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Can a Declaratory Judgment Action Be Brought to Confirm Non-Infringement of a Patent Covering a Therapeutic Indication Not Listed in a Drug's Package Insert?
An action for a declaratory judgment is a type of civil action available under Taiwan law. Compared to other types of civil actions, the requirements for bringing a declaratory judgment action are strictly circumscribed. Paragraph 1, Article 247 of the Taiwan Code of Civil Procedure provides: "An action for a declaratory judgment confirming a legal relation may not be initiated unless the plaintiff has immediate legal interests in demanding such judgment. The same rule shall apply to an action for a declaratory judgment confirming the authenticity of a certificate or the existence or nonexistence of the facts from which a legal relation arises." Accordingly, whether a plaintiff may bring an action for a declaratory judgment hinges on whether the plaintiff has immediate legal interests. However, in each specific case, whether immediate legal interests exist has long been a point of contention between parties in such actions and a persistent challenge for legal practitioners.
In this regard, on 25 March 2026, the Supreme Court rendered the 2023 Tai Shang Zi No. 7 judgment, providing further guidance. In the underlying case, Pharmaceutical Company A (a generic drug manufacturer) received a market approval from the Taiwan Food and Drug Administration (the "TFDA") for its drug product X (a generic drug), after which Pharmaceutical Company B, the original drug developer, sent a warning letter asserting that "therapeutic indication Y of drug product X potentially infringes patent Z, a use patent owned by Company B that remains in force." In response, Company A removed therapeutic indication Y from the list of therapeutic indications for drug product X. However, Company A subsequently came to believe that patent Z lacked patentability, and a dispute arose between Companies A and B over whether listing therapeutic indication Y for drug product X would infringe patent Z. Company A thereupon commenced a declaratory judgment action against Company B, seeking a declaration that "listing therapeutic indication Y for drug product X does not infringe patent Z."
Regarding the issue of whether Company A had immediate legal interests sufficient to bring a declaratory judgment action, both the first instance (the 2020 Min Zhuan Su Zi No. 79 judgment, rendered by the Intellectual Property and Commercial Court (the "IPCC") on 28 September 2021) and the second instance (the 2021 Min Zhuan Shang Zi No. 31 judgment, rendered by the IPCC on 26 May 2022) held that Company A had immediate legal interests sufficient to bring the action, and ruled in its favor. A summary of the key reasoning on immediate legal interests is provided below.
1. Paragraph 1, Article 247 of the Code of Civil Procedure provides that "an action for a declaratory judgment confirming a legal relation may not be initiated unless the plaintiff has immediate legal interests in demanding such judgment." Immediate legal interests in demanding a declaratory judgment refer to circumstances in which the existence or nonexistence of a legal relation is uncertain, such that the plaintiff's position under private law is at risk of prejudice, and the risk can be eliminated by a declaratory judgment against the defendant (see the 2015 Tai Shang Zi No. 1355 judgment rendered by the Supreme Court).
2. Company A sought to confirm whether a legal relation of patent infringement existed between the parties with respect to the listing of therapeutic indication Y for drug product X. The existence or nonexistence of such legal relation has legal bearing on whether therapeutic indication Y may be listed for drug product X and on the elimination of interference by Company B acting under the guise of exercising its patent rights. The risk to Company A's position under private law could be eliminated by a declaratory judgment against Company B. Company A therefore had immediate legal interests in demanding a declaratory judgment, and the action for a declaratory judgment was properly brought and should be permitted.
However, on further appeal by Company B, the Supreme Court questioned whether Company A had immediate legal interests to bring the action. In the 2023 Tai Shang Zi No. 7 judgment, the Supreme Court stated: "An action for a declaratory judgment operates through a judgment on the merits carrying res judicata effect to establish the existence or nonexistence of a right or legal relation. It is only where a present dispute over a legal relation is at issue that there is necessity and practical utility in demanding a declaratory judgment. The following factors are also considered. Article 246 of the Code of Civil Procedure expressly limits actions for future performance to cases where there is a necessity to make an advance claim, which means that a present obligation to perform is the rule in actions for performance, and an action for future performance may only be brought where the statutory requirements are met. However, no equivalent exception exists in actions for a declaratory judgment. Given that judicial resources are finite, unnecessary litigation inevitably impairs both other parties' access to the courts and the efficiency of adjudication. Since disputes over the existence or nonexistence of a prospective legal relation involve inherently uncertain facts that have yet to arise or materialize, adjudicating such matters risks imposing unnecessary litigation burdens on opposing parties and overwhelming the courts, thereby crowding out those with more pressing needs for access to the judicial system. Furthermore, potential future legal disputes are factors that parties may weigh in advance through risk assessment, and may be addressed through other social mechanisms such as professional evaluation, legal consultation, negotiation and agreement with potential counterparties, and risk allocation and transfer, where involvement in an action for a declaratory judgment may not be necessary. Therefore, a plaintiff may not bring an action for a declaratory judgment under Paragraph 1, Article 247 of the Code of Civil Procedure with respect to a prospective legal relation."
The Supreme Court further indicated that, under Paragraph 1, Article 39, Paragraph 1, Article 46, and Article 48-1 of the Pharmaceutical Affairs Act and Article 24 of its Enforcement Rules, even after a market approval has been granted, any addition of a therapeutic indication still requires approval from the competent authority before it may be listed on the package insert. Since Company A had already removed therapeutic indication Y, it would need to reapply for approval from the competent authority before the indication could be listed again. The Supreme Court therefore held that whether Company A's claim seeking a declaration that "listing therapeutic indication Y for drug product X does not infringe patent Z" constituted a claim concerning a prospective legal relation, and the status of Company A's efforts to reinstate therapeutic indication Y, were both directly relevant to whether Company A had immediate legal interests to bring the action. The second-instance court's failure to investigate these matters constituted a violation of law due to misapplication and erroneous application of legal provisions, as well as inadequate reasoning.