Litigation / Foreign Patent Litigation / Taiwan

Patent Litigation in Taiwan

Rights arising from Patent Grant

Turning now to the rights afforded by the patent grant, the new law adds to exclusive rights of manufacturing, selling and using a patented article granted by the old law an additional right of precluding importation of patented articles. [1] The new right will, however, only come into effect after Taiwan has become admitted to GATT and one year has elapsed from the RIPS Agreement coming into effect. As with the previous law it is specifically provided that a patent directed to a manufacturing process also gives rights for articles made through the direct use of that process. The law contains no provisions having regard to contributory or induced infringement but does specifically state that "the scope of a new invention patent right shall be limited to the scope of claims set forth in the specification ... The specification and drawings of the new invention may be used as reference in examining the scope of the patent right". It thus appears that this legislative provision is intended to make it clear that the doctrine of equivalents does not apply in respect of patents in Taiwan.

Although beyond the broad provisions set out above there is no specific extension of what might constitute a patent infringement, the new law does re-enact certain limitations on the rights of patentees to enforce the patents and adds one new one.[2] The reenacted provisions, provide for exclusions from infringement 1) where an invention is only practiced for research or experimental purposes only with no profit making acts or intentions involved, 2) where there was prior use of the invention in Taiwan or where all necessary preparations have been completed for such purpose (although there is a limitation on this exclusion in situations where knowledge of the invention was obtained from the patentee and a patent application was filed within six months of the date from which the knowledge was imparted to the party that wished to rely on its activities as a defense to the action, 3) further where the object in question was already in existence in Taiwan prior to the filing of the patent or 4) where patented item's presence in Taiwan is simply a matter of its transit through the country. The new exclusion from patent right is a specific enactment of an exhaustion of rights provision in respect of articles that were manufactured by or for the patentee and such products are put into use or resale. It is specifically stated that such manufacture or sale "is not limited to manufacture and sale in this country only" but that "the areas in which sale can be made shall be determined by the competent court based on fact".[3] A further exclusion[4] provided for pharmacists making mixtures of medicines in response to prescriptions issued by physicians.

The principle of patent right exhaustion by first sale is specifically set out in the statute. It is apparently intended that the principle be of world-wide application so that it will not be possible to bring a patent infringement action in Taiwan in respect of sale or use of a product that was made or sold by the patentee or an authorized licensee anywhere in the world.

Enforcement

Patent infringement is both a civil wrong and a crime. Criminal proceedings may be instituted by a complaint to either the Public Prosecutor or direct to the district court, the former normally being preferred to take advantage of investigations carried out by the public persecutor (which can include the execution of a search warrant by the police). A civil suit on the same issue may be made supplementary to the criminal action or independent of it.

All district courts in Taiwan have competence to deal with patent infringement matters. Jurisdiction of a district court over a case is determined by the location of the infringing act or the residence of either of the parties.

Patent infringement proceedings in Taiwan are similar to those in Japan in that the "trial" is in fact a series of hearings before the judge with the judge himself being involved in elucidating the facts of the case. Evidence and arguments is by way of written submission or oral statements. In Taiwan, the use of court appointed experts is common in patent infringement cases and the expert's opinion is normally given in writing. If there are criminal proceedings on the same issue, the evidence can also include the results of police raids on the defendant's premises.

There is no discovery or deposition practice in Taiwan, although the court has the power to call witnesses and carry out on-site inspections. It is possible for the parties to suggest questions that the judge should address to the other side. In some cases it seems the court will even allow interrogatories to be presented to the other party although normally such questions are routed through the judge.

Remedies for infringement which are available to the patentee (and also to an exclusive licensee if the patentee declines to act) include damages, an injunction against infringement and (in a new provision) injunction against threatened infringement.[5] As under the previous law, damages may be determined by profits lost by the patentee, profits made by the infringer or by virtue of an estimate made by the Patent Office or a professional expert. Additional claims may be also made for loss of business reputation resulting from the infringement. In a new provision it is also provided that damages may be doubled in the case of willful infringement. Another provision provides for reversal of the burden of proof in the case of claim for infringement of a process claim. The defendant can, however, discharge this burden fairly simply by showing that the item in question "can be manufactured using another manufacturing process". [6] It should be noted that in order to obtain an award of damages, a patentee "shall" affix to the patented article or its packaging the serial number of the patent in question.[7] Marking of patented products with the patent number is mandatory if damages are to be awarded for infringement.

In addition to the civil remedies available to a patentee or an exclusive licensee, criminal provisions may also be invoked to deal with patent infringement. The maximum fine for patent infringement is 600,000 new Taiwan dollars (approximately $US 23,000) for infringement of a product patent and 300,00 new Taiwan dollars (approximately $US 11,500) for infringement of a process patent. The possibility of imprisonment for patent infringement that existed under the previous law has, however, been repealed for invention patents. Rather strangely, it has been retained for utility model and design patents.[8]

The limitation period in respect of a civil suit for patent infringement is three years from the date on which the patentee becomes aware of the infringement subject to a further limitation that no action may be commenced more than 10 years after the actual act of infringement itself.

In Taiwan, infringement issues are dealt with separately from issues of validity. A Taiwan court confronted with the question of patent infringement will assume the patent is valid and has no power to investigate validity itself. Validity can, however, be changed in a cancellation action before the Patent Office. If such a cancellation action is pending the court hearing the infringement action has the power to stay the infringement proceedings until such time as the cancellation proceeding is completed (Article 94). Similar provisions apply in respect of actions brought under the provisional protection granted to the owner of a Taiwan patent application that has been examined by the Patent Office and found to be acceptable but not yet granted cases where a pre-grant opposition is being made to the grant of the patent.[9]

Preliminary injunctions may be obtained in cases where there is a high probability that the alleged infringer would continue manufacture sale or use of the patented invention unless enjoined from doing so. Actions for such relief are separate proceedings from a normal infringement action. To obtain such an injunction the plaintiff must establish a prima facie case that the patent is being infringed and will normally also be required to post a bond for about one third of the amount claimed in damages. Preliminary injunctions are normally granted without notice to the prospective defendant and the recipient of such an order has a number of possible remedies including appeal against the grant of the injunction and the possibility of asking the court to commence full infringement proceedings within 7 days. Additioanl remedies are possible if after grant of a preliminary injunction, the trial of the main action ultimately determines that there was no infringement.

A patent infringement action in Taiwan typically takes about four months to a first instance decision and will cost of the order of $NT 500,000.