The contents of Tsar & Tsai IP News are not legal opinions and shall not be taken as legal advice on any particular issue or case. If the reader has any suggestions or questions, please do not hesitate to contact us.

Tsar & Tsai IP News is aimed at providing the readers and clients

  1. important recent changes in IP related laws and regulations in Taiwan,
  2. practical views and interpretations on IP related laws,
  3. important IP legal news and case developments, and
  4. information on recent IP related activities of Tsar & Tsai Law Firm. If you have any comments or questions, please feel free to contact us (Tel: 886-2-2781-4111; e-mail: patent@tsartsai.com.tw; TM@tsartsai.com.tw ).

Editors: George Shih / Sophia Tsai
Consultants: Jennifer Lin / Joyce I. Ho/ Jeanne Wang

Patent

TIPO-JPO PPH MOTTAINAI program become a permanent program on May 1, 2020

In order for patent applicants to obtain their patent approvals more expediently, TIPO and JPO established the PPH pilot program on May 1, 2012 to speed up examination of patent applications.  The pilot program was modified to PPH MOTTAINAI in 2014.  In 2017, the program was extended for three more years to April 30, 2020.  Since the program produced very good result, the parties agreed to make the program permanent beginning May 1, 2020 to provide stable and convenient PPH services continuously for the applicants of both nations. (Lanya Chiu, Patent Department)

TIPO provided Taiwanese patent information regarding international clinical trial drugs for COVID-19

TIPO has compiled the data of international clinical trial drugs for COVID-19 together with the Taiwanese patent information related thereto for public reference.  The information could provide a preliminary understanding of the general patent status of the small molecule and macromolecular drugs in clinical trials for COVID-19 in Taiwan.  The source of the information is the U.S. database of the currently registered COVID-19-related clinical trial, which covers the small molecule and macromolecular protein drugs tested with a list of their original clinical use, the drug approval status, and the related patent information.  The relevant patent information is then categorized based upon the subject matter of the claims set forth in the patent applications, including substance, composition, use and preparation process, etc. (Lanya Chiu, Patent Department)

TIPO published the Patent Application Trend of Q1 2020 (Patent)

In the first quarter of 2020, a total of 16,680 patent applications (a 3% decrease compared to the same period last year) were filed with the TIPO, of which 8,381 were by domestic applicants (3,963 for invention patent, 3,572 for utility model patent, 846 for design patent), and 8,299 were by foreign applicants (7,007 for invention patent: 7,007, 228 for utility model patent, 1,064 for design patent).  The design patent applications filed by foreign applicants had a slight increase of 2%.

As for the invention patent applications, the statistics based upon the applicant’s region is as follows: (i) domestic juridical persons: the top three were TSMC (129), AUO (114) and REALTEK (111); (ii) domestic colleges: the top three were Chiao Tung University and Cheng Kung University (19), Kaohsiung University of Science and Technology and Tsing Hua University (17) and Taiwan University and Taiwan University of Science and Technology (15); (iii) domestic research institutions: the top three were Industrial Technology Research Institute (54), Taiwan Textile Research Institute (9) and Chung-Shan Institute of Science & Technology, National Applied Research Laboratories and Institute for Information Industry (6); (iv) domestic State-Owned Enterprises: the top three were Taiwan Financial Holdings and Land Bank under the Ministry of Finance (10), CPC Corporation, Taiwan under the Ministry of Economic Affairs (3) and Taipower under the Ministry of Economic Affairs (2); (v) foreign juridical persons: the top three were Nitto Denko Corporation (148), Qualcomm (147) and Alibaba (136).

The statistics reveal that the top three applicants by the applicant’s nationality are (i) invention patent: Japan (3,525), U.S.A. (1,389) and China (503); (ii) utility model patent: China (122), Japan (24) and U.S.A. (23); (iii) design patent: U.S.A. (260), Japan (236) and China (101).  (Jimmy Wu, Patent Department)

Sharp vs. OPPO Patent Dispute – Sharp Requested OPPO be banned from selling OPPO Smartphones in Taiwan

Sharp Corporation (“Sharp”), a subsidiary of Foxconn, filed a patent infringement suit in the Taiwan Intellectual Property Court on April 1, 2020 against a smartphone distributor, Guangdong OPPO Mobile Telecommunications Corp. (“OPPO”).  Sharp alleges that OPPO smartphones sold in Taiwan infringe one LTE patent related to communication technologies implemented in smartphones, and requested the court to ban OPPO from importing and selling of the OPPO smartphones in Taiwan.

