NAIP Patent Blog

Two Markets, Two Systems

Since the Nationalist party fled to Taiwan in 1949, IP has remained one of the many complicated and unresolved issues. Both Taiwan and China implement their own IP systems. Both administer their own patents. Both are important participants in the global IP industry. However, neither acknowledges the validity of each other's patents. This means a Taiwan patent cannot be enforced in China—and vice versa. Most significantly, priority rights are not recognized. Copyrights, trademarks and plant variety rights also face similar issues, with added complications including copyright authentication and interpretation over well-known places names or well-known brands.

A Framework Agreement

The IPR agreement has been touted as a "framework" for future collaboration between Taiwan and China. The purpose, goals, benefits and subjects covered in the agreement can be found in the TIPO press release here. Briefly, the agreement aims for:

1. Mutual recognition of priority rights for patents, trademarks and plant varieties.
2. Establishment of mechanism to combat illegal IPR activities.
3. Establishment of a formal communication platform.
4. Copyright authentication service based in Taiwan (currently being done in HK).
5. Search and examination results-sharing

Overall, the agreement touches upon a broad and wide range of IP areas from improving protection to increasing opportunities for economic development. In addition, many goals—such as copyright, trademark or even patent "squatting"—were written directly to address concerns of IP holders in Taiwan. Both sides have planned ambitiously, which is in line with the current Taiwan government's view that China is an integral part of Taiwan's economic future.

Collecting Public Opinion

After signing of the IPR agreement, the Taiwan Intellectual Property Office (TIPO), together with the Chinese National Federation of Industries, hosted a symposium to hear the thoughts, opinions and suggestions of the Taiwan Public. The two-day event, from 14-15 of July, was split into four discussions, covering:

1. Trademark & Geographic Indicators
2. Copyrights
3. Patents, Technology Transfers & Trade Secrets
4. Prevention of Piracy and Counterfeiting

At each event key members of both TIPO and China's State Intellectual Property Office (SIPO) were on hand to briefly explain the IPR agreement and listen to participants' opinions, suggestions and concerns. Although no decisions were made on how to proceed with the goals stated, the discussions provided an excellent window into the attitudes, frustrations and expectations of Taiwanese organizations dealing with IP in China. Many shared stories about difficulties encountered with applying for IP rights, enforcement, and dealing with the substantial experience gap between two patent offices. Overall, the symposium was a valuable source of experience sharing and learning about the successes and failures in dealing with IP in China.

First Steps on a Long Journey

Although much remains to be done, Taiwan has already begun with minor, but significant adjustments to its IP laws. On 17 October 2010, amendments to Patent Law (Article 27 and 28), Trademark Law (Article 4), and Plant Variety Act (Article 17) were passed that would allow recognition of China patent priority rights. Previously the wording of the laws required the applicant supply documents and proof issued from a reciprocating "country". To circumvent the political mutual non-recognition issue, the wording was changed to allow documents and proof issued from "a member of the World Trade Organization".

The next steps, unfortunately, will not be so easily taken. Beyond a general working guideline and schedule, the goals must be reviewed with more specific details in mind—for example, transitional arrangements, cooperation or conflicts with international standards, litigation procedures and many, many more. These topics must be discussed and agreed upon by both sides as well, ensuring that the journey ahead is not just a long one, but also one that is full of complications.

A novelty grace period is the allowable time from the disclosure date of the invention to the filing date. It's a special rule that, under a certain conditions, prevents the disclosure of an invention prior to the application to be recognized as prior art during examination. Many people assume the grace period is for the benefit of the inventor, allowing him to disclose his/her invention before filing an application. However, reality is opposite, because of the high risk of losing "novelty" in most or even all the patent offices if something unexpected happens during the period of the disclosure to application. Therefore, to help fully explain the details, here we will explain the grace period rules in TIPO and the risks that an applicant faces.

In the Taiwan Patent Act, Article 22, paragraph 2 deals with grace periods, and states:

an invention may not be patentable if it has been published, put to public use, or known to the public before applying for patent, unless it is filed within 6 months from the date of occurrence of the following causes:

1. Where the invention is disclosed as a result of research or experiment;
2. Where the invention has been exhibited at an exhibition sponsored or approved by the government; or
3. Where the invention has been disclosed in an occasion not intended by the patent applicant.

Of the three causes, subparagraphs 2 and 3 are well-defined (though proving accidental disclosure is another matter), so here we focus on the first condition, paragraph 1.

TIPO's patent examination guidelines goes into further detail about this condition:

If the content of the invention sought to be patented has been published, put to public use, or known to the public prior because of the purpose of research or experiment, for example, the publication of a thesis, the novelty of the invention is kept if the patent is filed within 6 months from the date of occurrence, which is the date that the content of the invention is available in public, not necessarily read or known."

