The nation's four major discmakers decided to unite to sue Royal Philips Electronics NV, claiming its royalty requirement is "unreasonable" and unfair competition.
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They have asked Philips to return the money they have paid in royalties, and compensate them for damages incurred from the unfair treatment.
"We are willing to pay a royalty but it should be based on a reasonable level," said a source at one of the disc makers, who requested anonymity.
She said that in the past, a CD-R could be sold for US$5, but prices have now dropped to as little as US$1. The four companies still have to pay a royalty of US$0.025 per unit, which is a heavy burden, she said.
Philips introduced the Veeza scheme in January last year, cutting its CD-R royalty by 44 percent to curb the illegal use of its patented technology.
CD-R technology allows users to record digital information onto a compact disc. Philips introduced the discs in 1988, but it claims there have been a number of infringements of its copyright.
The four companies also said it was unfair for Philips to make them pay royalties as their counterparts in China and India have been exempted from them.
Philips Taiwan said yesterday that it had not received notice of the lawsuit, but that it was still in negotiations with the four firms to renew contracts.
"Our contracts expired in June, and no agreement has been reached for a renewal," said an official in Philips Taiwan communications department yesterday, who asked not to be named.
She said there were no double standards and that royalty payments were consistent in each country. In India, the company has no CD-R patent filing; whereas in China, it has yet to reach a contract with diskmakers but suitable actions was being taken there, she said.
This is not the first time local discmakers have clashed with Philips over terms. In June last year, discmakers filed a legal complaint with the Fair Trade Commission against Philips's Veeza plan, saying it had set "unreasonable conditions for patent licensing. However, the local companies eventually agreed to Philips' demands.
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