Overview

Last Updated: June, 2010

Contents

• Taiwan's IPR Environment
• Special 301
• Copyright
• Trademark
• Patent
• Trade Secrets
• Campus Issues
• Enforcement
• What AIT Can Do in IPR Infringement Cases
• Additional Resources

Taiwan's IPR Environment

As a condition of its accession to the WTO in 2002, Taiwan committed to complying with the WTO Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPs). Over the next eight years, Taiwan conducted reviews of its IPR legislation and took steps to strengthen protection, toughen criminal sentences for violations, and increase enforcement measures:

2001: the Legislative Yuan (LY) approved the Optical Media Law, which now requires CD manufacturing plants to use Source Identification Codes in production.

2002: The Executive Yuan (EY) announced an "IPR Action Year," during which authorities conducted IPR public awareness campaigns and offered training opportunities to IPR enforcement bodies, judges, and prosecutors.

2003: Taiwan created an ad hoc Integrated Enforcement Task Force (IETF) composed of police officers and other officials with expertise in detection and seizure of counterfeit and pirated goods. The EY announced a three-year "IPR Action Plan" to further promote and develop its regime. Taiwan Intellectual Property Office (TIPO) statistics showed the number of police raids on optical media factories increased dramatically from 2002. AIT reporting noted that piracy in the night markets began to decline.

2004: the IETF was made into a permanent Intellectual Property (IP) Police corps, which has a staff of over 220 officers and specialists who investigate IP-related crimes.

2005: The LY passed amendments that allow trademark registrations to claim multiple priority rights. This gives TIPO the legal basis to recognize trademark registration from other countries, and set priority dates based on the first trademark registration. Taiwan also passed legislation to establish a patent attorney system and provide for specialized patent attorney licensing.

2006: Taiwan's Pharmaceutical Law amended to provide drug companies five years of data exclusivity for new drugs. This coverage is limited to chemical entity products, and does not cover new indications.

2007: In June 2007, Taiwan passed legislation providing a legal basis for prosecuting online peer-to-peer platforms whose service allows for the exchange of IPR-infringing materials, and by the end of 2007, the authorities had shut down the two largest P2P service providers in Taiwan.

2008: The long-awaited specialized IP Court started accepting cases in July, and by year's end had a caseload of 694 cases. The Court accepts first-instance and appeals civil and administrative cases, as well as criminal case appeals. In 2008, the MOE issued increasingly strict Internet guidance to universities, including new rules forbidding all peer-to-peer (P2P) software use except with explicit permission, requiring daily bandwidth limits, and monitoring download volume per student .

2009: Taiwan passed amendments to the Copyright Law that limit an ISP's liability if the provider quickly removes IPR-infringing material. The IP Court handled 1878 cases, and closed out 1364.

As a result, Taiwan's overall IPR environment has improved significantly. According to police records, arrests and prosecutions for physical CD and DVD piracy also continue to fall. Industry figures indicate the percentage of pirated CD copies has fallen from 2006's 36 percent of all copies sold to around 20 percent today, and that the number of physical outlets for pirated CDs has also fallen to about 30 locations around Taiwan, versus 250 a decade ago. Seizures of counterfeit goods also declined in all major categories from 2008 to 2009, with pirated music, movie, and software/video-game disk seizures down 17.8 percent, 11.2 percent, and 19 percent, respectively.

Despite its stronger IPR protection laws and enforcement efforts, however, Taiwan continues to face serious challenges from counterfeiters and intellectual property pirates. The U.S. International Intellectual Property Alliance estimates that U.S. industries lose over U.S. $300 million yearly in Taiwan due to IPR violations. Business and entertainment software, DVDs, CDs, books, pharmaceuticals, branded goods, and auto parts are often cited as the most frequently pirated products.

In addition to physical piracy, digital piracy continues to grow, and is now the music and movie industries' number-one concern. Rights holders worry the downloading problem will worsen as broadband Internet service becomes cheaper and more widely available. Digital piracy is not restricted to just music and movies: according to surveys done by the Business Software Alliance (BSA), 39 percent of member-company software used in Taiwan is unauthorized.

Special 301(Click here for the USTR 301 reports)

The United States Trade Representative (USTR) placed Taiwan on its Priority Watch List in 2001, primarily due to concerns about Taiwan's increased production of pirated optical media products. Between 2001 and 2005, however, Taiwan made substantial progress in reducing piracy and counterfeit production through both legislative and enforcement measures. As a result of these positive actions, USTR announced, after an interim review in January 2005, that it would move Taiwan from the Special 301 Priority Watch List to the Watch List. Because of continued improvements to Taiwan's IPR regime from 2005 to 2008, in January 2009, USTR removed Taiwan from the Special 301 Watch List.

Copyright

Unlike patents and trademarks protection, U.S. copyrighted works do not require registration. Taiwan grants protection to persons from countries belonging to the WTO or from countries with which Taiwan has a bilateral copyright agreement. In 2003, Taiwan extended copyright protection to electronic media. Taiwan currently prohibits the use of devices to disarm or destroy technical measures taken by rights owners to protect their copyrighted material.

