1. Intellectual Property Management Strategy

As striving for the relentless success been AUO’s fundamental business philosophy, innovation becomes the key factor for pursuing excellence in implementing AUO’s operations. Thus, the intellectual property right is one of the most important assets owned by AUO.

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AUO values the intellectual property rights and respect the intellectual property rights of others. By actively managing the intellectual property rights, AUO encourages our members to dedicate themselves in creating valuable innovations and enhancing AUO’s intellectual property portfolio for securing the corporate competiveness and financial interest. AUO's intellectual property strategy aims to protect innovative achievements in the best possible way and maximize their value. This includes utilizing patent arrangements and trade secrets, with decisions made through expert advisory meetings to determine the most effective approach for achieving the highest asset value. AUO also diligently evaluates the intellectual property rights of third parties for minimizing the risk of any potential infringement, and AUO actively litigates against any indiscriminate patent infringement lawsuits to ensure the smooth operation of the company, maximize the protection of employee and shareholder interests, and enhance the sustainability and development of the organization.

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2. Patent Management Measures

The following procedure shall be followed if the innovation is determined to be protected by filing patent applications:

1. Applying for the patent in various countries based on the decision of the Innovation Proposal Evaluation Committee.
2. During the patent prosecution procedure, adequately controlling the process and doing the best to acquire the most appropriate scope of patent protection.
3. If withdrawal of any patent application becomes an option because of the denial by the authority or any other reasons, the decision of withdrawal shall be made in the meeting in which at least three supervisors of the Intellectual Property Department should be present.

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After a patent is granted, the following measures shall be adopted:

1. The Intellectual Property Department shall follow the maintenance procedure and pay fees pursuant to the regulations of the patent offices of relevant countries.
2. Conducting evaluation on patent assets and producing patent rating analysis report. The Intellectual Property Department shall arrange a patent asset evaluation meeting to review the rating.
3. Planning the project for exploitation of patent assets and effective disposition of patent assets based on the overall demand of patent asset management.

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3. Trade Secret Management

Confidentiality measures shall be adopted on the company documents and information which have been classified as confidential. If any innovation is determined to be protected by trade secret, the following measures shall be taken:

1. Arranging said innovation, marking said innovation as confidential and managing said innovation as confidential documents.
2. Signing a trade secret agreement concerning said innovation with the proposer of said innovation and informing the proposer that said innovation is the valuable confidential information of the company which shall be managed based on the confidentiality policy.

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4. Creation of an Innovative Environment

A proper mechanism in compliance of the related regulations should be implemented for providing information of IP risk and opportunity monitoring, and the mechanism should also provide the criteria to the decision makers for determining the value/risk of the related IP matters.

1. The Intellectual Property Department shall be responsible for providing the system and platform relating to innovations, patents and trade secrets, the functions of which shall include: track on the number of innovation proposal, statistics and analysis, patent application, patent management and trade secret management.
2. The Intellectual Property Department shall be responsible for education, training and propaganda of topics relating to intellectual property rights. The courses of intellectual property rights shall be divided into compulsory courses and elective courses based on the positions of the employees and actual demand.
3. The Intellectual Property Department shall hold intellectual property innovation activities and provide rewards to the innovator of each intellectual property right, including patent reward, trade secret reward and reward for publication of a copyrighted work.
4. The Intellectual Property Department shall be responsible for the deployment of intellectual property rights and the analysis of patent portfolio reports, providing information to the company's top management for making decisions on business strategies and R&D directions. Based on these decisions, the Intellectual Property Department collaborates with R&D personnel to implement integrated technology development projects, ensuring that the patent portfolio planning aligns with the company’s business strategies and R&D directions.

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5. Risk Management Mechanism

A proper mechanism in compliance of the related regulations should be implemented for providing information of IP risk and opportunity monitoring, and the mechanism should also provide the criteria to the decision makers for determining the value/risk of the related IP matters. AUO has designated personnel to promptly assess and respond to intellectual property disputes, with the primary principle of protecting the company, customers, and shareholders while formulating dispute resolution strategies to minimize uncertainty in business operations. Specific cases, such as the litigation or non-litigation events disclosed on page 105 of AUO's 2023 annual report, illustrate this approach.

The Intellectual Property Department will reports the implementation status regarding the intellectual property rights to the Board of Directs in the first Board meeting each year. The Intellectual Property Department will also take appropriate measure and adjustment according to the suggestions received in the Board meeting.

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The Intellectual Property Department will continuously devote its dedication to the intellectual property management plan. The implementation status of the plan is as follows:

1. “Intellectual Property Management Policy” has been prescribed and implemented, which contains clear regulations regarding intellectual property policy, the protection scope and ownership of intellectual property rights, intellectual property management and rewards.
2. “Innovation and Patent & Trade Secret Management Rule” has been prescribed and implemented, which contains sufficient explanations on the grounds for management, organization, scope of duty, and clear regulations regarding innovation management, patent management, trade secret management and creation of an innovative environment.
3. “Rule of Rewards on Innovation Disclosure” has been prescribed and implemented, under which an evaluation committee is formed to evaluate any innovative proposal and sets out the principle to classify the patent assets and the trade secrets. Adequate rewards are also provided to relevant employees who contribute to the innovative proposals, patent assets and trade secrets based on the outcome of relevant meetings.

To this date, the result and list of intellectual property rights are as follows:

1. Patent: Until the end of December 2024, the total number of our global patent applications has reached 32,000 while the total number of our patents granted in the world has reached 24,700. In 2024 (until the end of December), we have been granted over 460 patents in Taiwan as well as over 750 patents global patents. In 2023, passed the TIPS AA certification of Taiwan's intellectual property management regulations. The certificate is valid until 2025/12/31.
2. Trade Secret: Each unit of the company manages the confidential information according to its function and business nature; there are about 1,500 trade secrets related to technology research and development inventions each year.

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Contributions of Intellectual Property Rights to Business Operations and Revenue:

After AUO obtains patent certificates for its patent applications, the dedicated intellectual property department collaborates with relevant units to classify the granted patents, fully understanding the asset value and status of its intellectual property rights. In cases where a third party infringes upon the key technologies of patents held by AUO, appropriate legal measures will be taken after gathering relevant evidence to protect AUO's intellectual property rights and market position. The patents held by AUO not only serve as a tool to combat infringers but can also be the subject of cross-licensing agreements. Details regarding the company’s patent licensing or cross-licensing agreements are disclosed on page 90 of AUO's 2023 annual report.