In addition to arguing patent invalidity in a civil procedure, the defendant in a Taiwan patent civil lawsuit can also file an invalidation action with Taiwan Intellectual Property Office (hereinafter referred to as "TIPO"). Such is the case in our previous article titled “Taiwan Supreme Court’s Recent Decision Regarding Inventive Step in Patent Infringement Civil Litigation” (refer to our website). Said defendant argued the patent invalidity in the civil litigation before the Taiwan Intellectual Property and Commercial Court (hereinafter referred to as the “IPC Court”), and the IPC Court insistently held that the patent-in-suit lacked an inventive step in both first and second instances. Likewise, TIPO made a decision invalidating the relevant claims of the same patent after examination.
For the civil litigation, the patentee appealed to the Supreme Court. The Supreme Court made two judgments, namely 2022 Tai Shang Zi No. 186 and 2024 Tai Shang Zi No. 459, to nullify the IPC Court’s original judgments of lacking an inventive step and remanded the case back to the IPC Court twice. The Supreme Court pointed out that the IPC Court did not investigate the technical levels of a skilled person and did not consider whether obtaining patent license was a commercial success. In our previous article, the Supreme Court in the judgment of 2024 Tai Shang Zi No. 459 specifically pointed out that when lower courts examine the inventive step based on a combination of multiple prior art references, they must first define what the primary prior art is. The Supreme Court also referred to the “could-would” approach in European patent practice, explaining that when determining the inventive step, it can also consider whether a skilled person is able and willing to accomplish the invention by referring to the prior art.
As to the administrative litigation part of the TIPO’s invalidation decision, similarly, the Supreme Administrative Court nullified the IPC Court’s original judgments holding that the patent-in-suit lacked an inventive step, and remanded the case back to the IPC Court twice. Firstly, the Supreme Administrative Court in the judgment of 2021 Shang Zi No. 597 (dated October 13, 2022), pointed out that the IPC Court did not investigate the technical levels of a skilled person and did not consider whether the evidence provided by patentee can prove that the patent licensing was a commercial success. However, parallel to the developments of the civil counterpart, after the Supreme Administrative Court’s first remand, the IPC Court maintained that the patent-in-suit lacked an inventive step and the plaintiff appealed again.
Responding to the appeal, the Supreme Administrative Court issued a judgment, 2024 Shang Zi No. 132, on January 15, 2025 nullifying the IPC Court’s retrial judgment and remanded the case back to the IPC Court again. The Supreme Administrative Court reiterated that the IPC Court still did not investigate the technical levels of a skilled person, did not pre-define what the primary prior art is when there are multiple prior art references, and did not elaborate on whether the patent licensing can be considered as a secondary consideration factor, such as commercial success, in determining the patent’s inventive step. Since the IPC Court’s retrial judgment did not accept that the patent licensing was directly caused by the technical features of the patent-in-suit, holding that “signing a license agreement is a business activity with many other considerations,” the Supreme Administrative Court cited the previous judgment (2021 Shang Zi No. 597) and pointed out that the IPC Court did not follow the Supreme Administrative Court’s instruction to fully investigate the evidence provided by the patentee, thereby violating the stipulation of Administrative Litigation Act where the lower court shall enter a judgment based on the reason for remand by the Supreme Administrative Court. The Supreme Administrative Court also emphasized that if a patent had been licensed to competitors and since these competitors are most likely those who will develop innovation based on prior arts, it could prove that the patent is superior to the prior art and has an inventive step because most competitors had signed agreements and paid royalties. This issue requires examination of the motivation for the licensing and the content of the agreement, taking into consideration factors such as: “whether the licensee voluntarily obtained the license, whether the license covers a single patent or multiple patents, the duration and scope of the license, the amount of royalties paid for the patent, the motivations behind the licensee obtaining the license (e.g. implementing the patent’s technical features, simply to avoid paying large infringement litigation fees, the patent solving long-felt but unsolved problems, or other commercial considerations), and the circumstances of the licensee implementing the patent.”
We will continue to monitor the outcome of the second instance trial in both the civil division and the administrative division of the IPC Court. It is advisable that parties involved in a dispute regarding patent’s inventive step should pay attention to the Supreme Court and the Supreme Administrative Court’s views on the level of a skilled person as well as the definition of a primary prior art in a combination of multiple prior art references, especially when the patentee has a history of patent licensing. The patentee can refer to the Supreme Administrative Court’s judgment of 2024 Shang Zi No. 132, and present supplemental information favorable to the determination of inventive step, such as producing an unexpected effect, solving a long-felt but unsolved problem, overcoming a technical prejudice, or achieving commercial success.