IP violations to cost suppliers US$4.5 bil.

The group, based in San Jose, California, and commonly known as SEMI, estimates the losses may exceed US$4.5 billion annually, including loss of market share, reduced average selling process and loss of market value.

Violations include patent infringement, counterfeiting and theft of core technologies, products, spare parts and components. Trade secret theft and trademark infringement are also issues, according to the report.

Customers are among the chief offenders, with 53 percent of the companies participating in the survey reporting customer IP rights violations. Semiconductor manufacturers are the customers for this industry. “However, since the prevailing rule in the industry is that the supplier will not take legal action against its customers, suppliers feel helpless,” according to the report. “This is due to fear of antagonizing customers and the high probability of losing all sales to them.”

The trade group’s members reported their greatest concern about IP rights violations arising in Taiwan. Others on that list include China, Korea, North America, Japan and Europe. Of the companies participating in the survey, 60 percent have taken legal action against IP violators, with only 48 percent reporting satisfactory results.

Some companies said they chose not to take action against infringers, citing inconsistencies in global IP practices, concerns about countermeasures they could face, and worries their costumers would be dragged into the process.

Maintaining a patent portfolio and managing the company’s IP assets cost the trade group’s members and average of US$215 million per year. Annual losses relating to IP litigation average between US$75 million and US$120 million, according to the report.

The losses and costs relating to IP rights “undermine the development of the next generation equipment and materials to remain on the Moore’s Law technology curve,” Stanley T. Myers, the trade group’s president, said in a statement.

Moore’s Law, articulated by Intel Corp. founder Gordon E. Moore in 1965, states that the number of transistors on a computer chip would double every two years, speeding up a computer’s ability to process information.

Members of SEMI include Covalent Materials Corp., ATMI Inc., Cymer Inc., and Ultratech Inc.

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