Philips Suspected of Improperly Maintaining CD-R Licensing Royalty Rate. Case against DST Remanded to High Court on DST’s Appeal

The outcome of Philips’s action against Digital Storage Technology Co., Ltd. (DST) will possibly make a turn.  The Supreme Court remanded the case on DST’s appeal by reason of the High Court’s failure to look into the purported suspicion of Philips having improperly maintained the royalty rate.  If the High Court eventually finds in favor of DST, the other Taiwanese CD-R disks makers including CMC Magnetics, Ritek and Prodisc will possibly cite the judgment to help themselves win a reasonable royalty rate in their CD-R licensing negotiation with Philips.  Philips says it will study the Supreme Court’s decision at length to prepare its response.

  Disputes between Philips and Taiwanese CD-R dicks makers have continued for years.  Philips sued DST alleging default of royalty payments.  The district court and the High Court both sided with Philips but the Supreme Court considers the High Court has failed to investigate certain issues when making findings on the case.  The Supreme Court also finds the default interest rate stipulated in the licensing agreement in question is disproportionately high in contravention of public order and good custom.  Thus the Supreme Court vacated the High Court judgment and remanded the case for re-decision.  (2006.02)