Foreign companies operating in Taiwan, especially those in the semiconductor industry, have successfully established robust legal protections for their intellectual property. This is largely due to the high value and strategic importance of semiconductor technology, coupled with Taiwan's supportive legal and regulatory environment.
Taiwan is a global leader in semiconductor chip manufacturing. Given the complex and multi-step nature of semiconductor production--which includes both front-end and back-end processes--companies must amass a significant portfolio of patents to safeguard their proprietary know-how and fend off competitors. However, the high stakes involved in the semiconductor industry have led to an increase in patent disputes between domestic and foreign firms.
For example, Taiwanese company Gudeng Precision and US-based Entegris have been engaged in a high-profile patent infringement lawsuit. The case revolves around their competition for market share in wafer and photomask carriers. At one point, Gudeng was forced to sell assets, borrow funds, and even pledge its factory and patents to TSMC as collateral to finance its legal battle against Entegris.
Initially, Gudeng faced a damage claim of NT$978 million (US$30.65 million) from Entegris. However, the situation shifted when Entegris' patent was later declared invalid, lifting Gudeng's payment obligations. Undeterred, Entegris filed a new lawsuit against Gudeng in May 2024, which is currently under review by Taiwan's Intellectual Property and Commercial Court.
Semiconductors lead invention patents
According to data from the Intellectual Property Office under the Ministry of Economic Affairs, the three leading areas for invention patent applications in Taiwan are semiconductors, which account for 14.5%, followed by computing technology at 9.0%, and electronic mechanical energy devices at 6.1%.
Among the patents filed in Taiwan by companies from Japan, the US, China, and South Korea, semiconductors make up the largest category. South Korean firms have predominantly focused on memory invention patents, while Japanese companies have concentrated on patents related to equipment and materials. This reflects the active positioning of foreign companies in Taiwan's semiconductor equipment, materials, manufacturing, packaging, and testing sectors.
Despite the presence of Taiwanese patents, local companies face the risk of inadvertently infringing on foreign patents, potentially leading to lawsuits. The outcomes of such legal disputes may include cross-licensing agreements, damage payments, or counterclaims for patent infringement.
In 2023, invention patents represented over 70% of all patent filings in Taiwan for the first time. This figure slightly decreased to 69.4% from January to July 2024, compared to 20.3% for utility model patents and 10.3% for design patents.
Taiwanese companies, university professors, and research institutes typically seek patent protection for their technological developments. Thanks to the government's significantly lower patent application and maintenance fees compared to the US, a large number of patents are filed by local entities. Foreign companies, motivated by these low fees and the strategic importance of patent protection, have also been active in filing patents in Taiwan, especially for contract manufacturing technologies.
Statistics reveal that foreign applicants account for over 60% of invention patent applications in Taiwan. From January to July 2024, foreign applicants made up 61.8% of the total, with Japan leading at 25.0%, followed by the US at 13.4%, and China and South Korea at 6.6% and 6.0%, respectively.
Article translated by Willis Ke
