Taiwan - Restitution Of Unjust Enrichment In Patent Infringement.

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21 September, 2017

 

Taiwan - Restitution Of Unjust Enrichment In Patent Infringement.

 

Patent is an intangible property created via legislation.  

 

Unlicensed use of patent would not consume the patent, but constitute infringement of the exclusive interests of the patentee.  But it is difficult to determine the value of interest derived from an intangible property.  A high-tech electronic or communication device is usually involving several patents.  It is more complicated to determine the range of interests and losses in a patent infringement when there is patent stacking.  The issue is how to determine the range of the restituted interests when a patentee requests for restitution of unjust enrichment.

 

According to the Civil Code, a person who acquires interests without any legal ground at the expense of another shall make restitution.  In the Taiwan court practice, restitution is computed on the basis of the interest or benefit acquired by the user, and not on the basis of the damage suffered by the original owner of the interest.  Unjust enrichment in patent law, in this context, refers to the situation that a patent user who acquires interests without any licensing at the expense of the damage suffered by the patentee should restitute the acquired interests to the patentee.

 

The Supreme Court once defined the acquired interests as the interests of free from paying royalties.  However, Taiwanese courts have not form a consensus on the computation of such royalties.  The royalties can be estimated via a “hypothetical agreement between patent user and patentee”, or be determined as half of the pre-tax revenues of average product sales.  In a recent decision made by the Intellectual Property Court, even when there is only one patent used, the acquired interests were deemed to be the total royalties set in the package licensing agreement provided by the patentee on the market.

 

It is the confusion between the “damage suffered by the patentee” or “lost profits of the patentee” and the “acquired interests of the patent user” that led to the use of the total royalties set in the package licensing agreement to be the acquired interests.  Since the patent user has never used other patents provided in the package licensing agreement, how could he or she be deemed to have received the same interests as the total royalties in the package licensing agreement?  

 

Therefore, it makes more sense to determine the acquired interests of unjust enrichment based upon the actual interests received by the patent user.

 

To compute the reasonable royalties for the use of patents owned by others, there is a trend to take “patent contribution” into account, and to utilize this notion to determine the acquired interests of the patent user.  To utilize patent contribution is also to consider the real economic value derived from the used patent.  As mentioned above, it usually requires multiple patents and resources to make an electronic or communication device.  If the patent contribution is ignored, which would result in the total deprivation of revenues of the patent user, it would result in unjust enrichment on the part of the patentee, a violation of the very purpose of unjust enrichment restitution — the equity between the parties.

 

 

For further information, please contact:  

 

C. Y. Huang, Partner, Tsar & Tsai Law Firm

[email protected]