Access to affordable medical care is a fundamental right of every human being. From the perspective of patent law, in India, generally the focus has been on pharmaceutical drugs and how patent law can balance the right of public to affordable drugs viz-a-viz the right of innovators. However, healthcare in the contemporary world extends far beyond conventional medicine and into an untapped, unexplored and unchecked upcoming avenue: Medical Technology ("Med-Tech")
From health monitoring smartwatches/ bands, continuous glucose monitors, smart diagnostic equipments to mobile applications which can do cardiovascular diagnosis, there is an increasing reliance on Med-Tech both by the common man as well as medical professionals.
Medical professionals, using such devices, are now enabled to track data and provide specific and personalised treatments. At the heart of this is the use of interconnected devices and apps- devices which rely on, inter-alia, existing technology standards such as WiFi-tech, 4/5G and Bluetooth. The growth of the Internet of Medical Things or IoMT- devices, apps and systems communicating over the internet to provide better analysis of medical data is bound to revolutionize the medical space.
However, with the rise of Med-Tech comes the issue of patented technology and specifically that of Standard Essential Patents (SEPs) which are mandated to be licensed on Fair, Reasonable and Non-Discriminatory (FRAND) rates. Illustratively several questions- some of which we explore herein- arise; (1) Will new technology standards that are evolved in the medical devices also follow the FRAND protocol? (2) Will existing jurisprudential frameworks covering the use of SEPs from existing standards- like 5G and WiFi etc., apply sans any change in Med-Tech, for example- will FRAND royalties be derived from the price of the end device or will the Smallest Saleable Patentable Unit argument be revisited? and (3) since there is an undeniable element of public interest involved when it comes to medical space, will this have to be factored in while determining the appropriate FRAND license when it comes to use of SEPs in Med-Tech?
For the uninitiated, SEPs refer to patents which are self-declared to be essential to a certain standard (e.g. 4G) i.e. you cannot implement the standard sans use of the patent. These patents are mandated to be licensed on FRAND terms and a license cannot be refused. However, no authority verifies the validity or essentiality of the standard nor does any authority decide FRAND terms. Both these matters are left to courts of national jurisdiction, leading to litigation across the globe.
Therefore, if MedTech incorporates standards, it will be essentially locked in to the standard and bound to practice self-declared essential patents and will have to negotiate a FRAND license. However, this will lead to a rise of litigation, since parties seldom agree on essentiality, validity or the value of FRAND. Such issues have already begun to arise as demonstrated in the Masimo v Apple litigation over pulse oximetry in smart watches. Although not an SEP, this indicates the beginning of patent litigation in MedTech devices. In fact, a recent IAM article referred to an IPlytics report to demonstrate "number of smart healthcare patent filings has consistently risen over the past year" with over 36000 patent applications in healthcare and over 4000 SEPs as of 2021. These patent filings are led by sophisticated SEP holders such as Samsung, Qualcomm, Philips etc. The statistics show that SEP licensing is coming to healthcare, and imminently so.
But why should Indian companies care about SEP/ FRAND licenses matter in the med-tech space? Well, the reasons are not too hard to fathom:
- MedTech, especially in India, will comprise not just of major conglomerates but start-ups and MSMEs as well which segment can be particularly vulnerable to supra-FRAND rates and non-FRAND conduct by SEP holders, who look to leverage the smaller entities with threats of injunctions.
- In India, access to affordable healthcare including the best devices and equipment's is far more critical than it is in the West simply due the sheer numbers and limited access to healthcare. India- a social welfare state, is an emerging economy that is home to nearly 1.5 billion people (yes, you read that right). There is thus an urgent need to ensure technology democratization in India and, therefore, public interest might just be a critical element in any SEP/ FRAND negotiation and dispute in this field- an aspect that might not have existed in the smartphone space or in the automotive space. Health is not a luxury; it is a fundamental right.
- Some of the issues, such as device level license rate v. SSPPU (smallest saleable patent practising unit) level license rate might have to be revisited when it comes to med-tech. The value of standardised tech in med-devices cannot overshadow the overarching purpose and need for the device itself- its centrality to providing health care. For instance, diagnostic equipment would necessarily be required to conform to certain standards. However, if conformance to the standard results in royalties as a portion of the price of the device, which far exceeds the affordability for the patients, such devices would likely not be affordable to the common man.
- An already existing problem of informational asymmetries between SEP holders and implementers will become more pronounced in the Med Tech space, since players in this space have not had the benefit of the "Smartphone Wars". Thus, it is crucial that all MedTech companies be prepared and aware of their rights.
Lastly, considering the critical nature of this field and the growing dependence on SEPs by medical professionals and government MSME initiatives alike, it appears increasingly likely that the Government of India may eventually establish a formal framework to govern and monitor SEP-FRAND licensing.
However, until such regulatory oversight materializes, a crucial question emerges: Will SEP holders and medical device manufacturers demonstrate FRAND conduct and exercise appropriate caution in matters affecting public health, or will the medical technology landscape become another battleground for acrimonious FRAND litigation?
Originally published in Law Pickle
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