Newsletter
Legislative Yuan Passes the Amendment to the Intellectual Property Case Adjudication Act
On January 12, 2023, Taiwan's Legislative Yuan passed the Amendment to the Intellectual Property Case Adjudication Act (referred to hereafter as "the Amendment"). The Amendment covers an extremely wide scope and represents the most significant revision to the Act since its implementation more than 14 years ago. The Amendment is aimed at establishing an intellectual property litigation system that is more professional, effective, and in line with international trends. Key aspects of the Amendment are summarized as follows:
I. Changing the Jurisdiction of Intellectual Property Cases:
(I) Before the Intellectual Property Case Adjudication Act was amended, first-instance civil matters related to intellectual property were not under the exclusive jurisdiction of the Intellectual Property and Commercial Court. The Amendment stipulates that such matters are now under the exclusive jurisdiction of said court.
(II) The Amendment stipulates that first-instance criminal cases (including ancillary civil actions) in violation of the Trade Secrets Act should be heard before the Intellectual Property and Commercial Court, and that first-instance criminal cases in violation of Articles 8.1 to 8.3 of the National Security Act (i.e., misappropriation of trade secrets categorized as national core and key technologies) should be heard before the Second-Instance Tribunal of Intellectual Property, which falls under the Intellectual Property and Commercial Court.
II. Enhancing Protection of Trade Secrets:
(I) Extending the scope of the movant of a confidentiality preservation order:
When the Intellectual Property Case Adjudication Act was formulated in 2007, the confidentiality preservation order system was adopted to offer a mechanism that allowed the trade secret owner(s) to file a request with the court for the issuance of a confidentiality preservation order to the other party, advocates, assistants, or other persons concerned in litigation when evidence and other litigation materials included trade secrets. This system is meant to limit the disclosure of trade secrets to persons subject to the confidentiality preservation order and to prohibit the use or disclosure of trade secrets to other persons. However, before the Amendment, the Intellectual Property Case Adjudication Act only allowed the trade secret owner(s) to serve as the movant requesting issuance of a confidentiality preservation order, while the other party was not allowed to file such request. In other words, if a dispute between the trade secret owner(s) and the other party occurred regarding who should be listed as the persons subject to the confidentiality preservation order, such dispute might have prevented the other party from receiving information about the content of their case in a timely manner and would have impeded the smooth progress of the proceedings, which, in turn, might have affected the speed and accuracy of the judgement in the case. The Amendment provides that, under certain circumstances, a party in the litigation who is not listed as a secret holder may petition the court to issue a confidentiality preservation order for persons not bound by such an order.
(II) The Amendment increases "penalties for violations of a confidentiality preservation order" and introduces the "crime of violating a confidentiality preservation order from abroad."
(III) In addition, the Amendment stipulates provisions detailing prohibition of or limits on review of litigation materials containing trade secrets in civil and criminal cases. Furthermore, the Amendment provides that the parties or stakeholders to a criminal case involving trade secrets, as well as any ancillary civil action, may, prior to the first trial date, petition the court to determine an identification number or name for evidentiary documents containing trade secrets for the purpose of de-identification.
III. Adding a Mandatory Legal Representation System and Encouraging Concentrated Trials for Intellectual Property Cases:
(I) The Amendment stipulates provisions stating that legal representation is mandatory for certain types of civil intellectual property matters (e.g., first-instance civil actions in which the value or amount of litigation claims exceeds the amount under which an appeal may be taken to the court of third instance as set out in the Code of Civil Procedure and first- or second-instance civil actions involving patent rights, computer program copyrights, or trade secrets).
(II) For cases of mandatory legal representation, the Amendment stipulates provisions governing litigation aid, validity of litigation acts, that attorney remuneration should be calculated as part of litigation expenses, and the like. For litigation involving patent rights, patent attorneys may be appointed as representatives with the consent of the presiding judge. The mandatory legal representation system may apply mutatis mutandis to interveners, but the remuneration of their representative(s) is not calculated into the expenses of the litigation or proceedings.
(III) The Amendment provides that the court should, through consultation with the parties, determine a trial plan in certain cases where the mandatory legal representation system is utilized, where the circumstances of a case are complex, or as otherwise necessary. The trial plan should specify "the date or a period for sorting out disputed issues" and "the methods, sequence, and dates or periods for investigating evidence," along with "periods for raising means of attack and defense regarding particular disputed issues" or "dates or periods for other matters necessary to advance litigation proceedings as planned." Matters concerning the aforesaid trial plan should be recorded in the transcript.
IV. Expanding Expert Participation:
(I) The Amendment states that, after a lawsuit for patent infringement is initiated, the parties may petition the court to select and appoint an "inspector" to carry out evidence collection procedures. The inspector should be a neutral expert who possesses professional knowledge and should be allowed to conduct evidence collection on site (e.g., by confirming the structure and operations of large equipment at a factory). The system will be a mandatory method for collecting evidence. The regulations apply mutatis mutandis to computer program copyright infringement and misappropriation of trade secrets.
(II) The Amendment introduces the expert witness system, and relevant provisions stipulated in the Commercial Case Adjudication Act apply mutatis mutandis to the Amendment.
V. Easing Burden of Proof and Enhancing Trial Efficiency:
(I) The Amendment states that the court may, when it deems necessary, fully or partially disclose the technical report provided by a Technical Examination Officer. Additionally, the court should provide the parties with an opportunity for oral argument on the special expert advice acquired from the Technical Examination Officer before adopting the advice as a basis for a judgement.
