New IP Laws in Taiwan

As a signatory to GATT since 1992, and a WTO member since 2002, Taiwan has continuously revised its IP laws and regulations in order to keep in line with the global community. As the protection and exploitation of IP rights have profound business implications and involve greater complexities than other property rights, two new IP laws were passed recently to establish a specialized court for IP disputes. The Intellectual Property Cases Adjudication Act (IP-Adjudication Law) was passed on January 9, 2007, and the Organization Law for Intellectual Property Court on March 5, 2007. Although the dates for which these two new laws shall become effective are still uncertain, they are expected to be in or around July or August of 2007. Obviously the establishment and practice of the IP Court has been long awaited and would undoubtedly be in the spotlight in 2007.

Setting up a special IP court
Under the current court system in Taiwan, IP disputes may involve three types of litigation:

• civil litigation (for civil compensation);
• criminal litigation (for certain criminal penalties that apply to IP infringements); and
• administrative litigation (for disputes over the validity of IP rights).

District courts review civil and criminal cases, which may be appealed to the High Court and the Supreme Court. The Administrative High Court and the Administrative Supreme Court review administrative cases.

Figure 1: Courts reviewing IP disputes (current)

Although the Judicial Yuan’s initial plan was to establish a special court with integrated exclusive jurisdiction over all first-instance civil/administrative cases and second-instance civil/criminal cases relating to IP disputes, the bills passed by the Legislative Yuan actually give the IP Court non-exclusive jurisdiction over IP cases. The IP Court does NOT have exclusive jurisdiction, but has jurisdiction with priority. Judges of other civil courts may move IP-related cases to the IP Court, but if the judges of other civil courts still make decisions on IP related cases, the decision may not be appealed on the ground of lack of jurisdiction. Once the IP-Adjudication Law becomes effective, the IP-Adjudication Law applies to ALL pending IP-related cases, whether at the IP Court or other civil courts, whether filed before or after the effective date.

Figure 2: Courts reviewing IP disputes (new)

IP validity issues
IP validity issues are often raised by the parties in IP disputes. Currently, validity issues will be brought to the administrative system, namely the Intellectual Property Office (TIPO), the Ministry of Economic Affairs (MOEA), the Administrative High Courts and the Administrative Supreme Court. Once the IP-Adjudication Law comes into effect, the judge handling an infringement case must decide on the defenses of invalidity by himself/herself. This may be good for the patentee, because the court can no longer stay the proceeding pending invalidation. This may be good for the defendant also, because the defendant might successfully defend on the ground of invalidity.

According to the IP-Adjudication Law, opinion on validity in the infringement case is only effective in the current case and between the parties. To invalidate a patent, it is still necessary to file the invalidation action to TIPO, which can be appealed to MOEA and then in turn to the IP Court.

Introduction of technical examiners
Regarding IP infringement issues, courts used to rely on the opinions of patent verification institutes heavily. At preliminary injunction stage, an infringement report provided by one party is often sufficient. At trial, generally both parties will provide their own patent verification reports, and courts generally appoint a third independent verification institute to determine which patent verification report submitted is more credit-worthy. According to the new IP laws, court technical examiners with expertise in science and technology will be introduced. The duty of the technical examiners, who are mainly former patent examiners of TIPO, will assist the court in understanding and clarifying the technical issues involved in IP cases. The opinions of the technical examiners cannot be adopted as evidence in the litigation unless they are reviewed by the IP Court under the principles and rules of evidence.

Introduction of protective orders
Unlike the US court system, the Taiwanese court system has no discovery procedure. However, in IP disputes it may be necessary for the parties to submit confidential information to the court for litigation purposes. In order to protect the trade secrets of plaintiffs, defendants and any third parties involved in the litigation, the IP-Adjudication Law will introduce a new mechanism called “Protective Orders”. Upon receiving application by the holder of the trade secret, the IP Court has power to issue Protective Orders restraining the party, attorney, assistant or any relevant person from disclosing certain confidential information to others. The content of the specific information covered by the Protective Order may not be disclosed to anyone (whether or not in the same office or have supervision relationship) other than those also named on the Protective Order. Violation of protective orders is subject to criminal punishment.

Stricter standards for preliminary injunctions and provisional attachments Players in the IP field should already be familiar with preliminary injunctions that prohibit the defendant from manufacturing and selling infringing products, and reverse injunctions that prohibit a patent from interfering with a competitor’s business. Pursuant to the Code of Civil Procedure, an applicant of a preliminary injunction or provisional attachment need not necessarily have more probability of success to win the case in order for the court to grant the injunction. Sometimes an application for preliminary injunction or provisional attachment will be granted provided that the applicant is willing to submit a bond as security for damages that are likely to be suffered should the preliminary injunction or provisional attachment be granted. The bond shall be determined by the court at its discretion. These loose examination standards have created problems in the highly competitive technology industries. Big companies that can afford to pay large bonds may be able to use applications for preliminary injunctions or provisional attachments to intervene in competitors’ business.

In order to balance the protection of IP owners and their competitors, the IP-Adjudication Law indicates that stricter standards should apply in IP cases. It is stated that if an applicant fails to prove the absolute necessity for a preliminary injunction or provisional attachment to the extent required by law, the application should be rejected. Although the effective date of the IP-Adjudication Law is subject to the Judicial Yuan’s order, it has already influenced the courts’ approach to reviewing IP cases.

The IP Court is ready to go
Before the new IP laws become effective, the practice is already changing. This chapter introduced the forthcoming IP Court. Important changes of the current system can be anticipated. The IP Court is ready to go; we had better get ready!