1. Inclusion of patent rights in border measures

Under Article 15 of the Customs Act, goods that infringe patent rights, trademark rights or copyrights shall not be imported. Articles 72 through 74 of the Trademark Law were amended in May 2003, and the customs also prescribed the Implementation Regulations for Customs to Detain Articles Infringing the Rights in the Trademark by the Customs pursuant to the mandate under Article 78. The Copyright Law was also amended in 2003 and 2004 with the addition and amendment of Article 90-1 and Article 90-2, which contain border measure provisions. The customs prescribed the Implementation Regulations for Suspension of Release of Goods Infringing on Copyright or Plate Rights by Customs Authorities to the mandate under Article 90-2.

When trademark rights and copyrights were included in the scope of border measures by which imported or exported infringing goods are detained and managed, only patent rights were not subject to any border measure and customs seizure requirements. To enhance patent rights protection and to provide comprehensive protection of intellectual property rights, the Patent Law (hereinafter, the "Law") was amended with the addition of Article 97-1 through Article 97-4 on January 22, 2014. On March 24, 2014, the Regulations Governing Customs Detaining Goods Suspected of Patent Infringement were formulated pursuant to the mandate under Article 97-4 of the Law to allow patentees to request the customs to detain infringing goods. It should be noted, however, that although import and export detentions are both stipulated under the Trademark Law and the Copyright Law, the amendment to the Patent Law only provides border measure protection against the importation of patent infringing goods and does not have any relevant provision regarding export. Therefore, patentees still cannot request for the detention of exported infringing goods.

2. Requirements and procedure for application for customs detention of patent infringing goods

The amendment and implementation rules basically set the requirements for detention request, repeal of detention and damages in reference to the structure of the Trademark Law, the Copyright Law, the Implementation Regulations for Customs to Detain Articles Infringing the Rights in the Trademark and the Implementation Regulations for Suspension of Release of Goods Infringing on Copyright or Plate Rights by Customs Authorities.

  1. Detention Request:

To enhance patent rights protection, Article 97-1 of the Law grants a patentee the right to suspect infringing imported goods with justified reasons and to request to the customs for detention before litigation. However, in consideration of the rights and interests of the party subject to the detention, Paragraph 2 of the same article also requires a patentee to state the facts of infringement in writing and provide a bond equivalent to the after-tax value of imported goods as assessed by the customs.

  1. Posting of a bond to repeal of detention:

Although the customs cannot determine substantive legal relationships to ascertain if the detained goods are infringing goods or if patents are valid due to time limitation at the time of detention, still if a detention is easily repealed to release goods, the party subject to the detention may engage in fraudulent conveyance or concealment of assets to prevent the rights holder from recovery. To strike a balance between the rights and interests of the requester and the party subject to a detention, Article 97-1, Paragraph 4 of the Law also allows the party subject to the detention to provide a counter bond equivalent to 200% of the bond to request the repealing of the customs detention and to release the goods.

  1. Other circumstances for repealing of detention:

In addition to the circumstance where the party subject to a detention may request to repeal the detention by providing a counter bond, Article 97-2, Paragraph 1, Subparagraphs 1 through 3 of the Law provide for the circumstances under which a detention may be repealed according to the outcome of the litigation between the requester and the party subject to the detention and require that the requester shall file a complaint and notify the customs to that effect within 12 days after the day the detention application is accepted (the customs may grant a 12-day extension if necessary). If the lawsuit filed by the requester is rejected by a final judgment of a court or if the detained goods are found in the court judgment to be non-infringing, the customs shall repeal the detention immediately. In addition, Article 97-2, Paragraph 1, Subparagraph 4 of the Law also allows the requester to request for detention repealing.

  1. Expense sharing and damages

The amendment also stipulates the assumption of damages and relevant expenses arising from a detention or detention repealing. If a court judgment finds the goods to be infringing, the party whose goods are detained shall assume the relevant expenses such as demurrage, warehouse charges, and terminal charges (see Article 97-1, Paragraph 6 of the Law). However, if an requester fails to file a complaint within the required period, if the lawsuit as filed is rejected in a final judgment, if a final court judgment finds the attached goods to be non-infringing or if an requester applies to repeal the detention, the above-mentioned relevant expenses such as demurrage, warehousing fees, and terminal charges shall be assumed by the requester (compare Article 97-2, Paragraph 4 of the Law).

