China-based Netac Technology Co., Ltd. has been actively enforcing its patent rights in China in recent years, pursuing lawsuits against competitors ranging from local manufacturers to international corporations such as Sony. According to Netac Technology, such cases were either won outright or out-of-court settlements were reached, often resulting in Netac Technology becoming the defendants' product supplier. Furthermore, companies such as Toshiba, Kingston, PNY, Phison, to name a few, agreed to sign license agreements, entitling Netac Technology to royalties.
The company has similarly been active in taking legal actions in Taiwan. Infringement lawsuits were filed based upon the patents the company has obtained, such as for its 3-C products including mobile phones, MP3/MP4 players, and electronic dictionaries. The lawsuits targeted not only manufacturers, but suppliers and distributors as well.
In the first instance trial of a lawsuit filed by Netac Technology seeking damages of NT$30 million against a well-known Taiwan-based memory module manufacturer, the Taiwan Banciao District Court ruled that the defendant’s USB memory stick product constituted infringement, fining the defendant NT$16 million as damages.
The judge’s ruling in the first instance that the defendant was guilty of infringement relied heavily upon the opinion rendered by an outsourced institute. This prevented the two parties from sufficiently cross-examining each other in terms of the construction of the patent claims and the technical structure of the alleged infringing product so as to determine whether the product read on the claims’ scope. Thus if the ruling of the lawsuit took hold, and the defendant was made to pay to the complainant damages calculated according to the defendant’s applicable profits, it would deal a serious blow to the already struggling memory module industry.
The insufficiencies of the first trial were rectified when the case was appealed to the IP Court. After holding several oral hearings and allowing the two parties to alternately file written observations on a pleading-and-defense basis, the IP Court recently overturned the ruling of the first instance trial and held that the defendant did not commit infringement and therefore was not liable to pay damages.
The ruling of the IP Court not only underscores the inadequacies of solely relying upon the opinions of outsourced institutes, but also highlights the significance in preparing ample evidence and convincing argumentation for use in oral hearings or written observations.