Draft Amendment to Taiwan’s IP Case Adjudication Act Was Passed by the Congress on January 12, 2023

On January 12, 2023, Taiwan’s Congress passed a draft Amendment to the IP Case Adjudication Act, marking the most sizable and influential overhaul of this act since its enactment in 2008.  The implementation date of this Amendment is yet to be decided by the Government.

The main features of the passed amendments are as follows:

1. More cases will be mandatorily represented by lawyers

After the Amendment is implemented, basically speaking, civil disputes relating to patents, software copyrights, and trade secrets shall all be mandatorily represented by lawyers. The same is true with other civil cases unless the value of the plaintiff’s claims is low.

2. Augmenting the efficiency of trial of civil suits

Thanks to the Amendment, some long-standing practices adopted by judges of the IP and Commercial Court (the IPC Court) now entered the IP Adjudication Act, including:

(1) In principle, the court should discuss with the involved parties (through their lawyers) regarding the planning of a trial, unless the case does not require legal representation or the issues of the case are relatively simple.

(2) In patent litigation cases, the judge shall, in a timely and appropriate manner, disclose his/her interpretation of any disputed claim terms, ex officio or upon the request of a party.

3. Shedding new lights on TEO’s Reports and defendants’ burden of proof in infringing lawsuits

Under the current IP laws, reports drafted by court experts formally known as Technical Examination Officers (TEOs) are not disclosed to any parties. After the Amendment takes effect, when judges deems it necessary, they may disclose all or part of the content of the Reports drafted by TEOs and the parties may be given opportunities to debate on the Reports.

On the other hand, in infringement lawsuits on patent rights, software copyrights, or trade secrets, if plaintiffs have made a prima facie showing of infringement, defendants should make a “concrete defense” and provide the facts and evidence regarding their “denial of infringement.” Under such principle, the burden of proof resting with the plaintiff may be more or less alleviated.

Incidentally, the Amendment has introduced new mechanisms to reduce duplication of lawsuits and risks of inconsistent judgments. For example, after the Amendment takes effect, when an IP right based on in a litigation has been exclusively licensed to a third party, and the litigation is initiated by the IP right holder, the exclusive licensee shall be notified timely to ensure that it has opportunities to participate in the litigation and vice versa.

4. Regarding post-grant patent amendments made during infringement litigations

How should a patent infringement lawsuit be tried when the disputed patent claims have been amended is a challenging procedural issue, especially when the amendment is conducted not in the lawsuit but in a parallel invalidation action. The Amendment attempts to provide a comprehensive solution as follows:

(1) When patentees/plaintiffs have amended the patent claims before the IP Office (usually in a parallel invalidation action), they should make a report to the court. Otherwise, they can only claim their rights based on pre-amendment claims.

(2) If a patentee has missed the opportunity to amend claims at the IP Office (e.g. the patent has been held invalid by the IP Office in a decision being appealed), the intended amendment can be raised and considered in an infringement litigation, but only on the premises that “not allowing the amendment is manifestly unfair” and the miss is due to a cause not attributable to the patentee. In this scenario, judges may, at their own discretion, determine whether the amendment is legitimate or not or seek the IP Office’s opinion on the amendment. In the latter case, the IP Office may present its opinion in writing or by appointing an examiner to present before the court.

5. More experts are allowed to participate in litigations

By making reference to the Japanese Patent Law, the Amendment mandates that the court may, upon request, designate a neutral technical expert to carry out the “verification” task in evidence gathering proceedings. In addition, an expert witness system has been introduced into the Amendment with reference to the US litigation practice.

6. Trade secrets are protected by law in a more elevated manner

Per the Amendment, the IPC Court will have exclusive jurisdiction over criminal as well as lawsuits relating to trade secrets infringement. If the criminal lawsuit relates to state-level key technologies, it should start from the appellate instance IPC Court. In addition, the amendment has introduced the offence of “breach of trade secret maintaining order abroad” to further protect trade secrets.

7. Victims are allowed to participate in the trial procedure

After the Amendment takes effect, no matter whether an IP right infringement lawsuit is governed by the IPC Court or not, the provisions of the Criminal Procedure Law on “victims’ participation in litigation” shall apply mutatis mutandis.  By this token, victims can be voiced by prosecutors in the trial procedure, and also enter the procedure themselves to express their opinions and review case files.

The remaining outstanding Issues

It is noteworthy that the Amendment passed by the Congress does not contain two important changes proposed by the Judicial Yuan (Taiwan’s highest judicial organ) which initially drafted the Amendment.

Under the Judicial Yuan’s plan, administrative litigations for patent and trademark disputes will be converted into quasi-civil litigation proceedings by being subject to an adversarial system, and the Supreme Court will replace the Supreme Administrative Court to act as the court of final instance in these cases.  Further, the Judicial Yuan proposed to add more restrictions on submission of new evidence in invalidation and cancellation actions when they enter the court level.  

The Judicial Yuan’s proposed changes are just parts of a bigger plan initiated by the IP Office to overhaul Taiwan’s administrative appeal system for patent and trademark cases. The keystone of this plan is to establish within the IP Office a Patent Trial and Appeal Board (PTAB) and a Trademark Trial and Appeal Board (TTAB), which will act as the pre-court adjudication agencies, adopting an adversarial system and holding oral hearings as the default rule. However, neither PTAB nor TTAB has been established; they are still proposals lying in draft amendments to the Patent Law and Trademark Law and awaiting Congress deliberation.

For this reason, the above-mentioned two changes proposed by the Judicial Yuan are sort of premature at this moment and are thus shelved in this round of amendment.  Probably the legislators will need to get back to these issues when the overhaul of the Patent Law and Trademark Law is near completion.