Disputes Arise over Philips’s Veeza Licensing Program.　Four Major Taiwanese CD Discs Makers Filed Unfair Competition Complaint against Philips.

 

CMC Magnetics Corp., Ritek Corp. Prodisc Technology Inc., and Daxon Technology Inc. filed an unfair competition complaint with the Fair Trade Commission (FTC) alleging successive violations of the Fair Trade Act by Philips by adopting the Veeza licensing program.  The FTC vows to impose severe penalty if findings of the relevant investigation point against Philips.

 

The FTC just disposed Philips’s unfair CD-R technology patent licensing practice in April.  In that case, Philips is held in violation of Article 24 of the Fair Trade Act for preconditioning the grant of licensing on the licensee’s production of a detailed list of their manufacturing equipment and a sales report.  The FTC finding Philips’s such licensing practice patently unfair with possible adverse effect on the fair trade order imposed NTD6 million in administrative fines on Philips.

 

According to the complaint filed by CMC Magnetics Corp. et al., Philips disregards the above disposition made by the FTC and continues to adopt the Veeza licensing program.  Philips requires that the licensee not only produce a detailed list of their manufacturing equipment and a sales report but also label the trademark Philips designates on the CD-R discs they produce.  Such practice will as a matter of course force the licensee to divulge confidential information regarding the trading activities with their suppliers and their customers at the cost of trade order and fair competition.

 

According to the four complainants, Philips has forced Taiwanese CD-R discs makers to accept unreasonable terms for obtaining the CD-R technology licensing by abusing its dominant market position and is now additionally requiring the licensees to label the Veeza mark on the CD-R discs they produce.  Such practice of conditioning the patent licensing on the labeling of a designated trademark amounts to an offensive expansion of patent right rarely seen in international patent licensing practice, if ever.  (2006.06)

/EMA