SAINT ISLAND INTELLECTUAL PROPERTY GROUP

SAINT ISLAND INT'L PATENT & LAW OFFICES

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TABLE OF CONTENTS
 

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I       PATENT

Types of Patents

There are three types of Taiwan patents: invention patents, utility model patents, and design patents. The respective patent terms are 20, 10, and 15 years, all calculated from the filing date of a patent application, while the patent rights are actionable from the issue date of the patent. An extension of patent term of a maximum of 5 years is possible for invention patents involving pharmaceuticals, agrichemicals, or manufacturing processes thereof to compensate for the regulatory delay caused by marketing authorization procedures.  

As Taiwan is not a member of the PCT, it is not possible to file a national stage PCT patent application in Taiwan. However, as Taiwan is a member of the WTO and hence subject to the rules of the Paris Convention incorporated into the TRIPs Agreement, any foreign applicant, whose country of origin is a WTO member or who has a domicile or a place of business within the territory of a WTO member jurisdiction, is entitled to claim priority in Taiwan based on his invention patent or utility model application (including a PCT application) first filed in any member country of the WTO within 12 months (or 6 months in case of a design application) of the filing date in Taiwan.  

Further, the Taiwan Patent Law provides a 12-month grace period for an invention that was published in any printed publication other than a patent publication. As such, an applicant can file a patent application in Taiwan for his/her invention that has been published in a journal, periodical, or thesis within 12 months upon the publication thereof. Also, an applicant can file a patent application in Taiwan for an invention not yet publicly disclosed but having been filed in another country even after the above-mentioned 12-month priority period, as long as the foreign corresponding application has not yet been published at the time of the Taiwan filing.

i  Invention and utility model

A creation of technical ideas fulfills the patentability requirements of an invention, if it is industrially applicable and not found to lack novelty and inventive step. The applicant of an invention patent application must file a substantive examination request within 3 years from the filing date; otherwise the application shall be deemed to be withdrawn. The Applicant can concurrently submit amendments when filing the request.  

The same patentability requirements also apply to a utility model, while the eligible subject matter of a patentable utility model is limited to a shape or structure of an article, or a combination of articles. A utility model application in Taiwan is not subject to substantive examination as to novelty and inventive step. As long as the formality requirements of a utility model application are fulfilled, the application will mature into a registration within a timeframe of around 6 to 8 months. However, a utility model patent cannot afford presumption of validity. As such, before enforcing a utility model patent against an alleged infringer, the patentee is obligated to request the Taiwan's Intellectual Property Office (“TIPO”) to conduct substantive examination as to novelty and inventiveness of the utility model patent.  

ii  Design patents

A design patent is a novel and creative design of the shape, color or pattern, or any combination thereof, of an article as a whole or in part with visual appeal. Eligible subject matters of a design patent also include computer generated icons (Icons) and graphic user interface (GUI). A design application undergoes examination soon after the formalities are fulfilled, meaning there is no need to file a request for substantive examination. In general, the applicant may expect to receive a first examination report from the Examiner in about 4~6 months. 

Recent Developments of the Patent Law

i  Draft Amendment to Patent Law by TIPO in September 2024

On September 11, 2024, TIPO announced a Draft Amendment to the Patent Law, which focuses on two main areas:

1. To relax several restrictions on design patent protection, which include:

(1)  Expansion of the Scope of Design Protection: Computer-generated images are already eligible for design patent protection. The Draft Amendment further proposes that images generated by digital technology also qualify as eligible design subject matter. Concurrently, the Draft Amendment proposes removing the article indication requirement for this broader range of image designs. Under current law, designs must be described as being applied to a specific article. Applicants usually describe their computer-generated images as "a computer software-generated image/GUI/Icon" to satisfy this requirement, which has thus become largely nominal in effect.

(2)  The current law permits only one design per application. The Draft Amendment proposes to change this by introducing a multiple design application system, which would allow applicants to file multiple similar designs within a single application.

(3)  Extension of the grace period from six months to twelve months within which to file a design application irrespective of the prior publication or disclosure of the design.

(4)  Extension of the time limit to file design divisional applications. It is admitted, inter alia, to file a divisional application within three months from receipt of either the approval of a design application or a re-examination decision.

2. The disputes over the right to apply for a patent and patent rights shall be solely resolved by civil courts. The Draft Amendment has added relevant provisions to exclude disputes over “the right to apply for a patent” or “the ownership of patent rights” as grounds for invalidation, clearly stipulating that a rightful patent applicant should resolve such disputes through civil procedures to reclaim his/her rights.

