Case law clarifies jurisdiction over labour disputes involving IP rights

Since its establishment on 1 July 2008, the Taiwan IP Court has handled many IP cases in the country. However, it does not have exclusive jurisdiction over such cases. Therefore, disputes have arisen as to how jurisdiction over IP cases should be determined between the IP Court and an ordinary court, especially with regard to rulings by the IP Court or an ordinary court that grant transfer of jurisdiction to the other.

In Taiwan, in order to administer labour disputes in an efficient and professional manner, the Labour Incident Act was promulgated on 5 December 2018 and came into force on 1 January 2020. Pursuant to the act, the Judicial Yuan was given the authority to formulate the Enforcement Rules Governing the Labour Incident Act and the Labour Incident Case Adjudication Rules, both of which were implemented on 15 November 2019 and took effect on 1 January 2020.

Article 4(1) of the Labour Incident Act stipulates that courts of all levels must establish labour courts in order to administer and adjudicate labour cases. However, with regard to jurisdiction over labour disputes involving IP rights, it is not expressly stated as to whether an ordinary court (ie, a labour court), which possesses special knowledge in adjudicating labour cases, or the IP Court, which possesses special knowledge to adjudicate IP cases, should have jurisdiction.

Under the current law, both the IP Court and the labour court can be the court of competent jurisdiction over labour disputes involving IP rights; in other words, a labour court does not have exclusive jurisdiction (Article 4(2 to 4) and Article 7 of the Labour Incident Case Adjudication Rules). Further, workers are entitled to choose the court of jurisdiction under the Labour Incident Act, which also allows disputing parties to select the court in accordance with the agreement that they have reached on jurisdiction, making the jurisdiction issue in IP-related cases more complicated.

On 10 June 2020 the IP Court issued a ruling, which allowed the transfer of jurisdiction to a labour court for a case involving both labour and IP disputes. In the case, the plaintiff (the employer) claimed that after the termination of artist management contracts between it and the defendants (former employees), the defendants had infringed the employer’s copyrights by continuing to use the protected character backgrounds, copywriting and graphics designed by the employer in their own promotional activities, and that such use constituted acts of “deceptive use of symbols representing another person’s business or services” and “exploiting the fruits of another’s labor” in violation of the Fair Trade Act and the Copyright Act.

The employer claimed that because the former employees’ actions violating the Fair Trade Act and the Copyright Act occurred only after the termination of their employment and the former employees had not asserted any rights in relation to their employment contracts, there was no labour dispute in this case.

However, the IP Court held that the former employees had become aware of in-store performances of certain works, the copyright of which belonged to the employer. Further, they took in-store photos during the term of their employment and had deliberately reproduced and used these performances and photos without the employer’s consent, which constituted a violation of the Fair Trade Act and the Copyright Act, after the termination of employment. The IP Court therefore held that the fundamental cause and facts of the civil action lay in the disputes over the rights and obligations arising from the employment relationship between the parties, and that there was no doubt that the subject case was a labour dispute involving IP rights, to which the Labour Incident Act should apply.

According to Paragraphs 1 and 7 of Article 6 of the Labour Incident Act, where the employer acts as a plaintiff, the defendant will have the right to make a motion requesting a transfer of the case to a lawfully competent court of their choice. Thus, based on the motion filed by the former employees, the IP Court ruled that the case would be transferred to the labour court of the relevant region.

In the wake of the implementation of the Labour Incident Act, the issue of determining which court has jurisdiction over a labour dispute involving IP rights has become complex and entangled with stipulations from the Intellectual Property Case Adjudication Act, the Labour Incident Act, the Enforcement Rules Governing the Labour Incident Act and the Code of Civil Procedure. Thus, it would be prudent for any party facing a similar issue to first seek the opinion of legal counsel. In view of the IP Court’s ruling in the case at hand, in principle, if there is no agreement on jurisdiction between an employer and an employee, or if the agreement on jurisdiction between the parties is obviously biased, then, under the Labour Incident Act, the employee is entitled to exercise their right of choice and may file a motion for transfer of the case to a labour court or to the IP Court, regardless of whether the employer has initiated the lawsuit at the IP Court or a labour court.