Lu Bide said that the $3.5 patent fee was a reasonable price, and Philips had no plans to lower royalties in the near future. The reason why the price was lowered from US$5 to US$3.5 was to encourage manufacturers to support the development of the DVD market.
Philips couldn't sit still. Anton Handal, the American lawyer, had just walked away. Ruud Peters rushed to Beijing.
The two Americans appeared in Beijing in the same week. Although they were talking about the same thing, their positions were quite different: Anton-Handor represented the plaintiff’s Chinese DVD company and Lu Bide was the Intellectual Property and Standards Department of Philips. Executive Vice President and CEO.
For Lu Bide, the Chinese DVD company, which was always weak, suddenly fought back. He was surprised: this is the first class action litigation since the Philips patent authorization.
Philips Challenge
The strong position of Philips in the global intellectual property field is being challenged.
Philips is undoubtedly a giant in terms of patents and standards: With more than 20,000 patents, it has formed patent pools in different industries, has more than 500 employees in intellectual property and standards, and has branches in many countries in the world. And has offices in Shanghai, Beijing, Shenzhen and Hong Kong.
“We are the sales department of Philips and are the guarantee to keep the company alive.†Lu Bide commented on the importance of this department to Philips.
However, two lawsuits may change Lubide's optimistic view.
The first was on June 24, 2002, when Philips asked the US International Trade Commission (ITC) to investigate 19 CD-R and CD-RW vendors infringing on six of their patents. Philips asked ITC to issue a permanent injunction to prevent these manufacturers from selling products to the United States. After undergoing a review by ITC for the past 14 months, a preliminary judgment was made on October 24, 2003: Philips was found to have held that the authorization was unreasonably established, and it was determined that Philips did not authorize the unemployed to constitute abuse of the patent right in the United States law and could not exercise the relevant rights.
This lawsuit, although not yet waiting for the final verdict, has caused a blow to Philips’ intellectual property policy—already companies have come forward to openly oppose Philips’ authority.
But Luffy did not think so: The case stated that Philips’ insolvency was inaccurate. Because ITC's initial judgment has three conclusions: First, determine that Philips' patent is valid; Second, Philips' patent has been infringed; Third, Philips has enforced the intellectual property right procedure.
“We do not agree with the ITC ruling and have already filed an appeal.†Although Lu Bide believes that the outcome of this lawsuit was unfair. However, it cannot be concealed that the intellectual property policy that Philips has been using is being challenged.
It was with this case that there was a class action lawsuit against Philips from Chinese DVD companies such as Wuxi Multimedia (Hong Kong) Co., Ltd. and Dongqiang (Wuxi) Digital Technology Co., Ltd.
"The ITC case will be our very important basis." Han Dole believes that the lawsuits of Chinese DVD companies will become the most important intellectual property cases in the 21st century and will change the mode of patent licensing and enable companies to compete freely.
$3.5 dispute
Philips’ levying a $3.5 royalty on each DVD player was the focus of this case's controversy.
In this regard, Lu Bide believes that Philips charges 3.5 US dollars for each DVD player, which is calculated on the basis of Philips' R&D investment. It is an encouragement for technology research and development and there is no inappropriate place.
"According to international practice, patent fees should be 1% to 5% of the selling price," Dr. Wei Yanliang of the Research Center of the State Intellectual Property Office told reporters. "It is also controversial to charge a fixed amount of money." Wei Yanliang believes that the DVD is now sold. The decline was so rapid that the royalty paid by each DVD, including 4C, had reached more than 15%, and the supremacy of multinational companies in intellectual property rights was extremely unreasonable.
Seth Handor told reporters that $3.5 is just a figure we all know. In fact, there are many hidden terms in the contracts signed with companies, including requiring companies to pay royalties on time and having the power to review sales data of enterprises, etc. .
"The Chinese DVD industry is on the verge of collapse." Wei Yanliang said. DVD companies have been transformed: Xinke is now the main business is LCD TVs and GPS positioning system, Malata will be the main attack on small household appliances, BBK to start an electric bicycle, SVA is the next step is to focus on car DVD, Amoi in LCD TVs and mobile phones Has already made achievements.
"The ability of these big companies to resist storms will naturally be stronger. Many small and medium-sized enterprises do not have such a good fate. Only waiting for them to close down one road."
However, Lu Bide does not believe that royalties will lead to the survival crisis of DVD companies. He said that the sharp decline in profits of the DVD player industry and the closure of companies are caused by vicious competition. If Philips cancels its patent fees today, it will take less than a week for DVD players to drop their prices.
