The purpose of the patent system is to encourage and protect the use of inventions in ways that facilitate industry development.  However, for patents involving pharmaceuticals, agrichemicals, or manufacturing processes thereof, approval from the central authority is necessary for the utilization of such invention patents in order to ensure the safety and effectiveness of pharmaceuticals or agrichemicals.  As a result, there is often a significant gap between the time the patent is approved and the time the product is launched for sale.  To compensate patent owners for the period of time they spend on acquiring such approvals, during which they are unable to utilize/manipulate their inventions, an extension system was introduced under the Patent Act in 1994.  Later, the Intellectual Property Court gave clear explanations on “the period of time patent owners spend on acquiring approval, during which they are unable to make use of their inventions” in judgments No. 102-Min-Zhuan-Su-43 dated November 18, 2015, and No. 102-Min-Zhuan-Su-42 dated December 31, 2015.

In the above cases, the plaintiff was a pharmaceutical patent holder, who sued against a generic drug producer and its distributors for the infringement of the plaintiff’s patent (referred to as the “Disputed Patent” below).  The plaintiff claimed for an injunction to prevent the defenses from exploiting the Disputed Patent, and claimed compensation for the infringement and associated damages. The defendants argued that the administrative decision made by the Intellectual Property Office (TIPO), Ministry of Economic Affairs, on June 26, 2003, to extend the Disputed Patent, was in violation of the Patent Act at that time, in addition to the invalidity arguments. In other words, the defendants argued that the Disputed Patent should have expired, and requested that the Court dismiss the plaintiff’s claim for injunction.

According to the administrative decision made by TIPO, the length of extension granted for the Disputed Patent included: (1) The period for conducting the domestic clinical trial; (2) The period for applying for a Taiwan registration of the drug; (3) The period for conducting the clinical trials in the manufacturing country (Australia); and (4) The period for applying for the registration in the manufacturing country (Australia).

With regard to (1), the period for conducting the domestic clinical trial, both the plaintiff and TIPO opined that the period should begin “from the day the plaintiff submitted its clinical trial program to the Taiwan Food and Drug Administration (TFDA)” until “the day TFDA approved the clinical trial report, as shown on the approval letter.”  After reviewing the relevant facts and the context of "Regulations for Ratifying Extension of Patent Term" and "Guidelines for Reviewing Extension of Patent Term" at that time, the Court held that the period for conducting the domestic clinical trial should begin “from the commencement date of the domestic clinical trial” until the day TFDA approved the clinical trial report, as shown on the approval letter.  This duration should not include the time spent on administrative procedures (i.e. application for TFDA's consent on the clinical trial program).  Hence, the period for “conducting the domestic clinical trial” that TIPO had previously recognized should have been reduced.

With regard to (2), the period for applying for Taiwan registration of the drug, both parties agreed that the period should begin “from the day the application is submitted” until “the day the registration is actually awarded.”

With regard to (3), period for conducting the clinical trials in the manufacturing country (Australia), the plaintiff argued that the duration should begin “from the day the clinical trial is proposed” until “the day TFDA approved the clinical trial report.”  However, the Court held that, being an exceptional rule, the extension should be interpreted on a more stringent basis.  According to the context of "Regulations for Ratifying Extension of Patent Term" at that time, the Court opined that this period should begin from the actual commencement date of the clinical trial until the completion date of the clinical trial.  Neither the application period for the clinical trial nor the period for reporting the trial result to TFDA can be included.  Hence, the period for “conducting the clinical trials in the manufacturing country (Australia)” that TIPO had previously recognized should have been reduced.  In addition, the Disputed Patent actually underwent two separate stages of the clinical trials at the foreign country (Australia), and the Court held that, as far as patent extension is concerned, “only clinical trials that are critical to licensing at the manufacturing country should be taken into consideration.”  The second stage of the plaintiff’s clinical trial began after the launch of the drug in Australia, and thus the extension for such period should not be granted.

With regard to (4), the period for applying for registration in the manufacturing country (Australia), the Court considered that this duration is entirely inadmissible for extension purposes, because the "Regulations for Ratifying Extension of Patent Term" did not consider “the period for applying for registration in a foreign country” as grounds for extension.

To sum up, the Court only recognized “a reduced period for conducting the domestic clinical trial,” “period for applying for Taiwan registration of the drug,” and “a reduced period for conducting the clinical trials in the manufacturing country (Australia)” as grounds for an extension.  After removing overlaps, extension of the Disputed Patent was recalculated to expire on May 13, 2014, and thus the Court dismissed the plaintiff’s claim for injunction.

The Intellectual Property Court had adopted a more stringent approach when recognizing “the period for conducting the clinical trial in a foreign country.”  Although this interpretation was consistent with the existing "Guidelines for Reviewing Extension of Patent Term," it somewhat contradicted the practices that TIPO was accustomed to at the time when the Disputed Patent was granted its extension.  It remains to be seen whether these judgments will affect the future judicial reviews on patent extensions approved before the existing laws came into effect.