Newsletter
New Patent Border Protection Measures in Taiwan
Article 97-1 to 97-4 of the Patent Act regarding the "patent border protection" system passed by the Legislative Yuan on January 3, 2014 was promulgated by a Presidential Order dated January 22, 2014. The Legislative Yuan had stipulated that the relevant provisions would come into effect upon completion of the relevant implementation regulations by the Executive Yuan. Thereafter the Ministry of Economic Affairs (MOEA) and Ministry of Finance (MOF) jointly announced on March 24, 2014, the "Regulations Governing Customs Detaining Goods Suspected of Patent Infringement" (Jing-Zhi-Zi-10304601440 and Tai-Cai-Guan-Zi-1031006024). On the same day the Executive Yuan announced implementation of Article 97-1 to 97-4 of the Patent Act on March 24, 2014.
Before the implementation of patent border protection measures on March 24, 2014, there had been specific and fairly comprehensive regulations for trademarks and copyrights, as evidenced in the "Regulations Governing Customs Measures in Protecting the Rights and Interests of Trademark," "Implementation Regulations for Customs to Detain Articles Infringing the Rights in the Trademark," "Matters concerning Handling by the Directorate-General of Customs of Trademark Complaint Cases involving Import and Export of Counterfeit Goods," and "Implementation Regulations for Suspension of Release of Goods Infringing on Copyright or Plate Rights by Customs Authorities," etc. With respect to patent border protection, although Customs can implement it by way of the "Operational Directions for Customs Authorities in Implementing Measures for Protecting the Rights and Interests of Patents, Trademarks, and Copyrights," the said Guidelines did not contain specific regulations on the procedure and mode of implementation for seizure of infringing items by Customs and those on revocation of such seizure, thus significantly reducing the effect of patent border protection. This point is illustrated by statistical data compiled by the Customs Administration, MOF under "Border Measures for Intellectual Property Rights." Customs seizes or detains tens of thousands of imported items that are alleged to infringe trademarks, and thousands of imported items that are said to infringe copyrights, but has never seized any imported items that are said to infringe patents (see http://web.customs.gov.tw/lp.asp?CtNode=13159&CtUnit=998&BaseDSD=7).
The newly-implemented "Regulations Governing Customs Detaining Goods Suspected of Patent Infringement" ("Regulations") are specific implementations of Articles 97-1 to 97-4 of the Patent Act. Their key points are as follows:
1. Documents and materials to be submitted when applying for inspection and seizure (Article 2):
Where a patent holder suspects an infringement of its patent, it can apply in writing to Customs of the place of import for seizure. It should also attach documentary proof of its patent rights (for new utility patents the patent holder should also submit the new utility patent technical report), documentary proof of the patent holder's qualifications, analysis reports of the infringement, and explanations such as to identify the alleged infringing goods (sample or photograph, catalogue and pictures of infringing goods), and explanations such as to enable Customs to identify the goods to be seized (importer, uniform code, customs declaration form number, name of goods, model, specifications, likely date of import, port of entry or transportation means etc.)
2. Type of comparable security to be provided (Article 3):
Where a patent holder applies to Customs for seizure of alleged infringing items and such application has been approved by Customs on the ground of conformity with requirements, the patent holder should, upon notification, furnish cash security based on the amount assessed by Customs or comparable security. As for the type of security, the Regulations stipulate government bonds, bank certificate of deposit, certificate of deposit issued by a credit cooperative, over one year’s trust certificate from an investment company, and guarantee from a loan institution, etc.
3. When seizing the goods, Customs can enlist the assistance of the patent holder. It should also notify the patent holder and the importer of the seized goods in writing (Articles 4 and 5).
Time is of the essence with respect to border seizure by Customs. Out of prudence, the customs agency can, if it is necessary, enlist the assistance of the patent holder before seizure to identify the alleged infringing goods. Customs should notify all parties concerned in writing when carrying out seizure.
