IP COURT ANNUAL REVIEW

An Efficient Special Court

We are proud that TLC was ranked the second tier IP firm in patent and trademark
prosecution work and the third tier in IP litigation based on the 2008 survey conducted by
the Managing Intellectual Property journal.

In January 2009, the US Trade Representative (USTR) removed Taiwan from its Special 301 Watch List in recognition of progress Taiwan had made toward improving IPR protection and enforcement. The USTR spokesperson Sean Spicer said: “In 2001, USTR called Taiwan “a haven for pirates.” Today, Taiwan has strengthened its enforcement, strengthened its laws, and demonstrated a commitment to becoming a haven for innovation and creativity.” The decision resulted from an “Out-of-Cycle Review” which focused on three aspects, namely the establishment of a Special IP Court, the implementation of IPR protection on campuses and the amendments to Copyright Law in respect of Internet service providers (ISPs). Amongst the three issues, it is believed that the operation of the Specialized IP Court played a key role.

The IP Court officially launched its operation on July 1, 2008 pursuant to the IP Court Organization Act, and

began to accept and hear cases based on the IP Case Adjudication Act. The new court is currently equipped with 9 judges who are assisted by 9 Technical Examination Officers (TEOs) with expertise in science and technology. Until the end of May 2009, the court had received more than 1,188 cases, while 1,043 cases were accepted to be heard. Among the cases accepted, there are 346 patent cases, 397 trademark cases, 234 copyright cases and 65 others related to Fair Trade Law, Trade Secret Law, or general criminal law involving IP matters. The number of cases received by the new court up to now is not as significant as the relevant public expected, in contrast with the recorded 3000 IP cases filed in 2007 with general courts.

However, the number of cases terminated within the 11-month period by the IP court is very impressive. From July 2009 to May 2009, the court received 344 civil cases and closed 181 cases; in which 29 copyright cases, 64 patent cases and 16 trademark cases were closed at their first instance; while 20 copyright cases, 33 patent cases and 17 trademark cases were terminated at the second instance. The closing rate is over 52%.

For criminal cases involving IP matters, general courts still keep their jurisdiction at the first instance trial, only cases appealed to the second instance will be heard by the IP court for the reason that the IP court is not staffed with public prosecutors. The IP court received 279 criminal cases appealed from the first instance and closed 198 cases where 112 cases were in violation of copyright law, 52 cases were against trademark law and 1 was the offense relating to secrecy protection. The closing rate hits 70% at the criminal court.

As to Administrative Litigation, the court received 419 cases and closed 254 cases, among which 161 cases were for trademark disputes, while 93 cases were for patent rights. The closing rate for Administrative Litigation reached 60% in 11 months.

According to the monthly reports of Judicial Statistics from the Judicial Yuan, the time frame from when an action is filed to its termination is in average from 94 days to 114 days. Every month each IP judge received approximately 17 to 22 cases, closed 10 to 17 cases and still had 55 to 66 cases at hand for trial. The high efficiency of work not only reflects that the judges are extremely hardworking but also demonstrates the merits of a centralized court system for IP litigations.

Before the establishment of the IP court, it was common for an IP case to spend at least 2 years pending with a court, especially for a patent dispute. Under the old dual system, a civil court must suspend the adjudication until the Taiwan Intellectual Property Office (TIPO) makes an invalidation decision for the patent at issue. And in case the parties appeal from the TIPO’s invalidation decision to the administrative court, the civil case pending at the court will need to stay until the final decision is rendered. As such it surprises no one that a patent action could finally be terminated at its 5th year or even longer. Pursuant to the IP Case Adjudication Act, the IP court has the authority to decide whether an IP right shall be revoked based on the merit of the case and therefore other applicable laws concerning the stay of an action no longer apply. Such a change at the new court apparently accelerated the adjudication of an IP action. Although the court’s opinion on the validity of an IP right enjoys no binding effect in other court actions or invalidation actions initiated before the TIPO, parties in the following actions nevertheless would cite it as an important reference.

In addition to the revocation power over IP rights, the introduction of TEOs also contributes to the efficiency of the new court. In the first 6 months of the IP court, it is said that the TEOs had been appointed to assist judges in 136 cases. The role of a TEO is to collect, ascertain and analyze technical information, as well as to provide technical opinions to the judge. While the TEOs are obligated to be involved in the litigation procedure, their job is to organize and highlight the key issues between parties based on their professional knowledge, make inquires to the parties or their attorneys, witnesses and technical experts, provide professional references and explain technical terms to the judge. However, TEOs do not accept any inquires from parties; parties are not allowed to cite the TEOs’ opinion as one’s evidence but need to produce their own supporting evidence. In a patent litigation, it is inevitable that parties at issue would provide their respective technical appraisal report that supports its own merit. As a result, courts in the past need to seek the third opinion from other impartial technical experts, which obviously is very time consuming. The IP Court solves this problem by the institution of TEOs that was borrowed and modeled from Japan and Korea IP Court System, which had also raised some public concerns, doubting whether a TEO will be “a judge’s judge”. Such concern may be observed continuously, but from many local trial lawyers’ experiences, the TEOs actively involved in the litigation have proved to give a lot of help that enable the court to boost up the quality of its judgment and also speed up its adjudication.

With respect to the work efficiency of the IP Court, it has to mention that both parties have to comply with the “adjudication project” requested by the court. The “adjudication project” is a measure to systemize a party’s cause of action, claims, proof of rights, evidential materials, defenses, citations and power point brief for relevant technologies. Parties are requested to do their own project before the hearing, and then at the first preparation hearing, the court will help the parties to make a complete adjudication project which includes the parties’ disputable and non-disputable issues and the appointed dates for hearings at each stage, based upon which the court will proceed to adjudicate a case. While the court moves fast according to the schedule, it inevitably brings high stress to parties in preparing their argument and defense with the time pressure. The court’s innovative administration in organizing parties’ documentation and arguments provides a revolutionary example to the traditional court trial system.

According to § 8 of the IP Case Adjudication Act, an IP judge shall provide his/her legal opinions and disclose conviction. The essential purpose of this rule is to reduce the chance of a party being ambushed by an unexpected judgment due to not knowing to what extent that a judge has acquired a professional knowledge and by what position that a judge will stand when applying such a knowledge to his/her judgment. In order to accord parties an opportunity to present their arguments regarding the judge’s opinion on a special knowledge, the law requires the Presiding judge or the Commissioned judge to express their initial understanding toward a professional knowledge that may be adopted as a ground for judgment, and afford an opportunity for parties to argue. To avoid meaningless back and forth debates due to parties’ disturbance, the Adjudication Act initiates a leading example for litigation by stipulating that a judge shall straightforwardly “direct the parties to issues concerning the legal relations of the disputed matters, and shall, whenever appropriate, provide his/her legal opinions and disclose conviction.” Under this leading litigating rule, no guess or suspicion is needed and the court’s adjudicative process becomes more transparent and easily understood. Certainly this has saved a great deal of time in the litigation procedure.

Overall, we are glad to see that the IP Court has become Taiwan’s first special court that brings efficiency, quality and professionalism to IP litigations. According to China Supreme People’s Court’s recent “Supplementary Regulations on the People’s Courts’ Recognition of Civil Judgments Made by Courts of Taiwan,” Taiwan civil court’s decision may be enforced under some circumstances after being recognized by the People’s Court in Mainland China. In view of that more and more IP actions may need to be enforced in the Mainland China, Taiwan’s IP Court may provide even a better choice of forum to litigate in Greater China.