Amendment of Taiwan's Patent Act by Legislative Yuan

06/10/2013

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Taiwan’s current Patent Act was last amended on 29 November 2011 and took effect on 1 January 2013. To further upgrade the patent system, on 31 May 2013, the Legislative Yuan completed the 3rd reading of an amendment of the Patent Act, and the major content of the amendment is as follows:
	1.	According to Article 32 of the amended Patent Act, in the case of a two-tier filing (i.e., an applicant simultaneously files one invention application and one utility model patent application for the same invention), after a selection of an invention patent is made by the applicant, the original utility model patent shall become extinguished on the date of publication of the invention application (under the current Patent Act, if the invention patent is selected, the originally granted utility model patent shall be deemed non-existing from the beginning and the patent applicant is only entitled to protection and rights originating from the invention patent). The amendment further states that a patent applicant must declare the “two-tier filing” when filing the two patent applications so as to benefit from the advantages of “two-tier filing.”
		The term “two-tier filing” refers to the situation where an applicant simultaneously files one invention application and one utility model patent application for the same invention. Since a substantive examination is not needed for a utility model patent application, a utility model patent application is normally approved within 4 months. However, it may take around 3 and half years to complete the substantive examination of an invention patent application. For a “two-tier filing” under the current Patent Act, if the invention patent application is deemed patentable through substantive examination, and if the patent applicant decides selects the invention patent case (to avoid double patenting issue), then the originally granted utility model patent shall be deemed “non-existing” from the beginning (i.e., the patent applicant does not own any right under the originally granted utility model patent). Therefore, to protect patent applicants’ legitimate rights and interests, the Legislative Yuan amended the Patent Act so that patent applicants may benefit from their rights with respect to utility model patents (before selection) and invention patents. However, the amended Patent Act requires patent applicants to declare “two-tier filing” when filing their patent applications. The amended Article 32 is as follows:
			Article 32
			Where an applicant files an invention patent application and a utility model patent application for the same creation on the same date, the applicant must declare the above-mentioned filing nature at the time of patent filing; if the utility model patent is granted before the invention patent application is to be allowed through examination, the Patent Authority shall notify the applicant to select one patent application within a specified time period. The invention patent shall not be granted if the applicant fails to make the declaration as stated above or to make a selection within the specified time limit.
			Where the applicant selects the invention patent case according to the provision set forth in the preceding paragraph, the utility model patent right shall become extinguished on the publication date of the grant of the invention patent case.
			An invention patent shall not be granted if the utility model patent has expired or has been revoked before a decision is issued on the invention patent application.
	2.	Considering the amendment of Article 32, where there is an unauthorized practice of the protected invention by other persons before the grant of the invention patent, patent protection would become duplicated if a patent owner not only demands a compensation fee based on provisional protection on the concerned invention patent, but also seeks a damage award based on the originally granted utility model. Therefore, amendment of Article 41 was made so that, under the above-mentioned situation, the patent owner must make a selection between “demanding for a compensation fee” and “seeking a damage award.” The amended Article 41 is as follows:
			Article 41
			Where, after the laying open of an invention patent application, a person continues to practice the invention concerned for commercial purposes after receiving a written notice sent by the patent applicant regarding the content of the invention patent application and prior to the publication of the said patent application, the applicant of the invention patent application may, after publication of the said patent application, demand for a reasonable compensation fee.
			A claim referred to in the preceding paragraph can also be made where a person who knows that an invention patent application has been laid-open but continues to practice the invention for commercial purpose prior to publication of the patent application.
			The right to claim as provided for in the preceding two paragraphs shall not affect the exercise of other rights. However, where an invention patent application and a utility model patent application are simultaneously filed under Article 32 and where a utility model patent is granted, the patent owner shall select between claiming a compensation fee and claiming a damage award based on the utility model patent right.
			The right to claim compensation set forth in Paragraph 1 and Paragraph 2 of this Article shall become extinguished if it is not exercised within two years from the date of publication of the said invention patent.
	3.	Amendment was made with respect to calculation of the damage claim and punitive damage award. Through this amendment, the “maximum triple damage award against malicious infringement” has been brought back to the Patent Act (such punitive damage award practice was abolished in the amendment made in 2012). The amended Article 97 is as follows:
			Article 97
			When claiming for damages in accordance with the preceding Article, the damages can be calculated according to any of the following methods:
			1.	to claim in accordance with Article 216 of the Civil Code; however, if no other method can be presented to prove the damage suffered, the owner of the invention patent may claim damages based on the amount of the balance derived by subtracting the profit earned through practice of the patent after infringement from the profit normally expected through practice of the same patent;
			2.	to claim on the basis of the profit earned by the infringer as a result of patent infringement; or
			3.	to claim on the basis of the amount equivalent to the amount of reasonable royalty that can be collected from the practice of the invention patent under patent licensing.
			As stated in the preceding Paragraph, where the accused patent infringement is malicious, the court may, upon request by an injured party and depending on the actual situation, decide on a damage award of which the amount is more than the amount of damage suffered. However, the above-mentioned damage award shall not exceed triple of the amount of the proved damage.
	4.	A utility model patent only goes through formality examination, and no substantive examination with respect to its patentability is made before the grant of a utility model patent. To prevent an abuse by issuing warning notices by patent owners, when serving warning notices by owners of utility model patents, it is necessary for the patent owners to present “utility model patent technical reports” to serve as an objective basis for evaluation. Through the amendment of the Patent Act, it is clearly stated that “utility model patent technical reports” are not pre-requisite for filing patent infringement suits. The amended Article 116 of the Patent Act is as follows:
			Article 116
			When exercising a utility model patent, if the patentee fails to present a utility model patent technical report, it shall not serve any warning.
The Patent Act amendment passed on 31 May 2013 will be announced by the President and it shall take effect thereafter. We will closely monitor further development and keep our clients informed. If you have any questions or need our assistance, please do not hesitate to contact us.