From the example provided in the examination guidelines, we have a rough idea that something like thesis disclosures satisfies the condition set under Article 22, paragraph 2, subparagraph 1.

Most recently on 11 December 2009, a draft amendment of the Patent Act passed to the Legislative Yuan for examination, and may take effect in the near future. In Article 22, "research" was removed from the "disclosed as a result of research or experiment" (subparagraph 1) and a second paragraph, "disclosed via printed publication", was added. According to the explanation from TIPO, "research" is something incomplete and requiring further discussion or study. An incomplete invention is not a subject matter of a patent. Therefore, "research" should not be included in consideration. The phrase "disclosure via printed publication", provides a wider range of the conditions acceptable for grace period status.

In the previous paragraphs we defined grace period and described the acceptable conditions under TIPO's Patent Act. However, one important fact must be mentioned: unlike in the United States, a grace period does NOT determine the priority date of the patent. Although TIPO accepts the patent applications that disclosed prior to filing and meet conditions set in Article 22, paragraph 2, there are 3 major problems/risks caused by this process:

(1) If the applicant claims the benefit of a grace period under Article 22, paragraph 2, subparagraph 1, the invention may lose patentability in some patent offices. For example, China's State Intellectual Property Office (SIPO) allows the grace period only if the disclosure is in a national or an officially-recognized international exhibition, or in a national-level scientific seminar. In the Japan Patent Office (JPO), although a similar grace period clause exists, the recognition of "disclosed as a result of experiment" is different from TIPO. So the risk of losing patentability in other countries/regions is a major concern.

(2) If the applicant claims the benefit of grace period under Article 22, paragraph 2, subparagraph 2, the "exhibition" in which the invention was disclosed plays a key factor in its patentability. Unfortunately, currently no set definition of "officially recognized international exhibitions" exists. But for example, at the EPO, only the World Expo has been listed as a qualified event for 2010. Therefore, while you can still file a Taiwan patent after an invention exhibited in CeBIT or COMPUTEX, it has already lost its "novelty" for a European patent at the moment of exhibition.

(3) There is still a risk of non-patentability even if the invention is disclosed under the qualified conditions of Article 22, paragraph 2, subparagraphs 1 and 2. If another inventor files a patent or discloses his own invention (with subject matter which can be used as prior art against your invention), during the time between your disclosure and your application, that creates a "lose-lose" situation. The other inventor cannot receive a patent because your disclosure has made his invention "non-novel". Also under the "first to file" system, his application or disclosure also invalidated your application because the grace period only allows a prior art exception of your own disclosure. No one is able to receive a patent in this situation—unless you or he can prove that the other achieved the invention by through illegal means.

Let's take an example to explain the problem an applicant may have, if he/she does not completely understand the differences between grace period and priority. Assume that Jenny is the inventor of a special controller for the PlayStation 3. She disclosed the controller and how it works at the E3 game show, on 16 June, 2008. She filed her invention on 1 February 2009--within the 1-year grace period offered by the USPTO. On 16 February 2009, Jenny decides to authorize her good friend Huang to produce this controller in Taiwan, so she requests a patent firm to file a Taiwan patent and claim the priority from the US patent. Do you see the problem here? Although the first filing date of the invention was only half a month before her decision to file a Taiwan patent (which satisfies the regulation for the international priority claiming) 7 months have passed since disclosure of the invention to the date of decision to file a Taiwan patent. The application has no chance to meet the requirements for the grace period in Taiwan. In this case, the controller may not be patentable in all patent offices except the USPTO.

To summarize, a novelty grace period is a remedial measure for filing a patent if you have already disclosed your invention. But is an option nonetheless. However, please don't assume that this rule erases any and all disclosure, because in many countries the invention may still lose novelty. The best way to secure the novelty of your invention is still to first file the patent. Then you can claim priority of the first filing date of when applying in other countries. Just ask yourself before disclosing an invention: "Is it worth the risk of losing this patent?" I believe you will know what to do next.

"In disapproving an exclusive machine-or-transformation test, this Court by no means desires to preclude the Federal Circuit's development of other limiting criteria that further the Patent Act's purposes and are not inconsistent with its text.”

Top Filers

Top Resident Applicants- 2009

Top Non-Resident Applicants- 2009

The high tech industry dominates in Taiwan, with the majority of patents related to consumer electronics. When broken down into International Patent Classifications (IPC), over 63% are related to electronics.

Global Cooperation & Priority Rights
In 2002 Taiwan became a member of the World Trade Organization (WTO), and thus adheres to the Trade-Related Aspects of Intellectual Property Rights (TRIPS) agreement. However, Taiwan is not a contracting member of the Patent Convention Treaty (PCT) and cannot be included in PCT applications.

