Taiwan IP Update
National Intellectual Property Strategy Program
Bemoaning the state of patent litigation involving Taiwan’s technology companies, TSMC’s Dr. Richard Thurston1remarked in 2008 that “Taiwan is under siege.” After years of seemingly escalating litigation targeting Taiwanese companies2, Taiwan’s Ministry of Economic Affairs (MOEA) proposed the nation’s “National Intellectual Property Strategy Program” in November 2011.
Taiwan’s Industrial Technology Research Institute (ITRI, 工研院), a state-funded quasi-governmental agency situated in Hsinchu, will play a large role. In the first stage of forming an “IP Bank,” ITRI established Industrial Technology Investment Corp. (ITIC) as its wholly-owned IP management entity. ITRI will invest NT $250 million (US $8.28 million)3 primarily raised from the private sector to set up this management entity. The second stage of the IP Bank involves the formation of an IP Fund Company. The IP Fund Company will raise NT $900 million to $1,500 million (US $29.8 million to $49.66 million)4 to be allocated among three funds: counterclaim fund, deployment fund and virtual fund.5 The counterclaim fund will be primarily used for domestic companies’ defense against IPR infringement accusations in international patent litigation. The focus of the deployment fund will be on “long-term strategies for potential sectors to prevent international major companies from holding critical patent technologies.”6 The third fund, the virtual fund, is intended to be used by universities and R&D departments in their patent procurement programs.7
Although applauded by many in Taiwan, some Taiwanese scholars have raised concerns about the plan. They question the possible violation of certain World Trade Organization (WTO) provisions relating to joint monopoly because of the Taiwan government’s role in ITRI and the IP Bank.8 Some also question how patents in the IP Bank will be used by Taiwan’s high-tech companies in patent litigation counterclaims. If these patents are “temporarily lent” to the Taiwanese companies for counterclaim purposes, accusations of patent fraud may arise.9
Supporters point out that South Korea and Japan had undertaken similar actions to protect their own high-tech industries.10 As many details of the IP Bank are yet to be ironed out, its policies, operation and ensuing effectiveness will be closely observed.
On other fronts, ITRI has been asserting itself in the U.S. legal system by bringing patent infringement actions against South Korean electronics companies. Pending cases include those brought against LG in the Eastern District of Texas on a number of different patents involving different technologies and products. The Texas Court recently granted motions transferring those cases to California and New Jersey. ITRI’s prior settlement of seven patent infringement lawsuits with Samsung Electronics Co. for US $70 million was criticized by some recently as “unfair” and having an adverse affect on the IPR of Taiwan’s electronics companies.11 It remains to be seen how ITRI will manage the balancing act as it pursues lawsuits as a business model to monetize its patent portfolio while proceeding with the IP Bank program. Stay tuned.
1. Thurston, Richard L., “Taiwan Under Siege: the Intellectual Property Wars of the 21st Century,” National Cheng Kung University R&D Forum, May 2, 2008.
2. For example, one study found that of 136 U.S. patent law suits in the time period 2002-2010 related to the LCD industry, 81% of the cases involved Taiwanese companies.
3. “Expert on Patents Praises Idea to Set Up a Local IP Bank,” http://www.taipeitimes.com/News/biz/archives/2011/09/05/2003512461.
4. “The ‘National Intellectual Property Strategy Program’ to be Raised to the Level of Executive Yuan,” http://www.tsailee.com/news_show_en.aspx?cid=2&id=255.
10. Chiu, Yu-Tsu, “Taiwanese to Form Patent Bank to Defend Local Companies,” Oct. 2011, http://spectrum.ieee.org/at-work/innovation/taiwanese-to-form-patent-bank-to-defend-local-companies.
11. “ITRI Denies Samsung Deal Is Unfair,” Taipei Times, May, 13, 2011, http://www.taipeitimes.com/News/biz/archives/2011/05/13/2003503074.