含羞草社区

The amendment to the Intellectual Property Case Adjudication Act took effect on 30 August 2023. The amendment improves current trial procedures, making them more complete, and also strengthens the protection of trade secrets. Furthermore, the burden of proof for rights holders in cases of trade secret misappropriation, or patent, or computer program copyright infringements is much easier. This will greatly assist in establishing Taiwan as a country where intellectual property litigation is user-friendly.

The following contain statistical databases regarding cases overseen by the Intellectual Property and Commercial Court (IPCC) of Taiwan: (1) the official website of the Judicial Yuan of Taiwan; (2) the official website of the IPCC; and (3) an analysis report issued by the IPCC in 2017 titled “Analysis of Trial Performance Indicators for Various Cases Received by the Intellectual Property Court since its Establishment 10 Years Ago and Analysis of Trial Practices of the Related Litigation System “(2008-2017)”.

IP litigation trends

(1) Litigation can be completed within a year. On average, trials held by the IPCC (including civil, criminal and administrative) are completed within a year, with the average completion time for a trial in 2024 Q2 at 211 days. However, the average duration of a trial is slightly increasing year-on-year.

In terms of the type of litigation between 2008 Q3 and 2024 Q2, civil cases take the longest to complete, with an average of 211 days in the first instance and 289 days in the second instance. In addition, the average duration of administrative cases in the first instance is 173 days, while that for criminal cases in the second instance is 139 days.

In terms of the subject of litigation between 2008 Q3 and 2024 Q2, trade secrets cases have the longest average trial duration at nearly a year, followed closely by patent cases with an average of eight to nine months.

(2) Original judgments are usually maintained. The chances of maintaining the original judgment in first and second trial appeals are very high, ranging from about 74% to 95% per year between 2013 and 2022, indicating the importance of the first trial judgment and the need to sufficiently prepare for it.

(3) Success rates of IP litigation cases in Taiwan. According to the above-mentioned Analysis of Trial Performance Indicators for Various Cases Received by the Intellectual Property Court since its Establishment 10 Years Ago and Analysis of Trial Practices of the Related Litigation System (2008-2017), the success rates of different types of IP litigation cases in Taiwan between 2008 and 2017 are as follows:

(a) Civil cases. The plaintiffs’ average success rate in first-instance civil litigation at the IPCC was 34.03%, while the success rate at the district courts was 44.43%. In terms of the subject of litigation, the plaintiffs’ success rate at the IPCC was 53.6% for trademark cases and 20.78% for patent cases;

(b) Administrative cases. The Intellectual Property Office is typically one of the parties to a first-instance administrative litigation case before the IPCC, where the plaintiffs’ average success rate was 21.22%, calculated from the establishment of the court; and

(c) Foreign-related cases. Cases with foreign plaintiffs usually have a higher success rate than the overall average. Foreign plaintiffs have a 54.44% success rate in first-instance civil cases, a 79.25% success rate in trademark cases, and a 32.18% success rate in patent cases. In first-instance administrative litigation, foreign plaintiffs have a success rate of 27.29%, with trademark cases seeing the highest success rate at 27.97%.

According to the official website of the IPCC, the probability that an invalidity defence in a patent case would be accepted by the court was as high as 49.1% between 2008 Q3 and 2024 Q2.

Preparing for litigation

As Korean companies would be likely to engage in IP litigation as IP owners, the authors provide an overview of the preparation for IP litigation in Taiwan.

(1) Investigation and verification of suspected infringement. An IP owner shall bear the burden of proof in a dispute related to its IP rights. Before initiating any legal action against an alleged infringer, it is normal to conduct private investigations to identify the infringing acts and collect evidence concerning the alleged infringing acts. The infringed party can also consider filing a petition for evidence preservation to collect evidence of infringement. Evidence may be preserved through a compulsory execution force of the court.

(2) Assessment of rights. It is quite likely that an alleged infringer will file a cancellation action with the Intellectual Property Office against the asserted trademarks or patents after any enforcement action has been taken, or will make trademark/patent validity challenges before the court hearing the infringement case. In that event, an assessment of trademark/patent validity is required. To verify whether an IP right has been infringed, the authors highly recommend first conducting necessary assessment and preparing an assessment report. Under current practice, a plaintiff always attaches the assessment report prepared by a law firm or the third-party expert/institution to support its complaint filed with the court.

(3) Cease and desist letter. While the issuance of a cease and desist letter is not a prerequisite to filing a lawsuit, it may help to prove an intentional infringement if the alleged infringer continues to infringe after the letter is issued. However, the injured may choose to issue a letter after the necessary investigation has been conducted and the evidence collected. Otherwise, a letter may alert the infringer and make the investigation and evidence collection difficult. It is important for the infringed party to make sure that issuing such a letter shall not create an unfair competition issue.

(4) Security bond to be paid. If the plaintiff is a foreign company that has not been recognised in Taiwan, the court may, under the defendant’s motion, order it to pay a security bond for the court fees for the second-instance and Supreme Court levels (about 3.3% of the claimed amount), and the attorney fees for the Supreme Court level, not exceeding TWD500,000 (USD15,245).

Key issues

(1) Rights enforcement. Statistics from the IPCC indicate a high probability of a patent being deemed invalid. Korean companies are thus advised to assess whether an IP right is strong enough to go through the whole proceedings before initiating litigation in Taiwan. Specifically, the infringed party should first confirm the ownership and validity of the right in question; that is, it is advisable to select an IP with strong validity, and with an ease of proving infringement and damages. The amount of damages should also be calculated to determine the cost-effectiveness of litigation.

(2) Preparation for first-instance trial. Statistics from the IPCC indicate that higher-instance courts typically uphold first-instance judgments, meaning few cases are reversed at the higher-instance level. Hence, the first-instance trial is crucial, and the rights holder should be fully prepared.

(3) Design patents are recommended. Compared to invention patents and utility model patents, design patents are easy to obtain, easy to prove infringement and easy to win. In addition, the term of a design patent is now 15 years from the filing date of the application. Korean companies are thus advised to apply for more design patents to enhance the soundness of their IP rights.

(4) Announcement of rights enforcement. Businesses may wish to make a public announcement or notify its clients of the enforcement of their rights. However, Korean companies should be aware of the risk of violating the Taiwan Fair Trade Act, making sure that their announcement or notification is neutral and based on sufficient evidence. Otherwise, there is a risk for the counterparty to argue such announcement being determined as unfair conduct that can affect trading orders under the Taiwan Fair Trade Act.

(5) Importance of due diligence. When investing in an IP-related company in Taiwan, Korean companies should conduct thorough due diligence of the target. The items suggested to be confirmed include but are not limited to: (a) the IP owned by, used by or licensed to the target, including those in the process of application (special attention should be paid to ownership rights in cases where the rights were developed by employees, or where they were jointly developed or commissioned by external parties); (b) licensing or assignment agreements concerning the IP to/from the target; and (c) any disputes related to the target’s IP and any claim against the target for infringement of another’s IP.