Though India has the second-largest wireless subscriber base in the world, with more than 150 domestic mobile device vendors, it has, until recently, remained relatively unaffected by the global smartphone wars. Over the past few years, however, a growing number of patent enforcement actions have been brought by multinational firms against domestic Indian producers. These actions, which have largely resulted in judgments favoring foreign patent holders, have given rise to a variety of proposals for addressing this situation.
In order to assess the potential impact of patents on the mobile device market in India, and to assist policy makers in formulating and implementing regulations affecting this market, we have conducted the first comprehensive academic study of the patent landscape of the mobile device sector in India. The results of this study illuminate a number of important features of the Indian mobile device market, including the overwhelming prevalence of foreign patent holders, the rate at which foreign and domestic firms are obtaining patents, and how these patent holdings are likely to shape industrial dynamics in the Indian market for mobile devices, as well as the availability of low-cost mobile devices that can significantly enhance public health, agriculture, safety, and economic development throughout India.
TABLE OF CONTENTS I. INTRODUCTION II. OVERVIEW OF THE INDIAN MOBILE TELECOMMUNICATIONS MARKET A. Indian Telecommunications Regulation and Wireless Market Evolution 1. Early Telecommunication Market Regulation 2. Mobile Services B. Characteristics of the Indian Mobile Sector C. Applications of Mobile Technology in India 1. Healthcare 2. Agriculture 3. Personal Safety 4. Disaster Response and Relief III. THE INDIAN PATENT SYSTEM A. Overview of the Indian Patent System 1. Legal and Administrative Background 2. The Debate over Compulsory Licensing B. The Smart Phone Wars Reach India 1. Ericsson's Indian Patent Assertion Suits 2. Vringo's Indian Patent Assertion Suits 3. Competition Commission Investigations IV. The Mobile Device Patent Landscape in India A. Prior Studies 1. General (Global) Studies 2. India-Focused Studies B. Methodology C. Findings D. Analysis: Explaining the Disparity E. Areas for Further Study V. CONCLUSION I. INTRODUCTION
India has the second-largest mobile telephone subscriber base in the world, with nearly 1 billion wireless subscribers as of 2015. (1) Until recently, the Indian market for mobile handsets (including both feature phones and smartphones) (2) was dominated by multinational suppliers such as Samsung, Nokia, and Sony. (3) Over the past several years however, domestic Indian manufacturers have gained increasing market share, resulting in a market today with more than 150 different players. (4) The Indian firm Micromax rose from a 5.6 percent share of the Indian smartphone market in 2012 to an estimated 15 percent share in 2015, second only to Samsung, while Indian firms Intex and Lava rank third and fourth, respectively, in terms of market share. (5) These Indian firms, together with Chinese producers such as Lenovo and Xiaomi, have dominated the Indian market with a host of inexpensive units.
Many Indian smart phones are priced below $100, with a substantial number costing less than $40 or $50. (6) In February 2016, a virtually unknown Indian firm called Ringing Bells made international headlines when it announced the launch of its new bare bones "Freedom 251" smart phone, retailing for a mere Rs. 251 ($4) (7) While there is skepticism about the viability of sub-$5 smartphones, and even the authenticity of Ringing Bells' offer, (8) sub-$50 price points are critical to the broad dissemination of mobile technology throughout India, where the average income is far below Western levels. (9)
Domestic Indian mobile devices also cater to the local market with local language apps and features. (10) The least expensive devices are often characterized by the use of previous-generation technology, such as 2G or 3G rather than 4G wireless connectivity and lower-resolution displays and cameras. However. Indian firms have shown remarkable ingenuity in differentiating their product offerings, both from one another and from international competitors. Local Indian devices, offered at less than $100, have included models with oversized speakers, virtual piano keyboards, pico-projectors, multiple charging ports, and/or multi-lingual capabilities. (11) This flourishing of local innovation is remarkable and is encouraged, as this Article argues, by low entry barriers. (12)
In the developed world, the mobile device industry has been embroiled in patent infringement litigation for nearly a decade. (13) Multinational players such as Apple, Samsung, Google/Motorola, and Microsoft hold thousands of patents covering mobile devices and technology. (14) Patents in the mobile industry are held not only by handset manufacturers, but also by technology developers such as Qualcomm, Alcatel-Lucent, Broadcom, Texas Instruments, and Intel, wireless carriers such as AT&T, Sprint, Verizon, and NTT DoCoMo, and patent assertion entities, which may hold fewer patents but act more aggressively in asserting them. (15)
