2004 has seen the emergence of an unprecedented trend toward litigation among Japanese ICT firms. Gone are the days when Japanese companies considered it a compliment when their technologies were copied. Feeling increasingly threatened by low-cost manufacturers in South Korea and Taiwan, Japanese ICT companies are quickly getting over their traditional distaste for public confrontation and heading to court to defend their patents. Many Japanese companies believe that much of the losses of the nineties can be attributed to their failure to protect their technologies. 

 

Flat-panel displays became the first bone of contention in 2003, as Fujitsu took Samsung to court and Sharp filed litigation against Taiwanese maker TECO. In 2004, the cases have multiplied. Just last week, Japanese retailer Seiyu pulled a 27-inch LCD (Liquid Crystal Display) TV from its shelves because of a patent dispute. Semiconductor Energy Laboratory, an R&D firm specializing in thin-display devices, asked the Tokyo District Court on December 1 for an injunction against sales of the TV made by Chi Mei Optoelectronics from Taiwan, claiming technology used in the panels infringed on its patents. 

 

Semiconductor Energy has also filed a separate suit against iriver Japan -- a local division of the Korean company -- alleging that the high-resolution LCD panel used in the PMP-120 portable music player violated its patents. Semiconductor Energy is seeking to halt imports and sales of the product. The LCD panel in question is supplied by Topply Optoelectronics, another Taiwanese maker. In the communications sector, NEC has raised a patent infringement case against Harris, a telecom equipment maker in the US, but most of the defendants in the case are regional competitors such as Samsung, Hynix, and TECO.

 

In November, Toshiba decided to take Hynix Semiconductor to court for alleged violations of seven patents on memory chips in the US and three in Japan. Toshiba tried for two years to reach a deal with the South Korean firm to cross-license patents on NAND flash memory chips, which Toshiba invented. NAND chips are the fastest growing segment in the semiconductor market. Toshiba officials cite huge losses in the DRAM sector as the decisive factor that prompted the NAND litigation. Toshiba was forced out of the DRAM chip business in 2003 after losing market share to South Korean competitors that had reverse-engineered their technology. Samsung has already surpassed Toshiba to become the largest maker of NAND chips, and Hynix began producing the chips in 2004. 

 

In another high profile patent dispute, Japanese Customs in November banned imports of PDPs (Plasma-Display-Panels) produced by the South Korean maker LG Electronics, following a request from Matsushita. Matsushita, the maker of Panasonic electronics and one of the initial developers of PDP, filed a lawsuit in Tokyo district court against LG Electronics charging LG with illicit use of patented technology that dissipates heat that is generated when PDPs are activated. 

 

LG filed a counter-suit in Seoul Central District Court accusing Matsushita's South Korean unit of violating its patents on a variety of PDP technologies. At the end of November, the South Korean Ministry of Commerce, Industry, and Energy retaliated against Japan by ordering Panasonic to cease all imports and sales of PDPs in South Korea. 

 

The Japanese government has recently taken a more active role in promoting intellectual property, encouraging companies to be more aggressive in safeguarding it. Japan's Prime Minister Junichiro Koizumi has called for a national campaign to "found an intellectual property nation." A law passed in April 2003 that allows for a ban on products involved in a patent dispute while the case is being adjudicated served as the basis for Matsushita's injunction against LG. 

 

The government has also passed legislation to speed up patent suits and make it easier to gather evidence from suspected violators. Beginning in spring 2005, Japan will have a high court dedicated to intellectual property cases. The Japan Patent Office has pledged to reduce the time it takes to review a patent application from 26 months to 11 months. It is outsourcing some of its cases and planning to hire 500 more employees in the next decade. 

 

According to the Japan Patent Office, corporations and individuals in Japan held 453,878 internationally registered patents in 2000. But by the end of 2003, the number had jumped to 1.62 million, posting year-on-year growth of 52%. Three of the top four patent holders in the US are Japanese companies: Hitachi, Canon, and Matsushita. In November 2004, 146 intellectual property managers from 115 Japanese companies gathered in Tokyo for a two-day training on intellectual property that featured a mock trial with legal experts and a judge from the US.