Legal

An Update on the Pros and Cons of Taiwan IP Court Practice

On October 2, 2009, the Taiwan Intellectual Property Court (hereinafter “IP Court” or the “Court”) held a roundtable discussion to hear public suggestions and opinions with regard to the Court’s practice after a year’s operation. Participants were mainly invited from lawyers and patent attorneys of Asian Patent Attorneys Association Recognized Group of Taiwan (hereinafter “APAA Taiwan Group” or the “Group”), IP Committee of Taiwan Bar Association (hereinafter “TBA”) and distinguished IP firms in Taiwan. Our partners, Candy Chen and Victor Lee were invited to participate on behalf of APAA Taiwan Group and Taiwan Intellectual Property Office (hereinafter “TIPO”) respectively.

The roundtable aimed at providing a platform for open discussion between IP Court Judges and practicing IP professionals, in the hope that the public’s voice can be heard and the Court can pace itself according to the public’s need.

1. Controversy of High-Speed Adjudication
The first disputed issue brought to discussion is the high-speed adjudication of the Court.

IP Court has jurisdiction over appeals from TIPO, appeals of the district court from criminal cases arising under IP laws, and over all first instance and second instance civil litigation related to IP laws. From July 2008 to June 2009, there were totally 1,480 cases lodged with the Court, where 1025 cases were closed; the overall closing rate came to 69.26%. By a detailed analysis, the Court closed 303 civil cases among the 414 cases lodged at the first-instance, while at their second-instance 150 civil cases terminated among the total number 233 appealed from the first instance. The closing rate for civil cases at the first instance was 73.19% and it still had 64.38% high at the second instance. Among all kinds of litigations, the highest closing rate, 75.14% was contributed by criminal court, where 275 out of 366 criminal cases were terminated in a year. As to the administrative cases appealed to the Court, they also enjoyed a 63.6% closing rate from 467 cases lodged. Looking back on the first year of the IP Court, the new Court attracts praises on its high efficiency from the impressive closing rates shown above. However, relevant publics including trial lawyers, patent attorneys and parties involved in the litigation have different feelings about pros and cons of the high-speed case adjudication.

It is a general impression that the Court overweighs its efficiency performance. Parties and litigating lawyers had experienced that Judges would enjoin parties to file written briefs and motions within a relatively short period of time, or refuse parties’ requests to provide their own expert witness, or restrict the time for attorney’s oral arguments and parties’ oral statements. Moreover, it is likely that the Court has developed its own opinions or conviction before the preparatory procedure of a lawsuit begins, which would undoubtedly affect the fairness of a judgment and harm the parties’ interest to litigate their cases. The APAA Taiwan Group points out several issues from the perspective of patent litigations, and proposes the following:

(1) With regard to the current short responding time (such as 10 days) given by the Court, it is proposed that in a patent litigation case the Court should grant at least 30 days for parties’ first time response especially when a foreign party is involved in the case.

(2) According to the Court’s practice, parties are requested to organize their disputed issues while making their own adjudicative project. However, it is questionable as to whether parties are not allowed to supplement additional disputed issues after the entire adjudicative project is complete. The Group suggests the Court to put off organizing disputed issues until the end of oral statements in the preparatory procedure.

(3) For patent cases relating to high technology or new invention, the Group prays that parties may be allowed to either individually or jointly appoint expert witnesses to testify before the Court. The Group also prays that the Court may adjust its adjudicative timeline to allow parties more time to litigate.

(4) For cases involving validity issues, the Group prays that the Court can grant both parties sufficient time to conduct prior art searches, and to have thorough debate in all issues before the Court.

In responding to the Group’s opinion and proposal, the Court had promised to prolong the 10-day responding period to 30 days. The Court also showed their acquiescence to expert witnesses retained by parties, in case it is needed in a sophisticated case. Moreover, the Court clarified that parties are able to supplement disputed issues even after the submission of their respective adjudicative project. The compilation of the disputed issues is for the purpose of “getting to the point” at the initial stage. In the future the Judge will also expressively indicate the closing time of preparatory procedure, and will urge the parties to submit their further issues, if any, to supplement and complete the final adjudicative project.

2. Invisible Impact of TEO
The second issue that was brought to discussion in the roundtable is the role of the technical examination officer (hereinafter “TEO”). Based on the IP Case Adjudication Act, the role of a TEO is an assistant to Judge, whose technical opinions related to a case are merely provided for the Judge’s reference and such opinions are not disclosed to the public. Therefore, a TEO is commonly regarded as a “technical interpreter” of the IP Court. However, parties have no access to a TEO’s written opinions in order to supplement relevant arguments to the Court. It is therefore highly concerned that the parties’ interests would be harmed if a Judge merely relies on a TEO’s unilateral opinion to make his or her judgment on a critical technical issue, and that the parties’ arguments would not be fairly treated without an opportunity to comprehend the TEO’s opinion.

