IP Court’s Recent Decision on Patent Entitlement Lawsuit with Labor Law Overtones

As reported in last July, with the implementation of the Labor Incident Act (LCA), a defendant employee is allowed to move that her IP-labor law suit be transferred out from the IP Court to a district court of competent jurisdiction. However, whether a case will be moved out in the end depends on the IP Court judge’s discretion, as the LCA and its bylaws do not say a judge is obligated to grant such a motion.

This position of the IP Court was further elucidated in a recent decision made by a three-judge panel in a patent entitlement lawsuit. Uniflex Technology Inc. v. Li et al., 109 Min Zhuan Kang 21, Taiwan’s IP court (January 2021).

The transfer motion raised by the defendant finds seemingly strong support from a legislative note on the LCA, which mentions that “to protect the interests of the economically disadvantaged and to give the employee easier access to courts, the employee shall be permitted to, prior to an oral debate hearing, move that the lawsuit be transferred to a court of competent jurisdiction of his/her choice, and the court shall transfer the case upon request” (italics added by the writer). The defendant is accused by his former employer of breaching a work-for-hire agreement and thereby unlawfully patenting 17 inventions and utility models created when he worked for the plaintiff.

The defendant’s argument, however, was dismissed by the IP Court panel as a misinterpretation of the legislative note. The panel, headed by the Division-Chief Judge Jack H.C. Wang, indicated that:

Defendant employees’ forum-selection standing is granted [by the LCA] for the purpose of facilitating their access to courts, while balancing the need of seeing the evidence examined deftly by a court. It is impermissible to ignore this legislative goal and overstretch the law to grant defendant employees an unconditional right to select the labor tribunal of a district court over the IP Court, both being professional forums, when the defendants’ access to courts and the court’s access to evidence are not compromised [by the IP Court being the forum.]
The case before us is a patent entitlement dispute arising out of an employment relationship; it is highly technical and differs in nature from an ordinary labor law dispute. To have this case adjudicated in this court by a judge having IP expertise and assistance from an in-court technical examination officer better serves the legal interests of both the employer and the employee, as the technical issues will be comprehended more instantly and the whole dispute will be solved more efficiently here in this court as opposed to a labor tribunal in a district court. More, when a technical issue has been promptly and effectively clarified to the parties, mediation is more likely to succeed. 

Mainly for these reasons, the IP Court denied the defendant employee’s motion to transfer this case out to the district court for the city where he resides—a court which is located around 20 minutes by car from the IP Court, and this is another reason why the judges found the defendant’s motion unjustifiable. 

Filing of an invalidation action with the IP Office used to be the more popular approach to address patent entitlement disputes, but the IP community now has more appreciated the benefits of filing a lawsuit directly with the IP court. In fact, one of the recent proposals from the IP Office to amend the Patent Law is to divest itself entirely of the authority of reviewing an entitlement dispute-based invalidation action. Viewed in this context, Uniflex v. NORPEIsemicon becomes all the more important, because, as it happens, a majority of patent entitlement lawsuits arise in connection with work-for-hire agreements, and patent law crosses paths with labor law in these cases. The IP Court’s message through this decision is clear: it still is and will continue to be the best venue for employees and employers to litigate complex patent entitlement disputes.