An increasing number of international electronics manufacturers are pushing Chinese companies to start paying royalties on the patents that power digital video-disc players, but negotiations between the two sides might not end any time soon.
Sony, Philips and Pioneer, three major DVD technology developers in the world known as "3C," recently began urging domestic DVD manufacturers to solve the patent problem. The group say that most Chinese manufacturers of DVD machines don't pay any copyright or licensing fees for the technology they are using.
"We, together with Sony and Pioneer, are in talks with Chinese DVD producers to require them to begin paying royalties on our DVD technologies," said Susan Chen, a spokeswoman for Philips Electronics China Group.
Chen said there is still no time frame for when local manufacturers will begin paying licensing fees. More than 80 domestic DVD manufacturers have entrusted the China Acoustic Equipment Association to negotiate with the three foreign electronics giants.
"The talks between 3C and us is an arduous task," said an official of the Shanghai-based association who declined to be identified. "It still needs a long time to solve the patent problem because we should check whether domestic DVD producers have used their technologies and whether the 3C's DVD patent rights have been registered in China."
The two sides are also haggling over the issue of how high the fees should be.
The action by 3C follows similar steps by a group of six global electronic giants - Hitachi, Matsushita, Mitsubishi, Time Warner, Toshiba and Japan's Victor Co - known as the "6C" group.
That group says China's electronics makers should start paying fees ranging from 15 US cents to US$4 on the whole gamut of DVD products, from discs to players. If these fees were paid, local consumers could expect the price of domestically made DVD machines to jump by a little less than 100 yuan (US$12).
Negotiations with 6C, which have been going on for about a year, have yet to produce any tangible results.
"No domestic DVD maker has ever paid royalties to us yet," said Hu Ronghui, lawyer for the 6C's patent licensing program on the Chinese mainland.
"The key element of the dispute is the fees required by 6C," said Hu.
"Most domestic DVD makers have agreed to pay royalties, but only if the fees can be lowered," the lawyer added.
The 6C group insists that all DVD makers should pay licensing fees before production, and companies failing to forward the fees should be charged with an additional 2 percent interest per month.
In addition, Hu said that 6C will ask its retailers worldwide not to import DVD products from Chinese companies that fail to pay the fees.
China is the world's largest producer of DVD players with an annual output of 10 million machines. About 4 million players a year are exported to other countries where they compete with machines made by 6C and 3C companies and other producers who pay licensing fees.
(Eastday.com 10/11/2001)
