Taiwan IP Court judges are required, under the current practice, to review defendants’ defenses to patent infringement lawsuits, including counter-claims for patent invalidity. The IP Court, therefore, provides a second track for an accused infringer to challenge the validity of the patent-in-dispute, in addition to the invalidation action track offered by the Taiwan Intellectual Property Office (“TIPO”), making it no longer an option for a judge to stay a lawsuit pending the outcome of a parallel invalidation action. Although a judge’s decision on a patent validity issue is binding to the parties of the lawsuit only, it is of rare occurrence that a patentee can prevail eventually in a patent infringement lawsuit if the patent has been declared unpatentable by the IP Court in a previous proceeding.
IP Court judges and TIPO examiners, in a conference of 2010, agreed that any decision made earlier by either party should be respected by the other. This agreement, however, is rendered void when taking into account that in most cases, the IP Court’s rulings precede those of the TIPO’s in parallel invalidation actions. The already substantial influence of the IP Court’s rulings over the TIPO is further enhanced by the fact that all TIPO’s decisions in invalidation actions are ultimately appealable to the IP Court. In light of this, there is a tendency for the IP Court to become a more important forum than the TIPO to decide on the issue of patent validity. Accordingly, accused infringers would opt to defer filing invalidation actions if they believed they had in their possession strong prior art references capable of defeating the validity of the patents-in-dispute before the IP Court.
Based on the TIPO’s Annual Report 2011 and The Third Quarter Report 2012, invalidation actions filed with the TIPO have decreased in number since the inception of the IP Court in 2008. While there were 1034 invalidation actions filed in 2008, the number had dropped to 792 by the year 2011. As a further indication of the IP Court’s influence, Patentees’ win-rate at the TIPO plunged to below 50% in 2009, and continued the unfavorable streak with only 46.9% in 2012 (as of September), although some analysts attribute such significant drop in win-rate to the stringent criteria implemented by the TIPO in examining the patentability of inventions.