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99 U Disk Patent Expire

U disk patent expires, China Netac technology faces dilemma

U disk played a very important role in our daily office life. Many people did not know that U disk technology was first invented by Chinese people. Deng Guoshun and Cheng Xiaohua, founders of China Netac Technology, invented an alternative floppy disk in 1999. The electronic product, named U disk, and applied for registration of related patents on November 14 of the same year, although many companies claimed that they had pioneered the U disk technology and launched a patent dispute lawsuit. Finally, China Netac Technology Co., Ltd. was The parties identified the U disk as the world's first inventor.


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With the patent advantage of U disk, Netac's performance has achieved a leap-forward development. In 2003, revenue exceeded 500 million yuan. At that time, one of every two U-disks was from Netac Technology, the founder of Netac. Deng Guoshun was once hailed as the "father of U disk". After a brief glory, Netac's performance declined year by year, and it was also involved in patent infringement cases. Afterwards, Netac received compensation of up to 18 million US dollars. Perhaps Netac has tasted the sweetness of patent rights protection. Since then, the development of Netac's business has begun to stagnate, relying on the advantages of patent holders to find domestic and foreign electronic companies to file lawsuits, including Toshiba, Sony, Kingston and many others. Well-known electronic brands have been awarded and signed a patent licensing agreement.

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According to the 2018 financial report released by Netac, the annual revenue was 970 million yuan and the net profit was 64.5 million yuan, of which the income from patent authorization was 36.29 million yuan. The gross profit margin of this part is 100%. Patent fees account for a large share of the company's earnings. As for the second profitable project, it comes from the rental of houses. The rental of the Netac Building is 30.62 million yuan per year, and the gross profit margin is as high as 85%. The gross profit margin of products such as U disk is only about 6%.

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In recent years, due to the rise of network storage modes such as cloud disk, the role and sales volume of U disk has been declining year by year. The competition of many manufacturers has also made the U disk's gross profit margin low. This is one of the reasons why Netac's main business is poor. The technology U disk patent application has officially expired for 20 years, which means that Netac will lose patent protection, and it will no longer be able to charge license fees to other manufacturers. According to the 2018 revenue forecast, Netac will lose the patent license fee. More than half of the decline, in the previous media interviews with Netac technology staff, how the company will deal with this situation, the other responded that "the company still has no effective measures to fundamentally solve the risk of the company's operation after the patent expires." The gross profit margin of the main business is low. If there is no technical advantage, it is likely to continue to decline. After renting the building, it may become the main profit point. Netac's road ahead is worrying.

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