Notably, the Draft Amendment does not include provisions for establishing a "Patent Trial and Appeal Board" or the accompanying proposed changes to prosecution, invalidation, and the appellate system. These proposals were part of the earlier version of the Draft Amendment submitted to Congress in March 2023. However, deliberation on the proposals was ultimately discontinued due to the expiration of the legislative session without further examination.

ii  The Patent Law Was Amended in April 2022 to Round-off the Patent Linkage System

On April 15, 2022, a draft Amendment to the Patent Law proposed by the Ministry of Economic Affairs and aiming at rounding off Taiwan's patent linkage system was passed by Taiwan's Congress; the implementation date of these amendments was July 1, 2022.

Under Taiwan's patent linkage system which is set forth in Rules 48-3 to Rules 48-22 of the Pharmaceutical Affairs Act (see our Newsletter here), a patentee (or an exclusive licensee) of a patent for a new drug can prevent the Taiwan FDA (TFDA) from issuing a drug approval of an equivalent generic drug for a period of up to 12 months, if:

1. information relating to the patent has been listed in an information communication system run by the Taiwan FDA; and
2. the patentee (or the exclusive licensee) has filed an infringement lawsuit (a “Rule 48-13 lawsuit”) within 45 days after receipt of a mandatory notification from the generic drug applicant that it has duly declared with the TFDA that it believes the patent is either invalid or not infringed.

However, the Pharmaceutical Affairs Act does not clarify the nature and scope of remedies available in a Rule 48-13 lawsuit, since this part is deemed to fall within the realm of the Patent Law. Neither does the Pharmaceutical Affairs Act address whether the patent linkage system accords any proactive remedies to a generic drug company when the patentee does not take any legal action within the said 45-day period but is likely to launch a surprise attack after the generic drug is circulated on the market.

In the amendment, a new article (Article 60-1) is inserted into the Patent Law to solve these questions. Its key points are as follows:

• The remedies available for a patentee (or an exclusive licensee) in an infringement litigation filed after receipt of a generic drug applicant's “invalidity/non-infringement” notice are injunctive relieves, namely, court decrees ordering a defendant generic drug company or distributor to “stop infringement or prevent infringement from taking place. ”

  According to TIPO's Explanatory Notes issued along with the draft amendment, such a lawsuit can be filed in reliance upon a patent listed in the information communication system along with a non-listed patent. Listable patents include invention patents for compounds, compositions or formulations, as well as medical uses, while method patents are not listable.

• In a case where the patentee (or the exclusive licensee) does not file a Rule 48-13 suit within the 45-day period, the applicant for the generic drug approval is allowed to file a declaratory judgment (DJ) lawsuit for non-infringement.

  According to TIPO's Explanatory Notes, such a DJ action can be filed (1) against any listed patent for the new drug; or (2) against a listed patent along with a non-listed but related patent, e.g. a patent on the method of manufacturing the drug. In a case where multiple patents are listed for a new drug and only some of the listed patents (or patent claims) are asserted in the lawsuit filed by the patentee, the DJ action can be filed against the other listed patents (or patent claims).

The first part of Article 60-1 is not entirely new. As we reported at the end of 2020, in its first decision on a Rule 48-13 lawsuit, the IP & Commercial Court held that preemptive injunctions are allowable in a Rule 48-13 lawsuit upon a showing of necessity based upon known risks—even if no actual infringement has occurred.

Remedies and Defenses in a Patent Infringement Lawsuit

In a patent lawsuit, the patentee is required to establish that the defendant manufactures, sells, offers for sale, uses, or for any of the above purposes imports a product that embodies the patent. In a method patent case, the patentee is required to establish that the defendant uses that method or uses, manufactures, sells, offers for sale, or for any of the above purposes imports a product obtained directly by that method.

Under the Patent Law, if an infringement case is established, the patentee is entitled to claim for injunctive relief, damages, and destruction (or other necessary disposal) of the infringing articles or the materials used in the infringing act. Damages are calculated by one of the following options as the patentee selects:

1. an account of the patentee's lost profit due to the infringement;
2. an account of profit the patentee would have otherwise gained from the patent minus the account of profit actually gained after the infringement;
3. an account of profit gained by the infringer attributable to the infringement; and
4. reasonable royalties.

Further, if the defendant is found to have willfully infringed the patent, the plaintiff will have a claim for treble damages.

Meanwhile, defenses usually raised by defendants in patent infringement lawsuits include:

1. the alleged patent should be invalidated;
2. the patent is not infringed, either per a literal reading of the patent claim or under the doctrine of equivalents; or
3. affirmative defenses like the doctrine of exhaustion and prior use privilege.

II       TRADEMARK

Introduction

Taiwan follows the first-to-file principle. An applicant is not required to submit any evidence of use when filing a trademark application in Taiwan. Therefore, although holder of an unregistered mark may seek remedies based upon the Fair Trade Act if said mark has obtained a reputation in Taiwan, it is still highly recommended that trademark applications be filed at the earliest possible opportunity for the following reasons: (1) the threshold adopted by the Fair Trade Commission in recognizing the reputation of unregistered trademarks is high; and (2) since the commercial value of a trademark may increase with age, it is wise to register a mark early so that its reputation increases over time.