4. Procedure for applications to inspect seized items and implementation method (Article 6):
After Customs has carried out seizure, the parties concerned can apply to inspect the seized items in accordance with Paragraph 5, Article 97-1 of the Patent Act. They should do so in writing and to Customs of the place at which the goods are imported. Furthermore, in order to prevent disclosure of confidential materials relating to the seized goods, the parties should carry out their inspection in accordance with the time, place and method stipulated by Customs, thereby ensuring protection of their rights.
5. Commencement date for deadline before which a patent holder should institute litigation (Article 7):
Upon application by the patent holder for seizure of goods and upon seizure of such goods by Customs pursuant to Article 5 of the Regulations, both the patent holder and the importer should be notified in writing. The patent holder should institute infringement litigation within 12 days following that on which it receives such notice, and notify Customs with respect to such litigation. If the patent holder has already instituted litigation before seizure by Customs, it should also notify Customs to facilitate follow-up enforcement. Customs shall have the discretion to extend the aforesaid deadline by another 12 days.
6. Where the importer intends to provide counter-security with respect to its application for revocation of seizure, and where the litigants apply for revocation of seizure on the ground of non-infringement as adjudicated, documents should be provided (Articles 8 and 9).
Upon the patent holder's application for seizure, the importer may provide security amounting to twice the value assessed by Customs or its equivalent, and apply in writing to Customs for revocation of seizure (Article 8). Upon application by the patent holder for seizure of goods and upon seizure of such goods by Customs, and the patent holder's litigation has been dismissed by the court with respect to the issue of whether or not there is infringement, either the patent holder or the importer may apply in writing to Customs for revocation of seizure by submitting the judgment (Article 9).
7. Where the importer provides counter-security with respect to its application for revocation of seizure, Customs can obtain representative samples before allowing customs clearance as per normal procedure (Article 10).
After Customs has revoked seizure in accordance with regulations, Customs will proceed with customs clearance as per normal procedure. In order to maintain integrity of relevant evidence and materials for the case, as well as to facilitate subsequent processing, Customs may, with respect to goods for which seizure has been revoked by reason of the importer provided counter-security, obtain representative samples before allowing customs clearance as per normal procedure.
8. Documents to be submitted in application for return of security deposit or guarantee (Article 11):
The Article expressly provides the documents to be submitted by the parties concerned with respect to their application for return of security deposit or guarantee (documentary proof which has similar binding effect as the court's decision, agreement for settlement between the parties, documentary proof of a party giving the other party 20 days or more to exercise its rights and such other party fails to so exercise, or documentary proof of the other party's consent to return).
Conclusion
As with the "Operational Directions for Customs Authorities in Implementing Measures for Protecting the Rights and Interests of Patents, Trademarks, and Copyrights," the patent holder should still be required with regard to the seized imported or exported infringing items, to apply to the court for issuance of provisional injunction or prohibition of import or export of the infringing goods. Upon obtaining such order, it should also apply to the court for it to deliver such order (which should include the alleged infringing party's information, name of goods involved, specifications, model number or other information) to Customs for enforcement. Under Articles 97-1 to 97-4 of the Patent Act which came into effect and the Regulations, with respect to the seizure of alleged infringing imported products, the patent holder, instead of spending effort, time and expenses to obtain a provisional injunction in advance, can apply to Customs for seizure of suspected infringing goods, and upon payment of security deposit or comparable guarantee of an amount assessed by Customs, Customs can implement such seizure. The procedure no doubt offers better protection of the patent holder's rights.
Worthy of note is the point that Articles 97-1 to 97-4 of the Patent Act and the Regulations merely regulate the seizure of alleged infringing imported products; there is no provision for relevant procedure and implementation method for "exported products" which are allegedly infringing. However, under the Patent Act, the patent holder can still exclude sales (including export) of infringing goods. Since seizure of "exported" infringing goods is just as important to the patent holder as that of "imported" infringing goods, it remains to be seen how Customs should implement seizure of "exported" infringing goods, and the actual effect of the newly-implemented seizure regulations for "imported" infringing goods.