TIPS® Taiwan Intellectual Property Special
Taiwan Updates
Philips Wins the CD-R Blanket Licensing Dispute
Philips Electronics (Philips), Sony Corporation, and Taiyo Yuden’s dispute with the Taiwanese local CD-R manufacturing industry began in the late 1990s. The said three companies pooled their patents covering CD-R technology in a patent pool and licensed the pool to Taiwanese manufacturers. The patents in the package included both essential and non-essential technology to the production of CD-R. As a result, Taiwanese CD-R manufacturers refused to pay the royalty fees requested by Philips et al., and filed a complaint with the Taiwan Fair Trade Commission (TFTC) accordingly. In January 2001, the TFTC found concerted action among the three companies, and rendered the decision that Philips and the other two CD-R patentees violated Article 7 of the Fair Trade Law for monopolizing through the patent pool, and requested that the three companies should discontinue the patent package, with a fine totaling approximately NT$14 million. Subsequently, Sony and Taiyo Yuden offered separate licenses, while Philips filed an appeal and continued the lawsuit with the TFTC for the next seven years.
In January 2007, the Supreme Administrative Court affirmed the decision of the High Administrative Court, and revoked the ruling from TFTC. The Supreme Administrative Court found that, although patents owned by the three defendant companies are essential in the manufacture of DC-R and were in monopoly position, the three company do own the patented technology that fulfill the requirement of “Orange Book;” the patented technology owned by each of the defendant is supportive and complimentary to each other, rather than replaceable. Without replaceable products, the three companies were not in a competitive relationship; so even with concerted action, they would not be able to engage in illegal price fixing or restraining the production quantity. Therefore, they would not affect trading opportunity or order, and hence did not violate Fair Trade Law.
The Fair Trade Commission has not yet decided whether to make a new ruling for this case. |