Taiwan Patent Act of 2021 Unveiled

As Taiwan enters 2021, the Taiwan Intellectual Property Office (TIPO) announced an initiative to amend the Patent Act on December 30, just two days prior to the end of 2020. TIPO brought up a planned overhaul of the patent system which will alter the content of roughly 50% of the Patent Act as it is currently construed, adding 30 articles, amending the wording of 33 articles and deleting 10 articles. The revisions draw inspiration from concepts found in the U.S., Japan, and Germany. The amendments constitute the most extensive revision of the Patent Act since 2012.

Establishment of a new division within TIPO

The most noticeable change brought by the amendment to the Patent Act is the creation of the tentatively-named Patent Review and Dispute Adjudication Board (PRDAB), the inspiration of which was taken from members of the IP5[1]. As its name suggests, regarding patent review, PRDAB will deal with primarily the second reviews of TIPO’s decisions of (1) the first examination, (2) patent term extension for pharmaceutical products and agricultural chemicals, (3) post-grant amendments, and (4) other applications and procedural matters. As for dispute adjudication, PRDAB will be vested with jurisdiction over the decisions of (1) patent invalidation and (2) cancellation of patent term extension. (Art. 66-1)

Along with the organizational transformation brought by these changes, the current “re-examination” dealing with second review of the first examination will be abolished and be replaced by the aforementioned new patent review procedure handled by PRDAB. (Art. 66-1) PRDAB may carry out other searches and hence possibly raise new objections which were absent from the decision in first examination.

Under the amendments, divisional practice will be imposed with more restrictions, giving the applicant a narrower window of time to file for a divisional application. The former language of the Patent Act entailed that divisional applications were permitted all the way from first examination until the decision of re-examination, within three months from the allowance of first examination or re-examination. That is, a divisional was permitted so long as an application was pending in TIPO, assuming that other requirements were met. According to the amendment, however, a case of patent review by its nature is an appeal, or a remedial phase, despite the fact that pro forma it still remains in PRDAB of -TIPO. Such a case entering the PRDAB phase is considered to have exited pendency and hence a division is no longer available. (Art. 34)

TIPO’s rationale behind restricting divisions has attracted criticism. Firstly, at least in JPO and CNIPA, there remains a chance for division after a case is rejected from the first examination. While the new PRDAB is modeled after peer offices which do allow for less restricted division, PRDAB does not. Secondly, divisional applications are no longer permitted when a rejected case exits pendency from TIPO and then proceeds to the next stage of remedy (“administrative appeal” by the Ministry of Economic Affair which is explained in latter paragraphs), because logically TIPO has no control of the case anymore. But now the next stage of remedy following the first examination remains inside PRDAB under TIPO, therefore it seems unreasonable to refuse divisions.

Procedural Rules in PRDAB

        PRDAB will manage each case by a panel of 3 or 5 members, one of whom will, tentatively devised, preside and be served by a senior examiner or divisional chief. (Art. 66-2) Under the PRDAB regime, there will also be new procedural measures such as oral debates, a preparation stage, procedural schedule planning, timely advice of interim opinion by the panel during a review, interim (interlocutory) decision, and pre- notification to close the review.

A patent review case will proceed as documentary examination by default, and the oral debate will be available by request or under PRDAB’s discretion. Conversely, a dispute adjudication case will be conducted as an oral proceeding by default, while examination in documents is still only possible upon two adversary parties’ mutual consents or by order of PRDAB.

“Procedural schedule” in dispute adjudication cases is a new system transplanted from the judicial courts. Under the current regime, the timeframe within which the patent challenger or the patentee can take a specific offensive activities or defensive counter-activities during an invalidation action is explicitly stipulated. However, the amendments remove the rigid timeframes. Instead, before a proceeding begins, PRDAB will plan a procedural schedule which will at least include (1) a set period of time to collect the facts, evidence, and disputable issues as well as (2) the prospective time to conclude the oral debates. (Art. 74-2) A procedural schedule will have flexibility to adjust the time of a particular stage on a case-by-case basis.

        In both review and dispute cases, a third party whose interest in law is aligned with either party,  may either request or be ordered to participate as an intervener for aiding in procedural challenges and defense. (Art. 66-4) PRDAB’s decision concluding a proceeding also binds the intervener. An assignee in a patent review case or an exclusive licensee in a dispute case which falls under the category of” third party” insofar as that party has a legal interest which is aligned with a party in the proceeding.

Similar to the current counterpart regimes in China, Japan, and Korea, before the panel review of a patent review case, there is a pre-review stage which is presided by the examiner responsible for the case in the first examination and may decide to proceed to grant if amendment(s) to the rejected application are admissible without referring to the panel. (Art. 66-9)

Legal remedies beyond TIPO

Under the amendments, in instances in which a party is not satisfied with the decision made by PRDAB, that party may directly file a lawsuit to the Intellectual Property and Commercial Court (IPCC),[2] whereupon the current administrative appeal in the Ministry of Economic Affairs will be cancelled.

Furthermore, a lawsuit against the PRDAB decision brought into the IPCC will be conducted in accordance with civil litigation procedures rather than administrative litigation procedures. This entails that an administrative remedy is no longer available for patent related disputes.

A notable change in the area of evidence submission is that evidence not previously submitted to PRDAB can no longer be presented to the IPCC. This rule enables PRDAB to become a quasi-first instance trial court and also upholds the doctrine of equality of arms.

Resolution for patent ownership disputes

Under the current regime, a dispute regarding the determination of a real/lawful owner of a patent can be resolved in two ways, either (1) by resorting to invalidation by TIPO or (2) by seeking civil litigation in the court. TIPO is limited intrinsically in its ability to investigate true ownership of an intangible right, while conversely the courts are regarded as a better venue to do this. Under the draft amendments, it will no longer be possible to invalidate a patent held by an unlawful holder via TIPO. Going forward, patent ownership disputes will be resolved only by the judicial courts in the future.

While some practitioners question this change, they by and large agree with TIPO’s rationale. By taking the current route of invalidation at TIPO, the true owner, after the disputed patent is announced invalid, is entitled to re-apply the same subject matter while keeping the original filing date as it was. It means that the true owner has a chance to make desired modifications to the application, assuming that there can be found support in the disclosure. However, the draft amendments have rendered the judicial system being the sole forum for the resolving the ownership dispute. The courts lack TIPO’s power to alter the scope of a patent, which means that no further changes can be made to the patent even if a party regains patent rights after being determined the true owner of a patent.

Grace period of design to be extended to 12 months

The exemption from loss of novelty and creativeness of a design application will be 12 months from any intentional or unintentional disclosure, which is identical to the regimes in the U.S., the E.U., Japan, and Korea, as opposed to six (6) months under the current Patent law regime.