Newsletter
NEW IPR LITIGATION SYSTEM
In order to improve the quality and effectiveness of the adjudication of intellectual-property-related litigation in Taiwan, in 2007 the Legislative Yuan passed the Intellectual Property Court Organization Act and the Intellectual Property Case Adjudication Act, both of which took effect on 1 July 2008. Under the new legislation, an Intellectual Property Court has now been established in Taiwan, and all IPR litigation should be heard in accordance with the IP Case Adjudication Act.
After several years of preparation, on 1 July 2008 the Intellectual Property Court formally started its operation, which is initially staffed by eight judges (in two divisions), and around nine technical examination officers. The eight judges all have previous experience of handling IPR cases, and the technical examination officers are all senior patent examiners transferred from the Intellectual Property Office (IPO).
The operations of the IP Court and the new system for hearing IPR cases are outlined below:
I. Organization and jurisdiction of the IP Court
Litigation in Taiwan can be divided into the three categories: administrative litigation, criminal litigation, and civil litigation. Because judges generally do not have any technical background, when faced with IP-related technical issues, they would generally commission infringement assessment institutions to assist them in deciding such technical issues.
However, the new IP Court has the following features:
‧The IP Court is specifically responsible for hearing IPR-related civil, criminal, and administrative litigation. The IP Court has priority of jurisdiction, but no absolute exclusive jurisdiction. Thus parties still have the right to choose to bring actions in the ordinary courts.
‧ The staff of the IP Court includes technical examination officers, who can directly assist the judges in handling technological points of dispute. This is expected to enhance both the effectiveness and the quality of the adjudication of cases.
‧ In civil cases involving disputes over intellectual property, the first-instance trial will be conducted by one judge of the IP Court. Second-instance proceedings will be heard by a panel of three judges of the IP Court, and third-instance proceedings will be heard by the existing Supreme Court. For IPR-related criminal cases, jurisdiction at the investigation stage and for first-instance trial proceedings remains with the local district court prosecutor's offices and the district courts. Jurisdiction in second-instance proceedings lies with the IP Court, and the court of third instance remains the existing Supreme Court. In administrative litigation, first-instance jurisdiction lies with the IP Court (trial by a panel of three judges), while the court of second instance is the existing Supreme Administrative Court.
‧ Specialist training for judges in intellectual property matters comprises both pre-service training and in-service training. The Judicial Yuan will also separately arrange for specialist courses or collaboration with foreign universities, and will select judges to go abroad for academic research and study, in order to bring their professional competence in IPR matters up to international standards.
II. Major features of procedure under the new system
The salient features of procedure under the IP Case Adjudication Act are as follows:
‧ Court to determine validity of IP rights
Previously, disputes over the acquisition or validity of intellectual property rights, or other private-law rights (such as infringement disputes) may simultaneously be the subject of proceedings with different agencies or courts. For example, in the case of a patent infringement dispute, on being accused of infringement the defendant would typically file a cancellation action with the IPO against the patent concerned, and on this basis the civil court would order the suspension of the infringement litigation. Proceedings on the infringement issue were then not resumed until an irrevocable decision was reached regarding the validity of the patent, which could take three to six years. This has left much to be desired in terms of the protection of the rights of both patentees and counterparties.
Under the new system, when the IP Court or an ordinary court hears IP litigation, the court itself should make a determination regarding a challenge to the validity of an IP right involved in the case, and may no longer suspend infringement proceedings on the grounds that a validity dispute has not been resolved. However, following the new legislation's entry into force, the IPO still has jurisdiction over disputes as to the validity of IP rights such as patent and trademark rights, so that parties may still choose to file dispute procedures such as patent cancellation or trademark invalidation actions with the IPO.
Parties may present arguments to the court contesting the validity of an IP right only in litigation that is already before the same court over alleged infringement of the contested right. In other words, a party may not file litigation with the court if the validity of an IP right is the only point at issue. Unlike the outcome of a patent cancellation or trademark invalidation action examined by the IPO, the court's decision on a challenge to an intellectual property right has only relative force, i.e., it is binding only on the parties to the underlying litigation, and does not have absolute force against all the world.
With the entry into force of the new Adjudication Act, from 1 July 2008 proceedings will be resumed in all litigation that was previously suspended due to a challenge to the validity of an IP right.