Further, the IP Case Adjudication Act (hereinafter “Adjudication Act) stipulates that a TEO is obligated to attend the hearing on the Judge’s request. However, due to the common conflict of hearings, a TEO can hardly attend all hearings relating to technical issues of a case. As such, a party at the hearing may lose his opportunity to explain technical issues to the TEO. In addition, parties are also concerned that TEOs may not fully acknowledge the technology involved in a case. Therefore, the APAA Taiwan Group prays that the Court could consider the necessity of the presence of parties’ own expert witnesses, lest the TEO’s advice would be the only resource for determining a technical issue.

The Court assured that the technical advice of a TEO is merely a part of the references and indicated that most of the time, on the same issue, judges have their own opinions opposite to a TEO’s. In the future judges will be willing to disclose their conviction as an opportunity for parties to present their further arguments; however, the Court still tends to non-disclosure of the TEO’s written advice.

3. Peer-Review on the Appellate Level
The third disputed issue of the IP Court is that judges hear and adjudicate cases at the first instance also conduct the appellate review at the second instance for civil matters. Currently the Court is equipped with nine judges; except the Chief Judge of the IP Court, 8 judges not only preside at the first instance, but also serve as judges of the appellate level. They sit on the appellate level for a peer-review on their colleague’s judgment that is appealed to the second instance. The Court’s review practice on the appellate level attracts public critics; as such practice could not even avoid the reasonable doubt of conflict of interest between judges, let alone the credible decision that the appellate review would make. As such, it is likely that the peer-review may materially deprive parties’ interest of a fair trial on the appellate level. Comparing with similar mechanism in Japan and the U.S. Federal Circuit, there is no such practice that the same group of judges that sit for the first instance may also conduct review at the appellate level.

The TBA urged the Court to consider (1) increasing judges of the IP Court, which makes no overlapping personnel for the first and second instances; or (2) keeping the IP Court at the appellate level while establishing local special courts to deal with the first instance adjudication in the IP cases.

However, under the limits of the relevant laws, the Court itself is vested no right to reform such a peer-review practice. Further reform with regard to the Court’s staffing and organization will need the effort and approval of the judicial branch of this country.

4. Infringement or Invalidity
Article 16 of the Adjudication Act stipulates that “when a party claims or defends that an intellectual property right shall be cancelled or revoked, the court shall decide based on the merit of the case, and the Code of Civil Procedure, Code of Administrative Litigation Procedure, Trademark Act, Patent Act, Species of Plants and Seedling Act, or other applicable laws concerning the stay of an action shall not apply.” Accordingly, the Court is vested the right to invalidate patents while adjudicating an IP infringement case. However, for the issues of “infringement” and “invalidity,” there is no detailed stipulation as to which issue enjoys the priority for the Court’s adjudication. Under current practice, validity issue is to be determined first. While at the first instance when a patent is found invalid, no judgment for the next infringement issue will be entered. But when the case is appealed to the appellate level and the appellate court overrules the lower court’s decision, it may make a judgment of “patent valid” and sustain an infringement for the case. As a result, judgment for infringement that should be reviewed by both instances of the Court goes through one review –appellate review – only.

The Court in response explained that, from experiences accumulated in the past year, most of the patent infringement cases are found obviously non-infringing. In view of this finding, judges exercise a flexible adjudication over the issues of “infringement” and “validity.” In case it is a straightforward non-infringing case, the Court will not consider the validity of a patent at issue. Only when the finding shows a likelihood of infringement will the Court deal with the “validity” issue before determining infringement.

5. Rarely Granted Motion for Preliminary Injunction
Under the Adjudication Act, a motion for preliminary injunction is designed to prevent abuse of right and is deemed a reform to previous law in which motion could be granted merely by posting a sufficient bond. Therefore, the current law requires a party who files a motion for preliminary injunction shall “provide a preliminary showing proving it is necessary to prevent material harm or imminent danger or other similar circumstances with regard to the legal relation in dispute.” However, in practice, such a high bar for the grant of a motion deters the Court from quick decision, as it would take months to consider the issue of validity of the patent right, issue of infringement or not, and to balance the interests of both parties. In view that it is nearly impossible to determine the validity of a right without a regular case adjudication procedure, judges tend to dismiss the motion rather than grant of which.

To resolve the dilemma of time efficiency and prudence of grant on a motion for preliminary injunction, the TBA suggests an amendment to the Implementing Rules.

Since most of the issues need to be resolved by law amendments, the impact of the roundtable discussion to the Court’s current practice remains to be seen. Despite of the many controversies, we are still glad to see that IP Court has infused Taiwan’s IP litigation with an energetic spirit.