Lu Bide said that for many years, Philips has adopted a method of charging a fixed amount of royalties. There is only one exception: CDAudio received a royalty fee of 2% of the price at the very beginning, but it was only performed for a short time because the accounting was too cumbersome.
Lu Bide thinks that it is too cumbersome to charge royalties by percentage and sometimes it is difficult to operate. If you charge by percentage, different prices for each model must be tracked, causing inconvenience to the management of the factory and many difficulties for Philips. The more complicated question is: If the products being sold are bundled products such as home theater, CD, DVD, etc., they cannot be stripped out to calculate prices alone, and it is not clear at what price they should be charged.
Lu Bide suggested that DVD companies should include royalties in fixed costs as a measure of the R&D expenditures that are reduced using mature technologies.
Whether Philips will lower patent licensing fees in the near future, Lu Bide said that the $3.5 royalty fee is a reasonable price, and Philips has no plans to reduce its patent fees recently. The reason why the price was lowered from US$5 to US$3.5 was to encourage manufacturers to support the development of the DVD market.
Customs is not all data sources
Even though Lubide spent a lot of his thoughts on "flame fighting", the situation faced by Philips is still rather awkward.
On the one hand, many Chinese DVD companies that have been granted patents are in danger of transitioning or even going out of business; on the other hand, many companies do not have the Philips patent license to sell their DVD products abroad.
The Plaintiff Wuxi Multimedia was one of the companies that did not receive a patent license. Seth Handor told reporters that Wuxi Multimedia had been unreasonably refused to transfer the latter to court because it had repeatedly applied for a patent license to Philips.
"This is not a small number of companies." Wei Yanliang told reporters. When a company applies for a patent license to Philips, it is often required to provide past sales data, but Philips does not agree with the data provided by the company. “Even customs data are not recognized by Philips.â€
"This is unfair competition." Ann-Handor bluntly stated that in accordance with relevant US laws, Philips must treat all companies applying to it fairly and cannot refuse without reason.
In this regard, Lu Bide believes that: "Philips is fair to any business, but only requires companies to report sales data, but many companies are reluctant to audit their data by third-party auditors, so we will not get our Authorization."
“The data provided by the Customs does not necessarily meet the requirements.†Lubide believes that customs can serve as the most basic source of data, but many times the data of the European and American customs and the data provided by the Chinese Customs are “not consistent and even very differentâ€.
Lu Bide believes that Customs cannot be used as a third-party audit data. Another reason is that the structure of Chinese companies is complicated and they are registered under different names in different places. In this case, “Customs cannot identify at all.â€
Philips couldn't sit still. Anton Handal, the American lawyer, had just walked away. Ruud Peters rushed to Beijing.
The two Americans appeared in Beijing in the same week. Although they were talking about the same thing, their positions were quite different: Anton-Handor represented the plaintiff’s Chinese DVD company and Lu Bide was the Intellectual Property and Standards Department of Philips. Executive Vice President and CEO.
For Lu Bide, the Chinese DVD company, which was always weak, suddenly fought back. He was surprised: this is the first class action litigation since the Philips patent authorization.
Philips Challenge
The strong position of Philips in the global intellectual property field is being challenged.
Philips is undoubtedly a giant in terms of patents and standards: With more than 20,000 patents, it has formed patent pools in different industries, has more than 500 employees in intellectual property and standards, and has branches in many countries in the world. And has offices in Shanghai, Beijing, Shenzhen and Hong Kong.
“We are the sales department of Philips and are the guarantee to keep the company alive.†Lu Bide commented on the importance of this department to Philips.
However, two lawsuits may change Lubide's optimistic view.
The first was on June 24, 2002, when Philips asked the US International Trade Commission (ITC) to investigate 19 CD-R and CD-RW vendors infringing on six of their patents. Philips asked ITC to issue a permanent injunction to prevent these manufacturers from selling products to the United States. After undergoing a review by ITC for the past 14 months, a preliminary judgment was made on October 24, 2003: Philips was found to have held that the authorization was unreasonably established, and it was determined that Philips did not authorize the unemployed to constitute abuse of the patent right in the United States law and could not exercise the relevant rights.
This lawsuit, although not yet waiting for the final verdict, has caused a blow to Philips’ intellectual property policy—already companies have come forward to openly oppose Philips’ authority.
But Luffy did not think so: The case stated that Philips’ insolvency was inaccurate. Because ITC's initial judgment has three conclusions: First, determine that Philips' patent is valid; Second, Philips' patent has been infringed; Third, Philips has enforced the intellectual property right procedure.
“We do not agree with the ITC ruling and have already filed an appeal.†Although Lu Bide believes that the outcome of this lawsuit was unfair. However, it cannot be concealed that the intellectual property policy that Philips has been using is being challenged.
