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Recent Intellectual Property and Commercial Court judgments on commercial success
The Patent Examination Guidelines list "Invention Achieving Commercial Success" as an "Auxiliary Factor Affirming Inventive Step," stipulating that "if a claimed invention achieves commercial success and if the technical features of the invention directly bring about such success, rather than other factors such as selling technique or advertisement, it can be determined that there exists a factor affirming inventive step." However, there appears to be divergence among the criteria adopted by the Supreme Court, the Supreme Administrative Court, and the Intellectual Property and Commercial Court ("IPC Court") in respective judgments delivered thereby regarding whether the same invention patent achieves commercial success and whether commercial success is sufficient to affect the judgment of inventive step.
1. Background and Litigation
The patentee of Taiwanese Invention Patent No. 420783, "Commandless programmable controller" ("Patent"), asserting that the accused infringer's developed tool "Q-Code" ("Product") falls within the scope of Claims 21, 27, 28, 36, and 37 ("Claims") of the Patent, and thereby infringing on the Patent, filed a civil lawsuit for damages accordingly. The Intellectual Property Court ("IP Court," restructured as the IPC Court on July 1, 2021) rendered first- and second-instance judgments (Case nos. 2017 Min Zhuan Su Zi No. 1 and 2018 Min Zhuan Su Zi No. 23), both determining that the Claims lack an inventive step and ruling against the patentee. Despite the Supreme Court's judgment (Case no. 2022 Tai Shang Zi No. 186) to reverse the second-instance judgment and remand it to the IPC Court, the IPC Court still asserted that the Claims lack an inventive step and thus ruled against the patentee (Case no. 2022 Min Zhuan Su Geng 1 Zi No. 11).
In addition, the accused infringer in turn filed an invalidation action against the Claims. After examination, the Intellectual Property Office implemented an administrative action sustaining the invalidation action and adjudicated that the Claims should be revoked. After his administrative appeal was rejected, the patentee filed an administrative lawsuit to revoke the administrative act and the appeal decision. Similar to the civil judgments mentioned previously, the IP Court also rendered a judgment that the Claims lacked an inventive step and ruled against the patentee (Case no. 2019 Xing Zhuan Su Zi No. 41). Despite the Supreme Administrative Court's judgment (Case no. 2021 Su Zi No. 597) to reverse the IP Court's judgment and remand the same to the IPC Court, the IPC Court maintained that the Claims lacked an inventive step and ruled against the patentee (Case no. 2022 Xing Zhuan Geng 1 Zi No. 7).
2. Summary of IP Court Judgments
Both the second-instance civil judgment (Case no. 2018 Min Zhuan Su Zi No. 23) and the first-instance administrative judgment (Case no. 2019 Xing Zhuan Su Zi No. 41) concluded the following (the first-instance civil judgment did not mention commercial success).
To overcome the determination of lacking an inventive step based on commercial success, it is not only necessary to verify that sales volume of the patented product exceeds that of homogeneous products or that the patented product has a monopoly or has replaced competitor products in the market. Even so, the burden of confirming commercial success of the patented product being based on the technical features of the patent must be borne. Given that the Patent has 43 claims, and application scope and invention category thereof include control devices and programmatic methods, etc., the patentee failed to provide support for the industry having obtained the licenses therefrom being directly based on the Claims, rendering it difficult to ascertain whether the Claims achieved commercial success.
3. Summary of Supreme Court and Supreme Administrative Court Judgments
Both the third-instance civil judgment (Case no. 2022 Tai Shang Zi No. 186) and the second-instance administrative judgment (Case no. 2021 Su Zi No. 597) concluded the following.
The patentee claimed that granting of the Patent by various jurisdictions including the United Kingdom, the United States, China, and Japan more than 20 years ago, several publicly listed companies in the speech IC industry participating in obtaining licenses after examining the content of the Patent, and export of billions of ICs using the Patent technology all support achievement of commercial success by the Patent. The patentee provided patent specifications and bulletins, and the first page of license agreements for support. According to the patentee's explanations and general logic, the claims thereof appear verified, affecting judgment of whether the Patent lacks an inventive step.
4. Summary of IPC Court Retrial Judgments
Both the retrial judgments of civil and administrative cases (Case nos. 2022 Min Zhuan Su Geng 1 Zi No. 11 and 2022 Xing Zhuan Geng 1 Zi No. 7) concluded the following.
(1) The patentee claimed that many companies participated in obtaining licenses and applied the Patent's technology to their products. However, having previously worked for the toy company Mattel Inc., the patentee had influence over the procurement of IC products. Therefore, it remains questionable whether the patentee's evidence of negotiations for license with various IC companies was due directly to the technical features of the Patent. Moreover, license agreements constitute commercial actions based on various considerations. Licensing merely signifies agreement by the patentee to not take action against the licensee. If the licensee believes that the cost of litigation exceeds the license fee, it will be considered acceptable to sign the agreement. License agreements should not be directly inferred as recognition by the licensee of technical contribution of the Patent.
(2) All licensees are significant operators in the speech IC field, designing and producing a wide variety of speech ICs. The patentee cannot verify the proportion of products using the Patent's technology among the licensee’s offerings. The official website of the licensee lists only that MCU ICs have shipped in excess of 10 billion units, with no specific proportion of the same using the Patent technology provided. Moreover, other speech IC companies in the market did not participate in licensing of the Patent. The patentee cannot provide any share of products using the Patent's technology in the overall speech IC market. Even if some products obtained the license from the patentee regarding the Patent's technology and were sold in the market, it does not necessarily mean that the Patent has achieved commercial success.
(3) The determination of the inventive step of the patent focuses on the technical value, while commercial success is only an auxiliary factor affirming inventive step. Regardless of whether the Patent has achieved commercial success or the supportive evidence provided by the patentee regarding the inventive step, it is necessary to compare the technical aspects of the Patent and the citations. If it is already evident and recognized that the Patent lacks an inventive step, there is no need to take the auxiliary factors affirming inventive step into consideration. If the combination of evidence is sufficient to prove that the Claims lack an inventive step, whether the Patent has achieved commercial success does not affect the conclusion that the Claims lack an inventive step.
The Supreme Court and the Supreme Administrative Court affirmed that it seems not entirely baseless that the patentee raise evidence, such as license agreements, to verify commercial success of the Patent, and that the same affects determination of the inventive step of the Patent. However, the IPC Court maintains a stricter stance, determining that the patentee has verified neither that license agreement is based on the contribution of the Patent's technology nor the market share of products using the Patent's technology. Therefore, the IPC Court rejects assertions of the Patent’s commercial success. The IPC Court has further determined that when the combination of technical evidence is sufficient to prove that the Claims lack an inventive step, there is no need to take auxiliary factors affirming inventive step into consideration, and the auxiliary factors have no effect on conclusions regarding lack of inventive step. The judgments detailed in the foregoing serve effectively as reference in the preparation of evidence and formulation of strategies in disputes concerning validity of a patent. Whether the patentee will appeal, and the Supreme Court and the Supreme Administrative Court will accept the views of the IPC Court, nonetheless requires continued attention.