TIPS^®  Taiwan Intellectual Property Special

China Updates

EU Report Concerning Philips Compulsory Licensing Could be Adverse to Taiwan

Taiwan Intellectual Property Office (TIPO) in July 2004 granted permit to the applications of CD-R manufacturer GIGASTORAGE for Philips CD-R compulsory licensing and Philips took appeal immediately. In June 2006, the Committee of Administrative Appeal (CAA) under Ministry of Economic Affairs (MOEA) maintained the compulsory licensing. Philips deemed that it violated TRIPs, trade related agreement of WTO, thus in January 2007 Philips submitted an official complaint to the EU and requested Taiwan Intellectual Property Office’s abolishment of the compulsory licensing. In March 2007, the TIPO held the first hearing but scheduled a second review on April 25 due to insufficient proof of both parties. Unexpectedly, on April 23, GIGASTORAGE indicated that from May its production base would be relocated in Thailand and would not produce CD-R in Taiwan, so it would not use the patent of Philips any more and applied for revocation of the compulsory licensing from May. Philips deemed that the compulsory licensing should not be granted from the very beginning. In response to the above differences, the EU officials arrived in Taiwan to investigate this case on May 15 to clarify whether there were violations of TRIPs agreement.

After several months of investigation, EU officials’ Trade Barriers Provisions investigation report would be released in early October. It was understood that the EU was concerned that a high-tech compulsory licensing precedent would bring Chinese and other countries’ follow-up threats to disintegrate the IPR trade protection mechanism, so it is very likely to be unfavorable to Taiwan's decision and to submit the case to the WTO dispute settlement mechanism for clarification.

For the EU's attitude, the TIPO deputy director Wang Meihua indicated that the authority had followed progress of the compulsory licensing case through the Belgium representative office, and the EU official was yet to determine and made a response of no comment. However, EU officials in Taiwan indicated that the dispute between Taiwan and the EU on high-tech patent compulsory licensing would ultimately and inevitably face the WTO dispute settlement mechanism inspection in order to establish a future transnational IPR protection and compulsory licensing standard. If the EU investigation report was adverse to Taiwan, Taiwan would conduct international trade litigation for the first time for intellectual property. But the trade litigation would not only be time-consuming but also demand hundreds of millions of transnational litigation costs.