Revisitation of the Draft Amendments to Taiwan’s Intellectual Property Case Adjudication Act – Verification, Re-defense of Post-grant Amendment, Restrictions on Rehearing Action, etc.

September 2022

Eddie Shih

On June 24, 2022, the Judicial Yuan adopted the draft Amendments to the Intellectual Property Case Adjudication Act (hereinafter, the “Draft”) and requested the Executive Yuan on July 20 to jointly submit the Drat to the Legislative Yuan for deliberation.  The Draft marks the largest scale of revision since the implementation of the Intellectual Property Case Adjudication Act in 2007.

The Firm previously issued the article[1] to introduce the important issues concerning the Draft, such as the “exclusive jurisdiction of the Intellectual Property and Commercial Court over the first instance of civil and criminal intellectual property cases,” “the inter-partes review system adopted for the remedy procedure of patent and trademark cases,” “addition of provisions on mandatory representation by attorneys,” “enhanced trade secret protection,” etc.  This article plans to further introduce important parts involved in case review under the Draft, namely, “verification,” “expert witnesses,” “third-party opinions,” “re-defense of patent post-grant amendment,” and “restrictions on rehearing action.”

1. A verification system is added so that a party may check the evidence possessed by another party or a third-party through a verifier to balance the litigation interests and the protection of other party’s secrets.

In practice, patent infringement cases involving high technology and expertise, such as computer software invention patents and semiconductor invention patents, may involve large devices and complex processes in the facilities of the alleged infringer or third parties, and it is difficult for the patentee to access the relevant evidence and obtain it in the market, resulting in great difficulty in proving infringement.  Some commentators believe that Taiwan’s evidence preservation system is insufficient for the collection of patent infringement evidence, and it is necessary to increase channels of evidence collection through the discovery system in the United States.

In order to resolve the above issue, the parties may move for the court to appoint a neutral technical expert (verifier) to verify the documents or devices, or equipment (hereinafter, the “Verified Objects”) in the possession or under the management of another party or a third-party (hereinafter, the “Verified Party”) after the complaint is filed (Article 19 of the Draft).  To ensure the neutrality of the verifier, the person who has a certain relationship with the parties or a third-party shall not be appointed as a verifier by the court, and the parties or third-party may also refuse the appointment of the verifier (Article 20 of the Draft).

If the verification is difficult or the neutrality of a verifier is affected in the course of verification, the court may cancel the ruling that approves the verification (Article 21 of the Draft).  In addition to accessing the location of the Verified Objects, a verifier may also question the Verified Party and request it to produce the necessary documents.  If the Verified Party refuses to do so without justification or hinders the implementation of the verification, the Verified Party will be sanctioned (Article 22 of the Draft).

After conducting the verification, the verifier shall file a verification report with the court and the court shall serve the report on the Verified Party.  If trade secrets are involved, the Verified Party shall move for the court within a specific period for a ruling to prohibit the disclosure of the verification report in whole or in part (Article 22 of the Draft).  If the Verified Party fails to file the application within the required period or if the court does not issue a ruling to prohibit the disclosure of the verification report, the parties may move for the court clerk to reproduce it, and no third parties other than the parties are allowed to file the application to the court clerk (Articles 23 and 24 of the Draft).

The above provisions shall apply not only to patent infringement but also mutatis mutandis to the infringement upon the copyright of computer programs and trade secrets (Article 27 of the Draft).

A verifier is appointed by the court to perform a legally compulsory evidence collection procedure.  A verifier is required to take an oath when verification or court trial is conducted and is subject to a penalty of perjury if there is any false verification or statement concerning important matters to the case.  A verifier is also penalized for committing an offense of violating trade secrets if s/he reproduces, uses, or discloses trade secrets learned in the course of the verification (Article 78 of the Draft).