(II) Before the Amendment, the Intellectual Property Case Adjudication Act provided in Article 10-1 that, in actions against misappropriation of trade secrets, if one party had made a preliminary showing of misappropriation but the other party still denied such allegation, the court should order the other party to raise a concrete defense, so as to ease the burden of proof in infringement actions. In addition to renumbering the provision, the Amendment further expands it so that it is applicable to patent or computer program copyright infringement actions.
VI. Instituting One-Time Dispute Resolution:
(I) Creating an information exchange system between the court and the competent authority for intellectual property:
To keep the court and the parties abreast of the progress of deliberations by the competent authority in charge of intellectual property matters, in the event that a party states that there is a reason for the intellectual property rights at issue to be revoked or abolished, the court should immediately notify the competent authority. Upon receiving a notification, the competent authority should immediately inform the court as to whether any requests to revoke or to abolish the intellectual property rights at issue have been accepted. When the court receives this notification, it may then, at the request of the parties, ask for access to the case files kept by the competent authority.
(II) Adding duty to disclose ongoing litigation to concerned parties of exclusive license:
Where intellectual property rights at issue have been exclusively licensed, the proprietor(s), owner(s) of trade secrets, or exclusive licensee(s) should proactively disclose the ongoing litigation and its progress in a timely manner to the parties concerned with the intellectual property rights at issue. In this way, the concerned parties may decide whether to participate in the litigation or exercise their rights in accordance with other legal proceedings.
(III) Imposing restrictions on re-trials pertaining to discrepancies in patent validity judgment:
In the past, if the court ruled in favor of the validity of rights in a final and binding judgment rendered with respect to a civil action involving infringement on patent, trademark, or plant variety rights but the competent authority for intellectual property invalidated the same rights in a later decision made with respect to a subsequently established patent invalidation case, trademark invalidation or revocation case, or plant variety right nullification or revocation case, the parties could initiate a re-trial action due to the change to the administrative disposition that served as the basis for the aforementioned final judgment rendered in connection with patent, trademark, or plant variety right infringement (see Article 496.1.11 of the Code of Civil Procedure). However, according to the Amendment, the parties in the above situation are no longer allowed to initiate a re-trial action in light of a final and binding decision made with respect to a subsequently established patent invalidation case, trademark invalidation or revocation case, or plant variety right nullification or revocation case. This is meant to ensure the durability of the court's final and binding judgment.
VII. Resolving Practical Disputes:
(I) Handling instances in which the patentee advocates for a "re-defense based on correction of claims against patent invalidity defense":
A situation where a patentee files a post-grant amendment to patent claims against the reasons for invalidation asserted by the other party is known as "re-defense based on correction of claims against patent invalidity defense." The Amendment clearly states that, where a patentee makes a request for re-defense based on correction of claims, the patentee should, in principle, file a post-grant amendment to claims with the competent authority for intellectual property and then explain to the court what is to be sought based on the amended claims (if the patentee fails to file a post-grant amendment with the competent authority due to reasons not attributable to him/her and if the rejection of the post-grant amendment is obviously unfair, the patentee may directly provide the court with the amended claims and the argument based on the same). The legality of the post-grant amendment to the claims is at the court’s discretion.
(II) The Amendment modifies provisions pertinent to "ancillary civil proceedings."
VIII. Adding a System for Victim Participation in Proceedings:
The Amendment states that provisions governing victim participation in proceedings, as set out in the Code of Criminal Procedure, may apply mutatis mutandis in criminal intellectual property cases.
IX. Promoting Electronic Judicial Services:
The Amendment expands the scope of people who can use technological equipment to participate in litigation proceedings, including interveners, expert witnesses, and inspectors. The Amendment has also added a regulation that the original copy of a judgment may be served electronically with the consent of a corresponding recipient(s).
Finally, the Amendment originally proposed amended provisions for "proceedings of patent or trademark review and dispute cases" (i.e., the remedy for patent or trademark infringement was to be changed from the current administrative litigation proceedings to civil litigation proceedings). However, the "Draft Amendment to Partial Provisions of the Patent Act" and the "Draft Amendment to Partial Provisions of the Trademark Act" have yet to be submitted to the Legislative Yuan for deliberation. Therefore, the Amendment removed these relevant stipulations as they appeared in the earlier Draft version.
There are still various aspects regarding the enforcement of the Amendment that have yet to be clarified. For example, (1) the level to which the court is lenient in its examination of elements regarding whether to conduct an investigation (Article 19), (2) the feasibility of expert witnesses from both parties proposing joint professional opinions (applying Article 51 of the Commercial Case Adjudication Act mutatis mutandis), (3) the extent to which the court implements the system where the preliminary showing by the rights owner is seen as true when the party accused of infringement has not fulfilled the duty to raise a concrete defense (Article 35), and (4) the impact of the amendment allowing parties who are not trade secret holders to request a confidentiality preservation order on the willingness of the trade secret holder to submit evidence of trade secrets (Article 36). The aforementioned issues will be subject to further observation based on the actual operations of the courts during specific cases after the Amendment comes into effect.
The Amendment improves current trial procedures, making them more complete (these improvements include the introduction of trial plans, an investigation system, and an expert witness system; the establishment of a judicial and administrative information exchange system to avoid contradictory judgments; and more public and transparent Technical Examination Officer reports). The Amendment also strengthens the protection of trade secrets within the legal procedure system. Furthermore, the introduction of mandatory legal representation for certain types of civil intellectual property cases will help improve the protection of intellectual property rights in terms of both form and substance. This will greatly assist in establishing Taiwan as a country where intellectual property litigation is user friendly.