Wed, Jul 09, 2003 - Page 10 News List

Lite-On joins Via's patent-infringer list

By Bill Heaney  /  STAFF REPORTER

Lite-On IT Corp (建興科技), a manufacturer of CD and DVD drives for computers, joined the list of defendants in a patent infringement lawsuit launched in the US by the world's second largest chipset maker Via Technologies Inc (威盛電子), a Via official confirmed yesterday.

On June 3, Via filed the original suit in the US District Court in San Francisco, claiming computer chip designer MediaTek Inc (聯發科技) copied its designs for chips that increase the bandwidth of compact disk and DVD drives. On Monday, Via asked the court to also place MediaTek's largest customer, Lite-On IT, in the defendant's chair.

"It's a contributory lawsuit, so the same patents are involved," Gaynor de Wit of Via's international marketing department told the Taipei Times yesterday.

Via will now seek "reasonable compensation, including a stop to all sales, display and production of the products, the destruction of existing inventories and the payment of financial damages," a separate e-mail statement said.

Via also filed a similar suit against MediaTek in the Hsinchu District Court in Northern Taiwan early last month, the statement said.

Lite-On IT's spokesman dismissed Via's action, saying that it is covered by a contractual agreement with MediaTek.

"MediaTek promised to fully protect its customers so there will be no impact from patent-related legal difficulties on Lite-On IT's rights and interests," finance manager Chu Kun-cheng (朱崑城) said in an e-mail statement. "The MediaTek/Via legal argument has nothing to do with Lite-On IT."

MediaTek pledged on Monday to protect Lite-On IT from Via's legal action. "MediaTek will take a responsible attitude to maintain the legitimate rights of our customers who have been accused by Via," the company said in an e-mail statement.

Legal experts said yesterday that contractual clauses offering to protect customers in the case of legal action relating to patents and intellectual property rights (IPR) are common in the technology industry.

"These clauses are fairly normal and act like insurance," said John Eastwood, a lawyer at Winkler Partners (博仲法律事務所) and co-chair of the Intellectual Property Committee of the European Chamber of Commerce Taipei. "They are telling customers that if you get in trouble, we'll be there to take over the defense."

But the contracts might not be worth the paper they are written on.

"That type of agreement doesn't mean anything," said Jeffrey Harris, co-chair of the American Chamber of Commerce in Taipei's Intellectual Property Committee and director of Orient Commercial Enquiries, a consulting firm specializing in IPR. "The court may give [the customer] more leniency, but they would have been notified of the potential infringement and have had time to stop."

MediaTek also challenged the validity of the patent Via claims has been infringed.

"We instructed our lawyers in the US to make a preliminary investigation into the claim and have concluded that the Via patent is neither innovative nor ground-breaking," an e-mail statement said.

The posturing may be a ploy to force both sides to the negotiating table, one analyst said yesterday.

"MediaTek sued Via last year [in June], so by filing this suit, Via may be exerting pressure on MediaTek to make a deal," said Benny Lo (盧志恆), an analyst at Primasia Securities Co. "I believe the two sides will settle out of court."

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