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News - 10 June 2019

With respect to whether the exercise of patent rights constitutes abuse of rights or unfair competition, an express standard is still lacking in practice. On January 21, 2019, Intellectual Property Court rendered a civil judgment 106-Min-Zhuan-Shang-Zi No. 16 where an accused .  infringer (Company A) sued a patentee (Company B) for abusing of right and unfair competition by maliciously using the patent infringement claim to seek a provisional attachment, resulting in the closing of Company A's business.

The court of first instance of this case (Taiwan Shilin District Court civil judgment 96-Zhi-Zi No. 18) dismissed Company A's allegation. However, the aforementioned Intellectual Property Court's judgment of second instance revoked the judgment of the first instance. In which, the court deemed that Company B engaged in patent rights abuse and unfair competition mainly based on the following reasons:

1. The technical features of the invention patent owned by Company B (hereinafter "Disputed Patent") mainly involve imitating a specific model to prevent interruption of peripheral data flow when a switch switches a peripheral to connect with a different computer system. However, the accused infringing product of Company A (hereinafter "Accused Product") did not have such imitation capability, and when the switch switches, the peripheral data flow would also be interrupted. This is something a person having ordinary skill in the art can confirm from the user's manual of the product. As such, the conclusion in the Examination Report X attached to Company B's application of provisional attachment which stated that the Accused Product infringed upon the Disputed Patent was obviously false.

2. When Company B filed the patent infringement lawsuit, it attached Examination Report Y. However, Examination Reports X and Y had the exact same typos and electric diagram errors. It is impossible that Company B did not know of the defects in the Examination Reports. Hence, Company B's submission of a false Examination Report X to defraud the court in its application for a provisional attachment was obviously for the purpose of restraining competition.  Company B shall be liable for intentional act or gross negligence of infringement. 

3. The priority date of the Disputed Patent is November 9, 2001. However, when Companies A and B both attended an exhibition in June 2001, Company A was already selling the Accused Product. Also, an archive of Company A's official webpage showed that the Accused Product had been sold prior to the Disputed Patent's priority date. When Company B applied for the provisional attachment on July 13, 2005, it also enclosed the aforesaid official webpage as an exhibit. Therefore, it is apparent that Company B knew that the Accused Product was not within the scope of the Disputed Patent. In this connection, Company B's application for a provisional attachment was an intentional or gross negligence act that infringes upon the right of Company A.

4. Based on the foregoing, the court also deemed that Company B in fact engaged in unfair competition.

Since Company B's act had infringed upon the right of Company A, and the value of the objects attached in the provisional attachment was over 69 million NTD, which had become worthless over the years, the court held that such value was the damage to Company A. Hence the court granted Company A’s damage claim of 30 million NTD. If this case were to be appealed, it is worth noting whether the Taiwan Supreme Court will uphold the aforementioned opinions.

 

(Author: Tim Tsai)


Lipu Lee

Lipu Lee

Firm: Formosan Brothers Attorneys-at-Law
Country: Taiwan

Practice Area: Cross-Border