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SUPREME COURT GUIDANCE ON BONDS FOR LITIGATION COSTS
The Code of Civil Procedure provides that the cost of litigation should be borne by the losing party. Where each of the parties wins part of the case, the court should decide how the costs are to be apportioned after considering the circumstances. If the plaintiff has no residence, office, or place of business in Taiwan, the court should, if so petitioned by the defendant, order the plaintiff to deposit a bond to cover the litigation costs. There are also provisions empowering the court to demand further bond amounts if during litigation the situation arises that a bond is insufficient or of uncertain value. But the above provisions do not apply if the plaintiff has sufficient assets in Taiwan to defray the litigation costs.
In current practice, if a plaintiff is a foreigner without any presence or sufficient assets in Taiwan, the court, if so petitioned by the defendant, usually orders the plaintiff to pay into court a bond for the litigation costs at the time of filing the litigation. Because at the time of filing the plaintiff has already paid the court costs for first-instance proceedings, the amount of the bond is usually calculated as the court costs for second- and third-instance proceedings, plus a reasonable amount in lawyers' remuneration for third-instance proceedings. Thus providing a bond to cover litigation costs generally places a burden on foreign plaintiffs.
In a 2007 ruling, the Supreme Court gave a new interpretation in this regard. The district court in the case ordered the foreign plaintiff to provide a bond to cover the litigation costs. The plaintiff appealed against this ruling to the high court on the grounds that it had assets in Taiwan in the form of 50 patents and 372 trademark registrations (granted and pending). But the Taiwan High Court held that these intangible assets were not suitable to be used as a bond for litigation costs, on the grounds that their value was diffi-cult to assess; that their value would be affected by the period of time for which they were granted and would diminish year by year; that it was difficult to calculate the sale value of such rights; and that sales revenue arising from the commer-cialization of a patent was not the value of the patent itself.
However, the Supreme Court held that assets for purposes of determining whether a foreign plaintiff should be ordered to post a bond were not restricted to tangible assets. Patent and trademark rights lawfully acquired in Taiwan were capable of being utilized by means of as-signment, licensing to others for practice, or pledge. If the plaintiff did indeed hold many patent rights and trademark rights, the fact that the value of such rights was difficult to assess did not mean that they were valueless. If their value were sufficient to cover the defendant's litigation costs, then the court should not order the plaintiff to provide a bond to cover such litigation costs. By dismissing the plaintiff's appeal without having properly considered and clarified these issues, the Taiwan High Court had failed to apply the law correctly. Accordingly, the Supreme Court reversed the ruling, and remanded the matter back to the Taiwan High Court for re-consideration.