In Taiwan, patent invalidity may be used as a defense in infringement litigation in addition to asserting non-infringement of a patent. In other words, when the defendant counter-claims in a patent infringement lawsuit that the plaintiff’s patent is invalid, the Court shall decide on the merits of the case. In a recent infringement lawsuit filed with the civil division of the Taiwan Intellectual Property & Commerce Court (IPCC), the plaintiff (patentee) averred that the defendant’s selling of a certain type of controller and software development tool infringed its patent directed to a programmed method for a planning controller. As a counterclaim, the defendant submitted multiple prior art references, pointing out that the patented invention lacked an inventive step in view of the combination of the prior art references and that its validity was thus questionable. Separately, the defendant initiated an invalidation action with the Taiwan Intellectual Property Office (TIPO) based on the same prior art references.
In the civil infringement lawsuit, both the first and second instance Rulings rendered by the IPCC congruously held that a case of infringement was not established due to the lack of an invention step of the patented invention.
Not satisfied with the Rulings by the IPCC, the plaintiff filed an appeal with the Supreme Court. Upon trial, the Supreme Court handed down two rulings, one in August 2022, and the other in November 2024—both of which disagreed with the IPCC and overturned the IPCC’s Ruling that had found the patented invention to lack inventive step.
The Supreme Court repeatedly emphasized in its Rulings that the IPCC had failed to investigate the level of skilled persons in the art, and had also neglected to consider whether the patented invention had achieved commercial success. In the more recent Ruling rendered in November 2024, the Supreme Court specifically pointed out that, when assessing inventive step based on a combination of multiple prior art references, the IPCC should have identified, as the first step, which of the multiple prior art references should be considered “primary reference.” Further, the Supreme Court referenced the European Patent Law’s “could-would” approach, stating that in evaluating inventive step, the IPCC should have considered whether a skilled artisan in the relevant field could combine, and would be motivated to combine the primary reference with the other references to arrive at the patented invention.
Likewise, the TIPO rendered a Decision on the invalidation action in favor of the petitioner, declaring the challenged patent invalid. The patentee then pursued a series of remedial actions. After the case was ultimately brought to the Supreme Administrative Court, it rendered, on October 13, 2022 and January 15, 2025, respectively, two Rulings, both of which overturned the Ruling rendered by the administrative division of the IPCC that had found the patented invention to lack inventive step and the case was remanded to the IPCC for retrial. The Supreme Administrative Court likewise pointed out that the IPCC had failed to investigate the level of skilled persons in the art, and had not fully considered the various pieces of evidence submitted by the patentee concerning whether the patented invention had achieved commercial success thanks to the endeavor of the licensee of the patented invention.
In the reasoning of the more recent Ruling rendered on January 15, 2025, the Supreme Administrative Court further elaborated on whether patent licensing could serve as a secondary consideration favorable to the determination of inventive step, particularly with respect to commercial success. Regarding the IPCC’s exclusion of the probative value of the license in the determination of inventive step by reasoning that “licensing is a commercial activity, and involves many other considerations,” the Supreme Administrative Court emphasized that if a patent was licensed to competitors who are most likely to engage in R&D based on prior art, and if multiple competitors entered into license agreements through payment of royalties, these facts should be able to support the argument that the patented invention is more advantageous over the prior art and possesses inventive step. The Supreme Administrative Court further stated that this issue requires an examination of the licensing motivations and contract terms, including: whether the licensee obtained the license on its own initiative; whether the licensed subject matter includes a single patent or multiple patents; the duration and scope of the license; the amount of royalty paid; the licensee’s motivation in obtaining the license, e.g., to practice the patented technical features, to avoid substantial litigation costs, to solve a long-standing industry problem, or due to other business considerations; and how the licensee actually practiced the patented invention.
The outcome of the retrial proceedings to be conducted separately by the civil and administrative divisions of the IPCC remains to be observed. Nevertheless, for parties involved in disputes over the issue of inventive step, apart from taking note of the opinions rendered by the Supreme Court and the Supreme Administrative Court, such as the level of persons skilled in the art and the identification of the primary reference among multiple prior art references, they may also, in cases where the patentee has actual licensing records, refer to the reasoning of the Ruling rendered by the Supreme Administrative Court on January 15, 2025 as supporting evidence favorable to the finding of inventive step. Such supporting factors may include assertions that a patented invention has achieved unexpected results, solved a long-standing problem, prevailed over technical prejudice, and obtained commercial success, among other benefits.