Jimmy Hsu, Taipei; Adam Hwang, DIGITIMES [Monday 18 August 2008]
A local court in Taiwan, on August 15, announced its judgment that Princo, a Taiwan-based maker of blank optical discs, must pay Royal Philips Electronics a total of 2.354 billion yen (US$21.1 million) for CD-R licensing. The fees are due for the period from the fourth quarter of 1997 to the fourth quarter of 1999 plus interest for delayed payment, according to Princo’s filing with the Taiwan Stock Exchange (TSE) on August 18. Princo has decided to appeal, the company stressed.
In June 1997, Princo signed a licensing agreement to pay a royalty fee of 10 yen per blank CD-R disc to Philips, Sony and Taiyo Yuden, Princo indicated. Princo later felt the rate was unreasonable and thus asked Philips to reduce the charge, but Philips declined. Princo refused to pay the royalty charges starting from the fourth quarter of 1997 and Philips, in response, terminated the licensing agreement in the first quarter of 2000 and filed with the Taiwan courts to recover payment.
Princo filed with Taiwan’s Fair Trade Commission (FTC) in 1999 accusing Philips of operating a monopoly, and the FTC judged in 2001 that Philips had violated regulations regarding price fixing and fined Philips NT$14 million (US$447,000).
Princo took FTC’s judgment as an excuse to not pay the due royalty fees, but the local court’s recent judgment accepted Philips’ argument that the FTC’s decision covered the regulation of relations between the government supervisory authority and private interest groups only, and had nothing to do with the private licensing contract between Philips and Princo.
Princo has focused on shipments of CD-R and DVD discs to retail channels in emerging markets such as Russia, China and Latin America since the dispute with Philips.