Taiwan's current patent laws do not recognize partially valid patents. Only if the Taiwan Intellectual Property Office (IPO) finds a patent application to be patentable in its entirety will a patent right be granted; otherwise the application is rejected in entirety. In an invalidation action, after reviewing the invalidation petitioner's arguments and the patentee's rebuttals, the IPO is obligated to render a decision invalidating the entire patent right even though the IPO only considers it partially unpatentable. The principle underlying this practice is known as "All Allowance or All Rejection."

The Supreme Administrative Court (the "SAC") applied this principle in Judgment 99-Pan-1261, issued on November 25, 2010. In this case, the IPO's original decision was to entirely invalidate a patent, but in the first instance of the administrative suit, the Intellectual Property Court (the "IP Court") found only part of the claims of the same patent invalid. The SAC sustained the IPO's decision, citing as the basis for its judgment the aforementioned "All Allowance or All Rejection" principle and explaining that under the current laws the court has no way to partially revoke the IPO's invalidation decision. Furthermore, the SAC specifically rejected the patentee's request that the IPO's decision be vacated and remanded so that the patentee would have the opportunity to amend those claims that the IP Court had found invalid.

The Draft Amendments to the Patent Act (the "Draft Amendments"), which passed the first reading in the Legislative Yuan on April 6, 2011, are intended to discard the principle of "All Allowance or All Rejection." Article 75, Paragraph 2 and Article 81, Paragraph 2 of the Draft Amendments would allow invalidation actions against only part of the patent claims, and require that the IPO make a decision on each claim under an invalidation action. Consequently, upon implementation of the Draft Amendments, the IPO would no longer be restricted by the "All Allowance or All Rejection" principle, and would have discretion to find a patent partially invalid in an invalidation action.

Although the Draft Amendments have yet to pass final reading in the Legislative Yuan, and it cannot be determined when they will be implemented, the SAC has already adjusted its position. In Judgment 100-Pan-896, issued on June 3, 2011, which concerned a case similar to that considered in Judgment 99-Pan-1261, the SAC opined that the "All Allowance or All Rejection" approach to patent validity effectively renders claim-by-claim review in administrative suit meaningless, because even if an administrative court determines that a patent is only partially invalid, it is legally prohibited from issuing a judgment of partial validation or partial invalidation. To remedy the situation, the SAC instructed that in such cases, the administrative court should vacate the IPO's decision to invalidate the entire patent on the ground that "the IPO failed to fulfill its duty to notify the patentee and provide an opportunity to amend the patent," as required by the IPO Patent Examination Guidelines (the "Guidelines"). This interpretation gives patent holders the chance to make amendments to their patent claims, thereby preserving their patent rights.

The Guidelines cited by the SAC in Ruling 100-Pan-896 provides that "during the invalidation action proceeding, if the Patent Authority finds that only part of the claims should be invalid, it shall notify the patent holder and provide an opportunity for amendment; if the patent holder fails to make amendments or the amendments are unable to overcome the defects in those claims, the Patent Authority shall render an invalidation decision on the entire patent." Under past interpretations of the Guidelines, the IPO's duty to notify the patent holder exists only when the IPO holds the view that some of the claims are unpatentable. However, in the above-cited two cases, the IPO determined that all the claims were not patentable and the said "duty of notification" need not apply; even though the IP Court thereafter took a partially different position from that put forward by the IPO, theoretically, "duty of notification" could not serve as the legal basis to reverse the IPO's decision. By expanding "duty of notification" to include such cases, Judgment 100-Pan-896 provides an additional layer of protection for patent holders by giving them the opportunity to amend their patent claims under the circumstances that the IP Court finds the patent partially valid, despite of the prevailing "All Allowance or All Rejection" principle.

As discussed, the Draft Amendments to the Patent Act abandons the "All Allowance or All Rejection" principle. Even though the Draft Amendments are yet to be implemented, it appears that the SAC has already anticipated this development and adjusted its practice to reflect the pending change of the Patent Act. In the future, patentees will be better able to defend their patents.