Trademark

Unlike the U.S., Taiwan operates a "first to file" trademark examination and registration system. When two applications have been filed for similar or identical trademarks, the first application filed will be considered for approval. This does not apply to international "well-known" trademarks such as major brands with trademarks registered in other countries, although owners of well-known trademarks are strongly advised to register their marks in Taiwan. In addition, foreign companies should register appropriate Internet domain names and Chinese language versions of their trademarks. As with patent registration, foreign parties that do not have a place of domicile or a business office in Taiwan must use the services of a registered trademark agent when submitting a trademark application.

Patent

Taiwan follows a first-to-file system for patents, which means patents are granted to those that file first even if the filers are not the original inventors. This system is unlike the United States, which recognizes the "first to invent" rule, but is consistent with practices in other parts of the world, including the European Union. A foreign patent application filed by a person or firm without a business office in Taiwan must be made through an authorized patent agent. Patents are filed with the Taiwan Intellectual Property Office (TIPO).

Trade Secrets

Taiwan's Trade Secrets Act provides for protection of trade secrets belonging to both Taiwan citizens and citizens of WTO member countries including the United States.  As a rule, trade secrets belong to an employer if they result from an employee's work during employment or while using resources belonging to the employer.  Contract language determines ownership in cases involving joint-development of a trade secret, and/or licensing and assignment of trade secrets.  To prevent trade secret disputes, it is important to carefully review all contracts before entering into any agreements with employees, business partners, and contractors.

Campus Issues

The Taiwan Ministry of Education (MOE) continues to combat intellectual property rights (IPR) violations on Taiwan's campuses, and will indefinitely continue its Campus Intellectual Property (IP) Action Plan that began in 2007. The Plan's requirements and incentives are spurring schools to increase enforcement efforts, and the MOE is helping schools to implement best practices across Taiwan. Rights holders report online infringement is down from 2007, and confirm the MOE continues to cooperate in tracking and punishing unauthorized file-sharing on the pan-island university intranet, the Taiwan Academic Network (TANet). Rights holder groups, however, still report widespread use of pirated or unlicensed software. Although on-campus textbook copying and other physical infringement appear to have continued their decade-long decline, rights holders report widespread off-campus textbook piracy.

Enforcement

In 1999, Taiwan established the Taiwan Intellectual Property Office (TIPO) under the Ministry of Economic Affairs to coordinate and administer Taiwan's IPR policies. TIPO's key roles include patent and trademark examination and registration, advocating IPR legislation, coordinating public outreach, and providing training to the judiciary, customs, and law enforcement agencies.

Taiwan's judicial system handles IPR infringement cases. Trademark, copyright, and patent disputes may be addressed through civil litigation, while copyright and trademark cases may be handled through both civil and criminal courts. Pre-trial mediation is not required by Taiwan courts, and is rarely used. In most cases, a plaintiff's objective is to stop the infringement and punish the infringer, often a small business owner, through a fine or prison sentence. Unless the infringer is a major corporation, large awards for damages in civil trials are rare. To effectively deter future infringements, therefore, most rights holders choose to file criminal cases.

The specialized IP Court started accepting cases in July 2008. The Court accepts first-instance and appeals civil and administrative cases, as well as criminal case appeals. Rights holder industry representatives have praised the Court for its knowledgeable experts, and note the IP Court is handling cases faster than non-specialized courts.

What AIT Can Do in IPR Infringement Cases

Because intellectual property rights are private rights, AIT can provide only limited direct assistance. In many cases, AIT can provide companies with basic information on the Taiwan legal system, including lists of local investigative firms and attorneys. However, AIT cannot provide American companies with legal advice or advocate on a company's behalf where a matter is before a court in Taiwan.

When a company encounters serious infringement of its IPR, the rights holder should hire local counsel and pursue a preliminary investigation themselves or through a contracted professional firm, keeping in mind that U.S. companies should ensure compliance with all Taiwan laws. Once the initial investigation is completed, the company should determine whether it is worth pursuing further action.

Additional Resources

Information on organizations, government agencies, and law firms handling IPR-related issues is available here.

 

Disclaimer Links to websites outside the U.S. government or the use of trade, firm, or corporation names are provided for the convenience of the user. Such links and/or use do not constitute official endorsement or approval by the U.S. government of any private sector or non-U.S. government website, product, or service. The information provided above by no means constitutes legal advice and should not be a substitute for advice of counsel. Its intended purpose is to provide an overview of Taiwan's IPR environment, available enforcement mechanisms, and Taiwan offices sharing jurisdiction over IPR protection and enforcement. We recommend that U.S. companies seeking to do business in Taiwan or facing IPR infringement issues retain qualified U.S. and/or Taiwan legal counsel and pursue their rights through Taiwan's IPR enforcement regime.