Sharp previously filed damage lawsuits against OPPO for patent infringement in the District Court Munich and District Court Mannheim on March 6, 2020, and against OPPO Japan in the Tokyo District Court on March 6 and 9, 2020.  Sharp alleges that OPPO and OPPO Japan infringe several of its LTE patents related to communication technologies implemented in smartphones.  Earlier in late January 2020, Sharp filed a patent infringement lawsuit in Tokyo District Court against OPPO Japan, alleging that OPPO Japan infringed one of its wireless LAN patents related to communication technologies for smartphones, and requested a preliminary injunction in the court against OPPO Japan for preventing OPPO Japan from selling five items of smartphones related to the alleged infringement. (Tony Hsieh, Patent Department)

Trademark

New “Fast-Track” trademark examination mechanism to hit the road on May 1, 2020 for applicants to secure their rights quickly

To encourage applicants to utilize TIPO’s e-filing application system and to speed up trademark examination, TIPO now enforces a “Fast-Track” mechanism. Beginning May 1, 2020, the trademark applicants who pay their fees duly and whose documents meet the following requirements at the time of application will find their cases examined two months earlier than others: (1) using e-filing applications; (2) only applications for plain trademark are eligible, excluding non-traditional trademark, certification mark, collective membership mark and collective trademark; (3) the names of the designated goods or services are exactly the same as the ones listed in TIPO’s e-filing system; (4) the fees are paid through a designated bank account or an electronic payment sheet in printed form by the counter or via eATM; and (5) a power of attorney should be presented if there is an agent or agents in power.

Once all requirements are met, this type of applications will be prioritized for examination.  The applicant should expect to know whether his or her trademark can be registered 1 and a half months earlier than the current average first action (FA) period.  This will help the applicant to use his or her trademark to expand business activities and build a portfolio sooner.  However, the “first-to-file” principle is still applicable, namely, the application which is filed with TIPO the earliest will be registered first, thus blocking applications that files later.

The qualified trademark application cases will be noted as “Fast-Track case” in a detailed form in TIPO’s trademark search system approximately 1 month after e-filing, and its status will also be shown. (Kevin Wei, Trademark Department)

TIPO published the Patent Application Trend of Q1 2020 (Trademark)

Applications for trademark registrations (20,310 cases) were up 4% compared to the same period last year.  Applications filed by domestic applicants (15,008 cases) increased 7%, while those by foreign applicants (5,302 cases) decreased slightly.  Domestic applications have registered a positive growth for four consecutive quarters, and their share rose from 71% in Q1 2018 to 74% in the current quarter.

Looking at a breakdown by nationality of foreign applicants, Japan topped the list with 1,042 applications for trademark registrations.  Application by the applicants from the U.S., South Korea, and Hong Kong, who are among the top five countries (regions) all saw positive growth.

A breakdown by the Nice class shows that class 35 (advertisements, business operation, etc.) was designed in the most applications (2,729) by domestic applicants, and class 9 (computer, technology products, etc.) was designated in the most applications (1,091) filed by foreign applicants.  In terms of growth rate, applications by domestic applicants in class 37 (construction services, installation, repair services, etc.) increased 41%, and applications by foreign applicants in class 12 (vehicles) increased.

ROEHL and DAHAN (domestic applicants) and TURRITOPSIS (foreign applicant) tied the first place with 80 applications each. (Kevin Wei, Trademark Department)

The IP Court ruled that due to similarity of the cross design to the national flag of Switzerland, the mark “OVERLAND and Design” is not registrable

