1. Intellectual property strategy and goals

We actively encourage innovation and independent research and development. The priorities in our intellectual property strategy are focusing on core technologies and developing good quality patents. Meanwhile, we continue to promote the concept of a "patent portfolio", and employ highly promising technologies to drive the creation of good quality patents. We are also constantly managing risks to reduce the infringement risk. Furthermore, we are moving toward strengthening R&D outcome commoditization and enhancing brand images by creating added value from intellectual property. We aim to operate in all areas of our business and maximize the value of intellectual property while managing and utilizing effectively our patents, trademarks, trade secrets, and copyrights.

2. Intellectual property management system

As part of our ongoing commitment to intellectual property, we have implemented the Intellectual Property Management Procedure to regulate and manage the grant of the right, maintenance, and utilization of patents, trademarks, copyrights, trade secrets and other forms of intellectual property. The procedure serves to help the company compete in the market and protect the rights of itself and its shareholders.

In addition, we have implemented the Patent Incentive Award Procedure so to have well-established systems and processes to encourage our employees to turn R&D outcomes into protected intellectual property (including patent application, trade secret, or thesis publication). The effort will generate momentum for R&D and innovation in products and technologies. We also try to file good patents to build up powerful patent portfolio for the company as a whole and pave the way for the company to compete more effectively in the tech industry.

We have also implemented the Trademark Management Procedure to govern the application, evaluation, acquisition, and maintenance of trademarks.

We have also implemented the Engineering Notebook Management Procedure. It serves the purpose of effectively protecting the company's R&D outcomes and intellectual property rights. It requires R&D personnel record in writing outcomes of their work in detail so to facilitate viewing and long-term preservation and help the company accumulate intellectual property and become more competitive.

Our Trade Secret Management Procedure sets the rules for the categorization, classification, and labeling of confidential information in the company. We also take appropriate confidentiality measures to prevent the theft, alteration, damage, destruction, or leakage of confidential information. There are also controls in place to manage access to view confidential information.

Moreover, for the purpose of protecting the company's intellectual property, employees joining the company are required to sign related employment agreements to agree, in addition to making their inventions created on the job as required by law of the intellectual property of the company, to undertake the duty to safeguard the confidentiality of the company's intellectual property rights and trade secrets and other obligations for the duration of employment and after termination of employment.

We perform regular internal audits of the R&D cycle every year in order to ensure the acquisition, maintenance, and utilization of the intellectual property comply with the company's regulations.

3. Intellectual property outcomes

As of the end of 2019, the company has a total of 3,000 patents and patent applications and 2,300 granted patents, including 1,800 utility patents. These patents are spread across a number of major markets and countries, and cover primary places of manufacture and sale for related products. In particular, the technical field covers our core products, including LEDs, power supply units, servers and network communication parts and components, multifunction machines, keyboards and chassis, and automotive electronic parts and components. The focus is on core technologies, including opto-electronics, cloud computing, AI (industrial automation), smart home, network communication, storage, smart lighting, consumer electronics and game consoles, onboard parts and components, and imaging. A huge amount of patent data is handled systematically entirely by the LITEON patent database. The system makes it easier to track the status of patent applications and issued patents and subsequent maintenance and operations.

So far the company has more than two hundred granted trademarks which spread across ten categories and registered in more than forty countries in order to ensure they can be used for the company's products, including opto-electronics, information, automotive, lighting, and storage products. Meanwhile, to enhance the brand image and recognition, we not only place our trademarks on the products and the exterior packaging and on business documents, such as product catalogs and income certificates, but also use it throughout international business activities and exhibitions. In addition, we organize internal education and training sessions as needed to raise awareness of the correct way of using trademarks.

We also work with well-known universities around the world in various cooperation programs, such as the R&D center established jointly with National Tsing Hua University. These programs help us secure technologies and patents for key technologies in the business. In addition, more than a hundred theses have been published on domestic and international journals under these programs. The internships offered to students of the universities attract outstanding talent to work at LITEON.

To encourage technical innovation and creativity, we have created the Innovell Creativity Center (ICC) to handle the development and overall design of innovative products. The range of ICC services include innovative product design, green design, packaging design, and mobile app design. The adoption of digital technologies and environmental policies in recent years extends the range further to include augmented reality (AR) application and green packaging design. For example, the keyboard packaging transforms into a marine debris table card game, and the mouse packaging box converts into a card storage box. Using the exciting game education to raise the next generation's focus on marine debris issue. Furthermore, LITEON's NM-Dial Remote Control is based on the Smart Life concept, and uses a dial to control louvers in homes. It can also be used with a mobile phone to operate windows remotely. The creative ideas above won international industrial design awards in 2019 and 2020, including the iF Design Award, the Red Dot Product Award and the Reddot Brands & Communication Design. Furthermore, as part of our commitment to our corporate social responsibility and drive innovation in Taiwan, LITEON Award each year hold contests, campus seminars and international forums to push forward advance technologies and innovative designs in global Chinese community. It provides young creative teams with a platform where they are able to exchange ideas with international top-notch corporate, academic, technical experts and social resources in Taiwan.

4. Purposes of intellectual property and contributions to business activities

We work hard to invigorate and manage the existing intellectual property, such as receiving royalty from licensee, cross license, purchase, sale or trust of intellectual property, and anti-counterfeiting efforts. We sometimes use patents as weapons to open doors and form strategic alliances to create win-win situations. There have been many successes with invigorating intellectual property to create profits for the company, improving the brand image, increasing market shares for specific products, and winning clients' trust. Meanwhile, we continue to innovate and develop new products and technologies. Through the coordination among different entities in the LITEON Group, we can establish an intellectual property wall which increases LITEON’s advantage and competitiveness.

5. Countermeasures against intellectual property related risks

We take an active approach to facing and handling intellectual property disputes as appropriate with priority given to protecting the company's market, products, technologies, and clients. We do not seek out fights, nor do we shy from challenges. Besides following the dispute resolution mechanisms to perform technical, legal, and industrial analyses and formulate dispute resolution strategies, we utilize various models to erect technical barriers to trade for competitors, thereby acquiring protection of intellectual property rights or avoiding infringement on patents of others.

To ensure LITEON's information assets are adequately protected while following the trend of going paperless and electronic transmission, we have implemented an ISO 27001:2013 compliant information security policy. To prevent hacker attacks and theft of the company's confidential information, we have installed information security monitoring systems and implemented Microsoft Azure Information Protection (AIP). Digital cloud tools, such as Microsoft Office 365, and encryption, identification and authorization rules are utilized to protect confidential business documents. Furthermore, in terms of security in the real world, all of our employees and external parties (including clients, consultants, partners and suppliers) are inside the scope of this policy.


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