Supreme Court's Opinion on
Objective Criteria for Avoiding Hindsight

In a patent infringement case, when the defendant raises a defense of invalidity, the court will generally follow the same steps laid out in the Patent Examination Guidelines to determine whether the patent at issue involves an inventive step. These steps are as follows: (1) determining the scope of the patent at issue; (2) determining the contents disclosed in the relevant prior art; (3) determining the technical level of a person having ordinary skill in the art ("PHOSITA"); (4) determining the differences between the patent at issue and the contents disclosed in the relevant prior art; and (5) determining whether a PHOSITA can easily accomplish the patent at issue based on the contents disclosed in the relevant prior art and common general knowledge at filing. Therefore, the key point of the determination is "whether a PHOSITA can easily accomplish the patent at issue based on the knowledge available at filing."

In order to minimize any hindsight bias arising during the examination which may affect the assessment of an inventive step, it is important to interpret the uncertain legal concept of a PHOSITA. Accordingly, it is debatable whether the court should first define or explain the PHOSITA when the issue of invalidity is raised. The negative argument derived from some past practices holds that the PHOSITA is presented to some extent through the prior art revealed in the litigation process or in the process of assessing the inventive step, so there is no need to define it separately; the following case[1] illustrates the positive argument.

The appellant (the plaintiff in the first instance court and the appellant in the appeal court), whose patent right (TW I420783) was valid from Feb. 1, 2001 to Oct. 16, 2015, filed a patent infringement lawsuit at the time when the two-year statute of limitations for claiming damages for infringement was due to expire under Taiwan law. Although both the first instance court and the appellate court found that the patent at issue lacked an inventive step, the Supreme Court remanded the case to the appellate court with a different opinion.

Firstly, the Supreme Court held that the appellate court was in contravention of the laws and regulations because it ruled, without making reference to the specification, that the claims which the appellee intended to invalidate were not clearly and concisely disclosed, thereby rendering the inventions impossible or difficult to exploit.

Secondly, the application of the patent at issue was filed on Oct. 17, 1995, so the patentability should be determined objectively according to common general knowledge at filing. In the litigation process, the appellant had proposed that the interpretation of the terms of the patent at issue should be based on the opinions of general technicians in the relevant industry, so it was necessary to bring in as expert witnesses those who had possessed ordinary skill in the art for over 20 years in order to prove the technical level of a PHOSITA. However, the appellate court failed to show the grounds for the decision, and there was no explanation of a PHOSITA. Not only was there a contravention of the laws and regulations, there was also a failure to provide reasons in the judgment.

In addition, the appellant repeatedly stated that the patent rights were also granted in the United Kingdom, the United States, China and Japan more than 20 years ago, and many domestically listed companies are also involved in the licensing agreement, so the patent at issue solved some long-standing but unsolved problems and was commercially successful. It was in contravention of the laws and regulations, and there was a failure to provide reasons in the judgment of the appellate court. Accordingly, the Supreme Court opined that when conducting the determination of an inventive step, in order to avoid subjective determination (such as hindsight), the following factors may be taken into consideration: (1) the patent at issue fulfilled a long-standing need; (2) the patent at issue replaced the products of the prior art, thereby achieving commercial success; (3) concessions were made by licensees and competitors; (4) the invention was copied or praised by the infringer; and (5) there existed no nearly identical invention simultaneously.

In summary, the Supreme Court firstly indicated that if one of the parties raises a dispute over the PHOSITA, the court should justify the grounds for determining a PHOSITA or should state the reasons for not doing so. Also, "commercial success" was originally a supplementary judgment factor in the determination of an inventive step in the Patent Examination Guidelines, but the Supreme Court provided a new opinion on the specific judgment factors of commercial success, which seems to recognize the importance of commercial success for the determination of an inventive step. In other words, in order to minimize hindsight bias which may affect the assessment of an inventive step, the Supreme Court held that both PHOSITA and commercial success are key factors to be taken into consideration. However, it remains to be seen whether the court will follow this view and whether it will be an entry point for disputes between parties in future patent infringement litigations.