INTELLECTUAL PROPERTY REPORT

Process and mechatronic technologies used in the manufacture ofsemiconductors and flat panel displays represent Tokyo Electron’score technologies. Tokyo Electron devotes considerable resources todeveloping technologies that bolster the competitiveness of its
products. Without protection of its intellectual property rights, Tokyo
Electron would not be able to lay claim to independently developedtechnologies and products as proprietary assets. It is precisely theintegration of our intellectual property strategy with our technologicaland product strategies that allows Tokyo Electron to realize maximum
benefits from development efforts.
With the increasing division of roles between semiconductor
manufacturers and SPE suppliers, Tokyo Electron is playing anexpanding role that goes beyond the supply of production equipment and embraces processing, multiple process integration andprocess control technologies. This situation makes protection of
intellectual property rights all the more complex. Tokyo Electronplaces high priority on protecting intellectual property by actively
filing for process recipe, software and other patents.

CONTRIBUTION OF LICENSE-RELATED ACTIVITIESIn developing and implementing our intellectual property rights strategy, we do not primarily see intellectual property rights acquired byfiling applications and securing rights for proprietary products anddevelopment technologies as a source of income from licensing toother companies. Rather we view this as a method of differentiating
our own products and bolstering our competitive advantages. Semiconductor and FPD production technologies are becoming increasingly advanced and sophisticated. To effectively develop newproducts incorporating leading-edge technologies, and bring them tomarket as quickly as possible, it is essential to utilize all availableintellectual properties. Tokyo Electron places high value on introducing cutting-edge technology, on constantly enhancing the efficiencyof research and development, and on quickly launching new products.
We also respect the intellectual property rights of others, just as
we do our own, and effectively use them through licensing.
Tokyo Electron is also exploring the feasibility of licensing or
selling its proprietary technology to third parties in other businessfields and to cooperating partners.

POLICIES ON ACQUIRING AND MANAGING INTELLECTUAL
PROPERTY, MANAGING TRADE SECRETS AND PREVENTING TECHNOLOGY LEAKAGE
Tokyo Electron has a set of internal rules that define the management of its intellectual property. According to these rules, TokyoElectron provides incentives for inventors and creators within
Tokyo Electron. We established awards to honor inventors andcreators. We also make lump-sum payments at the time of submission of applications for patents, utility model rights, designs
and other property rights. Bonuses are also given as incentives ifsuch creations are implemented at Tokyo Electron or licensed tothird parties. The latter bonuses are scaled to the earnings recordof such licenses and other rights.
Based on the Revised Patent Law that came into force in fiscal
2005, Tokyo Electron is working to make its award and bonus
systems for creations easier to understand and revising how inventors are rewarded for their contributions. The goal is to bring thesystem into conformity with the recommendations in “The Case
Studies of Procedures Under the New Employee Invention System,”
published in September 2004 by the Patent Office.
Management of trade secrets is handled according to Tokyo
Electron’s “Internal Rules on Managing Technology and Marketing
Information” and “Manual for Managing Technology and MarketingInformation.” The provisions of these measures are approximately
equivalent to those of the government’s “Policies Regarding
Managing Trade Secrets” and “Policies Regarding the Prevention ofTechnology Leakage.”
By promoting greater cooperation with the materials and procurement divisions, Tokyo Electron is strengthening measures against
pirated technologies at the component level. These initiatives are notlimited to operations in Japan alone. They are to be expanded overseas through tie-ups with local law offices in the U.S. and in Asia.

INTELLECTUAL PROPERTY BY MAJOR COUNTRY
The following graph shows historical data on the number ofpatent applications filed in Japan by Tokyo Electron up to the endof March 2005. With it becoming more difficult to acquire patents
in Japan and other countries, Tokyo Electron is reviewing its policy
regarding the country of application, including Japan, from thestandpoint of key manufacturing bases and the markets of its
operating divisions.
In addition to the recent policy of emphasizing filing applicationsin the U.S., Tokyo Electron will also stress the need to file applications in China, South Korea, Taiwan and other Asian countries.
Number of Patent ApplicationsApplications (overseas)

Applications (domestic)

500

1,000400

800300600200400

10020002000
U.S.

2001

2002

South Korea

2003
TaiwanTOKYO ELECTRON LIMITED

2004

2005

China

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