Introduction
On June 24, 2025, the Industrial Technology Research Institute (ITRI), in collaboration with the Chinese National Federation of Industries (CNIA), the Taiwan Electrical and Electronic Manufacturers’ Association (TEEMA) and IP Bank, announced the formation of the License on Transfer (LOT) Industry Alliance. This initiative brings together nearly 20 leading companies in the semiconductor, ICT and printed circuit board (PCB) sectors, including industry giants such as TSMC, ASE, Powerchip, SPIL, Vanguard International Semiconductor, Gigabyte, NEXCOM, MSI, Shennan Circuits, and Unimicron. Collectively, these companies represent over NT$4.4 trillion in annual revenue and contribute more than 150,000 valid patents to form a robust intellectual property (IP) defense network aimed at safeguarding Taiwan’s technology sector.

Purpose and Significance of the LOT Industry Alliance
The LOT Industry Alliance is designed to counter the growing threat of Non-Practicing Entities (NPEs), also known as patent trolls, which acquire patents solely to extract high licensing fees without producing goods or services. NPE litigation imposes significant operational risks and financial burdens on targeted companies due to low litigation costs for NPEs and high defense costs for defendants. The LOT model, widely adopted by global tech leaders like Google, Dropbox, Canon, SAP, and Red Hat, mitigates these risks by enabling a collective defense mechanism. Supported by the Ministry of Economic Affairs’ Industrial Technology Division, ITRI’s initiative establishes Taiwan’s first cross-industry IP defense network to enhance global competitiveness and resilience against NPE threats.

Key Features of the LOT Mechanism
According to ITRI’s General Counsel and Executive Director of the Technology Transfer and Law Center, Wang Peng-Yu, the LOT Industry Alliance operates with three core principles:
1. Non-Interference in Commercial Competition: The alliance does not affect competitive dynamics among member companies.
2. Activation Only Upon NPE Transfer: Licensing is triggered only when a patent is transferred to an NPE, preserving the patent’s independent value for its owner.
3. No Disclosure of Sensitive Information: The mechanism avoids sharing technical details or trade secrets, ensuring confidentiality.

This framework consolidates the scattered patent portfolios of member companies into a unified defense system, protecting not only individual firms but also their supply chains. It strengthens Taiwan’s position in global technology competition and fosters opportunities for international collaboration with similar organizations.

Alliance Structure and Benefits
The LOT Industry Alliance focuses on key technology sectors critical to Taiwan’s role in the global value chain, including semiconductor manufacturing, IC design, mobile and broadband communications, computer hardware architecture, smart electronic products, and related applications. To accommodate diverse technical and market needs, the alliance operates two specialized streams: semiconductors and ICT. Members can participate in one or both streams based on their R&D and patent portfolios.
Membership benefits include:
• NPE Litigation Defense: Immediate access to a collective defense against NPE lawsuits.
• Shared Patent Resources: Access to a cross-industry patent pool, enhancing IP protection.
• Cost Savings: Reduced litigation and settlement expenses.
• Risk Intelligence: Access to patent-related insights and early warning systems through the alliance platform.
• Supply Chain Resilience: Strengthened protection for upstream and downstream partners.
Industry Support and Strategic Impact
The alliance has garnered strong support from industry leaders, with nearly 20 major firms joining the initiative. Xu Jie-Li, Standing Director of CNIA and Vice Chairman of TEEMA, emphasized that the LOT Industry Alliance represents Taiwan’s first cross-industry IP defense network, enabling companies to focus resources on technological innovation and market expansion while reducing operational risks and costs. By pooling over 150,000 patents, the alliance creates a formidable barrier against NPE threats, enhancing the global competitiveness of Taiwan’s technology sector.

The initiative also aligns with broader governmental efforts to advance IP value creation and protect cutting-edge technologies. Future plans include forging partnerships with international organizations and major global firms to expand the scope of protection and explore new commercial opportunities for patent utilization.

Source:
Industrial Technology Research Institute. (2025, June 24). ITRI, CNIA, TEEMA, and IP Bank Join Hands to Establish LOT Industry Alliance. Retrieved from https://www.ctee.com.tw/news/20250624701413-430502