1. Intellectual Property Management Strategy

Our company continues to advance its dual‑axis transformation, establishing Display Technology, Mobility Solutions, and Vertical Solutions as our three core business pillars. Innovation serves as the driving force and a key capability for achieving corporate excellence; therefore, intellectual property (IP) is regarded as one of the company’s most valuable assets.

In addition to valuing our own intellectual property, we also respect the IP rights of others. The company’s IP strategy is built upon four major pillars: Patent Management Measures, Innovation Environment Development, Trade Secret Management, and Risk Management Mechanisms. Since 2023, the company has implemented the Taiwan Intellectual Property Management System (TIPS) and continues to enhance its IP management practices through internal audits and external certification mechanisms. These efforts aim to safeguard employee and shareholder interests, strengthen competitive advantages, and enhance corporate profitability.

For patent management, the company adopts an expert review mechanism to ensure decisions that maximize asset value. In building an innovation‑friendly environment, the company has established comprehensive IP systems and platforms—supported by training, awareness programs, and incentive schemes—to encourage employee innovation and the creation of high‑quality IP assets. For trade secret management, the company enforces document and information classification policies to ensure optimal protection of innovation results. Within risk management, the company monitors IP‑related risks and opportunities, performing risk assessments to minimize infringement risks and reduce exposure to frivolous litigation.

All IP strategies are executed in accordance with the company’s Intellectual Property Management Guidelines, Innovation, Patent, and Trade Secret Management Regulations, and Employee Innovation Proposal and Reward Policy to ensure effective acquisition, protection, maintenance, and utilization of patents and trade secrets.

In response to rapid advancements in display technologies in recent years, the company has actively developed Micro LED technologies, including applications for large‑scale and transparent displays. One of the key R&D focuses is overcoming yield‑rate limitations. To effectively manage the know‑how associated with these high‑value technologies, the company has designated Trade Secret Management as one of its core IP strategic pillars. In 2023, the company enhanced its trade secret proposal mechanism by introducing a dedicated submission portal to further encourage innovators to generate and document know‑how with high economic value. Through a trade secret incentive system, innovators are encouraged to convert know‑how into documented assets, further strengthening structured trade secret management.

In addition, to address uncertainties arising from geopolitical shifts, international trade, and global mergers and acquisitions—factors that may significantly impact R&D and production strategies—the company continuously monitors global developments and adjusts its patent deployment accordingly. For example, new patent filing strategies have been expanded to ASEAN countries and Europe to maintain strategic flexibility and respond to evolving market conditions.

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.

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.

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.

4. Creation of an Innovative Environment

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.

5. Risk Management Mechanism

To ensure robust intellectual property (IP) protection, the company has established mechanisms aligned with legal requirements to monitor IP‑related risks and opportunities. These mechanisms provide decision‑makers with reliable criteria for assessing value and risk.

The company has designated dedicated personnel to promptly assess and respond to IP disputes. Upholding the principle of prioritizing the protection of the company, its customers, and shareholders, the team formulates dispute‑handling strategies aimed at minimizing operational uncertainties. When major IP incidents arise, past cases are referenced as benchmarks for risk assessment and for developing concrete response strategies.

For example, upon receiving notice of a potential patent dispute, the Legal Department and the Intellectual Property Office are immediately informed to initiate investigation and assessment. When necessary, suppliers are notified and external counsel is engaged. If third‑party infringement is involved, evidence is collected, and cease‑and‑desist letters may be issued. When required, the company may petition the court for evidence preservation, initiate civil litigation, or request administrative enforcement.

The Intellectual Property Office conducts patent analysis and evaluation based on the needs of each case, and upon completion, provides detailed analysis reports to the requesting unit. Throughout the litigation process, potential business impact is evaluated in parallel, and litigation strategies are dynamically adjusted to reflect real‑time developments.

Specific examples are disclosed in the company’s annual report, such as the litigation and non‑litigation events outlined on page 76 of AUO’s 2024 Annual Report.

The Intellectual Property Office provides an annual report on the company’s intellectual property (IP) implementation status to the Board of Directors during the first board meeting of each year. This report clearly presents the company’s IP strategies and objectives, including: ensuring innovation momentum and output volume, establishing key technology portfolios and competitive‑advantage programs, reviewing execution results, and advancing strategies for realizing patent value. The report also incorporates improvement measures based on the Board’s recommendations. In addition to reviewing the previous year’s performance, the report confirms alignment on future strategies and areas requiring adjustment.

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 2025, the total number of our global patent applications has reached 33,000 while the total number of our patents granted in the world has reached 25,500. In 2025 (until the end of December), we have been granted over 420 patents in Taiwan as well as over 800 patents global patents.
2. Trade Secret: Each unit of the company manages the confidential information according to its function and business nature; there are about 1,270 trade secrets related to technology research and development inventions each year.

