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There are a number of situations in which several individuals co-own a patent, whether as a result of a contract or for other reasons. However the Patent Act in Taiwan is rather backward in regard to joint-ownership of patents, and stipulates only the following provisions:
lApplication for a Jointly-Owned Patent
Where a right to apply for a patent is jointly owned, the patent application related thereto shall be filed by all the joint owner(s). Where two or more persons engage in any patent-related procedure other than filing a patent application, each of them may complete such procedure independently, except for making a withdrawal or an abandonment of a patent application, filing an application for division or conversion, or taking other actions for which this Act requires joint execution. However, if a representative is designated by a covenant, such covenant shall prevail (Article 12, Paragraphs 1 and 2 of Patent Act).
If a co-owner contravenes the above provision for "joint-application" by individually filing an application and obtains a patent as a result thereof, other co-owners may file a cancellation action with respect to such patent and seek revocation of the patent right (Article 71, Paragraph 1, Item 3).
lDisposal of a Jointly-Owned Right to Apply for a Patent
Where the right to apply for a patent is jointly owned, the right to apply for the patent shall not be assigned or abandoned without the consent of all joint owners. Where the right to apply for a patent is jointly owned by two or more persons, none of the joint owners shall assign his/her own share therein to a third party without the consent of other joint owners. Where one of the owners of the right to apply for a patent abandons his/her own share, this share shall be vested in other joint owner(s) (Article 13 of the Patent Act).
lImplementation and Disposal of a Jointly-Owned Patent Right
Where a patent right is jointly owned, except for exploitation by each of the joint owners, it shall not be assigned, entrusted, licensed, pledged, or abandoned without the consent of all the joint owner(s) (Article 64 of Patent Act). Where a patent right is jointly owned, no joint owner may assign, entrust or establish a pledge on his/her own share without the consent of all the other joint owner(s). Where a joint owner of a patent right has abandoned his/her own share, this share shall be vested in other joint owner(s) (Article 65 of the Patent Act).
It can be seen from the above that the Taiwan Patent Act, with regard to the joint ownership of patents, merely provides for the application of patents, the disposal of rights for applying for a patent, and the disposal of patent rights to the extent that it expressly requires such action be jointly taken by all co-owners, or that their unanimous consent be required. In addition, although a co-owner is allowed to implement such patent without obtaining the consent of co-owners, there is no express provision on whether the profit obtained from such implementation is required to be distributed among all co-owners or whether remuneration is required to be paid to the other co-owners. This has led to significant legal problems in actual practice. Such omissions in the Patent Act can therefore only be supplemented in specific cases through judgment of the Court.
In a judgment by the Intellectual Property Court ("IP Court") rendered on September 26, 2013 (Min-Zhuan-Shang-Zi-17), the IP Court held a negative view on the question of "whether a co-owner of a patent is required to pay remuneration to the co-owners when implementing the patent on his own."
