Teco settles Japanese lawsuit with Sharp

Teco Electric & Machinery Co (東元電機), the nation's leading maker of consumer electronics and industrial motors, announced yesterday that it had reached a settlement with Japan's Sharp Corp in a two-year-old lawsuit over an alleged patent violation on flat-panel TVs.

"This chapter of the lawsuit is now closed, giving us a new chance to develop brand image and improve our market share in Japan," Eugene Huang (黃育仁), vice executive of the IT and optronics product sector at Teco Group (東元集團), told reporters yesterday.

Supported by the settlement news, shares of Teco moved up 0.1 percent to close at NT$9.68 on the Taiwan Stock Exchange yesterday.

Teco, which operates under the affiliate Sankyo Co in Japan, is the first and only Taiwanese brand to attempt to sell brandname products in the highly competitive liquid-crystal-display (LCD) TV market in that country.

In June 2004, not long after it first introduced branded flat-panel TVs in Japan, Teco was hit with the Sharp lawsuit filed at a Tokyo district court.

The case alleged that Teco's models with 20-inch panels, which were sourced from AU Optronics Corp (友達光電), infringed Sharp's patents and Sharp demanded an import ban on these models.

On April 12 last year, Sankyo filed a counter lawsuit against Sharp, seeking about ¥200 million (US$1.86 million) in damages for lost sales.

The lawsuit and countersuit hurt its reputation in Japan, Teco said, prompting traditional resellers to shun its products.

But with the settlement of the lawsuit, the company will soon gain the upper hand, Huang said.

He said the company has outlined aggressive plans for the Japanese market this year, and aims to "at least double" its sales from the 17,000 units it sold last year.

The company will build a logistics center in Japan to manage spare parts and inventory, as well as a testing lab for LCD TVs, quality control and maintenance support, he said.

"Offering the ideal product mix at the right price is not enough in Japan; we need to offer good service as well," Huang said.

To enhance its current offerings on 27, 30 and 32-inch panels in Japan, Teco will also consider bringing models more suited to consumers' needs there, he said.

Teco is poised to launch a new 46-inch LCD TV in the next quarter, and has plans to unveil a 50-inch flagship model in conjunction with its 50th anniversary in October.

Unlike Teco's aggressive plans, rival Tatung Co (大同) said it has no intention of moving into Japan's market by selling its own brand of flat-panel TVs.

"The intense competition there makes it hard for foreign brands to get their footing. We will continue to focus our exports on European markets and boost brandname products sales this year," Tatung president Larry Hsiao (蕭綮鞍) said yesterday on the sidelines of an annual product launch.

Tatung has set a sales target of 85,000 LCD TV units this year, which would help it clinch leadership of the local market, he said.

The company sold 32,000 units last year, making it the No. 3 vendor after Matsushita Electric Industrial -- which sells electronics under the Panasonic brand name -- and Teco, Hsiao said.

Tatung aims to boost its local revenues to NT$10 billion this year, from NT$7 billion last year, he said.