Amendments to Taiwan’s IP Laws Were Passed on April 15, 2022

On April 15, 2022, Taiwan’s Congress passed the amendments to the Patent Law, Trademark Law, and Copyright Law. The amendments were drafted by the Ministry of Economic Affairs. The implementation dates of the amendments are yet to be decided by the Government. 

The main points of the Amendment are summarized as follows.

I. Amendment to the Patent Law

The amendment is aimed at rounding off Taiwan’s patent linkage system which was implemented from August 20, 2019 (see our news alerts here.)

Under Taiwan’s patent linkage system which is set forth in Rules 48-3 to Rules 48-22 of the Pharmaceutical Affairs Act, a patentee (or an exclusive licensee) of a patent for a new drug can prevent the Taiwan FDA (TFDA) from issuing a drug approval of an equivalent generic drug for a period of up to 12 months, if:

(1) information relating to the patent has been listed in an information communication system run by the Taiwan FDA; and

(2) the patentee (or the exclusive licensee) has filed an infringement lawsuit (a “Rule 48-13 lawsuit”) within 45 days after receipt of a mandatory notification from the generic drug applicant that it has duly declared with the TFDA that it believes the patent is either invalid or not infringed.

However, the Pharmaceutical Affairs Act does not clarify the nature and scope of remedies available in a Rule 48-13 lawsuit, since this part is deemed to fall within the realm of the Patent Act.  Neither does the Pharmaceutical Affairs Act address whether the patent linkage system accords any proactive remedies to a generic drug company when the patentee does not take any legal action within the said 45-day period but is likely to launch a surprise attack after the generic drug is circulated on the market.

In the amendment, a new article (Article 60-1) is inserted into the Patent Law to solve these questions. Its key points are as follows:

  • The remedies available for a patentee (or an exclusive licensee) in an infringement litigation filed after receipt of a generic drug applicant’s “invalidity/non-infringement” notice are injunctive relieves, namely, court decrees ordering a defendant generic drug company or distributor to “stop infringement or prevent infringement from taking place.”
  • According to TIPO’s Explanatory Notes issued along with the draft amendment, such a lawsuit can be filed in reliance upon a patent listed in the information communication system along with a non-listed patent. Listable patents include invention patents for compounds, compositions or formulations, as well as medical uses, while method patents are not listable.
  • In a case where the patentee (or the exclusive licensee) does not file a Rule 48-13 suit within the 45-day period, the applicant for the generic drug approval is allowed to file a declaratory judgment (DJ) lawsuit for non-infringement.
  • According to TIPO’s Explanatory Notes, such a DJ action can be filed (1) against any listed patent for the new drug; or (2) against a listed patent along with a non-listed but related patent, e.g. a patent on the method of manufacturing the drug.  In a case where multiple patents are listed for a new drug and only some of the listed patents (or patent claims) are asserted in the lawsuit filed by the patentee, the DJ action can be filed against the other listed patents (or patent claims).

The first part of Article 60-1 is not entirely new.  As we reported at the end of 2020, in its first decision on a Rule 48-13 lawsuit, the IP & Commercial Court held that preemptive injunctions are allowable in a Rule 48-13 lawsuit upon a showing of necessity based upon known risks—even if no actual infringement has occurred.

II. Amendment to the Trademark Law

The amendments to the Trademark Law are basically for the purpose of meeting the standards of the “Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP)” which Taiwan applied to join in September 2021.

The main features of the amendments include:

  1. The mental element of “knowingly” currently requisite for civil liability for manufacturing, selling, holding, displaying, importing, or exporting a counterfeiting trademark label is now deleted.

In other words, the above-listed infringing activities are now joining other comparable types of trademark infringements to become subject to the same mental element test of “willfulness or negligence” as stipulated in the Civil Code.

  1. Likewise, the mental element of “knowingly” currently applying to criminal liability for manufacturing, selling, holding, displaying, importing, or exporting trademark counterfeits or counterfeiting certificate mark labels is substituted with a “willfulness test”.
  1. Further, two more types of trademark infringements become criminally liable: (1) manufacturing, selling, holding, displaying, importing, or exporting counterfeiting trademark or collective trademark labels, and (2) manufacturing, selling, holding, displaying, importing, or exporting counterfeiting trademark, collective trademark or certificate mark labels conducted through electronic media or the Internet.

III. Amendment to the Copyright Law: Combating Digital Piracy

Under the pre-amended Copyright Law (which is still in force at this moment), except for optical disk piracy, copyright infringements are indictable only upon complaint.  Therefore, unless a criminal complaint has been timely filed, most types of copyright infringements are not subject to criminal investigation, let alone indictment, court trial or punishment.  At the same time of giving copyright owners in these offenses (“IUC offenses” for short) the right to start a criminal proceeding, the law also gives them the right to end it: complaints against IUC offenses can be withdrawn by the end of trial at the first instance and hence terminate the entire proceeding.  As such, withdrawal of complaint is often used by copyright owners as a bargain chip in negotiations with infringers in cases other than optical disk piracy.

However, copyright owners may be going to lose quite a bit of this bargain chip.  To give anti-counterfeiting forces more power to combat digital piracy and to meet the CPTPP standards, the amendment now redefines the scope of non-IUC copyright offenses as follows:

  • A copyright infringement constitutes a non-IUC offense if:-

(1) The infringed work is provided [by the copyright owner] for a fee;

(2) The infringement involves exploitation of the entirety of the infringed work in its original form;

(3) The infringement brings about NT$ 1 million or more damage to the copyright owner; and

(4) The infringement must at the same time constitute one of the following three offenses

(a) Reproducing a copyrighted work into a digital copy without authorization for the purpose of sale or rent;

(b) Distributing or, with the intent to distribute, publicly displaying or possessing a digital infringing copy with the knowledge that it is an infringing copy; and

(c) Publicly transmitting a copyrighted work without authorization.

Practically speaking, the redefined non-IUC offenses are to cover most types of copyright infringements in the cyberspace as long as the NT$1 million damage threshold is met.

An optical disk piracy act will still constitute a non-IUC offense if it meets the above requirements, although fewer and fewer optical disks piracy acts nowadays are caught with NT$1 million or more damage.  According to the Explanatory Notes of the Ministry of Economic Affairs, this ease of sanction on optical disk piracy is due to the fact that optical disks are no longer a major digital information carrier.

Being a non-IUC offense, a copyright infringement will be subject to investigation, indictment, trial and punishment even if there is no complaint being filed, and withdrawal of complaint cannot terminate the proceeding.

However, when we consider the $1 million damage threshold tied to the definition of non-IUC offense, uncertainties arise. Copyright owners rarely know how much damage they have suffered at the time of filing of complaints. In fact, they often rely on the prosecutor’s investigation to obtain evidence for calculation of damage. This makes it difficult to determine or predict whether a copyright infringement falls within the non-IUC category at the time of filing of a complaint.

Nevertheless, the question of how much damage the infringement has brought about at least partially depends on the copyright owner’s willingness as well as ability to prove the damage. In this context, it is arguable that, in some cases, using withdrawal of complaint as a bargain chip in a copyright case might still be a possible option.