The U.S. International Trade Commission (ITC) ruled last Thursday favorably to Taiwan's Gigastorage and Princo Corporation in an infringement claim sought by U.S. Philips Corp.
The ITC says that "six CD Recordable (CD-R)/Re Writeable (CD-RW) patents owned by Royal Philips Electronics (Philips) were valid and infringed, but not enforceable in the proceedings before the commission due to patent misuse." It also ruled that Philips shall not execute an injunction order.
In June, 2002, Philips filed a complaint with the ITC against 19 optical disc manufacturers and U.S.-based trading companies for infringement of Philips' patents covering CD-R and CD-RW technologies. Among the 19 defendants, two of them are Taiwan disc companies Gigastore and Princo.
The case was initially decided favorably to the two defendants last December, but Philips requested a review.
In response to the ITC's final decision, Philips announced last Friday that it would appeal to the Court of Appeals for the Federal Circuit (CAFC) and hence the decision is not final yet. And negotiations for royalties on DVDs have been suspended temporarily.
In Taiwan, disc makers are hoping that because of the ITC ruling, Philips will soften its stance over the DVD-R royalty charge.
The DigiTimes says disc makers widely feel that Philip's DVD-R patent rate, about US$0.06 per disc, is too high. It says Sony has signed several agreements with some major Taiwan producers of optical discs fixing royalty charges of 1.5-3.5 percent for DVD-R/+R discs.
According to local manufactures, Taiwan paid NT$1.5-2 billion in royalties to Philips in 2002, of which RITEK Corp. paid NT$700 million, CMC Magnetics Corp. NT$500 million, and Jxxx NT$300 billion. The total amount in 2003 could be a lot more.
As DVD-R burners are getting more and more popular, many say that they will eventually eliminate CD-R burners. Analysts have predicted that Taiwan's DVD-R disc producers, given its role in supplying to the swelling U.S. market, will see rising revenues this year.
CMC Magnetics is expected to double its output to 60 million discs this year, RITEK to see a rise of 75 percent, or 35 million in its production, and Prodisc Technology may also produce 24 million, a report says.
Ed on Mar 16, 2004