Quanta's Fines for Infringing Laser Dynamics's Patent Sharply Slashed to US$50,000 from US$52 M.

Taipei, Nov. 14, 2012 (CENS)--After nearly seven years of disputes over patent infringement on Japan-headquartered Laser Dynamics, Quanta Computer Inc. has seen the best outcomes in the predicament, as the U.S. Court of Appeals for the Federal Circuit has ruled to sharply cut Quanta's fines for infringing the Japanese firm's patent to only less than US$50,000 from US$52 million required in a verdict earlier brought by a district court in Texas in 2009.

The Taiwan-based Quanta, the world's largest ODM (original design manufacturer) of laptops by shipment now, has been mired in the patent-infringement case since Laser Dynamic filed the case with the district court of Texas in 2005 against the Taiwanese firm allegedly illegally using its patented technology of viewing DVDs/CDs to produce DVD drives for laptops. The cutting-edge technology, noteworthily, has helped the inventor to rake in considerable amount of royalty fees from Sony, Toshiba and other electronic devices vendors over the past decade.

In 2009, the district court issued a ruling to ask Quanta to pay US$52 million fines plus NT$5 million in interest to Laser Dynamics as the latter required. But Quanta decided to file a complaint with the U.S. Court of Appeals for the Federal Circuit against the district court's ruling, reasoning that the required fine amount, which was calculated based on the price of every entire laptop shipped by Quanta, was unreasonable and unacceptable, given the fact that a DVD drive amounts to only a small share of a laptop's production costs.

Quanta, instead, asserted that the fines in the case should be recalculated based on the cost of DVD drives built in its laptops and subject to use of Laser Dynamics's patented technology. Accepting Quanta's assertion, the Court of Appeals hence ruled to have the Taiwanese firm pay out only less than US$50,000 in fines in the case.

While being upbeat with the court's determination, Quanta still emphasized that it uses DVD drives designated by customers who already pay royalty fees for use of Laser Dynamics's patented technology, Quanta shouldn't be subject to royalty payments on the licensed components again. This is also among reasons why the required fine amount is sharply reduced.

More importantly, industry insiders said, is that the ruling means that the court eventually comprehends how contract manufacturing is dealt with in high-tech industries. And this will provide guidelines for Taiwanese OEMs (original equipment manufacturers) and ODMs to learn how to better safeguard their rights and interests when taking on patent-infringement charges in the future.