EU threatens Taiwan with WTO case on CDs

The EU opened a probe into Taiwan's practice of letting domestic producers of blank CDs use patents without having to negotiate a licensing agreement with the owner. Netherlands-based Philips, which invented some of the technologies for recordable CDs and holds related patents, complained about the use of five of its patents by Taiwan's Gigastorage Corp. under a compulsory-licensing system.

"The proper enforcement of intellectual property rights is one of the central planks of the EU's global" commercial strategy, European Trade Commissioner Peter Mandelson said in a statement Thursday in Brussels. "The allegations made in respect of the grant of these compulsory licenses give ground for substantial concerns."

The 27-nation EU is stepping up the fight against violations of intellectual property rights in a bid to enforce WTO rules and help European technology companies gain revenue in emerging markets. Taiwan, according to the EU, makes 80 percent of the world's blank CDs, which store data or music.

Philips welcomed the EU inquiry, which follows an unsuccessful two-year effort by the company to win a reversal of Taiwan's July 2004 decision letting Gigastorage use the five CD patents. Philips appealed the decision by Taiwan's Intellectual Property Office a month later at the country's Economic Affairs Ministry, which rejected the request last June.

"Adequate protection and enforcement systems for intellectual property rights conforming to international standards are key elements for countries to create or maintain a positive investment climate," Femmy de Rijk, a spokeswoman for Philips Intellectual Property & Standards in the Dutch city of Eindhoven, said in an e-mailed statement. Philips complained to the EU on Jan. 15.

The probe by the European Commission, the EU's regulatory arm, will last as long as five months. Should the commission conclude that Taiwan's measures amount to unfair trade obstacles, it would give Taiwan a chance to change policies or have the right to complain to the Geneva-based WTO.

"I am hopeful that we can find a means to resolve any WTO violations identified in the investigation," Mandelson said.