經通國際智慧產權事務所

On March 13, 2008, Taipei High Administrative Court reversed Taiwan Intellectual Property Office’s (TIPO) decision of compulsory licensing regarding Koninklijke Philips Electronics N.V.(Philips)’s registered “CD-R” manufacture patents in Taiwan.

Philips is the owner of 5 registered patents regarding the CD-R manufacturing methods in Taiwan and had entered a license agreement (ten-year duration) to authorize Gigastorage Corp. to produce CD-R with the said patents in October 1999. However, in March 2001, as Gigastorage considered the license royalty of 30% of the product sale price to be unreasonably high, Philips was requested to lower the royalty to 2~5% of the sale price. As the negotiation between the two parties eventually failed, the license agreement was therefore terminated. As a result, Gigastorage had then sought TIPO’s decision of compulsory licensing the said patents with success in July 2004.

However, Philips had then taken this matter to the Taipei High Administrative Court and successfully appealed TIPO’s decision. The court reasoned that for a compulsory license order to be legitimate, the applicant should exhaust the attempts to seek license authorization from the patentee under “reasonable commercial terms” which includes the calculation method of the royalty, the distribution of risks, the technology/brand awareness, the competition among the related industries, and etc. However, even though the evidence provided by TIPO (including the disciplinary order against Philips by the Fair Trade Commission of Taiwan and the statement by the International Trade Commission of the United States) states that the calculation method of the loyalty requires further review; such evidence is unrelated to proving the misconduct of fair competition by Philips. As regards to Gigastorage’s claim of that the calculation of royalty is the most important factor in the agreement, the court’s review of the negotiation documents between Philips and Gigastorage reveals that the dispute also covers other conditions. Therefore, it is unreasonable that TIPO issued the decision of compulsory licensing based on the sole consideration of the royalty.

TIPO takes the position that even several statements covered in the decision issued by the court are arguable, as Gigastorage and Philips already reached a settlement; it is now unnecessary to further appeal against the court’s decision.

(from IPO 2007/05/02)

By Jenny Yu

International Affairs