It was with this case that there was a class action lawsuit against Philips from Chinese DVD companies such as Wuxi Multimedia (Hong Kong) Co., Ltd. and Dongqiang (Wuxi) Digital Technology Co., Ltd.
"The ITC case will be our very important basis." Han Dole believes that the lawsuits of Chinese DVD companies will become the most important intellectual property cases in the 21st century and will change the mode of patent licensing and enable companies to compete freely.
$3.5 dispute
Philips’ levying a $3.5 royalty on each DVD player was the focus of this case's controversy.
In this regard, Lu Bide believes that Philips charges 3.5 US dollars for each DVD player, which is calculated on the basis of Philips' R&D investment. It is an encouragement for technology research and development and there is no inappropriate place.
"According to international practice, patent fees should be 1% to 5% of the selling price," Dr. Wei Yanliang of the Research Center of the State Intellectual Property Office told reporters. "It is also controversial to charge a fixed amount of money." Wei Yanliang believes that the DVD is now sold. The decline was so rapid that the royalty paid by each DVD, including 4C, had reached more than 15%, and the supremacy of multinational companies in intellectual property rights was extremely unreasonable.
Seth Handor told reporters that $3.5 is just a figure we all know. In fact, there are many hidden terms in the contracts signed with companies, including requiring companies to pay royalties on time and having the power to review sales data of enterprises, etc. .
"The Chinese DVD industry is on the verge of collapse." Wei Yanliang said. DVD companies have been transformed: Xinke is now the main business is LCD TVs and GPS positioning system, Malata will be the main attack on small household appliances, BBK to start an electric bicycle, SVA is the next step is to focus on car DVD, Amoi in LCD TVs and mobile phones Has already made achievements.
"The ability of these big companies to resist storms will naturally be stronger. Many small and medium-sized enterprises do not have such a good fate. Only waiting for them to close down one road."
However, Lu Bide does not believe that royalties will lead to the survival crisis of DVD companies. He said that the sharp decline in profits of the DVD player industry and the closure of companies are caused by vicious competition. If Philips cancels its patent fees today, it will take less than a week for DVD players to drop their prices.
Lu Bide said that for many years, Philips has adopted a method of charging a fixed amount of royalties. There is only one exception: CDAudio received a royalty fee of 2% of the price at the very beginning, but it was only performed for a short time because the accounting was too cumbersome.
Lu Bide thinks that it is too cumbersome to charge royalties by percentage and sometimes it is difficult to operate. If you charge by percentage, different prices for each model must be tracked, causing inconvenience to the management of the factory and many difficulties for Philips. The more complicated question is: If the products being sold are bundled products such as home theater, CD, DVD, etc., they cannot be stripped out to calculate prices alone, and it is not clear at what price they should be charged.
Lu Bide suggested that DVD companies should include royalties in fixed costs as a measure of the R&D expenditures that are reduced using mature technologies.
Whether Philips will lower patent licensing fees in the near future, Lu Bide said that the $3.5 royalty fee is a reasonable price, and Philips has no plans to reduce its patent fees recently. The reason why the price was lowered from US$5 to US$3.5 was to encourage manufacturers to support the development of the DVD market.
Customs is not all data sources
Even though Lubide spent a lot of his thoughts on "flame fighting", the situation faced by Philips is still rather awkward.
On the one hand, many Chinese DVD companies that have been granted patents are in danger of transitioning or even going out of business; on the other hand, many companies do not have the Philips patent license to sell their DVD products abroad.
The Plaintiff Wuxi Multimedia was one of the companies that did not receive a patent license. Seth Handor told reporters that Wuxi Multimedia had been unreasonably refused to transfer the latter to court because it had repeatedly applied for a patent license to Philips.
"This is not a small number of companies." Wei Yanliang told reporters. When a company applies for a patent license to Philips, it is often required to provide past sales data, but Philips does not agree with the data provided by the company. “Even customs data are not recognized by Philips.â€
"This is unfair competition." Ann-Handor bluntly stated that in accordance with relevant US laws, Philips must treat all companies applying to it fairly and cannot refuse without reason.
In this regard, Lu Bide believes that: "Philips is fair to any business, but only requires companies to report sales data, but many companies are reluctant to audit their data by third-party auditors, so we will not get our Authorization."
“The data provided by the Customs does not necessarily meet the requirements.†Lubide believes that customs can serve as the most basic source of data, but many times the data of the European and American customs and the data provided by the Chinese Customs are “not consistent and even very differentâ€.
Lu Bide believes that Customs cannot be used as a third-party audit data. Another reason is that the structure of Chinese companies is complicated and they are registered under different names in different places. In this case, “Customs cannot identify at all.â€
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