‧ IPO participation in litigation
Because IPR disputes usually involve technological issues, and very few judges have a background in science and technology, when hearing IPR litigation the courts must rely to a high degree on technological experts with specialist knowledge and expertise. Nevertheless, the participation of such experts or infringement assessment institutions, and the opinions they provide, may not fully meet the court's need for various types of technological support when considering cases. This has been one of the major difficulties in the adjudication of IPR-related litigation.
Now that the new legislation has given the court both the authority and the duty to make a determination in disputes over validity, in future there will be two routes available for contesting the validity of an intellectual property right. That is to say, a party that challenges the validity of a patent or trademark may opt to only file a cancellation or invalidation action with the IPO; or, in the course of litigation involving the right concerned, it may dispute the right's validity before the court. Alternatively, a party may simultaneously pursue challenges to the validity of an IP right with both the IPO and the court.
In order to effectively integrate the opinions of the IPO and the court as to the validity of the same IP right, the court, in addition to having its own technical examination officers, may order the IPO to participate in infringement litigation and express its opinion on a challenge to the validity of an allegedly infringed IP right. This is an innovation in Taiwan's litigation procedure.
‧ Compulsory enforcement of evidence preservation
In IPR infringement disputes, the burden of proof lies with the rights holder. Previously, when rights holders petitioned the court for evidence preservation, because the Code of Civil Procedure does not provide for compulsory enforcement of evidence preservation orders, in practice infringers have often refused to cooperate, so that evidence preservation procedures have failed to achieve their intended substantive purpose.
The new Adjudication Act addresses this situation by providing for compulsory enforcement of evidence preservation. From 1 July 2008, a counterparty that is the subject of an evidence preservation order may no longer refuse to cooperate.
‧ Confidentiality preservation orders
Taiwan's legal system has long provided protection for trade secrets under the Trade Secrets Act, the Civil Code, and the Penal Code. In the course of IPR litigation, the courts have been able to make rulings to restrict access to case files or to close proceedings to the public, etc., in order to protect the lawful rights and interests of the owners of trade secrets. However, the above confidentiality measures may prevent a party to litigation from having access to related evidence and being able take it into consideration, so that the party would be unable to put forward a defense. Such measures are also open to abuse as a means to maliciously obstruct an opposing party in the lawful pursuit of litigation.
In view of the fact that the parties to IPR litigation are typically competitors in related markets, and the documents or physical evidence that they submit to the court or disclose during proceedings may relate to their own or third parties' technical or commercial secrets, the Adjudication Act introduces a specific mechanism to protect trade secrets: the confidentiality preservation order.
Following the Act's entry into force, a party to litigation, or any third party, may during litigation or prior to litigation being filed, petition the court under the Act to issue a confidentiality preservation order. If the court approves the petition, its ruling will expressly enumerate the matters to be kept confidential and the parties bound by the order. Any person who deliberately and unlawfully reveals a trade secret in violation of a confidentiality preservation order will be subject to criminal penalties (up to three years' imprisonment).
‧ Changed statutory criteria for injunctive relief
Under the Code of Civil Procedure, in order to avert major loss or imminent danger, an intellectual property rights holder could, on providing preliminary evidence to the court, petition the court for an injunction to prohibit a counterparty from manufacturing or selling specific products on the basis of rights-infringing actions. If a rights holder was unable to provide appropriate preliminary evidence in a timely manner, it could still obtain the protection of an injunction on depositing a bond with the court in lieu of such evidence.
Under the new Adjudication Act, a rights holder may obtain injunctive protection only if it is able to provide appropriate preliminary evidence to the court. It may not deposit a bond in place of providing such evidence. When considering whether to issue an injunction, the court should take into account such factors as the likelihood of successful litigation for infringement, whether approval or rejection of the petition will cause irreparable harm to either party, and any impact on the public interest. Thus in the future the barriers to obtaining injunctive relief are likely to be higher than before.
The system established under the new legislation will surely enhance the quality and execution of IPR litigation in Taiwan. The reforms will not only make it easier for rights holders to upholding their rights, but will also help Taiwan's IPR dispute resolution system to come into closer line with international standards. We will continue to follow the implementation of the new system in practice, and keep readers updated.