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Taiwan DVD-ROM company held liable for damages of more than NTD72,000,000
The Intellectual Property Court has once again ruled in favor of Toshiba Corporation, one of the leading technology firms in the world. It held that the defendant, a Taiwan DVD-ROM company, committed willful infringement, and shall pay compensation of more than NTD72,000,000 to Toshiba Corporation.
In June 2011, Toshiba brought a patent infringement lawsuit to the Intellectual Property Court against a Taiwan DVD-ROM company for infringing its DVD-ROM patent (Taiwan Patent Certificate No. 098207). The court of first instance delivered its judgment in September 2012, Judgment No. 2011-Min-Zhuan-Su-60, that the defendant committed willful infringement and should pay triple damages, amounting to about NTD5,890,000 plus interest. Upon appeal by both parties, the second judgment of the Intellectual Property Court on February 27, 2014 upheld its original judgment of "willful infringement by the defendant" with Judgment No. 2012-Min-Zhuan-Shang-50. The court held the defendant liable for additional damages of about NTD66,550,000 plus interest. Thus, the total amount of the damage award granted to Toshiba is over NTD72,000,000.
In the second-instance judgment, the Intellectual Property Court took into account the argument that "The defendant's DVD-ROM product conforms to the DVD-ROM specification commonly used in the industry," and used the DVD-ROM specification as the basis for analysis of infringement. In addition, the court reaffirmed in the course of calculating the damage amount that the "costs" and "necessary expenses" deductible from the sales income of the infringing product as claimed by the defendant shall refer to the direct cost in accounting, excluding indirect costs. Further, "gross profit" shall serve as the basis for calculation of damages, rather than "net profit" or "net profit after tax." This is in line with recent rulings by the Intellectual Property Court on using "gross profit" as the standard for damage calculation.
The above judgment rejected the defendant's claims that the damage amount should be mitigated because its business failed to generate a profit, having instead incurred a loss. Specifically, the Intellectual Property Court stated that the infringer's costs and expenses including factory rental, cost of maintenance, insurance, depreciation, amortization, royalty fees, labor costs, etc., shall not be deducted from its sales revenue when determining the damage amount. Otherwise, it would be equivalent to the patentee bearing such costs or expenses on the infringer's behalf, which is neither fair nor generally accepted by society.
The judgment of the Intellectual Property Court shows that Taiwan does provide patentees with effective intellectual property protection, and it also reminds companies to respect the intellectual property rights of others.