The mark registered by the Plaintiff, Airiness Enterprise Co., Ltd., was opposed by Ming J International Trade Co., Ltd. and was revoked by the Defendant, TIPO, based upon Article 30-I-(2) of the Trademark Act.  The Plaintiff filed an unsuccessful administrative action with the IP Court.  The IP Court dismissed said action on the ground that the above-mentioned Article clearly provides that a trademark similar to a foreign country’s national flag should not be registrable.  The court found that the cross design positioned in the middle of the contested mark was more impressive compared to the non-designed portion of the words OVER and LAND, and formed the more distinguishable part of the mark; that both the cross designed in the contested mark and , the national flag of Switzerland, featured the same design concept, i.e., a white cross displayed in the center of a square red field; that although the former is surrounded by a curved double-line square, both were still quite similar and the consumer with normal attention could make an association between them.  Thus, the court held that the contested mark should not be registrable based on the aforesaid Article.  In addition, the court, in response to Plaintiff’s other argument, held that the consumer’s confusion was not a necessary element of the applicability of the abovementioned Article; therefore, the conclusion of similarity between the cross design in the contested mark and the Swiss flag was not affected by whether the consumers could be confused.  Although there were some previous registrations of marks comprising cross design, the court indicated that the circumstances in those previous cases are different from those present in this case.  Besides, the court indicated, when examining whether a mark could be approved for registration, it should refer to the situation in each individual case and make correct finding of facts and application of the laws.  Based on the principle of equality that the same thing should be treated/processed in the same manner and the different things can be treated/processed in different ways, the court concluded that the Defendant’s revocation ruling did not violate the principles of equality and self restraint in administration. (Jay You, Trademark Department)

Regarding the indictment of United Microelectronics Corporation and its three employees by Taichung District Court Prosecutor Office for unlawful acquisition, disclosure and use Micron’s trade secrets for the DRAM technology cooperation project with Jinhua Integrated Circuit in Fujian, China, Taichung District Court rendered a decision on June 12, 2020, finding UMC’s three employees to have misappropriated trade secrets with the attempt to use in China in violation of Articles 13-1 and 13-2 of the Trade Secret Act and sentencing the individual defendants to imprisonment from 4.5 years to 6.5 years and to pay criminal fine in the amount ranging from NT$4 million to 6 million, respectively, with illegal gain forfeited.  UMC was sentenced to pay criminal fine for NT$100 million for failure to use its best efforts to prevent the crimes in violation of Article 13-4 of the Trade Secret Act.  Tsar & Tsai represented Micron Technology Inc. and Micron Memory Taiwan during the investigation and court proceeding.  (Jeanne Wang / Henry Chang / Marilyn Wu / Elvin Peng)

Lesson Learned from the UMC’s Trade Secret Misappropriation Case Regarding Criminal Liability Faced by An Employer

Regarding the indictment of United Microelectronics Corporation (“UMC”) and its three employees by Taichung District Court Prosecutor Office for unlawful acquisition, disclosure and use Micron’s trade secrets for the DRAM technology cooperation project with Jinhua Integrated Circuit in Fujian, China, Taichung District Court finally rendered a decision on June 12, 2020 after almost three years from the indictment, finding UMC’s three employees to have misappropriated trade secrets with the attempt to use in China in violation of Articles 13-1 and 13-2 of the Trade Secret Act and sentencing the individual defendants to imprisonment from 4.5 years to 6.5 years and to pay criminal fine in the amount ranging from NT$4 million to 6 million, respectively, with illegal gain forfeited.  UMC was sentenced to pay criminal fine for NT$100 million for failure to use its best efforts to prevent the crimes in violation of Article 13-4 of the Trade Secret Act.  

According to the Taichung District Court’s decision, Defendant UMC entered into the Technology Cooperation Agreement with Jinhua Integrated Circuit in Fujian, China in January, 2016, under which UMC is responsible for developing DRAM process technology and Jinhua shall pay several millions of U.S. dollars to UMC for equipment purchase and several millions of U.S. dollars of development fee to UMC in accordance with UMC’s progress of development.  The result of development will be jointly-owned by the two companies and the entire technology will be transferred to Jinhua for mass production.  To implement the technology cooperation project, UMC established the “New Business Development Center (“NBD”)” in January 2016.  Defendant Rong was the director of the department, whereas Defendant Ho and Defendant Wang worked under Rong as managers in the same department after leaving Micron Memory Taiwan (“MMT”).  All three defendants worked in UMC’s managerial positions.

