The doctrine of exhaustion of patent rights has long been a gray area of law in Taiwan. The main reason is that there are neither clear provisions in the Patent Law nor precedents.
According to Item 6, Paragraph 1 of Article 57 of the Patent Law, after a patented product made by a patent holder or its licensee has been sold, the patent right shall not extend to cover use or resale of the product, and such making or sale is not limited to the territories of Taiwan. Many have interpreted this provision to mean that Taiwan embraces the doctrine of international exhaustion. However, in Paragraph 2 of the same article, it is provided that the territory of such sale is determined by the Court, thus beclouding the issue. It has been expected that the Court would throw light on the extent of the territory of sale in court decisions. However, no decision has been rendered on the issue of exhaustion of patent rights to date, and there has been considerable debate on the issue. For the patent holder, such nebulous state of affairs may have the effect of deterring parallel importation, but it is due to change.
The recent draft amendment to the Patent Law has deleted the provision concerning the determination of the territory of sale by the Court. The main reason for the deletion is to make clear that Taiwan adopts the international doctrine of exhaustion. Furthermore, whichever doctrine is adopted by Taiwan, it is a matter within the ambit of legislation and does not involve any finding of facts by the Court. The amendment passed the first reading on April 6, 2011. If the amendment passes the three readings, the dispute over the exhaustion of patent right will be settled.
One issue that might arise after passage of the amendment is that: if the patent holder of a Taiwanese patent is different from the patent holder of a corresponding foreign patent, as in the case that the former is an affiliate company of the latter, will the doctrine of exhaustion apply? Under such circumstances, whether the exhaustion doctrine is applicable may need to be determined by the Court based on a finding of facts.