TIPS^®  Taiwan Intellectual Property Special

Battle with Provisional Injunctions in Patent Litigation

After the recent Taiwan Patent Law Amendment totally removes criminal liabilities for patent infringement, provisional injunctions replace the police search and seizure under the Criminal Procedure Law to stop infringing activities. While provisional injunctions are usually used by the patent owners to prevent future infringement, parties whom are accused of infringing patents also use them to avoid unnecessary interruption of their business operation.

A request for a provisional injunction can be brought at any time of litigation, even before the litigation is brought. Like the preliminary injunction in the U.S. litigation, a bond is required for all the provisional remedies. In theory, the amount should be sufficient to compensate the accused for damages suffered if he/she is later found not infringing. Nevertheless, the patentee may not have the figures of the losses of the accused. Therefore, most of the time, the amount is determined by the information about the possible profits of patentee. Of course, the information is provided by the patentee, who is expected to figure out a lower number. However, the accused may challenge the amount by providing more evidence to prove his/her loss suffered by the injunctions exceeds the bond provided by the patentee. As the new Civil Procedure Law Amendment took effect on September 1, 2003, the proceeding to grant a provisional injunction shall never be ex parte. At lease a hearing should be held, offering the accused an opportunity to be heard. When a provisional injunction is granted by the district court, the accused has two ways to revoke the injunction. The accused may appeal to the high court. Alternatively, if the injunction sought can be determined by monetary amount, or the accused will suffer irreparable harm due to the injunction, the court may vacate the injunction after the accused provides a counter-bond. However, as long as the injunction is granted, it remains enforced until revoked by a final court decision.

From the viewpoint of the accused infringer, an injunction is likely to interrupt its business operation. As the product circle in the high-tech field is getting shorter and shorter, any interruption may result in loss of the market forever. To avoid unnecessary interruption, where a patent dispute may involve, the party who is accused of infringement may, usually after receiving a warning letter from the patent owner, request a provisional injunction to maintain its current status quo, i.e. continuing the accused activity, so-call “reverse provisional injunction.” Purpose of the reverse provisional injunction is to enjoin the patentee from interfering the activities at issue. The petitioner of the reverse provisional injunction, i.e. the accused infringer, shall also post a bond, at the amount equal to damages the patentee may suffer due to the injunction. As other provisional injunctions, a hearing should be held for arguments from both sides. While the reverse provisional injunction prevents the patentee from interfering the accused infringing activities, it does not prevent the patentee from suing the accused infringer. The patentee can always initiate a patent litigation before a court.

Although the reverse provisional injunctions are not always granted, they are clearly permissible. Because the stake of provisional injunctions is high in patent matters, more and more accused infringers actively invoke reverse provisional injunctions as soon as they become aware of the possibility of patent disputes. This practice undermines the function of the warning letter. In general, a patent owner sends a warning letter, hoping the accused infringer may cease the unlawful activity or start a negotiation of licensing or settlement. Now, a warning letter may trigger a reverse provisional injunction, which renders the patentee with no effective method to stop future infringement, and the patent owners shall take the downside into consideration before alerting suspicious infringers.