Heading towards a Knowledge Economy and Industrial Upgrading: Patent Matters that High-Tech Companies should not Neglect


Roger Chang, Partner – Lee and Li, Attorneys-At-Law
Byline article published June 3, 2019 by Commercial Times


In the era of global knowledge economy and in pursuit for innovative research and development, Taiwan launched the 5+2 Industrial Innovation Program to accelerate the industrial transformation and upgrading from a labor-intensive industry structure to the value-creating core technology industry. In the process of developing core technologies, intellectual property and patent positioning is the keystone of the steady advancement of the industry. According to the 2017 Report on “Intangible Assets in Global Value Chains,” published by WIPO, one of the specialized agencies of the United Nations, if we take the iPhone 7 produced by Apple as an example, 42% of the profits were attributed to Apple, and the OEM factories in Taiwan only obtained 3%, which shows deepening the understanding of intellectual property rights, cultivating intellectual property professionals, and continue improving the intellectual property litigation system enable Taiwan to create an intellectual property rights ecosystem as a key strategy for its industrial transformation and upgrading.

According to the prediction of the Industrial Technology Research Institute, the output value of Taiwanese semiconductor industry will exceed NTD 2.7 trillion in 2019, and the annual growth rate will continuously grow by 4.5 to 5.3%, outperforming the average of global semiconductor industry. The Taiwan Intellectual Property Office pointed out that in the ranking of patent applications in 2018, in patent applications of invention, utility model, and design, TSMC took the first place for the third year in a row, and in patent certifications, TSMC and Semiconductor Energy Laboratory also ranked first, which shows that patents play significant roles in the semiconductor industry.

In the recent patent lawsuit between Entegris and Gudeng Precision Industrial Co., Ltd pertaining to reticle pod products, the products in question are indispensable in the semiconductor manufacturing process for semiconductor foundries, and both parties of the case are the manufacturers of such products. The results of this judgment should once again make the Taiwanese semiconductor industry, and even all the high-tech Taiwanese enterprises, intellectual property professionals, and the government gain a deeper understanding of protecting patent rights.

IP rights facilitate Taiwan to transform towards high value knowledge economy

In the era of knowledge economy, we attach great importance to R&D and innovation. The Organization for Economic
Co-operation and Development (OECD) also pointed out that intellectual property protection has a positive effect on attracting foreign investment. The improvement of intellectual property protection intensity and the legal environment of each country by just 1% can increase the foreign investment by 2.8%, the service industry imports by 2%, and R&D investment by 0.7%. Thus, the economic benefits brought by intellectual property rights and patents are quite obvious.

Take Europe as an example, the local job opportunities directly created by intellectual property industry are up to 56 million, and the indirect ones are 20 million. Within the EU, one-fourth of job opportunities are related to IP-intensive industries. 

In order to encourage innovative research and development, the Intellectual Property Law grants exclusive rights to the holders of intellectual property, and protects owners of the rights with the means to prevent unauthorized use of the protected technology and to defend their rights in law. Hence, inventors will be able to make profits from patents, enabling them to continually invest in new research and development activities. Unfair competition by hitchhiking is prevented through remedies for infringement. Under the protection of patent rights, the inventors can fully expose the technical content and expand the accumulation of knowledge. Therefore, countries around the world have set up specialized courts to deal with matters concerning intellectual property. In addition to strengthening the legal remedy channels and litigation procedures for intellectual property, they have focused on the impact on the overall industry and the national society, and thus promoted the ecosystem of innovative research and development.

Establish comprehensive IP understanding and be prepared for the international marketplace

In recent years, the awareness of IP protection is growing in every market around the globe. How should Taiwanese companies develop value through patent positioning as they go global? The author once discussed the issue with the Associate Professor Su-hua Lee of the National Taiwan University Law School. According to Professor Lee, firstly, at the R&D stage, it is necessary to consider how to leverage IP-related laws to protect innovative technology. Secondly, at present, the first-to-file system has been adopted by various countries, where the first inventor who submits a patent application can obtain the exclusive right, to encourage the inventor to apply for patents and publicize the invention technology content and research results as soon as possible after the research is completed. Professor Lee also pointed out that, in addition to applying for patents and planning for key intellectual property, companies can further consider how to maximize the business value of patents, including selling the patents and technologies, earning royalties via patent licensing, leveraging patents to negotiate for partnerships and collaboration, or commercializing the patents in product design to increase product value.

She further suggested that, when innovating new products or technologies, companies should assess the risk of patent infringement through the “Patent Search system”. Companies should also be cautious in responding to patent infringement warning letters, and should consider if they should stop selling the accused products during the litigation process to avoid expanding the scope of infringement and being identified as an actor of malicious or intentional infringement.

The management teams of technology companies should be equipped with the understanding of intellectual property and assist technology developers in improving the understanding and awareness of the field of intellectual property to cultivate the cross-disciplinary professionals in the fields of technology and intellectual property. Meanwhile, the professional team of patent consultants, including professionals like patent engineers and patent attorneys, should be established to grasp the actions of competitors in each market and understand whether the business will be influenced by the existing intellectual property lawsuits. Apart from holding core technologies and brand value, if Taiwanese enterprises are able to establish complete developing and protective measures, they can enjoy greater advantages in planning for industry transformation and heading towards international markets.