PATENT ACT AMENDMENTS ON INFRINGEMENT-RELATED IS-SUES

01/01/2009

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On 31 October 2008 the Intellectual Property Office held a consultative meeting on issues relating to proposed amendments to the Patent Act's provisions on infringement.  The IPO invited a wide range of practitioners and academics to the meeting, at which it explained the content and orientation of its initial draft of the amendments, and solicited stakeholders' opinions.
The amendments envisaged by the IPO mainly relate to the following three areas:
Ÿ	Expressly defining the subjective criteria for patent-infringing activities (i.e., intent or negligence).
Ÿ	Introducing provisions on contributory infringement, based on US, Japanese, and EU legislation.
Ÿ	Introducing "reasonable royalties" as an additional basis for calculating damages.
Subjective criteria for infringement
Article 84 Paragraph 1 of the current Patent Act provides that if a patent is infringed upon, the patentee may petition the court to grant an injunction order to preclude the infringement, and to award damages for harm suffered.  But the Act does not define subjective criteria applicable to the infringer.  In judicial practice, there have been different opinions as to whether, for damages to be awarded, the infringer must have malicious intent or negligence.  To clarify this issue, based on provisions of the Copyright Act and the Trade Secrets Act, as well as the draft amendments to the Trademark Act, the IPO plans to insert a new Paragraph 2 into Article 84 of the Patent Act to expressly provide that "the holder of an invention patent may seek damages for harm suffered through intentional or negligent unlawful infringement of its patent rights."
Contributory infringement
Under legislation in various countries, an unauthorized third party must practice all elements covered by a patent claim to commit an infringement, and Taiwan 's Patent Act applies the same principle.  However, in the US, Japan, South Korea, and the EU, a third party that has not practiced all the elements set forth in the claim of the patent may still be held to have committed acts "preparatory to" or "assisting in" patent infringement, and the legislation expressly defines such activities as constituting "contributory" or "indirect" infringement, for which the contributory or indirect infringer still bears civil liability.  But Taiwan 's current legislation contains no similar provisions, so that rights holders may only pursue such issues via the provisions of the Civil Code that apply the doctrine of joint torts.  This represents a gap in patent protection in Taiwan .
Accordingly, based on the provisions of German and Japanese patent legislation, the IPO proposes to introduce a new Article 84-1: "Any party that offers for sale, or sells, items that are indispensable for the practice of an invention patent, being aware that such offering for sale, or sale, is detrimental to the rights of the patentee, shall be deemed to infringe against the patent, except insofar as the items offered for sale or sold are generally available in ordinary trade.
Reasonable royalties
Article 85 Paragraph 1 of the Patent Act provides for three methods of calculating damages for patent infringement:
Ÿ	According to Article 216 of the Civil Code, which encompasses loss suffered and lost profit.
Ÿ	Based on the profit that might normally have been earned by the practice of the patent, less the profit earned by the practice of the same patent subsequent to the infringement.
Ÿ	Based on the profit earned by the infringer through the infringing activities.
Although the above remedies refer to the profits lost by the patentee and the profits gained by the infringer, unlike legislation in countries such as the USand Japan , the Patent Act does not expressly allow for "reasonable royalties" to be taken into accountdamages.  The IPO proposes to insert new wording into Article 85 Paragraph 1 of the Patent Act to allow damages to be assessed on the basis of "the amount of royalties that could have been obtained through the practice of the patent."  This is intended to provide a reasonable minimum level of compensation for patentees, as well as making the burden of proof on patentees less onerous.
Attendants to the meeting expressed a variety of different ideas and suggestions on the three key amendments outlined above.  The IPO promised that after further study it would put forward a more specific and appropriate set of draft amendments.