When the Taiwan Intellectual Property Office (TIPO) granted compulsory licences for five CD-R patents owned by Philips to Gigastorage (a small local manufacturer of CD-Rs) in July 2004, it might not have foreseen the amount of international attention the decision would draw. TIPO's decision, confirmed on appeal, was based on Article 76.1 of the current Patent Act, which stipulates that in addition to coping with national emergencies and non-profit-seeking use of a patent for enhancement of public welfare, a compulsory licence, if used predominantly for the supply of the domestic market, may be granted to an applicant who has offered reasonable terms and conditions to a patentee but has failed to reach an agreement with the patentee within a considerable period of time.
The European Commission, in response to a complaint filed by Philips on January 15 2007, published an investigation report in January of 2008 which criticized TIPO's decision as containing "a number of violations of the TRIPs agreement many of which raise issues of general concern for protection of intellectual property rights," and demanded that Taiwan amend its Patent Act and revoke the compulsory licences.
On March 13 2008, the Taipei High Administrative Court reversed the decisions of TIPO and the Board of Appeals, stating that the determination of reasonable terms and conditions should not be merely based on the calculation of royalties proposed by Gigastorage, which TIPO relied on in granting the compulsory licences. Instead, it should also take account of other factors, such as the profit margins of both parties, shared risks, scope and period of the licence and market competition. However, the Court does not comment on whether TIPO's decision is in line with the TRIPs agreement.
As a result of the failure of TIPO to file an appeal, the ruling rendered by the Taipei High Administrative Court is now finalized. Officials of TIPO said that they would negotiate with the European Commission regarding the concerns raised in its report.
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| Yu-Jiunn Kao |
Saint Island International Patent & Law Offices
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Nanking East Road
Taipei 105-45
Taiwan, R.O.C.
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