SAINT ISLAND INTELLECTUAL PROPERTY GROUP

The calculation of damages arising from patent infringement has changed considerably with the recent amendment to the Patent Law. The major changes are:

1. Deleting the proviso in Article 85.1.2 of the old law that, in the calculation of damages, the overall gross sales of the infringing article should be deemed to be the infringer's profit if the infringer was unable to provide documentation proving the costs of production or other necessary expenditures. The reasons for the deletion are such calculation presumed that the patented article had monopolized the market and the patentee’s damages award would be unduly high if the infringer itself had a large sales network and a high competitiveness in the marketplace. Therefore, with the new law, the patentee is only entitled to claim damages for losses that can be proven and cannot claim damages according to the overall gross sales of the infringing articles. 
2. Deleting the proviso in Article 85.3.2 of the old law that the Court can award damages up to three times the claimed damages if the infringement was found intentional. The reasons for the deletion are that the award of punitive damages is a practice of the common law in the United States and the United Kingdom, which is to award damages higher than the actual loss sustained and therefore departs from the civil damages system of Taiwan which adopts the compensatory principle. The deletion brings patent infringement damages awards in line with the civil damages system. 
3. Adding the provision that damages are calculated according to an amount equivalent to the compensation that can otherwise be collected by licensing to others the right to practice the patented invention. The reasons for adding this provision are: At the time the infringer practices the patented invention without authorization from the patentee, the patentee may still license the patented invention to a third party and obtain royalties. Therefore, according to the traditional concept of civil damages, the patentee needs to prove in the litigation that he may obtain higher royalties in the marketplace if there is no infringing act or that he cannot license the patented invention to a third party due to the infringing act in order that the patentee’s loss in this respect can be regarded as part of the lost profit under the principle of civil damages. Therefore, the new provision provides a legally reasonable compensation for losses suffered by the patentee by calculating damages based on reasonable royalties, and eliminates the burden of proof on the part of the patentee to a certain degree. 

Subsequent to the implementation of the new Patent Law, some local scholars and practitioners have expressed their serious concerns that with the deletion of the provision of punitive damages, the deterring effect on potential infringers might be reduced. It hence remains to be seen if the relevant provision will be reinstated in the future.