A. Development in Legislation

1. The Personal Information Protection Act

The Taiwan Personal Information Protection Act has been in effect since October 1, 2012. The highlights of the said Act are given as follows:
 
 (1) All government, non-government sectors, and individuals are subject to the said Act.
 (2) Names, birthdays, IDs, special features, fingerprints, marriages, family, education, occupations, medical records, medical histories, generic information, sexual preferences, health examinations, criminal records, contact information, financial statuses, social activities, and any other data which is sufficient to directly or indirectly identify a person would be considered as “personal information”.
 (3) All statutory requirements must be followed when collecting, processing or using personal information.
 (4) Proper security measures must be adopted when keeping personal information files.
 (5) An accused non-government sector (such as an enterprise) shall bear the burden of proof regarding its lack of subjective requirement (intention or negligence) when an adverse party claims for damages.
 (6) Failure to comply with the said Act will be subject to civil liabilities (up to NT$200M), administrative penalties (up to NT$500,000), and criminal liabilities (up to 5 years and/or NT$1M).

2. The Trade Secrets Act

The revised Taiwan Trade Secrets Act became effective on February 1, 2013. The purpose of this new amendment is to cope with the increasing cases of industrial espionage, especially the international industrial espionage and to protect the technological competitiveness of enterprises. Highlights of the new provisions include:

 (1) As a new measure, criminal penalties for up to five years of imprisonment and/or fines from N.T.$ 1,000,000 to 10,000,000 will be imposed for person who:(i) acquires a trade secret by improper means; (ii) uses, reproduces or discloses the trade secret without suitable authorization; (iii) refuses to delete or destroy or continues to conceal the trade secret after the owner of the trade secret has instructed to delete or destroy the trade secret, (iv) acquires, uses or discloses the trade secret from a malicious third party who obtained the trade secret by improper means as elaborated above.
 (2) Increased penalties: If the wrongdoer intentionally uses the trade secrets in foreign countries (including China, Hong Kong and Macau), the penalties will be increased to imprisonment from 1 year to 10 years and/or fines from N.T.$ 3,000,000 to 50,000,000.
 (3) The prosecutor or the complainant may withdraw the charges against one of the accomplices: Violation of trade secret is often committed in a surreptitious manner, and the victim or the prosecutor usually faces difficulties in collecting the evidence of the crime. To encourage the wrongdoer to reveal the crime and facilitate investigation, the prosecutor or the complainant may choose to relieve the criminal responsibility of the whistleblower.
 (4) Vicarious liability: Employers shall bear vicarious liability for any damages if its employee has wrongfully committed the aforementioned crime unless the employer can prove that it has exercised reasonable care to prevent the occurrence of crime.

3. The Patent Act

Customs protection measures are introduced to the Taiwan Patent Act to strengthen the protection of patent rights.

The Taiwan Patent Act amendment concerning customs protection measures (Articles 97-1 to 97-4) has been in force since March 24, 2014. Based on the said amendment, a patentee may request the Customs to detain the imported articles that are suspected of infringing the patent right(s). Such request shall be made in writing, accompanied by the preliminary showing of the facts of infringement and deposit of a security. When such request is granted, the Customs shall give a notice in writing to both the detention requester and the owner of the detained articles when carrying out the detention. By providing a counter security amounting to two times the security previously provided by the requester, the owner of the detained articles may request the Customs to repeal the detention. Both parties may examine the detained articles, provided that confidential information protection of the detained articles is not compromised.

After the requestor has been served a notice of admission of the request, the patentee (the requester) shall file a patent infringement lawsuit against the owner of the detained articles within 12 days and inform the Customs accordingly, otherwise the Customs shall repeal such detention ex officio. In addition, the detention may also be repealed in any of the following circumstances:

 (1) A final and binding judgment of non-infringement is rendered by a court.
 (2) The requester revokes his/her request for detention.
 (3) The owner of the detained articles provides counter security amounting to two times the security previously provided by the requester.

Please note that, except for the Item (3), the requestor shall bear the expenses generated from warehousing, loading and unloading the detained articles as the detention is repealed under any of the foregoing situations where the cause thereof can be attributable to the requester.

On the other hand, if the detention requester obtains a court judgment confirming that the detained articles infringe the patent right(s), the owner of the detained articles shall be liable for relevant costs generated from warehousing, loading and unloading the detained articles.
     
4. The Intellectual Property Case Adjudication Act

By increasing an infringer’s burden of proof, the protection of an enterprise’s trade secrets can be materially enhanced.

An amendment on the Taiwan Intellectual Property Case Adjudication Act for increasing an infringer’s burden of proof in a trade secret infringement lawsuit has been effective since June 6, 2014. Under such amendment (Article 10.1 of the said Act), when an owner of the trade secrets (“the complainant”), in a trade secret infringement lawsuit, has sufficiently presented the matter of fact regarding its claim for trade secret infringement, and the accused infringer has simply denied such claim, the court shall demand the said infringer to give substantive reasons and suitable arguments. Where the accused infringer disobeys such demand without giving a justifiable reason, the court may, in its discretion, take as the truth the complainant’s allegation with regard to its claim for trade secret infringement. By taking an obligation of giving substantive defense in such a trade secret infringement lawsuit, an infringer carries heavier burden of proof for non-infringement.    

