India’s desire to become a leading semiconductor production center, as projected in the India Semiconductor Mission (2021), is based on a robust intellectual property (IP) regime. Patent protection for semiconductor design and manufacturing inventions under the Patents Act of 1970 safeguards innovations; however, patent thickets, high costs of litigation, and access restrictions to advanced technology are major hindrances to development. This article examines the nexus between patent law and innovation in India’s semiconductor industry, covering issues with standard-essential patents (SEPs), cross-licensing agreements, and global competition, and proposing how IP protection could be harmonized with technological progress.

PATENT LAW IN INDIA’S SEMICONDUCTORS CONTEXT

The Patents Act, 1970

The Patents Act of 1970, Section 3, lists some exceptions to patentability, e.g., software as such; however, semiconductor designs qualify for protection under the patent system if they are novel, have an inventive step, and are useful for industry. Semiconductor-related inventions, such as chip architectures, may be patented subject to these stated requirements. However, the strict requirements of the Act, especially those listed under Section 3(d) on incremental inventions, restrict the issuing of patents on minor improvements, which negatively impact small and medium enterprises (SMEs) in India’s growing semiconductor industry. This stringent criterion limits the ability of smaller players to secure IP protection for iterative advancements, potentially stifling innovation in a sector where incremental improvements are critical.

Standard-Essential Patents (SEPs)

Semiconductors revolve around SEPs, which are essential to industrial protocols such as 5G and IoT. They are key patents in compliance with widely used technical standards and therefore licensing of such patents is a point of dispute. There is doubt in the absence of simple affordable, non-exclusive or discriminatory (FRAND) terms of licensing by manufacturers. Regulators in India have been known to favour local manufacturers, but lack of a comprehensive FRAND policy makes agreements between implementers and patent holders difficult. Against the backdrop of upcoming 5G implementation in India, SEPs regarding semiconductor technologies are more controversial and should be struck in a balanced manner to allow access and act as a motivation factor. The lack of clear guidelines can even slow down the adoption of technology and India will not be able to compete in the international markets.

Patent Thickets and Cross-Licensing

Thickets Patent thickets (that is, the grouping together of overlapping patents by more than one party) hinders innovation because it puts up higher barriers to market entry. Product innovation becomes difficult when such thickets exist in the semiconductor industry, where each chip is patented thousands of times. The process taking place in these intersecting rights is quite complicated and demands substantial input, which averagely smaller companies cannot afford. The agreement of cross-licensing might help to reduce conflicts, yet it is not possible to employ it widely in India due to the sparse patent portfolios of fellowdom corporations. The problem of sample patent approval also contributes to the thicket since the slowness in patent granting generates uncertainty and heightened the risk of conflicting claim inflicting harm to India competitiveness in the world semiconductor market.

PRESENT CHALLENGES

Access to Technology

The semiconductor business of India is entirely dependent on foreign (imported) technology of industry giants like TSMC and Intel. Proprietary processes like 3nm production Patent restrictions deny access to critical processes in advanced chip production. The dependency on imported technology puts Indian companies at a disadvantage, since the cost of licensing and the counterproductive patenting conditions may be impediment to accessing the latest processes. The delay in patenting local innovations deters investments in research and development since the inventor is forced to incur an uncertain period. Section 84 compulsory licensing of the Patents Act may work as an obstacle remover but it is questionable whether it is testable in semiconductors as these are quite specific and complex in nature. Overcoming these limitations as well as building local capacities is still a serious challenge.

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Excessive Litigation Costs

Indian patent disputes are long and costly, discouraging startups. The monetary cost of delayed litigation comes to the forefront, particularly in disputes involving intricate chip design technologies. The absence of specialized IP courts, like the U.S. Patent Trial and Appeal Board, is also responsible for delay. Small businesses, the pillars of India’s semiconductor sector, are discouraged from enforcing or defending patents, discouraging innovation. The high financial and temporal costs of litigation create a chilling effect, where only well-funded entities can afford to protect their IP, leaving SMEs vulnerable to infringement or unable to assert their rights effectively.

Global Competition

China, South Korea and Taiwan are a competitive threat to India since they have effective patent systems. The meager numbers of patents that are filled by India, which amount to less than 2,300 applications as indicated in 2022 WIPO reports, are overwhelmed by the huge number of applications filled by China, which stands at over 68,000 semiconductor patents. This deficit is to be bridged by the India Semiconductor Mission; without patent reforms, local firms might fall behind. The urgency of swift patent adjudication so that India can compete with the world is rather obvious as stalled patents embolden India to compete in the blistering world global economy. The presence of streamlined patentation system and strong R&D network of countries continues to dominate further the need to reform the IP framework in India.

METHODS AND POLICY RECOMMENDATIONS

Streamlining Patent Awards

To curtail delays, amendments to the Patents Act can be brought to ensure quick processing of semiconductors related patents, rather like those proposed in the Draft Patent Rules (2023). That would be more effective when we have independent IP tribunal similar to the Intellectual Property Enterprise Court in the UK. Complex semiconductor patent disputes that would otherwise take a long time to adjudicate in the traditional manner, would be dealt with effectively within such a tribunal. The rapid processes of startups such as those tested in Singapore can be of value to the innovation economy of India. India can create a more inclusive ecosystem of innovators by focusing on patent filings by SMEs and startups, as this action would promote the entry of more innovators in the semiconductor industry.

FRAND Licensing Shell

India must have statutory FRAND, as is the case with the EU treatment of standard-essential patents. This will facilitate equitable access rights to SEPs as well as protection of the patent owners rights. The Patent Office can also work with the Central Consumer Protection Authority (CCPA) to regulate the use of FRAND to ensure that there is no conflict in terms of licensing. Clarity on FRAND regime would fix the doubt, ease with adoption of the technology, and enable the quest of India in realizing 5G and IoT. India has the capability to establish a predictable environment in SEP licensing by striking the right balance between the interests of patent holders and implementers due to the guidelines.

Public-Private Partnerships

India Semiconductor Mission must ensure that it can facilitate public-private ventures to facilitate R&D. Pooling patents such as Japan semiconductor consortia to prevent thickets by ensuring that various stakeholders can access crucially important patents. Filing of patent, as KIPO provided in South Korea, would subsidize the startups and SMEs and assist them to be relieved of the economic costs of obtaining IP protection. Such alliances may also be used to finance joint R&D activities and assist Indian companies in generating their own technologies and minimizing the use of foreign patents, which would enhance the domestic chip market.

CONCLUSION

The Patent law has both incentives and disincentives to the Indian semiconductor industry by fostering innovation, promoting thickets, cost barriers and access barriers. The Patent Act, 1970 is the jumping off point, however judicial expediency and international competitiveness require changes. India has the potential to leverage its semiconductor ambitions by streamlining the patent procedures, by adopting FRAND principles, and by encouraging partnerships with the help of IP. As the world demands more and more chips, a good patent regime will see India become a leading innovator and chip manufacturer globally. An equitable IP system will not only safeguard innovations but also make the global industry where India competes in semiconductors successful, which is what the India Semiconductor Mission is about.

Author :- Amrita Pradhan, in case of any query, contact us at Global Patent Filing or write back us via email at support@globalpatentfiling.com.

REFERENCES

1. Patents Act, 1970, No. 39, Acts of Parliament (India).

2. World Intellectual Property Organization, Patent Landscape Report: Semiconductors (2023).

3. Draft Patent Rules, 2023 (India).