Indirect Infringement of Patent Rights

11/01/2012

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It is stipulated in the Taiwan Patent Act that anyone who manufactures, offers to sell, sells, uses or imports for the aforementioned purpose any patented goods shall be liable for infringement. Only the person who directly conducts the aforementioned behavior will constitute patent infringement under the Patent Act. Currently, in the Taiwan legal system, there is no concept similar to the "indirect infringement" or "contributory infringement" in foreign patent laws. A patent owner can only rely on the theory of "joint torts" under the Civil Code if one attempts to claim liabilities against an indirect infringer, such as an inducing infringer or a contributory infringer.
Article 185 of the Civil Code provides that "If several persons have wrongfully injured the rights of another jointly, they are jointly liable for the damage arising therefrom; instigators and helpers are deemed to be joint tortfeasors." The "instigation" and "help" here mean to instigate others to commit torts, or to assist others in easily consummating torts. The concepts of inducing infringement and contributory infringement in the patent law could correspond to "instigation" and "help" under the Civil Code, respectively. Theoretically, as long as a patent owner can prove that a direct infringer and direct infringing conduct exist, and that there is a causation between the indirect infringer's "induction" or "contribution" and the result of infringement, the accused indirect infringer would be held responsible for joint infringement. Furthermore, since the Civil Code allows the right owner to choose to claim indemnification against all joint and several debtors, or claim all or partial indemnification against one or some of the joint and several debtors, the patent owner may sue the indirect infringer in a litigation without having to identify the direct infringer or to list the direct infringer as a defendant. It is quite flexible in terms of litigation strategy.
However, since the Patent Act itself does not have the concept of "indirect infringement," in past judicial practices, although the "joint torts" of the Civil Code could be used, cases that simply listed indirect infringers as defendants were quite rare and no court had ever expressed its opinion about the application of the law for indirect infringement of patents. During the early stage of this amendment of the Patent Act, the Taiwan Intellectual Property Office (TIPO) had considered to add the "indirect infringement" scheme and held a consulting meeting in October of 2008 to solicit opinions from people from all relevant fields. It further held an international seminar on indirect patent infringement in July 2009 and invited domestic experts and experts from US, Germany and Japan to discuss this topic; however, in the TIPO's draft of the Patent Act amendment filed in August 2009 for the Ministry of Economic Affairs' review, "indirect infringement" was not included. (After several reviews and revisions, the new Patent Act was promulgated in December 2011 and will be implemented from 1 January 2013.)
Although the Patent Act provided no rules to be followed until now, after the Intellectual Property Court’s establishment in July 2008, it was common for a plaintiff to sue indirect infringers based on the legal principle of joint torts in the Civil Code. By observing the judgments of the Intellectual Property Court, it could be concluded that a consensus about "an indirect infringer shall be liable for infringement" has been formed. The following are some judgments made in 2012:
●	2010-MinZhuanSu-59 (Date of judgment: 14 June 2012)
	The chip products manufactured and sold by the defendant did not possess all the technical features described in Claim 1 of the plaintiff's patent; hence, the defendant's offer for sale and sale of the chip products did not constitute patent infringement under the all element rule. However, in the product datasheet, the defendant's instructions for the use of the chip do literally match all the technical features described in Claim 1. Based on the content of the datasheet, the Court determined that the defendant must have at least manufactured and used a test version of the infringing goods, which constituted literal infringement under the all element rule. Thus, the defendant was held liable for direct patent infringement for his conducts of manufacture and use.
	Furthermore, the Court also determined that although the plaintiff could not prove the existence of a direct infringer, since the chip products of the defendant had been circulated in the market, there must be someone who had purchased the said chip products, used the products according to the datasheet, which, as a result, constituted direct infringement. Hence, the defendant's action of circulating its chip products and the datasheets in the market, which caused others to directly infringe the plaintiff's patent, had constituted the "joint torts by instigation or help" as stipulated in Article 185 of the Civil Code.
	It is worth mentioning that the Intellectual Property Court cited a Supreme Court judgment (2009-TaiShang-1790) and considered it not necessary for the "instigator" in the Civil Code to act "intentionally." As long as he negligently instigates a third party and causes the third party directly infringes other's right, the instigator shall be liable for joint torts.
●	2012-MinZhuanShangYi-1 (Date of judgment: 7 June 2012)
	The products sold by the defendant consisted of a "main body" and a "bag." A product certificate was delivered at the time of sale, which provided graphic instructions on how to combine the "main body and bag" to form a drain bag, and how to put stones into the bag for use. The product of the defendant (main body and bag) did not have the entire technical features described in Claim 1 of the plaintiff's patent. However, once a user fills the bag with crushed stones and combines the main body and the bag together, all the technical features of Claim 1 can be read on it.
	Unlike the preceding case (2010-MinZhuanSu-59) where the Court considered that the actions of "instigation" or "help" are were limited to those done "intentionally," the judge of this case took the view that the "instigation" or "help" shall be done "intentionally" by citing a Supreme Court judgment made in 2003 (2003-TaiShang-1593) and the opinions of former Honorable Justice Ze-Jien Wang, a famous scholar, which he expressed in his book. The defendant argued that the graphics on the product certificate were prepared according to the design drawings published by the government in a bidding project for public infrastructure, and that the "main body" and the "bag" originally had their respective uses. Based on such arguments, the Court determined that the defendant did not subjectively know that the disputed product manufactured and sold by him implemented the essential element of Claim 1 of the plaintiff's patent, nor did he know that if the main body and bag are combined together with crushed stones in the bag, the result will fall within the literal scope of Claim 1. The Court thus held that the defendant did not have any "intention" to help a direct infringer commit infringement easily. Hence, the Court finally concluded that the defendant did not constitute any infringement on the plaintiff's patent right.
●	2011-MinZhuanSu-69 (Date of judgment: 11 May 2012.)
	While the plaintiff's patented subject was a "device," the products manufactured and sold by the defendant were computer software, and therefore were not covered by the scope of the plaintiff's patent. Only when a consumer buys the defendant's product and then installs the product into a computer will the computer device with the disputed product installed fall into the patent scope.
	The Court determined that since the consumer clearly did not have any intention or display negligence to infringe the plaintiff's patent right, no direct infringement existed. Hence, there was no way for the defendant to have committed a joint infringement.
●	2011-MinZhuanSu-2 (Date of judgment: 23 March 2012.)
	The plaintiff's patent was directed to a packaging structure device. The defendant granted trademark rights and copyrights of some famous cartoon images to a third party to use on certain merchandise. The third party then put the licensed cartoon images into its packaging structure device. The plaintiff believed that the third party's packaging structure device was covered by his patent, and thus sued the defendant for contributory infringement, and claimed liabilities of joint infringement because the defendant refused to terminate the license it granted to the third party.
	The Court ruled that the third party was exclusively responsible for the design, manufacture, and sale of the disputed product, and that the defendant simply authorized the third party to use the famous cartoon images, but never authorized the third party to use its images on the disputed infringing products claimed by the plaintiff. That is to say, there was no causation between the defendant's authorization and the plaintiff's loss caused by the third party's infringement, and there was no intention or display of negligence. Hence the Court determined that the defendant did not infringe the plaintiff's patent right.
In the four judgments mentioned above, the requisites of indirect infringement liabilities of "there should be a direct infringer and direct infringement," and "a causation shall exist between the indirect infringer's acts and the result of infringement," were all addressed, and the Court's positions were consistent. However, it seems that, in respect to whether the instigation (inducement) or help (contribution) of the indirect infringer should be deemed "intention" or merely out of "negligence," a conclusion has not yet been made. This issue requires further observation in future cases.