation economy.[xiv]
The surge of patenting in the ICT industry has led to a fragmentation of IP rights which has proved to be a major bottleneck of most national patenting system. Disputes and litigations arising out of the licensing terms of such patents is also another issue plaguing the industry. Reforms of the patenting system, keeping in mind the specific needs of the ICT industry, will require a true harmonization of the patenting rules. A harmonized regime can prove to be a true game changer for the patents in ICT industry.
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Advocate Rahul Dev is a Patent Attorney & International Business Lawyer practicing Technology, Intellectual Property & Corporate Laws. He is reachable at rd (at) patentbusinesslawyer (dot) com & @rdpatentlawyer on Twitter.
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[iii] Page 7, The Innovation Economy: Implications and imperatives for States and Regions, Professor Greg Clark, Dr. Tim Moonen and Jake Nunley (August 2018), available at: https://www.industry.nsw.gov.au/__data/assets/pdf_file/0007/163267/IPC-The-Innovation-Economy-2018.pdf
[iv] See generally: The Innovation Economy: Implications and imperatives for States and Regions, Professor Greg Clark, Dr. Tim Moonen and Jake Nunley (August 2018), available at: https://www.industry.nsw.gov.au/__data/assets/pdf_file/0007/163267/IPC-The-Innovation-Economy-2018.pdf
[v] See generally The Innovation Union Competitiveness Report, European Commission, 2013, available at https://ec.europa.eu/research/innovation-union/pdf/competitiveness_report_2013.pdf
[viii] The Role of Patents in ICT: A Survey of the Literature, Stefano Comino et al. (2017) available at https://www.researchgate.net/publication/318040107_The_Role_of_Patents_in_Information_and_Communication_Technologies_ICTs_A_survey_of_the_Literature
[ix] Navigating the Patent Thicket: Cross Licenses, Patent Pools, and Standard-Setting, Carl Shapiro (2001), available at https://papers.ssrn.com/sol3/papers.cfm?abstract_id=273550
[x] Are ‘Patent Thickets’ Smothering Innovation?, Stefan Wagner, 2015, available at https://insights.som.yale.edu/insights/are-patent-thickets-smothering-innovation
[xi] Ibid. The author illustrates this with the example of Google launching its operating system. At that time, the patent portfolio of Google was relatively small. However, in order to be able to compete with industry giants like Apple, Google eventually acquired Motorola in order to gain access to its patent portfolio.
[xii] See footnote 8.
[xiii]Standard Essential Patents, Dipak Rao and Nishi Shabana, April 2016 available at http://www.mondaq.com/india/x/484412/Patent/Standard+Essential+Patents
[xiv] India as an Innovation Economy: The Role of IP and ICT, Indian Council for Research on International Economic Relations (ICRIER) and European Business and Technology Centre (EBTC), June 2018 available at http://www.indiaenvironmentportal.org.in/files/file/ICRIER-EBTC_White_paper_IP-ICT.pdf