B. Development in Court Decisions

1. A ruling on patent misuse

An infringement claim based on a patent subsequently invalidated does not inevitably constitute patent misuse

As patentees nowadays pay more attention to maintenance and protection of their intellectual property rights, defendants of patent infringement actions also adopt various kinds of defensive measures in response, such as filing an invalidation action, raising a defense of patent invalidity, bringing a new claim in a separate lawsuit or a counterclaim in the same lawsuit for patent misuse or impediment to fair competition, etc. In Taiwan practice, a defendant of the patent infringement lawsuit often alleges that the patentee’s filing a request with the court for preliminary injunction or provisional seizure with the knowledge that the patent in dispute is void or the patent infringement analysis report is incorrect has constituted patent misuse, and shall be liable for damages according to Article 184 of the Taiwan Civil Code (torts) and Fair Trade Act (unfair competition). 

If the defendant of the patent infringement lawsuit wants to establish the patent misuse of the patentee, an issue arises in to what extent the defendant shall bear the burden of proof. In a judgment rendered by the Taiwan Intellectual Property Court (“IP Court”) on September 21 of 2013, the IP Court elaborated that the defendant shall prove “the patentee has the knowledge that his/her right is limited or he/she does not have a ground to claim for patent infringement against the alleged infringer when filing the request for provisional seizure”. In the same judgment, the IP Court further stated that although the judgment finds that the patent in dispute lacks an inventive step, we may not infer that the patentee has the knowledge that the said patent is revocable when requesting provisional seizure, therefore the aforementioned finding is not sufficient to prove that the patentee has exercised his/her rights under the tortious intention or negligence.

2. R&D director banned from leaking trade secrets

Liang Mong-song (“Liang”), a former senior director of R&D at Taiwanese semiconductor giant Taiwan Semiconductor Manufacturing Co. (“TSMC”), was accused of disclosing TSMC’s trade secret to his new employer, Samsung. The IP Court rendered a ruling in May 2014 to ban Liang from leaking TSMC’s confidential information and from providing services for Samsung until the end of 2015. Liang can still appeal the case but the said ruling has set a precedent and Liang would have little chance to overturn the situation.

C. Other Issues To Be Noted

1. Development of patent indirect infringement

Similar provisions of inducement of infringement and contributory infringement as regulated in §271 (b) and §271 (c) of U.S. Code Title 35 (Patent Act) do not exist under the Taiwan Patent Act. If there are multiple wrongdoers involved in a patent infringement, the articles of the Taiwan Civil Code related to joint-participants, instigators and accomplices in general will apply.

Article 185 of the Taiwan Civil Code regulates that “if several persons have caused an injury to the right of another person by a wrongful act committed jointly, they are jointly and severally liable for the damage. The same rule applies if it cannot be ascertained which of several participants has caused the damage. Instigators and accomplices are deemed to be joint tortfeasors”. According to the said article, a person whose act is held as constituting inducement of infringement or contributory infringement under the U.S. Patent Act may be likely held responsible for patent infringement under the Taiwan Patent Act by the concept of joint tortfeasors. In determining if a person by the act of instigation or participation has jointly committed a patent infringement with the direct infringer, the court will look into the following factors:

 (1) The existence and establishment of the direct infringement (However, the patentee does not need to include the direct infringer in the group of the defendants in the patent infringement lawsuit. The patentee may, at its discretion, only sue the indirect infringer(s));
 (2) The mental state (intention or negligence) of the indirect infringers;
 (3) The establishment of the causation between the indirect infringers’ acts and the infringing result.

In spite of the foregoing current condition, more and more opinions arise from the academic circle strongly advising that the system of indirect infringement shall be expressly prescribed in the Taiwan Patent Act so as to well protect the rights and interests of a patentee. Any patentee holding Taiwanese patents should keep an eye on the development of this issue.
 
2. Patent validity evaluation

Patent validity shall be carefully evaluated before initiating a patent infringement lawsuit

An accused infringer would normally file an invalidation action and raise patent validity issue as a major defense in a patent infringement lawsuit. According to the statistics, more than 50% of the patents in dispute would be invalidated either by the Taiwan Intellectual Property Office or the IP Court. Therefore, it is strongly recommended that a patentee should carefully evaluate the validity of its patents before initiating a patent infringement lawsuit.

3. Interaction between the competition law and IP laws

According to Article 45 of the Taiwan Fair Trade Act, no provision of this Act shall apply to any proper conduct in connection with the exercise of rights pursuant to the Taiwan Copyright Act, Trademark Act, or Patent Act. As to any improper conduct concerning the exercise of copyrights, trademark rights, or Patent rights, the Taiwan Fair Trade Commission (“FTC”) has established the “FTC Disposal Directions (Guidelines) on the Reviewing of Cases Involving Enterprises Issuing Warning Letters for Infringement on Copyright, Trademark, and Patent Rights” and the “FTC Disposal Directions (Guidelines) on Technology Licensing Arrangements” to monitor an act of issuing a warning letter or technology licensing if there are any arrangements of lessening competition or impeding fair competition. Further, pursuant to Article 20 of the Taiwan Fair Trade Act, it also provides the protection to a well-known foreign trademark that has not been registered in Taiwan.