The damages calculation for a patent infringement litigation is determined by the Intellectual Property Court pursuant to the calculation method claimed by the patentee (such as the injury actually suffered and the interests lost,the difference between the profit earned through patent exploitation after infringement and the profit normally expected through exploitation of the same patent,the total profit,and a reasonable licensing fee; see Article 97 of the Patent Act) as well as evidence submitted by theparties.  Although there have been cases in the past in which infringers claimed that the patent contribution rate should be used as the basis for determining damages,some of the Intellectual Property Court judgments ruled that using the patent contribution rate as basis to calculate damages lacked legal basis, while some determined the calculation of damages based onthe patent contribution rate or recognizedthe concept of the patent contribution rate but did not adopt such rate to calculate the damages due to the case-by-case facts.  This article discussed the Intellectual Property Court's view regarding the patent contribution rate by citing the relevant judgments.

I.  Judgments in which the patent contribution rate was rejected as the basis for the calculation of damages due to lack of legal basis

Although the infringer in the Intellectual Property Court's civil judgments, 102-Du-Min-Zhuan-Zi No. 4 (Date of Judgment: October 17, 2013) and 102-Di-Min-Zhuan-Shang-Zi No. 16 (Date of Judgment: November 28, 2013), claimed that the court should take the patent contribution rate into consideration when calculating the damages, the court rejected such claim by ruling that Item 2, Paragraph 1, Article 85 of the Patent Act before amendment did not require such condition.  Therefore, the damages were ultimately calculated based on the loss of profit as a result of the infringer's actions.

II.   Judgments in which the patent contribution percentage was recognized as a factor to be considered when calculating compensation

A. Damage calculation based on the patent contribution rate

1. In civil judgment 99-Year-Du-Zhuan-Su-Zi No. 156 (Date of Judgment: February 22, 2012), the Intellectual Property Court took into consideration how the profit and the technology of the infringing product was affected by the contribution of the patent when determining the reasonable royalty.

"The court has considered that the abovementioned estimated figures and facts can prove infringement.  It has also considered the fact that the Plaintiff is a professional research institution and that the Defendant is an internationally-renowned mobile phone brand.  Given that the patent at issue has not been licensed to others, and owing to its level of contribution to the profitability of the alleged infringing products and technology, as well as the alleged infringing products' market share and the Plaintiff's evidence with respect to difficulty in proving the quantum of its damages, the court agrees that the Plaintiff can at least demand that the Defendant be jointly liable for the reasonable royalty of NT$3 million."

2. In Intellectual Property Court civil judgment 100-Year-Du-Min-Zhuan-Su-Zi No. 63 (Date of Judgment: November 28, 2011), the court, when calculating the damages suffered from the patent infringement, took into account the contribution of the product at issue (a tire bead breaker) to the tires.  It also considered the fact that, although ordinary consumers or retailers would not buy such product on its own, all tires that were sold would generally come with a tire bead breaker.  As such, the latter would comprise an indispensable component when selling tires (tires could not be easily transported or stocked without it).  Therefore, the court took the view that, after deducting the cost of the product at issue, its contribution to each tire would still be at least NT$5, based on which the court calculated the infringer's profit.

3. In Intellectual Property Court civil judgment 102-Year-Du-Min-Zhuan-Shang-Zi No. 3 (Date of Judgment: November 14, 2013), the court also took into consideration the contribution of the patented technology to the profit or technology of the alleged infringing product when determining the damages suffered.

"The court considered the royalty for similar technologies by adopting the equitable principles and deduced the licensing agreement's features and scope based on the facts of infringement as well as the market positions of the licensor and licensee, the contribution of the patented technology to the profit or technology of the infringing product and the infringing product's market share etc. to arrive at an appropriate and reasonable royalty.  It also considered existing evidence when determining the damages to be awarded in the case."

B.  Cases in which although the concept of the patent contribution rate was accepted, it was not used as the basis of calculating damages due to the facts concerned

1.  In Intellectual Property Court civil judgment 100-Year-Du-Min-Zhuan-Su-Zi No. 61 (Date of Judgment: June 28, 2012), the infringer had argued that the patent at issue was one of 400 patents in DVD6C and that the patentee would only be entitled to 1/400 of its claimed amount.  The court rejected the infringer's argument on the following grounds:

  1. The infringer failed to prove that it needed to use all 400 of DVD6C's patents to manufacture its DVD-R and that the percentage of royalty that the patent at issue and the remaining 399 patents account for.
  2. The patent at issue constituted a part of the DVD Specifications.  Its technological characteristics were integrated into DVD-R discs and could not be isolated.  Furthermore, without the technology of the patent at issue, DVD-R discs would be worthless.  There was therefore evidence that the patent at issue's contribution rate was 100%, and the infringer's argument that the damages to be paid to the patentee should be based on 1/400 was groundless.

2.     In Intellectual Property Court civil judgment 101-Year-Du-Min-Zhuan-Su-Zi No. 34 (Date of Judgment: January 25, 2013), the infringer claimed that when calculating the damages of patent infringement, the court should be required to deliberate on the contribution of the patent technology to the profit of the alleged infringing products sold by the infringer, with market information duly investigated for support.  The court took the view that since any such market survey would not be able to disclose the number of consumers who would consider the "style" relating to the patent at issue as their primary or secondary concern, such survey would not reflect the true percentage of the "style" with respect to influencing consumers' purchase of the machine.  Therefore, the court did not adopt the approach of the patent contribution rate when determining damages.

3.     In the case of civil judgment 101-Year-Du-Min-Zhuan-Shang-Zi No. 7 (Date of Judgment: December 27, 2012), the infringer argued that, based on the contribution of the patent, the overall price of the product at issue (a brassiere) should not be used for calculating damages.  The court had determined that when selling the product at issue, the infringer had stressed in its product catalogue that such product possessed an N-shape supporting strip — a feature of the patent at issue — and that such supporting strip could not be sold separately.  As such the profit obtained by the infringer from its infringement should be assessed based on the overall price of the product at issue.

Although the current Patent Act does not expressly provide for consideration of patent contribution with respect to damage calculation, one should note that there is still alegal basis for the court to use it when determining damages.  Put another way, if theparties are unable to calculate the damages suffered by the patentee under Article 97 of the Patent Act or if there is significant difficulty in proving such damages, the court can determine the damages based on Paragraph 2, Article 222 of the Code of Civil Procedure by considering the relevant facts and evidence (e.g., royalty for similar technology and patent; features and scope of licenseagreement deduced from facts of infringement; market positions of licensor and licensee; the contribution of the patented technology to the profit of infringing products or the technology, and the infringing product's market share.)

Based on the abovementioned judgments of the Intellectual Property Court, when considering whether or not to accept the patent contribution rate as the basis fordetermining damages, the facts and evidence furnished by the parties play a key role. If the infringeris able to provide facts and evidence with respect to the contribution of the patented technology to the profit for the infringing product, the court would be more inclined to accept it instead of determining damages based on the overall profit of the infringing product.  If the patentee is able to prove that the patent at issue has 100% contribution to the product at issue, it would be likely to be able to convince the court todeterminethe damages based on the entire amount of profit for the infringing product. The current practice of an infringer using the patent contribution as the basis fordetermining damages remains rather limited, and it remains to be seen what the court's specific standards for determining the patent contribution rate are.