Patent law development in Taiwan

Patent legislation across Asian jurisdictions is constantly catching up with the pandemic’s demands, with stronger protection, foreign filing and higher compensation being common themes. However, the gaps persist, and businesses need to fathom the domestic barriers to stay ahead.

Taiwan has long been known for its advanced technological developments, including but not limited to those related to R&D and the integrated circuit (IC) supply chain. The rapid recent growth of technology has put Taiwan in the spotlight. According to statistics shared by Taiwan industry research institute DigiTimes, in September 2021, among the major Asian countries, only in Taiwan is the contribution of the technology sector exceeding 60% among listed companies. This fact demonstrates the importance of Taiwan’s technology industries. Behind the scenes, the related legal frameworks are fundamental to fuelling the accelerated yet stable development of both the capital and technology markets.

Foreign stakeholders need to understand Taiwan’s patent laws, in addition to other types of IP protection available, for the purpose of doing business in Taiwan.

An introduction

Three types of patents available in Taiwan – invention, utility model and design patents.

An invention is eligible for patent protection if it is a technical creation that satisfies the requirements of novelty, non-obviousness and industrial utility. The term of an invention patent is 20 years from the date on which the patent application is filed. Extensions for the patent protection term are available for a pharmaceutical, agrichemical or manufacturing process, taking into account the time needed to obtain the required regulatory approvals.

A utility model is a creation made in respect of the form, construction or fitting of an object. The protection term for a new utility model is 10 years from the filing date.

A design patent is a creation made in respect of the shape, pattern or colour (or a combination of these) of an article as a whole or in part, by visual appeal. The protection term for a design is 15 years from the filing date.

Taiwan’s patent regime is open to foreign nationals on a reciprocal basis. That is, foreign nationals may apply for patent protection as long as their home countries also make patent protection available to Taiwanese citizens.

Under Taiwan’s Patent Act, as long as a foreign company can properly establish that it duly holds a Taiwanese patent, the company does not need to have corporate recognition from the Taiwan government – which exists when a foreign company has a presence registered at Taiwan’s corporate registry – before it may seek remedies that are available to all Taiwanese citizens.

Taiwan’s Patent Act only provides civil remedies to patentees who discover that another is infringing their patents. If a patentee establishes that a third party is infringing his/her patent, the patentee may seek a court judgment that orders the infringer to cease the infringing activities, to destroy infringing products/articles and tools/equipment used in the course of the infringing activities, and to compensate damages that the patentee suffers as a result of the infringement.

The Intellectual Property Office

The Taiwan Intellectual Property Office (TIPO) has authority to examine applications and grant patents, as well as to review other applications in relation to patent protections. The TIPO also has authority to preside over invalidation actions initiated by a party seeking to invalidate a patent.

Parties who disagree with the TIPO’s rulings cannot seek judicial remedies against these rulings unless they first file appeals with the administrative appeal review board, and subsequently fail to obtain favourable rulings from the board. A proposed amendment to the related laws was published by the TIPO for public review and comments in 2020.

Under the proposed amendments, in most situations parties can directly go to the court if they do not accept a TIPO ruling in relation to a patent matter. It is believed that the amendments, if passed by the legislature, will substantially decrease the time needed to conduct and conclude invalidation actions and the subsequent appeal process.

The Intellectual Property Court

In 2008, Taiwan established the Intellectual Property and Commercial Court (IP Court), which exclusively hears and adjudicates IP matters. The IP Court enjoys non-exclusive jurisdiction over patent infringement litigation at the first instance, as well as exclusive jurisdiction over the same in the second instance. So, a party seeking to initiate patent infringement litigation against an infringing party can choose to so do before the IP Court, or before a district court that has proper jurisdiction over the matter.

All patent infringement litigation at the second instance, however, is heard only by the IP Court. Subject to some exceptions, most patent-related judgments of the IP Court at the second instance can be appealed to the Supreme Court, which will only review legal questions present in the judgments issued by the lower courts.

When presiding over a patent infringement case, an IP Court judge may appoint a technical examination officer, who will assist the judge to understand technical issues involved in the case. Most technical examination officers are senior patent examiners at the TIPO, and are experienced in, and familiar with, patent matters.

The officers usually sit in the courtroom and listen to the arguments of both parties to the patent infringement litigation. They may directly make inquiries of any of the parties when the judge deems the question raised is proper and necessary. With these officers’ assistance, it is believed that the IP Court judges are much better equipped to look into complicated technical issues present in patent matters.

Infringement civil lawsuits

While a party must still file an invalidation action with the TIPO if the party wishes to invalidate a certain patent, infringement litigants (usually the alleged infringers) can raise a validity defence against the patents that are the subject of the infringement litigations. When an alleged infringing party raises a validity defence, the IP Court will investigate the substance of the defence and consider whether or not the patent is valid in light of the challenges raised.

If the IP Court finds the patent to be invalid, it will rule that the patent is unenforceable, and will dismiss the patentee’s litigation claims. In other words, when a parallel invalidation action is filed at the TIPO, the IP Court hearing the civil infringement litigation will not wait for the TIPO’s ruling, but will determine the validity issue on its own.

According to data published by the IP Court, between the third quarter of 2008 and the second quarter of 2021, 50.69% of all first-instance patent infringement litigations where validity defences were raised were concluded with rulings that the patents were invalid and thus unenforceable. The data demonstrate that it is crucial for patentees to re-examine the validity of their patents before initiating infringement litigation. To prevail in patent litigation, the first step is to overcome anticipated challenges to the patent’s validity.

Claims for damages

A patentee may recover damages if he/she successfully establishes the infringement and also overcomes any validity challenge. Under Taiwan’s Patent Act, when asserting a damage claim, the patentee may calculate the amount of the damages by either: (1) the monetary amount of injury suffered and/or the loss of profits due to the infringing activities; (2) the amount of the benefits gained by the infringing party due to the infringing activities; and (3) the amount of a reasonable royalty fee that the patentee could obtain from the infringing party’s activities.

An enhanced damages claim is available when the patentee proves that the infringing party intentionally conducted the infringing activities. The enhanced damages cannot exceed three times the amount of the actual damages amount established by the patentee.

According to a study published by the IP Court, among all first-instance patent infringement litigations where the patentees prevailed, the IP Court has tended to grant damages close to the amounts requested by the winning patentees. It is also noted that a damages award of TWD2 billion (USD72 million) was granted in an IP Court ruling in a first-instance patent infringement litigation.

Disputes on repairs exemption

Recently, some high-profile IP Court rulings on design patent infringements have attracted substantial public attention. The debate focuses on whether the Taiwan Patent Act should include an exemption that makes vehicle maintenance/repair activities free from patent infringement liability.

Currently, there is no such exemption available under Taiwan’s Patent Act. While some advocate adding such an exemption into the law, others argue against this, explaining that Taiwan law gives judges discretion in making some necessary arrangements if they find it extremely inappropriate to grant to a patentee all remedies available at law. In 2020, several legislators proposed an amendment to the Patent Act to include an exemption for vehicle maintenance/repair activities. It would thus be prudent to monitor future developments in this regard.

FORMOSA TRANSNATIONAL
13/F, 136 Jen Ai Road, Sec. 3, Taipei
Tel: +886 2 2755 7366
Email: ftlaw@taiwanlaw.com

www.taiwanlaw.com