Professor Chung-lun Shen of Taiwan's National Chengchi University has published a short article titled Taiwan Supreme Court to Clarify Distinction between Patent Damages and Unjust Enrichment: Koninklijke Philips N.V. v. Gigastorage Corporation, in NAIP IP Observer #108, Sept. 28, 2017. The article discusses a recent patent infringement case brought by Philips against Taiwanese manufacturer Gigastorage. (Disclosure: In 2007, I served as a proposed expert witness for the defense in a U.S. case brought by Philips against Gigastorage.) According to the article, the trial court concluded that (1) there was no proof of infringement from January 1, 2000 to April 1, 2003; (2) there was proof of infringement from January 1, 2014 to February 14, 2015, but under the patent statute Philips could not recover (as it requested) an award of the defendant's profit for that period, because Gigastorage earned no profit from the sale of infringing products during that time; and (3) for the in-between period, Philips was barred from recovering patent damages due to the two-year statute of limitations, but under an unjust enrichment theory (for which the applicable statute of limitations is 15 years) it could recover the benefit Gigastorage incurred during that time. The court calculated this benefit by (1) estimating Gigastorage's revenue from the sale of infringing products (NT$644 million), and then (2) based on the relative contributions of the patent in suit and other technology awarding NT$10.5 million (about US$347,000) altogether. On appeal, the Court of Appeals awarded $NT1.1 billion (about US$33 million) for unjust enrichment, based on its view that the defendant derived a benefit equal to the royalty it would have paid had it not infringed. The court calculated the royalty based on a price of $NT0.06 per infringing disk, concluding that apportionment is not relevant to the unjust enrichment remedy here, and that Philips offered Gigastorage an efficient package licensing deal. The court also held that Philips's delay in filing suit did not bar the award, and the matter is now headed to Taiwan's Supreme Court.
The case is interesting for a number of reasons. First, in some other countries including the U.K. and I believe Germany, a court will deny an award of infringer's profits under the patent statute if the infringer earned no profits, even though it may have incurred some benefit (for example, in the form of lower costs). See my book p.203 for discussion of a relevant English case. Apparently Taiwan follows the same rule. Second, the Taiwanese court's practice of awarding monetary relief for an unjust enrichment claim, for which the applicable statute of limitations is longer than for a patent infringement claim, is consistent with practice in some other countries, including as I recall Germany and Japan. Third, however, I'm not at all sure that it is sensible to award the entire benefit the infringer earned, where some of that benefit surely must depend on the use of other technologies; the trial court's "contribution" approach sounds more defensible than the Court of Appeals' rule. (In the U.S., of course, the infringer of a design patent can be forced to disgorge the entire benefit derived from the relevant "article of manufacture," but as I've argued many times before that result makes little economic sense. See, e.g., here.) Fourth, the question of whether laches or equitable estoppel should be a defense to a claim that is brought within the relevant statute of limitations (here, for unjust enrichment) is reminiscent of the two recent cases in which U.S. Supreme Court has held that under U.S. law laches is not a defense to a claim for damages for patent or copyright infringement (see, e.g., here).
It will be interesting to see what happens before the Taiwan Supreme Court.
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