The Taiwan Patent Act provides a patent term extension (PTE) to compensate patentees of pharmaceutical-related patents for the detriment incurred over a certain period when they are unable to practise their inventions pending the issuance of drug marketing certificates. However, the sphere of protection offered by a PTE, as approved by the competent patent authority, is limited to the active ingredients and intended uses stated on the marketing certificates, and cannot extend to the full allowed scope of the patent.
On the other hand, Taiwan’s Pharmaceutical Affairs Act has introduced a patent linkage system. Through a mechanism requiring disclosure of patent information after an innovator drug is approved for marketing, the regulatory review process for generic drug approval is linked to the generic drug’s potential infringement status with respect to patents associated with the innovator drug, in a bid to address potential patent infringement disputes before the generic drug enters the market.
Under the Pharmaceutical Affairs Act, a generic drug manufacturer, when applying for a generic drug marketing certificate, may exclude from its application materials certain indications that have already been approved for the innovator drug (e.g., indications falling within the sphere of protection offered by a PTE) to mitigate infringement risk. This approach is referred to as an ‘indication carve-out’ mechanism, and the resulting label is commonly known as a ‘skinny label’.
However, whether a generic drug manufacturer’s adoption of a skinny-label strategy is, as a matter of course, sufficient to dispel concerns of patent infringement remains a question warranting further examination. In particular, during commercial distribution and clinical use of a generic drug, it is questionable in practice whether physicians’ ‘cross-label’ (i.e., off-label) use may fall within the sphere of protection covered by a PTE and, if so, whether the generic drug manufacturer should be obliged to take measures to prevent or avoid the occurrence of such infringing outcomes.
Recent rulings on skinny-label strategy and patent infringement liability
Taiwanese courts have recently reached materially similar views with regard to the above issue in lawsuits involving different generic drugs. In particular, the Intellectual Property and Commercial Court, in an appeal judgment rendered in September 2025, and the Supreme Court, in a decision handed down in October 2025, articulated the boundary between the skinny-label strategy and patent infringement liability. A brief introduction follows.
Both the foregoing judgments affirmed the legality of the skinny-label strategy. The courts noted that, pursuant to the Pharmaceutical Affairs Act and the Regulations for Registration of Medicinal Products, a generic drug manufacturer may, when applying for a generic marketing certificate, carve out specific indications that fall within the sphere of protection covered by the PTE granted to the innovator drug. In such circumstances, the manufacturing, sale, and use of the generic drug within the indications stated on its skinny label will, in principle, not constitute infringement of patents associated with the innovator drug.
At the same time, however, the courts emphasised that the indications stated on the skinny label of the generic drug and the carved-out indications covered by the relevant patent rights (including the rights during the extended patent term) must be readily distinguishable in clinical diagnosis and treatment practice to ensure that, in actual medical use, the two correspond to different fields of application.
If, in medical practice, the distinction is difficult to draw – such that the generic drug is, in substance, used in an application falling within the sphere of protection covered by a PTE – then an issue of infringement liability may nonetheless arise.
The courts’ findings
Regarding the dispute concerning off-label use, the courts, after considering the relevant National Health Insurance (NHI) reimbursement rules, reasoned as follows:
Physicians’ prescribing within the indications stated on a drug label is the ordinary course of clinical practice. Off-label use, by contrast, is medical practice that is permitted only as an exception and only when certain statutory requirements are satisfied.
On that premise, where a physician, based on professional judgement and autonomous decision-making, uses a generic drug for an indication not stated on the skinny label, or within the scope of an indication of an innovator drug that the generic drug manufacturer has carved out, such conduct is, in principle, not readily attributable to the generic drug manufacturer. Accordingly, it does not constitute direct or indirect infringement by the generic drug manufacturer, nor does it necessarily support imposing any obligation on the generic drug manufacturer to prevent physicians from engaging in off-label use.
This is particularly so because a generic drug manufacturer’s acts of manufacturing and selling the generic drug, and a physician’s decision whether to prescribe it off-label, are separated by multiple intervening and uncertain factors, inclusive of the physician’s individualised medical judgement, the NHI reimbursement review, and the patient’s willingness to take the medication and/or pay out of pocket.
Thus, even if a generic drug might ultimately be used in a patent-protected indication as a consequence of off-label prescribing, the resulting linkage is, at most, a ‘but-for’ or factual ‘causal’ relationship. It falls short of the ‘adequate/proximate causal relationship’ required to establish infringement liability and is therefore objectively insufficient to constitute direct infringement of the patent right, or inducement, contributory infringement, or other forms of indirect infringement.
Implications of the decisions
As these two judgments illustrate, when determining whether a generic drug manufacturer’s adoption of a skinny-label strategy gives rise to a risk of infringement, courts will typically consider Taiwan’s NHI reimbursement standards and their practical operation. They will further examine whether the indications stated on the skinny label, as compared with the patented (and approved) indications that were carved out, are readily distinguishable and medically reasonable in clinical diagnosis and treatment practice.
The courts also observed that, at the marketing certificate application stage, whether physicians will later prescribe the generic drug off-label remains subject to numerous uncertainties and is difficult to foresee with specificity. Accordingly, the courts have, on the whole, taken a relatively conservative attitude towards inferring infringement liability solely from the mere possibility of off-label use.
That said, if, in the future, actual prescription data, market activities, or other concrete evidence can establish that off-label use of the generic drug was highly foreseeable to the generic drug manufacturer, or that the manufacturer engaged in affirmative acts of inducement, it remains to be seen whether courts will recalibrate their assessments of attribution and causal relationship for infringement purposes. This is an issue that warrants continued monitoring.