As Taiwan is not a signatory to the Madrid Agreement or the Madrid Protocol, it is not possible to extend an international registration to Taiwan. To obtain a trademark registration, it is necessary to file an independent national application. The duration of a trademark registration is 10 years calculated from the registration date, and is renewable every 10 years.

Trademarks that are eligible for registration include words, devices, symbols, color(s), sound, three-dimensional shaping of articles, motion, holograms, sounds, smells, trade dress and any combination of these. Multi-class applications are permitted in Taiwan and Nice Classification of Goods/Services (NCL) is adopted by TIPO. In addition, TIPO adopts the post-registration opposition system. Anyone may file an opposition against a trademark registration within 3 month from the registration date.

A trademark registered in Taiwan must be put to use within three years after its registration. Although the registrant need not voluntarily submit evidence of use on a periodical basis, once a non-use cancellation is filed against a registered trademark, the trademark holder bears the burden of submitting evidence of use to defend the validity of the registered mark. Trademark infringement gives rise to civil and criminal liabilities.

Recent Developments of the Trademark Law

i  Discontinuation of Plans to Establish a TTAB and Retention of the Opposition System

As noted in the Patent Law section of this Article, a Draft Amendment to the Patent Law was submitted to Congress in March 2023. However, deliberation on the amendment was discontinued due to the expiration of the legislative session without further examination.

Similarly, a Draft Amendment to the Trademark Law was submitted to Congress at the same time and faced the same outcome. As a result, the proposals included in that Draft Amendment were discontinued. These proposals included abolishing the current (post-registration) opposition system, establishing a "Trademark Trial and Appeal Board (TTAB)," and implementing accompanying changes to prosecution and the appellate system.

ii  The Trademark Law Was Amended in April 2022 to Enhance Anti-counterfeiting

On May 9, 2023, Taiwan's Congress passed a draft Amendment to the Trademark Law. The Amendment took effect on May 1, 2024. The main features of the passed amendments are as follows:

1. Qualifications of trademark agents

Taiwan did not previously limit the qualification of trademark agents. However, due to the growing complexity of trademark practices, the Amendment now requires that individuals must either pass a trademark agent exam to be held by the IP Office or have engaged in trademark examination for a period of time to be registered as a trademark agent. Despite this, lawyers are still eligible to act as trademark agents without the need to meet these requirements.

2. Request for accelerated examination

Under the Amendment, if trademark applicants require timely registration, such as when their goods are already on the market or when infringement has occurred and litigation is pending, they may request expediting examination by providing the IP Office with a statement of facts and reasons, along with payment of an official fee.

However, this acceleration program is not available if the IP Office has already issued an official letter requesting correction or an Office Action rejecting the application. Also, it is not available in applications for certification marks, collective membership marks, or collective trademarks.

3. Functional elements in trademarks

Under the pre-amended Article 30.1.1 of the Trademark Law, trademarks “being exclusively necessary for the goods or services to be functional” are not registrable. The Amendment further provides that trademarks containing functional elements are not eligible for registration unless the functional elements are presented in dotted lines. The IP Office's Explanatory Notes to the Amendment state that functional elements cannot obtain registrability through use and will not be considered in determining trademark confusion.

If a trademark contains functional elements that cannot be presented in dotted lines (such as functional sound or smell), the applicant must declare that these elements are not part of the mark being applied for.

4. Enhanced protection of famous organization names

The amendment prohibits the registration of a mark that is the same as or similar to the name of a famous juristic person, business, or other organization if such registration is likely to cause confusion among consumers. By adding the words “or similar to” into the law, the Amendment enhances the protection of famous organization names.

5. Indicative fair use

The pre-amended Trademark Law already recognized the concept of “descriptive fair use of trademark” as a form of non-infringement. The Amendment now further defines “indicative fair use” to formalize a longstanding practice of the IP Office and courts.

Under the newly added Article 36.1.2 of the Act, trademark rights cannot exclude use of another person's mark if the user needs to use the mark to indicate that person's goods or services, and if the use is in good faith and consistent with conventions of commercial transactions.

6. New exceptions to trademark right exhaustion

Taiwan's Trademark Law follows the principle of international exhaustion, but provides exceptions if the trademark holder intends to prevent changes or impairments to parallel imports after they have been put on Taiwan's market, or if there are other legitimate reasons.

The Amendment further allows for exceptions to the exhaustion principle in cases of preventing “unauthorized processing or alteration” of parallel imports. The existing catch-all clause for “other legitimate reasons” remains unchanged.

