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January 15, 2007 4:21 am

Philips seeks WTO help in Taiwan dispute

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Philips, the Dutch electronics group, will file a formal request to the European Commission Monday to seek a ruling from the World Trade Organisation in a patent dispute with Taiwan’s government, according to sources close to the company.

The move aims to force Taipei to respond to growing discontent among foreign businesses with the island’s attitude towards protecting intellectual property rights.

Philips’ complaint focuses on the Taiwan government’s decision to grant a compulsory licence to Giga Storage, a small local company, to produce and sell CD-Roms using patents held by Philips.

Taipei earned praise after its WTO accession in 2002 for improving copyright protection through legal amendments and stricter prosecution of infringements, efforts that helped it get off the US Trade Representative’s priority watchlist of violators of intellectual property rights in 2005.

But foreign investors and legal experts claim the island has changed course. “The picture has been pretty grim over the past year and a half,” said John Eastwood, a lawyer at Wenger & Vieli and co-chair of the Intellectual Property Rights Committee of the European Chamber of Commerce, Taipei.

The Philips case is at the heart of those concerns. In a final ruling late last year, the government confirmed the compulsory licence against Philips’ appeals. The company opposes it, claiming that the licence is only legalising the use of patents Giga Storage had been infringing on earlier, and that Giga Storage is a big exporter – contrary to the requirement that production under compulsory licensing should be restricted to the domestic market.

But once the dispute moves to the WTO, it is set to address a much broader controversy. Taiwan’s patent law allows compulsory licensing if an applicant has failed to reach a licensing agreement with the patent holder – a proviso that IPR lawyers believe is not in line with the Agreement on Trade Related Intellectual Property Rights (Trips).

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