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Taiwan: Calculating patent damages

In an infringement lawsuit, a patentee may choose to claim damages calculated according to the profits gained by the infringer from the infringing act, based on Article 97.1.2 of the Patent Act. In this case, the infringer needs to prove his costs and necessary expenses so that they can be deducted from his profits gained from the sale of the infringing product. However, the Patent Act does not mention the calculation of costs and necessary expenses.

As can be seen from a number of decisions on patent infringement lawsuits, the IP Court now takes into consideration the concepts of direct cost and indirect cost in accounting for the calculation of damages. The IP Court is generally of the view that costs and expenses attributable directly to the production of the infringing product can be deducted from the profits gained from the infringing act if the infringer is able to prove such costs and expenses, and that indirect costs are not deductable. In this sense, such profits resemble gross profits in accounting.

However, one decision rendered by the IP Court pointed out that costs involving illegitimacy, such as cost of labour hired to manufacture the infringing product, cannot be recognised as direct costs and deducted from the gains of the infringer, even if they are considered as direct costs in accounting.

The stance of the IP Court as to whether direct cost of labour can be deducted from the profits gained by the infringer in other decisions is worth observing.

Ming-yeh Lin

Saint Island International Patent & Law Offices

7th Floor, No. 248, Section 3
Nanking East Road
Taipei 105-45, Taiwan, ROC
Tel: +886 2 2775 1823
Fax: +886 2 2731 6377



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