The decision by the Taipei High Administrative Court, made on Thursday last week, could help end a dispute which escalated in January when the EU threatened to take Taiwan to the WTO over the compulsory licences row.
The dispute began in July 2004 when the Taiwan Intellectual Property Office (TIPO) granted five compulsory licences to local recordable CD-maker Gigastorage for patents held by Philips. Gigastorage had previously licensed the patents from Philips until the Dutch company terminated its business agreement with the company in April 2001.
In June 2006 the Committee of Appeal of the Ministry of Economic Affairs confirmed TIPO’s original decision to grant a licence. Philips then appealed to the Administrative Court and subsequently filed a formal request to the European Commission to ask it to help the company seek a ruling from the WTO in the dispute.
Last month the Commission issued a report strongly condemning the compulsory licensing system and arguing that Taiwan’s compulsory licence law did not comply with TRIPs.
The Administrative Court’s decision now looks set to defuse the row, which had threatened Taiwan’s economic relationship with the EU.
“We are very pleased to see this ruling and we think it is going in the right direction,” a spokesperson for Philips told Managing IP.
A TIPO official said that the Office would wait for the written judgment, which should arrive in two weeks, before deciding whether or not to appeal to the Supreme Administrative Court.
Frank Liu, a partner with Saint-Island International Patent & Law Offices in Taipei, said that he believed the Court overturned the original decision to grant the licences because TIPO had erred in its interpretation of the reasonable compensation terms requirement in Taiwan’s Patent Act.
Article 76 of the Act states that TIPO may issue a compulsory licence "in the case of an applicant's failure to reach a licensing agreement with the patentee concerned under reasonable commercial terms and conditions within a considerable period of time".
The EU Trade Barriers Regulation Committee report heavily criticized this Article, stating that it "empties the substance out of the exclusive rights granted by a patent and protected by the TRIPs Agreement".
The report asked Taiwan to amend its Patent Act and reverse the precedential opinion issued by the Ministry of Economic Affairs within two months. The Court has now reversed the opinion but no move has yet been made to amend the Patent Act.
