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Sat, Dec 04, 2004 - Page 12 News List

Japanese firms on the offensive to protect their patents

INTELLECTUAL PROPERTY Despite the traditional Japanese aversion to lawsuits, electronics innovators are taking legal action to prevent others muscling in on their turf


In Japan, where public confrontation is considered extremely distasteful, lawsuits have traditionally been something to avoid. So much for tradition. Threatened by the rapid advance of low-cost manufacturers in South Korea and Taiwan, Japanese companies are dropping their aversion to litigation and heading to court to protect their patents.

In just the last month, the Toshiba Corp sued Hynix Semiconductor of South Korea, accusing it of violating patents on memory chips. The Matsushita Electric Industrial Co, maker of Panasonic products, took legal action against LG Electronics, accusing the South Korean company of using its patented technology for flat-panel displays.

The cases are the latest in a string of suits by Japanese electronics makers. Last year, Fujitsu Ltd sued Samsung SDI of South Korea, while the Sharp Corp went after the TECO Electric and Machinery Co (東元電機) of Taiwan in disputes over flat-panel display technology.

The legal wrangling is reminiscent of disputes in the 1980s when Texas Instruments used intellectual property suits to fend off increasingly competitive Japanese manu-facturers. Back then, Toshiba, Fujitsu and others were threatening US manufacturers by cheaply mass producing computer chips and other devices first created in the US.

But Japanese companies are on the offensive now. Japan's manu-facturers have evolved from low-cost producers into innovators, thus from companies that pay to license the technology of others to the ones collecting the checks. Of the top four patent holders in the US last year, three -- Hitachi, Canon and Matsushita -- were Japanese. IBM held the most patents, as it has for years.

Many of the Japanese patents were a result of work in the last decade developing today's most popular electronic gear, like thin TVs, DVD recorders and digital cameras. Companies are eager to protect them, and the number of lawsuits is rising sharply.

"This is the new game, and it's going to continue to increase," said Robert Kahrl, chairman of the intellectual property practice at the US law firm of Jones Day.

The South Korean advance has been led by Samsung, a company that has grown rapidly in the last decade and has surpassed power-houses like Matsushita, Toshiba and other Japanese rivals to become the top maker of flat-panel liquid-crystal displays (LCDs) and memory chips, and the second-largest manufacturer of mobile phones, after Nokia.

One of the most contentious suits is that between Matsushita and LG. Early last month, Matsushita took legal action against LG, accusing it of infringing patents for technologies used in plasma-display flat-panel monitors and televisions. LG countersued, accusing a Panasonic unit in Korea of violating its patents. Each company has persuaded its home country to block imports of its rivals' products until the cases are settled.

Another reason Japanese companies are abandoning their reluctance to litigate is a feeling that they have been hurt badly in the last decade by failing to safeguard technologies.

Toshiba's president, Tadashi Okamura, for example, has said the collapse of the company's DRAM semiconductor business was caused by a failure to prevent the leakage of its technology to rival manufacturers. Facing tough competition from Samsung and other Korean companies, Toshiba pulled out of the market for commodity DRAM chips last year.

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