Newsletter
DECRIMINALIZATION OF PAT-ENT INFRINGEMENTS
When the Patent Law was amended in 1994, through the active endeavors of many people in industry and academia an effort was made for the first time to decriminalize acts of patent in-fringement. After intense debate, prison sen-tences for invention patent infringements were abolished, but fines were retained, while the penalties for infringing new utility model and new design patents were left completely un-changed. Recently, however, some legislators have drafted new proposed amendments, and are advocating that all criminal penalties should be removed from the Patent Law, for the following reasons:
Determining whether a patent infringement has taken place involves highly complex and specialized technical issues. It is an unsatis-factory situation if judges, lacking the relevant specialist knowledge themselves, base their judgments as to criminality entirely on ex-perts' assessment reports. Most criminal cases involve an aspect of moral censure, but in patent infringement cases this element is minimal, and what is involved instead is judgments based on specialist technical knowledge.
Public prosecutors typically do not understand the technical issues either, and even more se-rious problems arise if, on receiving a com-plaint citing patent infringement, due to the urgency involved they undertake searches and seizures based merely on the information in the complaint and in the infringement as-sessment report provided by the complainant, without giving the accused person any op-portunity to respond to the allegations. Since prosecutors' powers of criminal investigation are easily open to abuse by patent right holders, some patentees use the threat of criminal prosecution to coerce manufacturers into signing unfair licensing agreements. This adversely affects the development of industry in Taiwan.
In the United States, patent infringement dis-putes are purely civil matters—no criminal penalties are provided for. Some civil-law countries (e.g. France) have abolished crimi-nal penalties from their patent law, while oth-ers (e.g. Germany) retain criminal penalties, but very rarely apply them. The WTO TRIPs requires member countries to impose criminal penalties for trademark and copyright in-fringements, but it does not make the same demand regarding patent infringements.
In 1998, public prosecutors in Taiwan inves-tigated 578 cases of alleged Patent Law viola-tions, and pressed charges in 126 cases. The courts heard 162 criminal cases under the Patent Law, but defendants were found guilty in only 19 cases. In 1999, prosecutors inves-tigated 518 patent violations, and pressed charges in 109. The courts heard 147 criminal cases under the Patent Law, but gave guilty verdicts in only 20.
In the vast majority of cases where the courts found against the accused, they imposed fines. Imprisonment sentences were handed down in only a tiny number of cases.
In Constitutional Interpretation No. 507, handed down in 2000, the Council of Grand Justices ruled that the requirement under Ar-ticle 131 of the Patent Law, that a patent right holder must submit an assessment report when filing an infringement complaint, was an un-warranted restriction of citizens' right to in-stitute legal proceedings, as guaranteed by Article 16 of the Constitution, and violated the principle of proportionality under Article 23 of the Constitution. Following the announce-ment of Interpretation 507, there is an urgent need to reexamine the abolition of criminal penalties.
Among executive agencies, the Ministry of Economic Affairs opposes the decriminalization. Mindful of the need to attract foreign investment in order to promote economic development in Taiwan, the MOEA takes the view that since ROC law also provides criminal sanctions for infringements under the Trademark Law and Copyright Law, in the interests of overall bal-ance in the IPR legal framework it would not be appropriate to one-sidedly abolish the penal provisions of the Patent Law.
Furthermore, it often happens that when people in Taiwan are faced with litigation, they dispose of their assets before or during the proceedings. If claimants could rely only on civil protective measures such as provisional attachment and preliminary injunctions, and also had to first deposit a bond with the court to cover litigation costs, this would increase the burden on patent right holders in enforcing their rights. The im-portance of respecting others' intellectual prop-erty rights is not yet generally appreciated by people in Taiwan, and it is also necessary to dispel accusations or mistaken impressions in-ternationally that the ROC does not attach im-portance to the IPR protection. Therefore, to combat counterfeiting and assure IPR protection, there is still a need for criminal penalties for patent infringements.
On 29 May 2001, after cross-party consultation, the Legislative Yuan agreed on a version of the draft amendments in which criminal penalties would be abolished for infringement of invention patents, but would be retained for infringements of new utility model and new design patents. To make up for the reduced protection of invention patents after decriminalization, the draft also provides that in cases of intentional infringement the courts may, after considering the gravity of the infringement, award damages up to three times the value of the loss suffered by the claimant.
With this proposal and the proposal for complete decriminalization as described above having both been put forward, one cannot as yet predict if and when the law will be amended. But ROC court procedure does not include discovery of documents as in the US, so if in the future pat-entees cannot rely on prosecutors' powers of search and seizure, they may encounter practical difficulties in proving their case.
Any decriminalization of patent infringements will impact criminal prosecutions for infringe-ment that are then in progress. Also, the current practice whereby patent right holders save liti-gation costs by attaching a civil claim for dam-ages to a criminal prosecution after the prosecu-tion is referred to the court by prosecutors, will no longer be feasible. In some cases that have been in progress for several years, claimants who wish to file civil damages claims instead may find that the time limits on filing may already have expired, leaving them without any legal remedy. In view of all these issues, future de-velopments will be worth watching closely.