Court nullifies government compulsory licensing

The legal battle on high tech IPR can be traced back to 2004, when Taiwan’s Intellectual Property Office (IPO) under the Ministry of Economic Affairs (MOEA) , despite strong objections from Philips, granted compulsory licenses to Gigastorage, a relatively small manufacturer, for five CD-R patents. The decision was confirmed by the MOEA’s Committee of Appeal in 2006.

But a European Commission report issued Jan. 30 this year concluded that the Patent Law of Taiwan and related decisions made under it are inconsistent with World Trade Organization (WTO) rules on intellectual property. The EU also demanded that Taiwan take concrete steps to amend its Patent Law and reverse the compulsory license decision within two months, threatening to start WTO trade dispute proceedings if the Taiwanese authorities failed to comply.

Philips (Taiwan) welcomed the latest decision, saying that “the ruling affirmed that the decisions by the IPO and the Committee of Appeal are illegal and have no legal effect.”

After the EU’s report, the court verdict proves again that Philips is right on the issue, added James Lee, General Manager of Philips’ Intellectual Property and Standards division.

The European Economic and Trade Office (EETO) in Taipei, however, declined to comment on the decision, citing the sensitivity of the issue.

“Of course it is an important verdict, but we are now in extremely sensitive negotiations with Taiwan, “ explained an EETO official on condition of anonymity.

Wang may-hwa, director-general of the IPO, said her office will decide whether to appeal the case to the Supreme Administrative Court after reviewing the reasons stipulated in the verdict.

One expert said the court’s decision might be against the Taiwanese government, but it also provides an exit for Taiwan, since it seems to satisfy the second demand of the EU — the removal of the “recedential effects” of the measure, including the revocation of the compulsory licenses in their entirety.

A compulsory license is a decision by a government that permits another producer to use a patent without the consent of the patent holder.

Since Philips and Gigastorage have already settled the case with an unknown sum of compensation from Gigastorage, the case involves no commercial interests, but the EU decided to pursue it to the end for fear that if not totally resolved, it is still possible that Taiwan could use compulsory licensing again in the future.

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