2. An expert witness system is added so that expert witnesses may provide professional opinions to facilitate court decisions

As defined in the Commercial Case Adjudication Act, an expert witness is a person whose knowledge, skill, experience, training, or education in the fields of finance, accounting, corporate governance, science, technology, or other specialized knowledge domains is useful to the court in understanding or determining facts, evidence, and rules of thumb.  Due to the highly technical and legally specialized nature of civil intellectual property matters, courts need a variety of mechanisms to obtain expertise in various fields.  Article 28 of the Draft applies mutatis mutandis Articles 47 through 52 and 75 of the Commercial Case Adjudication Act and stipulates that the parties may move for an expert witness to provide a professional opinion subject to the approval of the court (Article 47 of the Commercial Case Adjudication Act).

An expert witness shall issue a written professional opinion with an oath and the disclosure of relevant information[2] to a party for presentation to the court (Article 49 of the Commercial Case Adjudication Act).  A party may raise questions in writing to the expert witness of another party within a period designated by the court, and the expert witness shall provide a written answer, which shall be deemed as part of his/her professional opinion.  The court may notify the expert witness to appear and state his/her opinion, and if the expert witness does not appear or refuses to answer questions without justification, the court may refuse to adopt the professional opinion into evidence (Article 50 of the Commercial Case Adjudication Act).  The court may, if necessary, request the expert witnesses from both parties to issue a joint professional opinion in writing (including the part on which a consensus is reached and the part on which a consensus cannot be reached) in a designated period, and the court shall give the parties an opportunity to present their arguments before making a decision (Article 51 of the Commercial Case Adjudication Act).

Since the expert witness has taken an oath, if the professional opinion is false but is adopted by the court as the basis of judgment, the parties may initiate a rehearing action against the final judgment (Article 75 of the Commercial Case Adjudication Act).

It should be noted that the above-mentioned provisions of the Commercial Case Adjudication Act only apply mutatis mutandis to civil intellectual property cases.

3. A system for the court to solicit third-party opinions is added so that the court may generally consider professional opinions or information provided by a third-party to make a correct determination in specific cases.

In practice, the Intellectual Property Court has records of taking the initiative to solicit “amicus curiae” opinions on the grounds that the legal opinions involved in the case are important as a matter of principle.  For example, the 105-Hang-Zhuan-Geng-(1)-4 administrative case dealt with “the definition of a person with ordinary skills in the art,” and the 107-Min-Zhu-Kang-1 civil case pertained to “international jurisdiction related to the Internet and intellectual property rights.”

To assist the court in making a correct determination in specific cases, these Amendments specifically provide that the court shall, upon the motion of the parties and when necessary, publicly solicit written opinions or information concerning the application of laws, technical determination, or other material issues in civil intellectual property cases from third parties (people, authorities, or organizations other than the parties) on its website during a specified period of time, and the parties shall be given an opportunity to present their arguments before the decision is made (Article 29 of the Draft).

4. The provisions on the re-defense of patent post-grant amendment are added so that the court can make its own determination on the eligibility of amending the scope of patent right

In practical cases involving patent infringement, the alleged infringer often defends that there are grounds for invalidating the patent (hereinafter, the “Invalidity Defense”), and that the court shall make a determination on its own of the merits of the Invalidity Defense (Article 16 of the current law and Article 42 of the Draft).  To avoid the invalidation of the patent and thus the inability of asserting patent infringement, the patentee often presents to the court that it has filed with the Intellectual Property Office (hereinafter, the “IPO”) for post-grant amendment (hereinafter, the “Re-defense of Post-grant Amendment”).  The question that arises is whether the court can determine the merits of the Re-defense of Post-grant Amendment on its own without waiting for the IPO’s final decision for post-grant amendment?  This issue has been discussed by some commentators.