7. Relaxed Customs proceedings

Under Article 75 of the pre-amended Trademark Law, if Customs officials detained imported or exported goods suspected of infringing on a trademark registered with Customs, the trademark owner or its agent was required to respond within a short time and “appear at the customs house” soon after to identify the detained goods and confirm whether they infringe on the registered trademark.

The Amendment removed the outdated and burdensome requirement of physical appearance by registrants in light of the availability of advanced information technologies. In fact, as of September, 2021, Taiwan's Customs Administration has implemented an information exchange platform to enhance border protection. Trademark owners can now access digital photos of suspected infringing goods on the online platform when notified by the customs house, eliminating the need for them or their agents to make a visit on short notice.

Remedies and Defenses in a Trademark Infringement Civil Lawsuit

In a trademark case against a direct infringer, the plaintiff is required to establish that the defendant uses a trademark identical or similar to the plaintiff's registered mark and uses it in relation to goods or services identical or related to those for which the plaintiff's mark is designated for use. Where the two parties' marks or the goods/services respectively designated thereby are not identical, an additional proving of likelihood of confusion among relevant consumers is necessary. A direct infringer's facilitators that manufacture, possess, display, sell, export or import labels, packaging or containers are also deemed to be infringers so long as they foresee that a trademark infringement is likely to stem from these articles, even if they have not yet been actually applied to any goods or services.

Meanwhile, registrants of well-known marks have broader claims and lighter burden of proof. Firstly, infringement of a well-known registered mark is constituted whenever the infringer knowingly uses an identical or similar mark (which may be used with respect to unrelated goods/services) and hence causes a likelihood of diluting the distinctiveness or disparaging the reputation of the well-known mark. Secondly, a squatter who knowingly uses a wording contained in a well-known registered mark as a portion of a company name, trade name or domain name is also deemed to be infringing trademark right, so long as such conduct gives rise to a likelihood of confusion or dilution. However, neither of said two types of infringements results in criminal liabilities.

The Plaintiff in a civil trademark lawsuit may claim such remedies as injunctions, damages and destruction of infringing articles and the materials or implements used to infringe the trademark. However, instead of destroying the infringing matters, a court may order other dispositions as it considers necessary after taking into account the proportionality between the scale and impact of the infringement on the one hand and the interests of a third party on the other. As to the calculation of damages, there are five approaches at the plaintiff's choice, which are:

1. an account of the plaintiff's lost profit due to the infringement;
2. an account of profit the plaintiff would have otherwise gained from the trademark minus the account of profit actually gained after the infringement;
3. an account of profit gained by the infringer attributable to the infringement, or the total revenue from the infringement where the infringer is unable to establish its costs or necessary expenses;
4. an amount not more than 1,500 times of the unit retail price of the infringing goods; if over 1,500 pieces of infringing goods were found, the amount shall be a lump sum of the market value of the infringing goods; and
5. reasonable royalties.

Meanwhile, defenses usually raised in a trademark infringement lawsuit include:

1. The alleged trademark registration should be cancelled or invalidated. For example, the registered trademark being indistinctive should not have been registered from the onset. Or, the trademark registration should be cancelled due to non-use for three consecutive years without a justifiable causes;
2. Claiming non-infringement. For example, arguing that no likelihood of confusion would result from concurrent registration of the two parties' marks;
3. Affirmative defenses like the doctrine of exhaustion, bona fide prior use, descriptive use, and so on. Note the principle of international exhaustion is applied across patents, trademarks and copyrights. However, the Trademark Law has a particular proviso against this defense, i.e., a trademark claim is still actionable under legitimate reasons such as to prevent the condition of the accused goods from being changed or impaired in their circulation in the market.

III       COPYRIGHT

Introduction

The Taiwan Copyright Law provides that original copyrightable works shall enjoy exclusive rights automatically upon their completion, with no form of registration required. TIPO has ceased receiving copyright registration applications since 1998.  

A copyrighted work is protected throughout the author's lifetime and 50 years after. Original copyrightable works of a foreign author being a national of a WTO member are also protected in Taiwan. 

As a copyright holder, when enforcing a copyright, bears the burden of proving the copyright ownership (and sometimes even the creation time of the copyright, if such issue is being raised), it is recommended to preserve relevant evidence by having it notarized by a notary public. For important copyrighted work, it is recommendable to obtain a copyright certificate issued by a copyright owners' organization so as to serve as prima facie evidence of the completion and ownership of the copyright. However, it is important to note that such private organizations do not and cannot conduct any substantive examination of the copyrightability of a work. Therefore, when a work's copyrightable is being challenged, only a court will have a final say over such dispute on a case-by-case basis.

In accordance with the Copyright Law, an infringement gives rise to civil and criminal liabilities; the latter may lead to a sentence of up to 5 years of imprisonment.  