In this case, Party A (an individual) was a director of Party B (a company), both of which jointly owned a "method and device patent" (hereinafter called "patent at issue"). Party A alleged that Party B had, without his consent, commissioned Party C with respect to the use of the patent at issue for the manufacture of products for sale by Party B, thereby infringing Party A's rights, and constituting unjust enrichment. Party B's defense was that its commissioning of Party C was in fact an implementation of the patent on its own accord, and that such implementation of the jointly-owned patent did not require Party A's consent. Party B also claimed that the patent at issue contained defects, including a lack of full disclosure, novelty and inventive step, and thus should have been invalid. After due consideration, the IP Court accepted Party B's defense of "implementation by Party C is equivalent to implementation by Party B on its own accord." It also determined that the method and device used by Party B and Party C did not fall within the scope of the patent at issue, and thus Party B had not committed an act that amounted to the implementation of the patent at issue. It therefore determined that Party A's claim of Party B's infringement and unjust enrichment was groundless. In its judgment, the Court clarified its views on other issues relating to "joint-ownership of patent" as follows:
lA Co-owner of a Patent Shall Not Be Entitled to Claim Invalidity of the Jointly-Owned Patent in Litigation
Under Article 71, Paragraph 1 of the Patent Act, "'any person' may file a cancellation action with the patent authority in any of the following situations with respect to an invention patent..." The petitioner for cancellation has been defined in the 2013 edition of the "Patent Examination Guidelines" published by the Taiwan Intellectual Property Office ("TIPO") on Page 5-1-2 under the section entitled "2.1 Cancellation Petitioner," which states: "A cancellation action filed by the patent owner himself should not be accepted. The execution of the cancellation procedure under this law is premised on joint participation by the two parties, and the patent owner's defense procedure should be complied with. Furthermore, the examination on cancellation cases is based on the petitioner's statement, reasons and evidence; if a cancellation petition is rejected, such decisions' binding effect extends to the third party and the third party cannot further dispute. On the above grounds, the said 'any person' provided in the above-quoted Article 71, Paragraph 1 of the Patent Act should not include the owner of the patent at issue. This is to prevent inconsistency with the public review system. Therefore any application by the patent owner with respect to cancellation should not be accepted."
Based on the aforesaid, the Court took the view that since Party B is one of the owners of the patent at issue, it cannot therefore claim that the patent at issue is invalid. In other words the patent at issue is valid.
lImplementation by a Co-owner of a Patent Does Not Require Consent of Other Co-owners
The Court took the view that the Patent Act has expressly given a co-owner the right to implement patents on his/her own without obtaining the consent of other co-owners. Thus, Party A's claim could not be supported. Moreover, since the patent at issue was filed in 1988 and granted in 1990, Party A also invoked Article 40 of the Enforcement Rules of the Patent Act promulgated in July 1987, which provides that "where a patent right is subject to joint-ownership and is not implemented by all the co-owners, the co-owners shall enter into a contract to govern the rights and obligations among them and file with the patent office for recordation of such contract. In this respect, the Court pointed out that said Enforcement Rules were revised and revoked in October 1994, and the commencement date for the compensation of damages, as claimed by Party A as a result of Party B's implementation of the patent at issue, was October 1996. Therefore the Court rejected said claim by Party A.
lA Co-owner of a Patent Is Not Required to Remunerate the Other Co-owners for Implementation of the Patent
The Court took the view that self-implementation by a patent owner was not tantamount to using another person's invention. Thus, a royalty was not required since this would mean paying himself for exchanging his invention. Furthermore, since the law has provided that a patent owner does not require the consent of other co-owners with respect to implementation of the patent, he/she is therefore not required to pay remuneration to the other co-owners; otherwise, it would run counter to the regulatory intent of "not requiring the consent of other co-owners," rendering it superfluous.
lSelf-Implementation by a Co-owner of a Patent Does Not Hinder the Use or Exercise of Patent Right by Other Co-owners. As Such, No Damage Can Arise and the Other Co-owners Cannot by Reason Thereof Claim Unjust Enrichment and Damages for Infringement
Party A also claimed that according to the relevant provision of real rights in the Civil Code, Party B's implementation action should be eliminated, and that Party B should, in addition, bear liability for damage compensation or return of unjust enrichment. The Court, however, took the view that the general law on real rights in the Civil Code differs in a substantive manner from that for intangible property rights. Given the lack of physical constraints, there would not be conflict with respect to the use of an intangible right and any number of persons can benefit from their own use. Since patent rights and tangible property rights are different in nature, the Civil Code cannot apply by analogy or inference to exclude the use of patents by other co-owners. Furthermore, the implementation by a patent co-owner does not hinder the use of exercise of patent right by other co-owners. Thus, pursuant to the legal principle of "no compensation if there are no damages," the other co-owners cannot therefore be entitled to claim unjust enrichment and damages for infringement under the Civil Code.
