Chinese Lithography Firm Rebukes ASML Over Patent Infringement Claims

Earlier in the week, it became public knowledge that pivotal chipmaking equipment maker ASML had pointed the finger of suspicion at a Chinese rival, raising the possibility of IP infringements. Dongfang Jingyuan Microelectronics Technology, the company under suspicion, released a strongly worded statement denying any underhand activities and pledging that its work was solely based on independent R&D. Dongfang Jingyuan hinted that it was even considering legal action due to the dissemination of "false information."

In our original report into what is now developing into a full-on PR war, ASML highlighted associations between Dongfang Jingyuan and XTAL. The latter lost a legal battle with ASML in 2019 when a US court found that it had stolen the Dutch tech firm's trade secrets. As a result, ASML was awarded punitive damages of $845 million (the damages were so high because the judge found XTAL acted purposely and maliciously). Additionally, the court issued an injunction to stop working on any software products that ASML alleged were contaminated with its IP.

With its research in hand, ASML said it approached the Chinese companies under suspicion, which were unresponsive to communications. To push the matter, ASML then contacted Chinese officials with its concerns.

However, ASML's actions seemingly went beyond initiating investigations and raising concerns to government/trade bodies. Perhaps the firm was a bit hasty here, but the previous report stated that ASML asked its customers to avoid business transactions with Dongfang Jingyuan. These requests could carry considerable weight due to ASML's status as an essential pillar in the semiconductor industry.

Dongfang Jingyuan's public statement regarding ASML's accusations and actions is understandably and predictably gruff and is packed with denials. In essence, the Chinese firm says it has been operating in compliance with Chinese laws and regulations since its founding. Moreover, the statement asserts that Dongfang Jingyuan adheres to "the concept of independent research and development and independent innovation… [and] respects and protects intellectual property rights."

Dongfang Jingyuan appears to be more than upset by accusations of patent-infringing behavior. Illustrating this, it mentions that it may turn to the legal system to fight back against "false information."

Dongfang Jingyuan has some degree of special status in China as a tech startup that has been given governmental praise and approval, with reduced scrutiny from regulators. Such firms are called "little giants" in China's tech business circles.

It would be interesting to see such a case brought in the US or Europe, but if this little giant is as cosseted in China as reports suggest, this statement could be viewed simply as a piece of theater. Ultimately, if Dongfang Jingyuan is, as it claims, important to China's core semiconductor technology development hopes, Chinese regulators might not be concerned about any Western criticism.