But, despite many years of relatively little patent litigation in the Indian telecommunication sector, there are signs that the attention of global patent holders has been drawn to this market. One 2010 study found that the vast majority of telecommunications-related patents in India are held by non-Indian firms. (16) And, over the past few years, multinational telecommunications giant Ericsson has brought patent infringement suits against several Indian and Chinese handset vendors serving the domestic Indian market. Industry experts have expressed concern that litigation by multinational patent holders against small Indian vendors could adversely affect recent national initiatives to foster a domestic Indian high-technology sector. (17)
In order to assess the potential impact of patents on the mobile device market in India, and to assist policy makers in formulating and implementing regulations affecting this market, we conducted a comprehensive patent landscape analysis of the mobile device sector in India. The study involved the collection and analysis of data relating to Indian patent ownership by technology type, nationality, and industry classification. These results illuminate a number of important features of the Indian market for mobile devices, including the overwhelming prevalence of foreign patent holders in India, the rate at which foreign and domestic firms are obtaining patents, and how these patent holdings are likely to shape industrial dynamics in the Indian market for mobile devices.
The remainder of this Article proceeds in three parts. Part II provides a brief history of the telecommunications market in India, charting the influence of foreign manufacturers and carriers on the market. Part II also includes a discussion of a range of humanitarian, public health, and agricultural uses of mobile technologies in India and other developing countries. Part III(A) provides an overview of the Indian patent system, focusing on its evolution in response to international pressures. Part III(B) discusses recent Indian patent infringement and competition litigation in the telecommunications sector. Part IV presents the results of the patent landscape study of the Indian mobile device market. Part V concludes with recommendations for further study and policy.
OVERVIEW OF THE INDIAN MOBILE TELECOMMUNICATIONS MARKET
Indian Telecommunications Regulation and Wireless Market Evolution
The telecommunications market in India has been characterized by a gradual shift from significant governmental regulation and control toward open market competition. This shift has both enabled competition among Indian service providers and carriers and fostered the opening of India's telecommunications equipment markets to foreign competitors.
Early Telecommunication Market Regulation
Following its independence, India established governmental monopolies in a number of industries, including telecommunications. (18) Foreign telecommunication firms were put under the control of the Posts and Telegraphs Department (P&T), a state-run monopoly, (19) and other private firms were prohibited from entering the market. (20) During the last half of the twentieth century, the Indian government invested only minimal amounts in its telecommunications infrastructure, severely limiting the quality, quantity, and range of available services. (21)
By the early 1980s, policy makers began to realize that India's protective industrial system and heavy regulation had resulted in stagnation and inefficiency. (22) In the mid-1980s, the Indian government took a first step toward liberalizing the telecommunications sector by allowing private firms to manufacture network terminal and switching equipment. (23) Around the same time, the Indian government also began to loosen import restrictions on electronics, computers, and telecommunications equipment. (24)
In the early 1990s, India experienced a severe economic crisis brought on by a combination of rising petroleum costs and the general global recession of 1991. (25) India's foreign exchange reserves were severely depleted and the rupee fell dramatically in value. (26) counter the effects of the economic downturn, the Indian government made several economic reforms, including partial liberation of the financial sector and gradual opening of the Indian market to foreign firms. (27) The resulting economic liberalization enabled private sector players to enter India's telecommunications market, boosting not only private investment and competition but also India's telecommunications infrastructure. (28)
Further changes to India's telecommunications sector were made in 1994 under the National Telecom Policy (NTP). (29) The NTP gave India's Department of...