In Taiwan, patent invalidity may be used as a defence in infringement litigation in addition to asserting non-infringement of a patent. In other words, when the defendant counterclaims in a patent infringement lawsuit that the plaintiff’s patent is invalid, the court shall decide on the merits of the case.
In a recent infringement lawsuit filed with the civil division of the Taiwan Intellectual Property & Commerce Court (IPCC), the plaintiff (the patentee) averred that the defendant’s selling of a certain type of controller and software development tool infringed its patent covering a programmed method for a planning controller. As a counterclaim, the defendant submitted multiple prior art references, pointing out that the patented invention lacked an inventive step in view of the combination of the prior art references and that its validity was thus questionable. Separately, the defendant initiated an invalidation action with the Taiwan Intellectual Property Office (TIPO) based on the same prior art references.
The legislative path of the case
In the civil infringement lawsuit, the first- and second-instance rulings rendered by the IPCC congruously held that a case of infringement was not established due to the lack of an inventive step of the patented invention.
Not satisfied with the rulings by the IPCC, the plaintiff filed an appeal with the Supreme Court. Upon trial, the Supreme Court handed down two rulings, one in August 2022 and the other in November 2024, both of which disagreed with the IPCC and overturned the IPCC’s ruling that had found the patented invention to lack inventive step.
The Supreme Court repeatedly emphasised in its rulings that the IPCC had failed to investigate the level of skilled persons in the art, and had also neglected to consider whether the patented invention had achieved commercial success. In the more recent ruling, the Supreme Court specifically pointed out that when assessing inventive step based on a combination of multiple prior art references, the IPCC should have identified, as the first step, which of the multiple prior art references should be considered the “primary reference”. Furthermore, the Supreme Court referenced the ‘could-would’ approach under European patent law, stating that in evaluating inventive step, the IPCC should have considered whether a skilled artisan in the relevant field could combine, and would be motivated to combine, the primary reference with the other references to arrive at the patented invention.
Likewise, the TIPO rendered a decision on the invalidation action in favour of the petitioner, declaring the challenged patent invalid.
The patentee then pursued a series of remedial actions. After the case was ultimately brought to the Supreme Administrative Court, it rendered two rulings – on October 13 2022 and January 15 2025, respectively – both of which overturned the decision rendered by the administrative division of the IPCC that had found the patented invention to lack inventive step, and the case was remanded to the IPCC for retrial. The Supreme Administrative Court also pointed out that the IPCC had failed to investigate the level of skilled persons in the art, and had not fully considered the various pieces of evidence submitted by the patentee concerning whether the patented invention had achieved commercial success thanks to the endeavour of the licensee of the patented invention.
Analysis of the Supreme Administrative Court’s ruling
In the reasoning of the more recent ruling, the Supreme Administrative Court elaborated on whether patent licensing could serve as a secondary consideration favourable to the determination of inventive step, particularly with respect to commercial success. Addressing the IPCC’s exclusion of the probative value of the licence in the determination of inventive step, the court reasoned that “licensing is a commercial activity, and involves many other considerations”. The judgment emphasised that if a patent was licensed to competitors likely to engage in R&D based on prior art and if multiple competitors entered into licence agreements through the payment of royalties, these facts could support the argument that the patented invention is advantageous compared with the prior art and possesses inventive step. The court further stated that this issue requires an examination of the licensing motivations and contract terms, including:
Whether the licensee obtained the licence on its own initiative;
Whether the licensed subject matter includes a single patent or multiple patents;
The duration and scope of the licence;
The amount of royalty paid;
The licensee’s motivation in obtaining the licence; e.g., to practise the patented technical features, to avoid substantial litigation costs, to solve a long-standing industry problem, or due to other business considerations; and
How the licensee actually practised the patented invention.
Key takeaways
The outcome of the retrial proceedings to be conducted separately by the civil and administrative divisions of the IPCC remains to be observed. Nevertheless, parties involved in inventive step disputes should first take note of the Supreme Court’s and Supreme Administrative Court’s opinions on the level of persons skilled in the art and the identification of the primary reference among multiple prior art references. Where the patentee has licensing records, they may also refer to the Supreme Administrative Court’s ruling of January 15 2025 concerning the use of supporting evidence favourable to the finding of inventive step.
Such supporting factors may include assertions that a patented invention has achieved unexpected results, solved a long-standing problem, prevailed over technical prejudice, and obtained commercial success, among other benefits.
