TOKYO ELECTRON LIMITEDANNUAL REPORT 07

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
to developing technologies that bolster the competitiveness of its
products. Since the fiscal year ended March 31, 2006, as measures to raise profitability, Tokyo Electron has been promoting
three themes: (1) launching new products imbuing high addedvalue, (2) raising manufacturing capabilities, and (3) expanding
post-sales businesses. Protecting the intellectual property rights of
independently developed proprietary technologies and products isvital in this context to ensure the smooth growth of businesses.
The integration of our intellectual property strategy with ourtechnological and product strategies is thus important to realizing
maximum benefits from development efforts.
Recently, Tokyo Electron has been developing technologies incooperation with semiconductor manufacturers, its customers.
Amid this development, the areas to be protected by intellectual
property rights are diversifying. Tokyo Electron actively files patentapplications for protecting intellectual properties such as software
technologies, process management technologies for multiple
manufacturing equipment and other technologies.

Policies on Acquiring and Managing IntellectualProperty, Managing Trade Secrets and Preventing
Technology Leakage
Tokyo Electron has a set of internal rules that define the management of its intellectual property. These rules were revised basedon the purport of the Revised Patent Law that came into force twoyears ago. Under these rules, Tokyo Electron provides incentives
for inventors and creators within Tokyo Electron. We make lumpsum payments at the time of submission of applications for patents, utility model rights, designs and other property rights.
Bonuses are also given as incentives if such creations are implemented at Tokyo Electron or licensed to third parties. We havealso established an incentive scheme, including awards to motivate inventors and creators.
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 Marketing
Information.” The provisions of these measures are approximately
equivalent to those of the government’s “Policies Regarding
Managing Trade Secrets” and “Policies Regarding the Preventionof Technology Leakage” (both issued by the Ministry of Economy,Trade and Industry). Furthermore, to raise the effectiveness oftrade secret management, Tokyo Electron runs an in-housetraining program and ensures that it monitors the subsequent
status of trade secret handling.
By promoting greater cooperation with the materials and procurement divisions, Tokyo Electron is strengthening measuresagainst imitation and pirated technologies at the component level.
Furthermore, outside of Japan, Tokyo Electron is strengthening
tie-ups with local law offices in the U.S. and in Asia and actively
conducting other activities to counter imitation and pirated products. These include cooperating with Japan’s Ministry of32

Economy, Trade and Industry, Japan External Trade Organization,
Japan Intellectual Property Association and other organizations,and participating in various activities.

Status of Intellectual Property Application
The graph in this section shows historical data on the number ofpatent applications filed worldwide by Tokyo Electron up to theend of March 2007. Tokyo Electron is reviewing its strategy
regarding the country of application, including Japan, from thestandpoint of key manufacturing bases and the markets of its
operating divisions. In particular, in addition to the recent emphasis on filing applications in the U.S., Tokyo Electron is also stressing the need to file applications in China, South Korea, Taiwan andother countries as a countermeasure against imitation and pirated
products, mainly in East Asia.

Contribution of License-related Activities
In developing and implementing our intellectual property rights
strategy, we do not 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 new products incorporating leading-edge technologies,
and bring them to market as quickly as possible, it is essential toutilize all available intellectual properties. Tokyo Electron places
high value on introducing cutting-edge technology and constantly enhancing the efficiency of research and development,
and on quickly launching new products. We also respect theintellectual property rights of others, just as we do our own, andeffectively use them through licensing.
Tokyo Electron is also exploring the feasibility of licensing orselling its proprietary technology to third parties in other businessfields and to cooperating partners.

Number of Patent Applications(Applications)

1,000
800
600
400
200
002

03
U.S.

04
South Korea

05
Taiwan06
China07
EuropeJapan