SEOUL Shares of South Korea's LG Display tumbled nearly 5 percent on Monday after its Taiwanese rival AU Optronics (2409.TW) said it would seek a sales injunction over alleged patent infringement by LG in LCD manufacturing.
LG Display (034220.KS), the world's No.2 maker of liquid crystal display (LCD), said it would take action on AU's moves once a U.S. court made a final ruling on the two firms' patent dispute.
AU said on Sunday that it would seek an injunction preventing LG from exporting to and selling in the United States products found to have infringed AU's patented technologies.
"We'll take rigorous steps to protect our patents after a final verdict is made," a LG Display spokesman said.
LG Display, which reported a stronger than expected quarterly profit last month, declined to give a detailed breakdown of its sales in the United States.
By 0120 GMT, shares of LG Display tumbled 3.2 percent to 46,400 won after falling almost 5 percent earlier. The stock has risen 35 percent over the past two months, driven by an upbeat industry outlook.
Shares of AU rose 1.1 percent to T$37 after rising as high as T$37.75.
"LG Display shares have rallied in recent months and a correction is due. With AU, I think it's just a common event that will eventually lead to a settlement," said Kim Sung-in, an analyst at Kiwoom Securities.
The dispute, dating from 2006, centers on patents covering technologies to improve the response time and reliability of LCD.
"It's probably only a short-term bullish factor for AU," said IBTS Investment Consulting Dennis Wang, noting that any legal process could take years.
Patent disputes are common in the technology sector, especially in flat screens and semiconductors, as makers aim to protect their latest technologies from being quickly commoditized and exploited by rivals.
But most are settled out of court as big companies want to avoid long fights and patent technology can be out of date by the time a case is over.
In February Samsung Electronics Co Ltd (005930.KS), the world's top LCD maker, agreed with Japanese rival Sharp Corp (6753.T) to drop all pending lawsuits over LCD panel and module technology and to enter a cross-license agreement.
(Additional reporting by Rhee So-eui in SEOUL and Rachel Lee in TAIPEI; Editing by Jonathan Hopfner)