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.
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