Taiwan: Commercial Success Recognized By IP Court To Support Patent's Non-Obviousness

For years patent practitioners in Taiwan had been looking forward to an IP Court decision affirming a patent's non-obviousness (or inventive step in local legal terms) on the ground of commercial success, or other objective indicia categorized as "auxiliary considerations", and now they received a heartening response from the IP Court. Wan-Sheng Trade Corp. v. IP Office, 107 Shing-Zhuan-Su 75, Taiwan IP Court (February 2019).

The seminal IP Court decision was rendered in late February 2019 for a patent invalidation dispute, in which a utility model patent for "a heat preservation cover for food" had been challenged, and later declared by the IP Office, as obvious in view of two prior art patents. As in many invalidation actions, the main issue contended by the parties before the IP Office was whether there would have been adequate motivation to combine the prior art features to arrive at the disputed UM (and the IP Office's answer was in the affirmative.) It was only after appealing the case to the IP Court that the patentee first brought forth the commercial success argument, which the IP Court found convincing. The IP Office's ruling was reversed and remanded.

Among the four objective indicia termed as "auxiliary consideration" by the Patent Examination Guidelines (2017) for the test of non-obviousness, commercial success of a patented product was the one most frequently invoked by patentees, the other three being unexpected efficacy, resolving a long pre-existing problem, and overcoming a technical bias. Despite this, before Wan-Sheng, never was any commercial success argument, or any objective indicia argument, known to be found convincing by the IP Court, the chief obstacle being the causal connection test — whether there was a reasonable causal link between the asserted indicia and the patented features was oftentimes found daunting to decide. The ill-chosen word "auxiliary" suggesting such considerations are secondary in importance and relevance further increased the difficulty for patentees to win on an objective indicia argument. The truth is, notwithstanding the somewhat misleading word "auxiliary," the Patent Examination Guidelines never indicated that objective indicia like commercial success should be considered secondarily. Quite the opposite, the Guidelines said commercial success and other objective indicia are in the class of "positive factors for inventive step" which "shall be considered together and weighed against negative factors against inventiveness" (referring to prior art disclosure, motivation to combine, etc.) More, the Guidelines reminded the reader that acknowledging these positive factors in the test of inventive step is for the purpose of "avoiding hindsight caused by arbitrary combination of segments of prior art references." Perhaps a better understanding of the term "auxiliary considerations" would be that these considerations being objective indicia help the examiner stay clear of said hindsight bias.

One might think that, to make the court buy its commercial success argument, the patentee in Wan-Sheng must have rendered an elaborate narrative along with abundant evidence proving all possible aspects of commercial success resulted from its UM. In fact, the patentee told a simply story, centering on the mushrooming of counterfeits after the patented product was offered for sale online.

According to the IP Court's decision, the patentee initially developed an original type of heat preservation cover which was first sold in 2012. That old product enjoyed longer sale duration and better market exposure, but no counterfeit was spotted, as results of a Google image search revealed. In 2014, the patented product was introduced to the market, the major distinguishing feature being that the patented product was foldable while the old product was not. In the period from 2014 through 2015, the patented product dominated the market, where no other foldable covers were found. However, as soon as the patented product was sold online in 2015, copycats started to appear, and counterfeits went rampant in 2017; they were sold at much lower prices and eroded the patentee's revenue.

Based on the above, the court was convinced that the commercial success of the patented product was not only real but was resulted from the patented feature (foldability) over prior art (including the patentee's old products which were unfoldable.) The interesting part is that the main body of the patentee's evidence consisted of nothing else than a dozen of print-outs of Google image search results.

While the patentee was fortunate enough to help turn a historical page for the development of Taiwan patent law, this was not a total victory, as the patentee did not win solely on the battle front of commercial success. Its defense against the "negative factors" turned out likewise effective as the IP Office's holding for the asserted motivation to combine the prior art was reversed by the IP Court. We do not really know whether the IP Court would have ruled in favor of the patentee if he had not won on positive factors and negative factors alike. However, it is the writer's belief that with Wan-Sheng as a firm bridgehead, increased confidence will be found in patentees as well as judges to advance into cases where patents' inventive step can be solely proved by commercial success and/or other objective indicia of non-obviousness in Taiwan.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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