The Taichung District Court found that Ho and Wang, instead of handing back to Micron or destroying Micron’s DRAM related trade secrets in their possession, took such trade secret materials to UMC for use after leaving MMT.  In July or August 2016, Rong asked Wang to compare the design rule used by MMT with UMC’s layout rule draft, circle out the difference, and mark Micron’s stabilization data in UMC’s design rule draft.  After following Rong’s instruction, Wang further discussed with UMC’s other employees and completed UMC’s design rule, which was provided to a chip designer for the next stage of work, substantially reducing the time, money, equipment and labor cost required for developing a design rule.  Further, with approval of UMC’s executive officer, defendants were provided with company laptops whose USB control function was discharged—an exception to UMC’s internal policy, for defendants to use the laptop to read Micron files saved in USBs, reviewing and studying Micron’s trade secret information at UMC’s office.

According to Article 13-4 of the Trade Secret Act, where a corporate person’s representative, agent, employee or other staffs commits the crimes under Articles 13-1 or 13-2, other than penalizing the offender according to the aforesaid provisions, the corporate person shall be sentenced to pay the criminal fine under the same provisions, unless the corporate person’s representative has used the best efforts in preventing the crime from happening.  Taichung District Court found that UMC failed to use its best efforts in preventing the crimes mainly based on the following three reasons: (1) By issuing special laptops with USB functions, UMC allowed or even encouraged its employees to use such laptop studying and reviewing Micron’s trade secret information at UMC for use UMC’s DRAM production.  The laptop was found to contain Micron’s trade secret files. (2) Rong instructed the other two defendants to delete and hide Micron materials when the Investigation Bureau of the Ministry of Justice conducted the search at UMC. (3) When Ho and Wang were recruited to work at UMC and were asked to issue declarations regarding whether they had access to Micron’s confidential information when working at Micron, both Ho and Wang responded in negative, which was clearly false given both being Micron’s R&D engineers.  However, instead of taking necessary risk-reducing measures, UMC merely accepted the false declarations, proving that UMC’s efforts in preventing the crime are only formalities.  Taichung District Court thus held that UMC liable pursuant to Article 13-4 of the Trade Secret Act because from the regulatory compliance perspective, UMC had failed to confirm that the new hires’ previous job functions and whether or not they are subject to any non-competition obligation so as to avoid assigning similar position immediately after the job transfer; from the physical control aspect, UMC failed to implement any restrictions preventing employees from trade secret misappropriation; and what is more, UMC failed to take any rectifying measure when the law enforcement conducted the search and to instruct employees not to violate the law.

Because three UMC’s employees were found guilty for trade secret misappropriation under Article 13-2 of the Trade Secret Act, the Court held that UMC should be sentenced to pay the criminal fine for each defendant with a total of NT$100 million.

This decision is the first court decision which discusses in details an employer’s criminal liability under Article 13-4 of the Trade Secret Act.  The legislative history of the provision states: “The liability exemption provided in this proviso allows a corporate or natural person employer to submit evidence to prove that it had already used its best efforts in preventing trade secret misappropriation from taking place.  This can help the enterprise avert from the situation where its reputation and goodwill are destroyed by an employee’s singular illegal act and offer incentive to enterprise to use its best efforts in preventing the crime, so as to achieve the purpose of thwarting crimes.”  The statutory provision and the legislative history have both made it clear that the proviso in Article 13-4 of the Trade Secret Act imposes the burden of the proof on the employer.  To meet the requirements prescribed by the court regarding an employer’s prevention obligation, the employer should take active and effective concrete measures to prevent the crime, not just prescribe some general and abstract rules.  Ideally, an employer’s best efforts in crime prevention should include the following:  (1) When hiring a new employee, there should be a set of measures in place to prevent the employee from bringing illegitimate information or materials to the company, including confirming the new hire’s job function in the previous employment and non-competition obligation, if any, and avoiding assigning the employee to a similar function immediately after the termination of the previous employment; (2) during the employment, the employer should provide adequate educational training, adopt effective monitoring and supervision mechanism, and implement sanctions in the case of violation, all of which should be kept in records; (3) after the alleged crime takes place, the employer should undertake honest and thorough internal investigation to confirm the facts, and take all necessary rectifying measures.

While the UMC trade secret misappropriation case has its unique factual background that prompts the court to impose a record high amount of criminal fine, an employer should still learn from the case and control the risk by undertaking active and effective concrete measures to prevent its employees from misappropriating another’s trade secrets to use in the company.

(Jeanne Wang / Marilyn Wu)