Article 97-3, Paragraph 1 of the Law also specifically stipulates that if detained goods are found in a final court judgment to be non-infringing, the party subject to the detention may also seek damages arising from the detention or counter bond from the requester. Since the bond posted by a requester is primarily used to secure the damage of the party subject to the detention as arising from the detention or the provision of a counter bond, Article 97-3, Paragraph 2 of the Law also stipulates that the party subject to the detention shall have the same rights over the bond as a pledger. Therefore, the party subject to the detention can certainly recover from such bond.

3. Regulations Governing Customs Detaining Goods Suspected of Patent Infringement and the matters that shall be followed in the detention procedure

As previously stated, the amendment referenced the Trademark Law and the Copyright Law. Therefore, the Regulations Governing Customs Detaining Goods Suspected of Patent Infringement (hereinafter, the "Regulations") are similar to the Implementation Regulations for Customs to Detain Articles Infringing the Rights in the Trademark and the Implementation Regulations for Suspension of Release of Goods Infringing on Copyright or Plate Rights by Customs Authorities and set the requirements for the materials that shall be attached to the detention application (Article 2 of the Regulations), the posting of bonds (Articles 3 and 8 of the Regulations) and their return (Article 11 of the Regulations), written notification to requester and the party subject to the detention (Article 5 of the Regulations), and the detention repealing procedure (Articles 9 and 10 of the Regulations).

However, since patent rights and other intellectual property rights still have certain differences in the determination of the scope of rights and facts of infringement, adjustment provisions are also made in the Regulations on such basis to satisfy the practical operation of patent-related detentions. The special provisions in the Regulations which should be noted are discussed below.

  1. An infringement report shall be submitted by a requester.

Since patent infringement involves technical details, the customs, which lacks relevant professional since it is not a patent agency, may encounter difficulties when reviewing if "facts of infringement" and "infringing goods" exist. Therefore, the competent authority revised the "facts of infringement and descriptions sufficient to identify suspected infringing goods" into the "infringement analytical report and descriptions sufficient to identify suspected infringing goods" in Article 2, Paragraph 1, Subparagraph 3 of the draft Regulations for Implementing the Detention of Patent Infringing Goods by the Customs, which were disclosed during public hearings. Under such circumstances, a requester is required to provide a specific infringement analytical report when requesting for a detention and cannot just generally state the facts of infringement.

  1. A requester shall submit descriptions sufficient to enable the customs to identify detention objects.

As previously stated, patent infringing goods, which involve technical matters, are relatively difficult to identify or determine on the face in comparison with trademark or copyright infringing goods. Article 2, Paragraph 1, Subparagraph 4 of the Regulations specifically requires a requester to provide descriptions sufficient to allow the customs to identify detention objects and to provide specific examples such as the importer, uniform invoice number, customs declaration entry number, name of cargo, models, specifications, potential dates of import, port of entry or means of transportation. Although disputes and concerns about the objects may be reduced under such requirement on the one hand, a requester faces more difficulties in preparing relevant materials. A requester should, therefore, conduct more thorough verification when requesting for a detention.

  1. A requester's obligation to assist

In view of the difficulties in detaining and identifying patent infringing goods and the potential issues facing the customs in detention execution, Article 4 of the Regulations provides that "before detention, the customs may notify the requester to assist, and if the requester fails to assist without justified reasons to the extent that such detention cannot be executed by the customs, the customs will handle the suspected infringing goods pursuant to applicable requirements for customs clearance of imported goods." The Regulations have provisions not found in other rules and made to request a requester to provide necessary assistance in the execution of a detention. Therefore, in addition to submitting written materials required under the Regulations, a requester is also obligated to provide execution assistance to the customs if necessary.

4. Protection of confidential information

To ensure that a requester and the party subject to the detention understand the status of the detained goods and to assert their rights on such basis, Article 97-1, Paragraph 4 stipulates that both parties may inspect the detained goods. However, the detained goods may involve important trade secrets or other confidential information of the party subject to the detention. Since the purpose of a detention under the Law is merely to address the urgency of infringement prevention, it is specifically stipulated that such inspection shall not compromise the confidentiality of the detained goods. The Regulations also require such inspection to be conducted at the time and location and in manners designated by the customs to protect the rights and interests of the party subject to the detention.

In conclusion, the amendment provides a new weapon for patentees to combat patent infringement. However, they are still required to heed the statutory requirements under the Law and the Regulations and to accommodate customs requirements to detain the infringing object beforehand.