LG ELECTRONICS, INC. V. BIZCOM ELECTRONICS, INC.: SOLVING THE FOUNDRY PROBLEM IN THE SEMICONDUCTOR INDUSTRY

摘要

Smaller chip designers cannot afford to operate manufacturing plants. Instead, they hire manufacturers to build their designs and sell back chips made to the designer's specifications. In an effort to secure "patent peace" and focus on innovation, leading semiconductor manufacturers entered blanket cross-licensing agreements in the 1980s and 1990s. The combination of contract manufacturing and these broad licensing agreements creates "the foundry problem," in which a third-party competitor can free-ride on the licensing agreements between patentees and foundries to gain access to technologies without negotiating their own license. A recent case, LG Electronics, Inc. v. Bizcom Electronics, Inc., demonstrated how carefully defined licensing agreements can overcome the foundry problem. This Note analyzes the foundry problem and the solution employed by LG Electronics as compared to other approaches. It also recommends further devices a patent licensor can use to avoid the foundry problem.