Five months after the new Patent Act (the “new Act”) came into effect, the Legislative Yuan swiftly passed another bill on further amendment to several disputable provisions of the new Act (the “partial amendment”). The partial amendment was promulgated and enacted on May 31, 2013 in the hope that it can eliminate any foreseeable impact to innovators and future patent applicants.
Amendment to dual filing mechanism
The utility model patent is one category of patent protection in Taiwan, and involves the protection of an invention creation relating to the shape or structure of an article. Since there is no substantive examination for a utility model application, it typically takes only six months from filing to grant. It is therefore a favorite tool used by many small- and medium-sized enterprises to obtain speedy and less-costly patent protection for less technical innovations.
However, some innovations relating to the shape or structure of an article may also qualify for an invention patent. In the new Act, a new stipulation has been introduced to facilitate procedures for applicants who wish to take advantage of both rights. Applicants may file both invention and utility model patent applications for the same inventive idea on the same date, and such a procedure is referred to as a “dual filing” mechanism.
The major disputed issue that initiated the partial amendment to the new Act related to whether a continuation of patent right should be adopted when an inventive idea is associated with both patent rights, namely, a utility model patent and an invention patent right.
The idea of “dual filing” mechanism allows an inventive idea to be granted as a utility model patent as soon as the application passes formality examination. Subsequently, when the invention application for the same inventive idea is granted, the patentee may have the option to abandon the utility model patent right, convert it to an invention patent and enjoy the remaining exclusive term of the invention patent. To achieve this purpose and to avoid a situation in which dual rights co-exist for the same invention (i.e., a “double patenting” situation), the earlier granted utility model patent must be made ineffective to allow the subsequent invention patent right to enter into force. Thus the latter right can continue in an uninterrupted manner from the time the former right is terminated.
This is in contrast to the original provision which precluded a continuation of patent right upon the patentee’s selection of the latter right. Under the original provision of the new Act, a granted utility model patent “would be deemed to have not existed ab initio upon the patentee’s selection of the invention patent right.” One foreseeable negative consequence of such a stipulation is that the non-existence status of the former utility model right in such a “dual filing” system could affect other legal relationships that have already been effective by the exercise of the utility model right. For example, with the former system, how would a situation be resolved where the patentee has enforced, assigned or licensed his or her right, and such right becomes non-existent ab initio upon the patentee’s selection of the latter invention patent right? Should the royalties paid or damage compensation received be returned to the counter-party? Does a potential defendant have a claim for a return of the damages paid in an infringement lawsuit based on the former utility model patent?
To avoid such issues, the partial amendment revised the legal status of a utility model patent so that once the applicant selects the invention patent, the former utility model patent “extinguishes” from the publication date of the invention patent. (This, however, is subject to conditions that the utility model patent is valid at the time the invention patent is granted.) That is to say, the patentee who files both applications for the same innovation can expect a continuation of patent right, assuming both rights are granted, in which the validity of the former right will discontinue upon selection of the latter right.
It is worth noting that the revised “dual filing” procedure is also harmonized with the dual filing practice in China.
Other amendments to the new Act
The partial amendment also revised the provision relating to compensation a patentee would be awarded. An invention patentee may claim compensation from parties who commercially exploit his/her invention before the patent publication date. If an invention patentee has already been granted a utility model patent for the same inventive idea, he/she can only opt for one right to obtain compensation- either claims based on a latter grant invention patent or claims based on utility model infringement.
Further, the partial amendment reinstated “treble damages” that was once abolished in the new Patent Act. It is believed that a punitive damage mechanism is a necessity in deterring patent infringement. The IP Court therefore continues to play a role as a gatekeeper when deliberating treble damages for willful infringement.
To urge the court to award higher damages for patentees, the partial amendment made reasonable royalty a “computing basis” for damage calculation. This is a change to the stipulation in the new Act where only an “equivalent” amount of royalty that may be collected from exploiting the patent is awarded. Awarding mere “equivalent” royalty as compensation was criticized for lacking any deterrence effect in combating an infringing act.
The partial amendment also made it compulsory for a utility model patentee to provide a technical assessment report when sending a cease and desist letter.