To resolve the above issue, the Amendments stipulate that if the patentee asserts the Re-defense of Post-grant Amendment, the patentee shall clearly state to the court that the complaint is based on the scope of the amended patent right.   However, if the patentee is unable to apply to the IPO for post-grant amendment for reasons not attributable to the patentee, and if rejection of the post-grant amendment is unfair,[3] the patentee may directly state to the court that the complaint is based on the scope of the patent right desired to be amended, which is the exception that the patentee must first apply to the IPO for post-grant amendment. After considering the opinion of the alleged infringer on the Re-defense of Post-grant Amendment, the court may decide for itself whether the amendment is eligible or not and disclose its inner conviction, and if it is eligible, the court shall conduct the infringement determination based on the scope of amended patent right (Article 44 of the Draft).

5. The provisions on the restrictions on rehearing action are added to maintain the stability of a final decision and avoid undermining the public’s confidence in the validity of right and the scope of patent right.

Under the current laws, the dual system of “patent invalidation” and the “Invalidity Defense” is adopted to determine whether a patent right should be invalidated.  If the IPO issues a final administrative decision finding that the invalidation should prevail or approving a post-grant amendment after the court has handed down a final civil decision on patent infringement, can the party seek the remedy of rehearing action as a result that the administrative disposition that serves as the basis of a civil decision is subsequently changed?  This issue has been discussed by some commentators.

To resolve the above-mentioned issues, the Amendments adopt “restrictions on rehearing action.”  When the IPO renders a final administrative decision that (1) the patent right, trademark right, and plant variety right should be revoked or invalidated, (2) the patent term extension of an invention patent is invalidated, and (3) the post-grant amendment of the patent specification, the scope of the patent right, or the drawings is approved, the parties shall not initiate a rehearing action in accordance with Article 496, Paragraph 1, Subparagraph 11 of the Code of Civil Procedure against the final judgment involving patent, trademark, or plant variety right infringement cases to avoid the dilemma that the damages already received by the above-mentioned right holders should be returned in accordance with the relevant provisions on unjust enrichment (Article 50 of the Draft).

For the same reason, when the civil court affirms the validity of the patent, trademark and variety rights by ruling on the preservation procedure (including provisional seizure, provisional attachment, and a temporary status quo injunction), if the IPO subsequently issues an administrative decision for the above three scenarios, the debtor cannot assert that the court’s ruling on the preservation procedure is unlawful and claim compensation from the creditor for the damage suffered (Article 50 of the Draft).

Since criminal incidental civil litigation is essentially a civil matter, in case a final judgment that affirms the validity of the trademark right and concludes violation of the Trademark Act in a criminal incidental civil litigation is handed down by a criminal court, while the IPO subsequently renders a final administrative decision that the trademark right should be revoked or invalidated, the parties should be restricted from initiating a rehearing action against the decision of the incidental civil litigation (Article 71 of the Draft).

As a result of the comprehensive revision, the Draft consists of 81 articles (adding 40 articles and revising 41 articles) and has a regulatory density much greater than that of the current law, which consists of 41 articles.  There are still a number of articles in the Draft that are important in practice such as the disclosure of the report prepared by the technical examination officer (Article 6 of the Draft) and the adjustment of the burden of proof for infringing patents or copyrights of computer programs (Article 36 of the Draft), which cannot be introduced one by one due to the space limitation of this article.  It is worthwhile to keep following the progress of the subsequent legal amendment.

(The author’s opinion does not represent the position of this law firm.)

[1] Jane Tsai and Tina Lee, Taiwan Executive Yuan Approves the Draft Amendments to the “Intellectual Property Case Adjudication Act, Law News of Lee, Tsai & Partners, August 2022.

[2] For example, whether the professional opinions or relevant materials are prepared or submitted under a division of labor or cooperation relationship among the parties, related parties, or process agents thereof, or with the monetary compensation or sponsor from the parties, related parties, or process agents thereof, as well as the amounts or value.  

[3] For example, before an administrative decision rendered by the IPO that concludes a patent invalidation is successful is revoked by a final court judgment, the IPO cannot accept the post-grant amendment application of the patentee.