Recent Developments of the Copyright Law

i.  The Copyright Law Was Amended in April 2022 to Enhance the Combat against Digital Piracy

On April 15, 2022, Taiwan's Congress passed a draft Amendment to the Trademark Law proposed by the Ministry of Economic Affairs for the purpose of enhancing the combat against digital piracy.

Under the pre-amended Copyright Law, except for optical disk piracy, copyright infringements were indictable only upon complaint. Therefore, unless a criminal complaint was duly filed, most types of copyright infringements were not subject to criminal investigation, let alone indictment, court trial or punishment.

To give anti-counterfeiting forces more power to combat digital piracy and to meet the CPTPP standards, the amendment now redefines the scope of non-IUC copyright offenses as follows:

• A copyright infringement constitutes a non-IUC offense if:-

  (1) The infringed work is provided [by the copyright owner] for a fee;

  (2) The infringement involves exploitation of the entirety of the infringed work in its original form;

  (3) The infringement brings about NT$ 1 million or more damage to the copyright owner; and

  (4) The infringement must at the same time constitute one of the following three offenses

  (a) Reproducing a copyrighted work into a digital copy without authorization for the purpose of sale or rent; (b) Distributing or, with the intent to distribute, publicly displaying or possessing a digital infringing copy with the knowledge that it is an infringing copy; and (c) Publicly transmitting a copyrighted work without authorization.

The redefined non-IUC offenses are to cover most types of copyright infringements in the cyberspace as long as the NT$1 million damage threshold is met. An optical disk piracy act will still constitute a non-IUC offense if it meets the above requirements, although fewer and fewer optical disks piracy acts nowadays are caught with damage at NT$1 million or more.

Being a non-IUC offense, a copyright infringement will be subject to investigation, indictment, trial and punishment even if there is no complaint being filed, and withdrawal of complaint cannot terminate the proceeding.

ii. Draft Amendment to the Copyright Law

On April 8, 2021, Taiwan's Cabinet (the “Executive Yuan”) released the final draft of amendments to the Copyright Law. What follows is an overview of the main changes brought about by the final draft.

(1) Redefining the “public broadcast right” and “public transmission right”

Under the current Law, public transmission right refers to the exclusive right to transmit a visual/audio work to the public through a wire or wireless network. Public broadcast right, on the other hand, is the exclusive right to transmit a visual/audio work to the public without intermediate forwarding and through non-network means (hence mainly through broadcast TV or radio). Live streaming, therefore, is categorized as an act of public transmission instead of public broadcast. Many believe such distinction is hair-splitting and counter-intuitive. In fact, few people would even care about whether a work they listen or watch is broadcast over the Internet or radio wave.

While this duo of rights still exists in the draft amendments, they will never again be distinguished by the means with which the transmission is performed. The demarcation line now shifts to whether the transmission is live and prohibits playback. If the answer is yes, like in the case of a live streaming, then the transmission constitutes public broadcast, even if the work is transmitted over the Internet. If the answer is no, namely a playback is allowed, public transmission occurs.

(2) Introduction of public forwarding right

When an eatery owner plays a radio song with a speaker for the listening of customers, which exclusive right is infringed upon? This is a question that puzzles Taiwan's IP world for years. The draft amendments now determine to solve this question once and for all. If the draft is passed as proposed, copyright holders will be accorded a new exclusive right named “public forwarding right,” as an extension of the public transmission/broadcast right. Hence, for a work that has been publicly transmitted or broadcast, to further forward it to the public with a screen, speaker or any other mechanic equipment will be subject to this new right, and the right holder's approval will be needed.

(3) More fair use exemptions

Class room exemption will be broadened under the draft amendments. First, legally established schools, for the purpose of classroom teaching, will be permitted to reproduce, adapt, and publicly distribute, perform, display and forward a published work. They will be further permitted to publicly transmit, broadcast or forward a published work to achieve distance teaching once they have adopted a reasonable technical measure (like encryption) to prevent unauthorized parties from accessing the work.

Similar advanced exceptions will be granted to libraries and archives. Under the draft amendments, these institutions will be permitted, subject to a few statutory restrictions, to provide users with online access inside the venues to digital copies of collections they create, without the need to obtain consent of the right holders. Under the current law, the right holder's consent is required of such conduct which is considered as an act of public transmission.

Further, organizers of regular, non-profit activities may use a copyrighted work upon paying an appropriate amount of remuneration, without having to first obtain the right holder's consent or license. Displaying music in a public open space with personal devices for nonprofit recreational or personal exercise purposes (e.g. square dancing) will become royalty-free.

(4) License for use of orphan works

Following the example of other countries, Taiwan will introduce a compulsory licensing mechanism into its Copyright Law for use of “orphan woks,” namely copyrighted works whose right holders are difficult or impossible to locate or even identify. Under the design of the draft amendments, the TIPO may grant, upon request, compulsory license for use of an orphan work to an applicant-licensee which has made considerable efforts to locate/identify the right holder and seek authorization but to no avail. After posting a security bond, the applicant-licensee may further apply for a right to use the orphan work before the compulsory license is granted.

