Capitol Commentary: IP Challenges Threatening Innovation

Capitol Commentary

IP Challenges Threatening Innovation

By Maggie Hershey, senior director, SEMI Americas Public Policy

SEMI recently celebrated “World IP Day” to highlight the importance of intellectual property (IP) protection to our industry.  The World Intellectual Property Organization (WIPO) designated April 26 as World IP Day to raise awareness about the value of intellectual property.  To mark the occasion, SEMI, Tokyo Electron America and WIPO held a webcast to discuss industry challenges and activities around the world to increase IP protection.  It is not too late to listen to the webcast online – click here for details.

A company’s intellectual property is fundamental to its ability to innovate, develop new technologies and methods, and keep moving forward in a very competitive industry.  Less obvious, perhaps, is something that distinguishes our industry from many others — the high amount of revenues that companies reinvest into research and development. 

On average, semiconductor equipment and materials companies put 10-15 percent of their revenues back into R&D each year.  The revenues last year for these companies were $91 billion, so their R&D investment translates to between $9 billion to $14 billion for 2011 alone.  There is a tremendous amount of pressure to see a return on that investment.  At the same time, management of IP itself is costly and requires a lot of resources, particularly in a global environment.  These issues are true throughout the supply chain, not just for SEMI members, but for their customers as well. 

SEMI recently surveyed our member companies about their IP challenges.  This is a similar survey to the ones conducted in 2006 and 2008 and the results affirm many of the previous findings.  The survey was sent to a global group of SEMI members and close to half responded. 

The survey respondents continue to have a lot of concern about IP infringement and the related challenges to innovation.  Only three percent of respondents considered IP challenges to be “not serious,” while the rest characterized the challenges as “somewhat serious” to “extremely serious.”

Degree of IP ChallengeDegree of IP Challenge

Over 60 percent reported that these challenges have translated into an adverse impact on their companies.  About half indicated that some of the challenges that they face involve customers.  This can pose a unique set of challenges and is an area where SEMI as an association can play a useful role through on our ongoing dialogue with the World Semiconductor Council’s IP Task Force.

SEMI asked about companies’ experience with pursing IP protection through the legal system and three-fourths of the respondents said that they have taken some kind of legal action.  Of that group, slightly less than half were satisfied with the outcome.  Some of the most common reasons cited for this lack of satisfaction were the difficultly in proving violations, the expensive and time-consuming nature of the process, and a lack of adequate penalties.

SEMI asked companies about what types of violations they have experienced.  There were several areas that were repeatedly mentioned, with patent infringement and counterfeiting being the recurring themes. 

Forms of IP Violations

Forms of IP Violations

SEMI also asked companies about their experiences in specific regions and whether the situation in that region was improving, worsening, or staying the same.  As with the previous questions, these results were consistent with the findings from earlier inquiries of member companies’ IP experiences.

IP Concerns in Specific Regions

IP Concerns in Specific Regions

IP Violations Trend

IP Violations Trend

Because of these ongoing challenges, SEMI continues an active industry advocacy program to promote intellectual property rights.  In addition to the IP position statement approved by the SEMI International Board of Directors in 2006, all SEMI member companies are required to commit to an IP statement of principles as part of their association membership. 

Our continuing outreach activities include meetings with government officials in several regions to build on recent efforts in Taiwan, Korea and the United States.  In the near term, IP protection is a major theme for the SEMI Washington Forum taking place May 8-9.  This event will include meetings with the U.S. Patent and Trademark Office, the office of the White House’s Intellectual Property Enforcement Coordinator, and the office of the U.S. Trade Representative.

Companies intertested in SEMI’s IP activities are encouraged to listen to the webcast [link] and to check out the SEMI IP webpage at www.semi.org/ip.  To get involved, please contact me at mhershey@semi.org.

 

May 1, 2012