Contributions of Intellectual Property Rights to Business Operations and Revenue:

AUO regularly convenes its Technology Advisory Committee meeting at the beginning of each year and a phase-by-phase results review meeting in mid-year. The Intellectual Property Office also provides industry IP analysis reports on targeted technologies to facilitate discussions and alignment among sales, R&D teams, experts, and management. This ensures consistency across organizational operations, technology development, and IP strategic planning.

After AUO’s patent applications are granted, the dedicated IP department collaborates with relevant units to classify the granted patents to fully understand the value and status of its IP assets. In cases where a third party infringes upon key patented technologies owned by AUO, appropriate legal actions will be taken after collecting relevant evidence to protect the company’s IP rights and market position. In patent disputes, AUO’s patents not only serve as tools for enforcing rights against infringers but can also be utilized as assets for cross‑licensing. Litigation is costly—particularly in the United States, where expenses can easily reach millions of dollars. By holding patents that can be asserted against counterparties, AUO can reduce litigation risks and costs while strengthening its negotiating leverage in cross‑licensing discussions, thereby creating additional value for the company.

Details regarding AUO’s patent licensing and cross‑licensing activities are disclosed in the technology cooperation section on page 70 of AUO’s 2024 Annual Report.

As the company expands business opportunities, strengthens competitive advantages, and grows revenue through mergers and acquisitions, IP management participates throughout the process and provides corresponding strategic support. In organizational operations, for example, within the company’s Mobility Solutions—one of AUO’s three major operating pillars—prior to AUO’s official acquisition of Germany‑based BHTC in April 2024, the IP division joined the M&A evaluation team to conduct IP due‑diligence assessments, contributing to the successful completion of the NT$40 billion acquisition. After the acquisition, AUO planned and integrated IP management mechanisms to maximize operational synergies, including optimizing IP workflows, introducing value‑driven asset management frameworks, and transforming business and technology advantages into sustainable IP competitiveness.

In technology development and IP deployment, AUO continues to strengthen its R&D capabilities in mobility technologies. In 2025, AUO’s Taiwan invention patent filings in this field more than doubled compared with 2024. As of December 2025, AUO held over 370 mobility‑related patents globally.

Leveraging advanced display technologies and supported by BHTC’s strength as a Tier‑1 supplier, AUO’s IP deployment and organizational operations translated into strong revenue performance in 2024. According to pages 2–3 of AUO’s 2024 Annual Report, revenue from AUO’s original Mobility Solutions business grew 18% compared with 2023, and after the inclusion of BHTC, the combined revenue growth reached 63%.

IP and ESG Sustainability:

AUO is committed to sustainable technological development, actively developing manufacturing processes and products that address energy‑saving and carbon‑reduction needs. Reducing power consumption through innovative technology is one of the most direct approaches. These technologies are incorporated into products such as mini LED, Micro LED, OLED, LED light bars, and e‑paper, including innovations in product design, process improvements, and technology development. AUO is dedicated to generating related green patents as part of this effort.

Among these technologies, Micro LED is AUO’s next major competitive‑advantage technology. Compared with OLED, Micro LED can reduce energy consumption by 50%, and when used as display pixels, it offers up to 90% energy savings compared with LCD. As of December 2025, AUO has accumulated over 4,880 patents globally related to energy‑saving and carbon‑reduction technologies, with Micro LED accounting for the largest share. The energy‑saving impact is significant, and the share of Micro LED patents in the company’s strategic portfolio continues to grow, reaching 86% in 2025, aligning with AUO’s long‑term sustainability strategy.

AUO also actively promotes industry‑academia collaboration by participating as lecturers in IP courses and serving as mentors for innovation and research projects. For example, senior IP executives were invited to serve as judges for the 2025 "NSTC 115‑1 Taiwan Germination Program Proposal Review," sharing real‑world IP management experience with academia to strengthen the connection between academic innovation and IP value, amplifying AUO’s social impact.

AUO also continues to participate in industry and IP‑related professional organizations. These include the “2025 Trade Secret Intelligent Management Expo,” jointly hosted by the IP & Legal Affairs Committee and the Trade Secrets Management Association, and the “2025 Annual Meeting” of the Licensing Executives Society Chinese Taipei. Through these platforms, AUO exchanges insights with peers on trade secrets, technology licensing, and litigation practices, contributing to building a more internationally competitive IP environment for society.

Furthermore, AUO has established comprehensive incentive mechanisms for employee innovation, including monetary rewards and formal recognition. Examples include: Innovation Proposal Awards for encouraging all employees, not limited to R&D personnel, to submit creative ideas; Patent Application Awards to recognize ideas that advance through evaluation and are formally filed; Asset Awards for patents demonstrating significant value and becoming usable corporate assets; Patent Asset Utilization Awards for employees who create or help leverage high‑quality patents; and Trade Secret Awards for innovative concepts evaluated as economically valuable trade secrets. Award recipients are publicly recognized and presented with trophies during AUO’s quarterly business briefings.