Newsletter
Jurisdiction over Labor Cases Involving Intellectual Property Rights Disputes
In civil disputes over intellectual property rights, the parties involved are often employers and employees respectively, such as whether a patent, trademark, or piece of work developed and created by an employee are vested in the employer, or over trade secret infringement in which an employee discloses confidential information to competitors. In the past, first-instance and second-instance civil cases arising out of similar intellectual property rights disputes have normally fallen under the priority jurisdiction of the Taiwan Intellectual Property and Commercial Court (hereinafter referred to as "IP Court").
Officially enforced on January 1, 2020, the Taiwan Labor Incident Act endows the employee with the right to petition to transfer the case to the jurisdictional court of their choice before the beginning of oral arguments in order to protect the rights and interests of economically disadvantaged employees and facilitate their convenience in litigation. In contrast, in cases with employers filing lawsuits with the court of common pleas, the employee involved in the case may also petition to transfer the case to the IP Court. However, said provisions do not apply to cases which continue after the parties fail to reach an agreement in labor mediation (see Articles 6 and 7 of the Taiwan Labor Incident Act, and Article 4 and Paragraph 1, Article 7 of the Taiwan Labor Incident Adjudication Rules.) The legislative reason of Article 6 in the Taiwan Labor Incident Act further elaborates that the court shall transfer the case to the jurisdictional court petitioned by the employee.
Following the preceding statutory provisions, the IP Court transferred several intellectual property rights cases arising from or connected with labor contracts or other labor relations to the jurisdictional court petitioned by the employees. In cases where several employees in the same case petition to transfer the case to different jurisdictional courts, the court may designate one final jurisdictional court after taking all relevant factors into consideration, such as the intertwined nature of the means of attack and defense towards the same transaction or occurrence, mutual exploitation of the information for oral arguments, avoidance of contradictory judgments and balance of litigation economy, and improper case splitting for different court adjudications (see 2020 Min Ying Su No. 9 Ruling rendered by the IP Court on October 26, 2020.)
Nevertheless, in cases where an employee faced no litigation inconvenience, the IP Court also has rejected employee petitions for jurisdiction transfer over a case (see 2020 Min Zhuan Su No. 91 Ruling dated November 9, 2020, and 2020 Min Zhuan Kang No. 21 Ruling dated January 8, 2021, both rendered by the IP Court.) In this case, the plaintiff company A filed a lawsuit with the IP Court, claiming that its employee B arbitrarily filed a patent application for their creation made in the course of performing their duties during the period of employment in the names of employee B, his spouse C, and D and E of the company founded by both B and C. Although the employee B petitioned to transfer the case to the Taiwan New Taipei District Court for jurisdiction, the IP Court rejected the petition because both the IP Court and the Taiwan New Taipei District Court are located in New Taipei City, and it no substantial inconvenience was presented by the employee's attendance at the IP Court for litigation.
The case was further appealed to the Supreme Court, which upheld the original ruling but on different grounds. The Supreme Court held that the dispute involved non-employee third parties (i.e., C, D, and E) who were not entitled to choose the jurisdictional court, having no labor relations with the employer A. Consequently, allowance of employees splitting respective parts of the litigation from the original litigation and petitioning transfer thereof to the jurisdiction of their choice shall depend on the specific facts and requests claimed by the plaintiff. If the obligations of the subject matter of litigation were to be jointly borne by the defendants or are based on the same factual and legal grounds, the employees’ rights in choosing the jurisdictional courts shall be restricted to balancing litigation economy and avoiding contradictory judgments. Under the foregoing circumstances, employees may not be entitled to petition transfer of their cases to chosen jurisdictional courts (see 2021 Tai Kang No. 315 Civil Ruling rendered by the Supreme Court on April 29, 2021.)
As one can see from the above, when an employer files a labor case involving intellectual property rights disputes with the IP Court after the enforcement of the Taiwan Labor Incident Act, the employer may face the circumstance that the employee petitions to transfer the case to another labor courts for jurisdiction on the grounds of litigation inconvenience. The employee’s choice of other jurisdictional courts may be precluded under the circumstances that no litigation inconvenience exists to trouble the employee, or no non-employee co-defendants are involved. At this point, the employer should immediately express their opinions to the court to avoid the court’s discretionary ruling to transfer the case to other jurisdictional courts.