(5) Preemptive strikes against online advertising

Preemptive strikes against online advertising for copyright infringement has played a pivotal role in anti-counterfeiting actions in the digital age. Realizing this, the draft amendments provide that a copyright shall be deemed to have been infringed by public dissemination of information about an infringing article through paper or physical ads, electronic or digital medias, or any other means, as long as a profit-making intention has been found in the actor. Such offense shall be liable for damages and punishable by up to two years' imprisonment.

Interestingly, it seems that only an infringement “article” is targeted by this preemptive strike clause. Whether the Congress will consider expanding the target zone to cover infringement services and content is worth continuing attention.

(6) More flexibility for claiming damages

In order to alleviate copyright holders' burden of proof in a lawsuit against an infringer for damage compensation, reasonable royalties will be added in the list of right holders' options of calculating damages against infringers. Further, in a lawsuit, right holders will be permitted to claim statutory damages without having to first establish (as the current law requires) that the amount of actual damages is hard to prove through other damages calculation methods.

(7) Regarding criminal liabilities

The draft amendments decriminalize selling/distributing in Taiwan legitimate copies of works even if they are imported from overseas without authorization. Meanwhile, the amendments removes the minimum imprisonment term for offenses including (1) infringement on reproduction right with an intent to sell/rent and (2) infringement on distribution right in optical discs, giving the court wider discretion in determining the term of sentence.

Remedies and Defenses in a Copyright Infringement Civil Lawsuit

In a copyright infringement lawsuit, the plaintiff is required to establish, first of all, the asserted copyrighted work passes the originality test and the plaintiff has the standing to sue by either being the owner of the asserted copyright or an exclusive licensee. Second, the plaintiff is required to specify which particular category of copyright is infringed, e.g., right of reproduction, distribution, or adaptation, etc. Third, the infringing material must be proved as being substantially similar to the copyrighted work. Finally, it need be proved that the defendant has a reasonable opportunity to access the copyrighted work.   

In a civil infringement lawsuit, copyright holders are entitled to claim for injunctive relief and damages; the latter may be calculated by one of the following options as the Plaintiff chooses:  

1. an account of the plaintiff's lost profit due to the infringement;
2. an account of profit the plaintiff would have otherwise gained from the copyright minus the account of profit actually gained after the infringement;  
3. an account of profit gained by the infringer attributable to the infringement, or the total revenue from the infringement where the infringer is unable to establish its costs or necessary expenses; and  
4. Statutory damages at an amount between NT$10,000-NT$1 million.  

If the infringing activity is intentional and the matter serious, the upper limit will be NT$5 million. 

Meanwhile, major defenses in a copyright infringement lawsuit include:

1. Contest the originality and authorship of the disputed copyright.   
2. Plead non-infringing by arguing, for example, the alleged infringing work is not substantially similar to the copyrighted work.  
3. Affirmative defenses like the doctrine of exhaustion and the fair use clause. The Copyright Law provides four factors to be considered before determining whether a fair use defense stands: purpose and nature of the use (e.g., whether it is commercial or for non-profit educational purposes), nature of the work, amount and substantiality of the portion used, and effect of the use on the work's market value.  

IV       TRADE SECRETS

Introduction

The Taiwan Trade Secret Law affords protection to any method, know-how, process, formula, program, design or any other form of information that may be used in the course of production, sales or operations, provided that it meets the following requirements: (1) it is not known to persons generally involved in this type of information; (2) its economic value, actual or potential, is dependent upon its secretive nature; and (3) its holder has taken reasonable measures to maintain its secrecy. Infringement of trade secrets gives rise to civil and criminal liabilities.

Recent Developments of the Trade Secret Law

On January 12, 2023, Taiwan's Congress passed a draft Amendment to the IP Case Adjudication Act. One feature of the draft Amendment is to elevate the level of court trying a trade secret infringement dispute; it will be discussed in the final part of Section V of this article.  

In June 2021, Taiwan's Supreme Court delivered a decision on reverse engineering as a defense in trade secret infringement lawsuit. Taiwan High Prosecutors Office v. Chen, 110 Tai Shang 3193, Taiwan's S. Ct. (June 2021). This is arguably the most important court decision related to Trade Secret Act in recent years. The Court's main holdings are as follows (for a detailed analysis, see our report here):

1. Reverse engineering does not deprive a trade secret of legal protection if it requires “considerable input” which may take the form of money, time, professional instrument, special knowledge, etc. The reason is, if reverse engineering turns out to be a brute-force attack or heavy lifting, then it must be true that the reverse engineered information is not easily available to experts in the art, and therefore merits protection by the Trade Secret Act.    
2. Even if the input is not considerable, the reverse engineering defense is doomed to fail if the product being reverse engineered was obtained through unlawful means, like stealing of an unreleased prototype.  

