Taiwanese compact disc producer Gigastorage Corp (國碩科技) has signed a preliminary agreement with rival Royal Philips Electronics NV to settle prolonged patent lawsuits, a filing with the Taiwan Stock Exchange said.
On Saturday, Gigastorage said that it had signed a memorandum of understanding with Philips over IPR disputes regarding the manufacturing of CD-R and CD-RW media that began in 2001.
The company did not disclose details about the agreement, saying only that it was prepared to discuss payments to the Dutch company.
Gigastorage's board approved the plans to settle the patent lawsuits with Philips on Friday. Its shares rose NT$0.75 (US$0.02), or 6.91 percent, to close at NT$11.6 on Saturday.
Gigastorage stock has shot up 37.28 percent since the beginning of this year.
Gigastorage's attempt to settle the patent disputes with Philips, however, may not mean an end to looming IPR disputes between Taiwan and the EU.
The EU is close to concluding a probe into the legitimacy of a ruling made by Taiwan's Intellectual Property Office (IPO) in 2005 in favor of Gigastorage.
The investigation came in response to a Philips request.
The IPO imposed compulsory licensing on five CD-R and CD-RW patents owned by Philips, allowing Gigastorage to use the Dutch company's patents in manufacturing CD-R and CD-RW discs without paying royalties and allowing Gigastorage to sell the products in the domestic market.
"We are closely monitoring the development. If the EU rules in favor of Philips, we'll have to solve the disputes under the framework of the WTO," Tsai Lien-sheng (
"This may mark the first time we seek to solve IPR problem with another WTO member within the system after Taiwan joined the trade body," Tsai said.
Gigastorage said it did not believe the case would develop into an international issue.
"According to our understanding, Philips may withdraw its request to the EU," Gigastorage spokesman Carl Lee (李朝欽) said in a telephone interview yesterday.
Lee said that the company expected to sign a definitive agreement with Philips by the end of this year, adding that the settlement, if reached, would not have a serious impact on Gigastorage's financial situation.
"We should be able to make the payments in annual installments. We would have to pay lawyers anyway if the lawsuits continued," he said.
Gigastorage has paid no royalties to Philips since 2001 after filing lawsuits in the US, saying that Philips had overcharged companies using its patents to make CD-R and CD-RW discs.
The end of the lawsuits with Philips would have a positive impact on Gigastorage's ability to sell its products internationally, the company's filing said.
Gigastorage posted a loss of NT$155 million for the first six months of the year.
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