Taiwan also has not signed the Paris Convention, although to fulfill the condition of WTO membership, Taiwan recognizes priority rights for applications from WTO, PCT and EPC member countries—provided the recognition is reciprocated for Taiwanese applicants (Article 27 of the Patent Act). This means the majority of non-residents filing applications at TIPO will be able to invoke their priority rights (the grace period is the standard 12 months). One notable exception is China, which does not recognize the priority rights of applications from Taiwan applications and vice versa.

On the Horizon
In less than a decade the Taiwan IP market has made significant growth, improvements and advances. Of course, the industry changes quickly. Major amendments to Taiwan's patent law are already in advanced draft stages, and include significant changes such as: providing more options for application restoration; allowing divisional applications even after notification of allowances; and incorporating inventive step into the disclosure grace period. Most recently, Taiwan and China signed a basic framework agreement on IP rights that will influence policy and IP strategies on both sides for decades to come. To stay up to date and informed of these developments, as well as news, IP events and more, be sure to subscribe to the NAIP Newsletter, or contact us at readersvc@naipo.com!

Resources & Links
Taiwan Intellectual Property Office
Taiwan Intellectual Property Court
Taiwan Intellectual Property Training Academy
NAIP Patent Blog

a) For Voluntary Divisionals: within 24 months of the Examining Division's first communication (called an "office action" at the USPTO) of the earliest application for which a communication has been issued. Thus, in the case of a sequence of EPO divisional applications, the 24 month time window is calculated from the date of the first communication issued for the earliest application in the sequence. Notification of the search opinion does not constitute a "first communication", since it is not issued by the Examining Division. Furthermore, the substance of the first communication is irrelevant for the calculation of the time window.

b) For Mandatory Divisionals: within 24 months of any first non-unity of invention objection from the Examining Division . Thus, each time the Examining Division raises a non-unity of invention objection for the first time, it creates a NEW time window of 24 months in which the applicant can file a divisional application. Notification of Summons to Oral Proceedings, or the minutes of a telephone conversation with the examiner, can also count as a communication (provided that lack of unity was the basis of the objection).

1. One Patent, Full and Equal Protection
   The new system will introduce a single patent that provides equal protection throughout the entire EU territory (Link to webpage with countries in EU).
   
   Currently applicants must either apply at the various national patent offices in the individual European countries, or opt for a unified application process through the EPO.
   In the first method, separate applications need to be prosecuted for each individual country in which the applicant wishes to establish patent rights.
   
   When opting for a unified application process at the EPO, the prosecution stage up, until grant of the patent is unified. However, the applicant must still delegate his patents to national offices and have them verified in such offices, in order to enforce patent rights in those countries.
   
   One system with full and equal protection in the whole Euro-territory upon granting of the patent will make access to European markets easier, more cost effective and less risky. This change will particularly benefit Small and medium-Sized Enterprises (SME's).
   
   

   

   
   
   
2. A Single Examination and Granting Authority: The EPO
   The EPO is to play a central role in granting the EU patent–sole responsibility for examining and granting EU patents.
   
   The EPO already has the infrastructure and expertise to deal with European Applications. To ensure the most effective implementation of the new patent system, it is vital that the EPO be entrusted with the administrative procedures and that their mandate extended to the post-grant phase of, for instance, managing renewal fees and the patent registry.
   
   
   
3. A New Role and Revenue Stream for National Patent Offices
   All central intellectual property offices will have an essential role under the new system–giving support and advice to applicants. In turn, they will be compensated through the distribution of annual renewal fees.
   
   This provision ensures that local knowledge and good relationships with the national patent offices are not lost. Furthermore, applicants may make use of this extra service to obtain the best advice for their respective applications.
   
   
   
4. Multiple Filing Offices
   Applicants will still have a choice to file their applications at the national offices, if more convenient, or directly at the EPO.
   
   
   
5. Unified Application Fees
   To ensure fairness throughout the European Union, all filing offices will charge the same fee for filing a European patent.
   
   
   
6. The European Patent Convention As the Principal Legal Structure
   In order to avoid unnecessary confusion and delay, the EPC will remain as the principle legal structure governing the pre-grant process. The EPC received a major revision in 2000 (implemented in 2007) which now makes it a trusted system.
   
   
   
7. Individual National Patents Remain an Option
   The proposed regulation will not replace national laws relating to patents nor will it remove the applicant's right to apply for national patents.
   
   If applicants wish to only apply for a selected country or countries, they will be allowed to do so. Applicants will thus, with the new system, have an additional option, and not be limited to a unitary European patent.
   
   
   
8. One Patent Court for the EU
   Having one unified patent litigation system for the whole territory will be a major advantage. The new system will cut litigation cost and ensure quick and effective enforcement of the patent rights throughout the whole Euro-territory.