Remedies and Defenses in a Trade Secret Infringement Civil Lawsuit

In a trade secret case, the plaintiff is required to establish, among other requirements, the existence and scope of the trade secret. A three-pronged test is applied under the law for this purpose: first, the trade secret must not be known to persons generally involved in this type of information; second, it must have economic value due to its confidential status; third, reasonable measures must have implemented to maintain the confidentiality of the trade secret.  

Plaintiff of a trade secret lawsuit may claim such remedies as injunctions and damages; the latter are calculated pursuant to one of the following options as the plaintiff chooses:  

1. an account of the plaintiffs lost profit due to the infringement;   
2. an account of profit the trade secret owner would have otherwise gained from the trade secret minus the account of profit actually gained after the infringement; and  
3. an account of profit gained by the infringer attributable to the infringement; or the total revenue from the infringement where the infringer is unable to establish its costs or necessary expenses. 

Further, if the defendant is found to have willfully infringed the trade secret, the plaintiff will have a claim for treble damages.  

Defenses usually raised in a trade secret infringement case include:  

1. The defendant may contest the trade secret in dispute is not protectable under the law on the grounds that, for example, it has fallen within public domain due to activities without the defendant's participation or control.    
2. The defendant may plead non-infringing by arguing, for example, its technology is developed independently or it differs from the trade secret alleged to be infringed. 

V       LITIGATIONS AT THE IP & COMMERCIAL COURT (IPC COURT)

The IPC Court

According to Article 3 of the IPC Court Organization Act and Article 9 of the IP Case Adjudication Act, the IP Tribunal of the IPC Court exercises exclusive jurisdiction over the first and second instances of a civil action for the protection of intellectual property rights and interests arising under the Patent Law, Trademark Law, Copyright Law, Optical Disk Act, Regulations Governing the Protection of Integrated Circuits Configuration, Species of Plants and Seedling Act, or Fair Trade Act. 

As such, civil litigations on IP disputes are tried at the IP Tribunal of Taiwan's IPC Court (hereafter simply “the IPC Court”), unless the parties have previously consented to the jurisdiction of a district court or the defendant does not raise an objection to a district court's jurisdiction where an IP litigation is filed.

To assist the judges in handling the technical aspect of a patent litigation and other technology-related disputes, the IPC Court has set up a panel of Technical Examination Officers (TEOs); most of them used to work as senior patent examiners with specialized skills in various technological fields. While a party may move the court to permit an expert to testify on relevant issues, such motion is subject to the discretion of the judge. Aside from providing necessary technical assistance, including preparing written reports to the judge, the TEOs may attend court hearings and interrogate the parties, witnesses and experts.

The IPC Court is noted for its expeditious proceeding. It is not uncommon for the IPC Court to complete a first-instance proceeding of a patent infringement suit within a year.

Taiwan's current appeal/court system for IP disputes

Evidence and Discovery

The discovery proceeding conducted in the IPC Court in an IP suit is of a limited-scope. Nevertheless, violation of the Court's discovery stipulations is apt to give rise to substantial legal consequences. For instance, judges tend to sanction defendants more frequently in recent years for non-compliance with the IPC Court's order to disclose bookings or commercial documents for the purpose of calculating damages. The judge can sanction such defendants by ordering that the damages should be deemed in default as what the plaintiff claims.   

Meanwhile, an IP right holder may file a motion with the judge to obtain an evidence preservation order against any person holding the evidence. By filing this motion, a plaintiff may, before initiation of a lawsuit, ask the judge to visit the defendant's or a third party's premises and order disclosure of evidence to the necessary extent. Likewise, either party, during the lawsuit, may request the judge order the opposing party or a third party to disclose evidence for the purpose of proving infringement as well as calculating damages. Although the court does not provide coercive force to ensure these orders are observed, it may impose a sanction on a non-observant party by taking as the truth the other party's allegation with regard to the evidence at issue or the fact to be proved by such evidence.

Structure of Trial

Generally, the proceeding of an infringement lawsuit may be divided into three stages. In the first stage, the IPC Court assigns an interim docket number for a case, and holds one or two hearings to assess the value of the plaintiff's asserted legal claims so as to determine if additional court fees should be submitted.

In the second stage, the case is assigned to another judge, namely the presiding judge for review. The presiding judge will give the parties chance to specify their respective disputed and non-disputed issues in the lawsuit. For instance, the plaintiff may assert that a wording of a patent claim is in dispute and need be construed. Or, in a trademark case, the defendant may argue that the mark at issue should be cancelled due to non-use for three years without a justifiable cause.  

