Authored by: Benjamin C. Stasa of Brooks Kushman and John Ghekiere of TechSovereign Partners
The semiconductor manufacturing industry, renowned for its precision, innovation, and intellectual rigor, thrives on technological advancements and collaboration. Yet, despite clear benefits, many companies remain hesitant to form partnerships, fearing loss of control over valuable intellectual property (IP), trade secrets, and competitive advantages. This caution is understandable, especially in an industry where even minor differentiation can yield substantial market advantages. However, today’s challenges often require complex, collaborative solutions. The question becomes: How can semiconductor companies advance their aims through partnerships while safeguarding what makes them unique?
This article explores common IP fears, actionable strategies for mitigating risk, and lessons from real-world semiconductor collaborations that provide fresh approaches to strategic IP management.
Why the Fear Exists
At the heart of hesitancy around partnerships lies a fundamental IP concern: sharing proprietary technology risks eroding competitive advantage, especially in a market where differentiation can be razor-thin or a challenge to sustain. Some companies hesitate to engage outside expertise, fearing that collaborators might not fully appreciate the importance of IP protection or could inadvertently misuse confidential information.
The primary question for semiconductor manufacturers becomes: What specific goals would grow more tangible with collaboration, and how do we control for risks when working with third parties? Achieving a successful balance requires both the right tools and an adaptable IP strategy.
A Fresh Approach to IP Protection: Beyond NDAs and JDAs
Relying solely on non-disclosure agreements (NDAs) and joint development agreements (JDAs) can create a “set it and forget it” mentality, which isn’t sufficient in today’s complex collaborations. By taking a more active approach—establishing joint IP protocols, real-time communication channels, and ongoing IP reviews—companies can harness the benefits of partnerships without compromising sensitive information.
Below are practical examples from the industry and deeper strategies for mitigating IP risk.
Anecdote 1: The Price of Secrecy – A Trade Secret Lost
A major advanced memory fabricator found itself dealing with a complex issue involving three vendors whose interoperating products were critical to a specific process. While two vendors were willing to collaborate, the third withheld details of their unique measurement system, fearing exposure of proprietary methods. When the fabricator identified the root cause with the help of the other vendors, they replaced the secretive vendor with a more cooperative competitor.
Lesson learned: Safeguarding trade secrets does not require avoiding collaboration. Here, the vendor could have initiated a controlled information exchange by requesting periodic joint reviews with a mediator or neutral third-party expert. Implementing “information segmentation” in NDAs—where each party specifies what will be shared, in what depth, and with whom—would have allowed targeted disclosure without revealing sensitive details. Establishing IP management practices that adapt to the project’s needs helps maintain control while facilitating necessary collaboration.
Anecdote 2: The Patent Pitfall – The Costs of Mistrust in Collaborative Development
A sustainability startup engaged an equipment vendor under an NDA to create a hardware design tailored to their particular application needs. However, when the equipping vendor, noting that their concept had extensible utility in the broader industry, sought patent protection for their invention, the startup abruptly canceled the project altogether, claiming the vendor had sought to compete with them. With stalled funding and strained relations, the vendor withdrew, and the startup’s project stalled.
Lesson learned: Negotiating joint IP terms early can avoid future conflicts. Here, a “patent-rights provision” in the initial agreement could have clarified who would hold patent ownership, co-ownership, or rights to license the technology. By engaging IP attorneys early and including “reach-back” provisions (guaranteeing compensation or licensing options if patents are applied for on jointly developed technologies), both parties could have proceeded with a shared understanding of ownership expectations.
Anecdote 3: Trade Secret Troubles – The Risks of Not Sharing Critical Information
A chemistry company, new to semiconductor manufacturing, sold a specialized plating solution to a fabricator. For a number of technical reasons, performance issues arose. When the fabricator requested additional formulation details from the chemistry vendor to help in diagnosing the problem, the vendor refused, leading the fabricator to invest in costly equipment modifications and to eventually discontinue use of the vendor’s chemistry. The chemistry company’s semiconductor aspirations fizzled as a result.
Lesson learned: Stonewalling on critical information can jeopardize long-term relationships. A more strategic approach could include phased information disclosure, where the company agreed to provide limited technical assistance with “redacted formulations” or data disclosures specific to the fab’s equipment needs. Structuring contracts to include periodic IP-sharing reviews or arbitration clauses can also address these situations before they escalate.
Three Key Strategies to Protect IP and Build Trust
Beyond “Set It and Forget It”: Establish a proactive IP monitoring plan during partnerships. This means scheduling regular reviews of the NDA’s scope, updating IP-sharing protocols as project needs evolve, and designating a cross-functional “IP task force” to maintain consistent oversight. This level of engagement ensures that both parties adapt their protections as new information or IP arises during the partnership.
Create a “Concerns Protocol”: Implement a standing protocol for IP concerns, setting guidelines for both parties to follow when a potential IP risk or disagreement surfaces. For example, if a metrology company faces requests to share a proprietary process, the protocol could include formal “IP mediation sessions” led by legal counsel to outline risk mitigation measures and address partner concerns in a structured setting.
Engage Legal Experts from Start to Finish: Involving IP counsel during the full lifecycle of a partnership—from drafting agreements to conducting mid-project audits—ensures both parties stay aligned on evolving IP rights. In cases where potential IP conflicts arise, counsel can review disclosure options and make risk assessments, equipping partners to make informed choices and preserve valuable assets.
Conclusion
The semiconductor manufacturing industry sits at the crossroads of rapid technological advancement and increasingly complex, high-stakes challenges. Collaboration, while inherently risky, offers tremendous benefits. By moving beyond basic legal tools and establishing proactive IP management strategies, companies can safeguard their innovations while achieving greater flexibility in partnerships.
By embracing these methods and aligning on clear, adaptable IP protocols, semiconductor companies can create a collaborative culture that fosters growth without compromising competitive advantage. For any company facing the delicate balance between innovation and protection, the answer often lies in adopting an active, ongoing IP management approach.
