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In June 2011, Toshiba Corporation, a famous Japanese manufacturer, initiated its first round of legal actions in Taiwan against DVD-ROM manufacturers who had not attained patent licenses. After hearing this case for one year, the Intellectual Property Court adjudicated on 28 June 2012 that the DVD-ROM products produced by the Defendant, Abico FS Co., Ltd. (formerly known as Feng-Sheng Co.,), infringed Toshiba’s invention patent No. 098207. The Court ruled that the Defendant shall not only pay Toshiba damages of NT$ 160 Million (interests charged separately) but also refrain from manufacturing, offering for sale, selling, using, or importing the infringing products. Any and all infringing DVD-ROM products shall be retrieved and destroyed.
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Important opinions expressed by the Intellectual Property Court in the judgment 2011-MinZhuanSu-61 included the following:
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In respect of the patentee's application for claim amendment, civil courts may make judgments at their sole discretion
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Toshiba, the Plaintiff, applied to Intellectual Property Office for claim amendment before filing the complaint. Even if the application has not yet been approved, the Intellectual Property Court may determine the legitimacy of said application for amendment at its sole discretion during the civil trial. Since the Court held that the Plaintiff's application for amendment complied with the related provisions of the Patent Act, the Court used the amended claims as the basis for determining the infringement issue.
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For determining the existence of infringement, a comparison between the DVD-ROM standard specification and the patent scope could be made
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The Defendant did not deny that its DVD-ROM products were manufactured in accordance with the industrial standard specification for DVD-ROMs (i.e., DVD Specifications for Read-Only Discs). Hence, the Court compared the contents of said specification with the claims of the disputed patent to identify infringement, and confirmed that DVD-ROM products complying with the specification were covered by the disputed patent.
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The Defendant intentionally and negligently infringed patent rights
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The Plaintiff previously entrusted licensing-related affairs of the disputed patent to DVD6C, and DVD6C negotiated with the Defendant for patent licensing. Although the Defendant had not agreed to sign any license agreements until now, it knew of the existence of the disputed patent rights since the negotiation. As for the period preceding its patent licensing negotiation with DVD6C, since the Defendant is a player with general knowledge in the technical fields of the disputed patent, and since it manufactured and sold related products, it should have at least conducted a precursory check of the patent rights for the techniques it planned to implement; otherwise, it shall be deemed negligent. Since patent rights are managed by a system of registration and publication, and because infringement of intellectual property rights has become a common risk encountered by the operations of modern enterprises, to avoid infringing the property rights of others, an enterprise shall be responsible for having risk awareness and shall assume greater duty of care.
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Disputed patent's contribution to DVD-ROM discs
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The Defendant claimed that the disputed patent is one of the 400 patents on DVD6C's patent list, and hence the amount claimable by the Plaintiff shall be divided by 400. However, the Defendant could not prove that the discs it produced used all of the 400 patents of DVD6C, nor did it prove the ratio of loyalties allocated to the disputed patent and the other 399 patents. Furthermore, the disputed patent is part of the DVD-ROM specification, its technical feature is incorporated essentially into the whole disc and cannot be solely separated, and discs would be valueless without the disputed patent. Therefore, the disputed patent offers essential contributions to the entirety of the discs. The Defendant's argument that compensation should be limited to one four-hundredth of the damages is unjustifiable.
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The Intellectual Property Court used the DVD sales revenue and the total disc sales revenue provided by the Defendant during the trial and the related figures disclosed in its annual reports to calculate the number of DVD-ROM discs sold during the period of infringement, further calculated the average price according to unit prices of discs as admitted by the Defendant, and then multiplied these two numbers to attain the amount of compensation to be paid by the Defendant to Toshiba. It is worth mentioning that the Court calculated punitive damages by doubling the compensation amount garnered during the period where the Defendant knowingly committed infringement. The calculated final amount of indemnification to be borne by the Defendant was NT$ 1.6 billion. Since the Plaintiff only claimed for NT$ 160 million, the Court then awarded the Plaintiff a complete victory.
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