Also in the second stage, the presiding judge will ask the parties to identify any and all the corresponding evidence in support of their arguments, such as expert, employee, or equipment required for proving infringement. As a rule of thumb, in an infringement suit, it will be the plaintiff that bears the burden to prove that the claimed IP right is infringed and the claimed damages were thereby incurred. On the other hand, since a patent or registered trademark is presumed to be valid in a civil lawsuit, a defendant challenging such presumption shall bear the burden of rebuttal. Upon expiration of the prescribed time for the parties to raise a new dispute, argument and evidence, the presiding judge will close the preparatory proceeding and set a date for an oral argument proceeding, which is the third and final stage of an infringement lawsuit.  

In the third stage, the judge will hear the oral arguments of the parties and review the merit of the case based on the evidence submitted in the prior proceedings. In principle, the parties will be bound by any stipulation rendered in the preparatory proceeding, and evidence not presented by the end of the preparatory proceeding will not be allowed to be introduced at the third stage.

Declaratory Judgment

An accused infringer under threat of an IP right claim may file a declaratory action of non-infringement with the IPC Court against the right holder pursuant to the Code of Civil Procedure. Under the current practice, a plaintiff in an IP declaratory judgment proceeding must establish his locus standi by showing the existence of a genuine IP right dispute that harms the stability of his legal status and may be solved by a declaratory judgment.

Attorney's Fees

In Taiwan, the prevailing party traditionally may only move to have the opposing party bear the court fees and witness transportation fees. The exception is the attorney's fees for representation in the third instance level, where the attorney fees incurred is deemed as part of the court fees, hence recoverable from the opposing party.  

However, the above traditional practices may undergo significant changes. In a 2013 second-instance decision, a panel of IPC Court judges held that the attorney's fees of the plaintiff (represented by Saint Island lawyers) can be included in the plaintiff's claimed damages. Further, in a 2017 first-instance decision, another IPC Court judge held that, at least for patent infringement lawsuits, the prevailing party's attorney's fees to a reasonable amount can be deemed a part of the prevailing party's litigation costs, which the losing party shall eventually reimburse.

Appellate Review

A first-instance judgment on a civil lawsuit is appealable to the second instance panel of the IPC Court, and further to the Supreme Court if appellate requirements are met (e.g., the value of the asserted claims exceeds a threshold at approximately US$50,000).  

The structure of the second instance level in the IPC Court is not totally different from that of the first instance level. A panel of three judges will be established to review the appeal (panel of the first instance consists of one judge), and the appellate panel may review the appeal independently without giving deference to the findings of the first instance level. However, this does not mean a party is free to introduce whatever evidence it wishes to submit. Under Article 447 of the Code of Civil Procedure, generally, an evidence not presented in the first instance level is precluded from entering the appellate proceeding.

Criminal Actions

Infringement of trademark right, copyright or trade secrets may lead to criminal liabilities, so another start venue apart from the IPC Court for the right holder to enforce any of such rights against infringers is a district prosecutors office where the infringement occurs or the defendant resides. After the prosecutor indicts the infringer, a criminal action of first instance commences at the district court where the prosecutors office is situated. Nevertheless, decisions of the district court are appealable to the IPC Court for a second instance review.

Draft Amendment to the IP Case Adjudication Act

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 Amendment was implemented on August 30, 2023.  

The main features of the proposed amendments are as follows:

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

Per the Amendment, the IPC Court now has 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.

2. More cases will be mandatorily represented by lawyers.

Under the Amendment, 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.

3. Augmenting the efficiency of trial of civil suits

Thanks to the Amendment, some long-standing practices adopted by the IPC Court judges 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.

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

Under the pre-amended IP laws, reports drafted by court experts formally known as Technical Examination Officers (TEOs) were 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.

5. 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.

6. 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.

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.

Trends and Outlook

The IPC Court is the pioneer centralized forum in Asia dedicated to solving IP disputes and, at the same time, exercises both first instance and appellate jurisdictions in terms of civil IP lawsuits. In addition to its centralized adjudicative power over infringement controversies, the IPC Court is empowered to review disputes on the validity of an alleged IP right in an infringement lawsuit or declaratory judgment action. The IPC Court does not have the option to stay the lawsuit pending the outcome of an action against the alleged patent or trademark filed with TIPO by the defendant as a counter-measure. On the other hand, TIPO's ruling in an administrative action is eventually appealable to the IPC Court, and thus, more often than not, TIPO would wait for the IPC Court's decision. According to data from the IPC Court, it takes roughly 11 months on average to render a first instance decision in a patent infringement lawsuit, often including a ruling on the validity issue. With such initiatives, Taiwan's IPC Court is widely believed as having the potential to bring itself to a leading place among the IP forums in East Asia.