Newsletter
Is It Legitimate for a Licensee to Exercise a Licensed Patent Right If Not Recorded with the TIPO?
According to Paragraph 1, Article 62 of the Patent Act, the assignment or licensing of a patent right by the patentee shall have no locus standi against any third party unless it is recorded with the Specific Patent Agency. In practice, if an assignee or licensee of a patent right exercises such right and brings infringement claims against a third party before the assignment or licensing is recorded with the Specific Patent Agency, the Fair Trade Commission would deem such action as constituting unfair competition and thereby impose a penalty on the assignee or licensee, as can be seen in Gong-Chu-Zi No. 098056 and Gong-Chu-Zi No. 097096 disposition letters issued by the Fair Trade Commission. However, the Supreme Court rendered the 2017-Tai-Shang-Zi No. 1906 civil judgment on August 10th, 2017, holding that the aforesaid action shall be deemed as a legitimate exercise of right provided that the licensee has been legally licensed.
Defendant A, who had been granted by the Taiwan Intellectual Property Office (hereinafter the "TIPO") a utility model patent ("Patent"), then, assigned the Patent to Defendant B, who, in turn, licensed the Patent exclusively to Defendant A. The plaintiff claimed that Defendant A, though knowing clearly that there was a reason for revoking the Patent, still sent warning letters to the plaintiff’s downstream distributors, alleging that the plaintiff's products infringed the Patent. The Fair Trade Commission considered the defendant's act of sending warning letters sufficient to affect trading order and thereby deemed such act as a violation of the Fair Trade Act. Further, the Patent was revoked by the TIPO and ruled invalid by a civil court. Therefore, the plaintiff filed a lawsuit against the defendants, claiming that the aforementioned act of sending warning letters was an abuse of rights and that the defendants should be liable for damages. Both in the first- and second- instance decisions, the Intellectual Property Court dismissed the plaintiff’s complaint as it held that Defendant A is entitled to exercise the patent right as an exclusive licensee since Defendant A obtained an exclusive license of the Patent. According to the Intellectual Property Court, Defendant A did not subjectively intend to jeopardize particular enterprises through sending the warning letter, and the disposition letter issued by the Fair Trade Commission was not sufficient to prove that Defendant A's act should be deemed as having negligence for infringement. The Supreme Court agreed with the Intellectual Property Court's opinions and rejected the plaintiff’s appeal.
The purpose of recording patent licensing or assignment should be for protecting trade security rather than protecting the patent infringer. The Supreme Court reiterates this purpose in 2010-Tai-Shang-Zi-No. 921 judgment, 2014-Tai-Shang-Zi No. 395 judgment and 2015-Tai-Shang-Zi No. 671 judgment. Therefore, as long as the patent right is legally obtained and an exercise of the right does not breach trading order or involve an abuse of rights, such exercise of the legally obtained right shall not be considered a violation of the Fair Trade Act merely because the licensing or assignment has not yet been recorded with the TIPO.