In addition to bringing a civil suit for patent infringement, a patent holder that discovers infringement can petition for a preliminary injunction to temporarily stop the infringement until the litigation has concluded. Such a preliminary injunction may force the accused infringer to cease all business, thus having a tremendous impact on its operations.

According to the Code of Civil Procedure and court practice, if the accused infringer appeals against a preliminary injunction and the appeal court decides that the lower court erred in granting the injunction and overthrows its decision, the accused may claim from the patent holder damages caused by the improper injunction. This claim is not contingent upon the patent holder's intentions or negligence in petitioning for the preliminary injunction.

The scope of the damages should be limited to injury suffered by the accused patent infringer while the preliminary injunction applied. However, the code does not offer clear guidance as to whether attorneys' fees incurred in the appeal procedure should be considered part of the injury suffered.

Under the existing system, an attorney must be retained to represent a party that is pursuing a third-instance proceeding. Therefore, only attorneys' fees for the third instance are considered part of the court costs (after litigation has concluded, the court costs shall be borne by the losing party or be shared between the parties in accordance with the court's decision). Further, the law imposes an upper limit on third-instance attorneys' fees to be included in the court costs. However, the question remains in the case of preliminary injunctions: can the accused patent infringer claim damages from the patent holder for attorneys' fees incurred during the third-instance appeal against the injunction?

This issue was considered by the Supreme Court in its 2011 judgment in Tai-Shang-1505, rendered in September 2011. In this case the accused patent infringer revoked the injunction through appeal proceedings and subsequently filed a civil suit against the patent holder to claim damages for patent misuse. In addition to the losses suffered by its business during the effective period of the injunction, the accused infringer requested payment of the attorneys' fees incurred in the third-instance appeal. Although this request was accepted and recognised by the IP court, the Supreme Court took a different view. The Supreme Court held that the attorneys' fees for the third-instance appeal could not be considered part of the damages caused by the preliminary injunction, so the patent holder could not be held liable for them.

For further information on this topic please contact Hsiu-Ru Chien at Lee and Li Attorneys at Law by telephone (+886 2 2715 3300), fax (+886 2 2713 3966) or email ([email protected]).