Intellectual
Property Developments
in the Greater China Region
edited by
Andy Y. Sun,
Executive Director, and
the staff of Asia Pacific Legal Institute
TAIWAN
TAIWAN
 Government Anti-counterfeiting Efforts Intensified
at Dawn of U.S. "Special 301" Review
Taiwan's Legislature Enacted Patent
and Trademark Examiners' Qualification Statute
Executive
Yuan Approved Electronic Signature Bill
IPO
Released Trademark Law Amendment for Public Comments
The Supreme Court Issued
Judgment on A Foreign Firm's Power of Attorney
Science and Technology Basic Law Enacted
–
Birth of A New Technology Transfer Model
U.S.
Issued Latest Findings on Taiwan's Intellectual Property Protection and
Trade Practices
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Fair Trade Commission
Issued New Guidelines on Licensing Agreements (September 2000)
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The United
Daily reported on February 1, 2000 that the government is all
but ready to launch a massive campaign next week to crack down on piracy
and counterfeiting activities that have once again mushrooming and plaguing
the legitimate businesses on the island. This campaign is also
designed to "preempt" any negative reviews that may be forthcoming in
this year's "Special 301" identification and consultation process under
the U.S. trade law and conducted by the United States Trade Representative
between the end of March and April.
While the government
may be doing its last-minute ditch for a nicer-looking report card,
the private sector seems to have done a much better anti-counterfeiting
job in 1999. For example, the Anti-Counterfeiting Coalition of
Information Products (ACCIP), a local business alliance devoted to anti-piracy
efforts, confiscated 83,640 illegal software CDs (commonly called the
"Dabutei," literally meaning "super nutritious prescription"),
18 coin-dropping computers, and 85,268 copies of illegal video games.
A total of 196 individuals were prosecuted and some of them were college
students. Although judges tend to be somewhat more lenient toward
first-time student offenders, because of the now more rigid copyright
penalty statute, in one particular case the student-defendant was convicted
and sentenced for seven months without any possibility for early release
or exchange jail time for fine (which was permitted under the old rule).
In other cases the penalties have increased significantly because the
contents of the pirated goods may involve pornography.
The United
Daily report also mentioned the rift the Business Software Association (BSA),
Taiwan and the island's local community. A leading voice for
global software anti-piracy, one of the strongest vocal critics
of Taiwan's piracy condition in the past, and with the full backing
of companies like Microsoft,
one would think that it is and should be working closely with groups
like ACCIP. However, both the government and ACCIP criticize BSA for
only making noises in Washington, D.C. but rarely taking serious actions
in Taiwan. According to a senior official of the ACCIP, BSA in
average go after only two (2) potential violators per month and most
of the disputes were settled out of court because BSA is really interested
in getting money. in addition, most of its targets are legitimate
businesses and hardly any serious criminal offenders were raided or
prosecuted by its actions (BSA was at the forefront to lobby for the
enactment of tough criminal penalties against copyright infringement
several years ago). So far neither BSA Taiwan nor its Washington,
D.C. headquarters has responded
to this complaint.
The United
Daily is one of the largest-circulating newspapers in Taiwan.
On January 14, 2000, the last day of session, the
Legislative Yuan enacted the Patent Examination Officer's Qualification
Statute and the Trademark Examination Officers' Statute.
Separately, a new Article 16bis is added to the Intellectual
Property Office Organization Law to deal with the so-called "outside
examiners" issues that have long plagued the patent examination
system in Taiwan.
Under these new rules, all patent and trademark examiners
must first pass a national qualification examination before they can
be appointed. Once appointed, each will follow a three-step career
ladder. First as an Assistant Examination Officer, then after
a five-year tenure and proper professional trainings, an Examination
Officer, and another three-year tenure plus further trainings, finally
a Senior Examination Officer. The statutes also guarantee the
rights and benefits of examiners to curtail the high turnover that has
mired the reputation and quality of work of the Intellectual Property Office (IPO). With regard to the "outside
examiners," after some arm-twisting, the law makers finally agree to
allow the IPO to nevertheless keep them, but no more than 20% of the
legally permitted hiring ceiling. To ensure that this backdoor
will not create a floodgate, these "commissioned examiners," as the
statute now calls them, must also meet certain qualification requirements
and be appointed through open competition.
The "outside examination" system was originally created
as an expediency to give many in academia an opportunity to help solve
the manpower shortage problems at the then National Bureau of Standards.
In time, however, what was meant to be a tentative measure became a
permanent fixture and at times a ground for political favoritism.
The lack of legal authority, formal training and proper management or
supervision often render the quality of IPO works questionable, and
result in prolonged legal battles, causing uncertainties to the intellectual
property granted. As of the end of 1998, there were 580 "outside"
patent examiners as opposed to 140 regular examiners, and they handled
roughly half of the newly filed patent applications. This issue
has also become one of the major concerns of the American businesses
and has been high on the agenda in the United States-Taiwan bilateral
disputes over adequate and effective protection of intellectual property.
In its 2061st
Cabinet Meeting, the Executive Yuan approved the Draft Electronic Signature
Law and subsequently transmitted the bill to the Legislative Yuan for
further review and enactment. This bill marks a critical step
in the construction of the island's e-commerce legal infrastructure.
After some intensive
debates, the administration apparently decides to base the bill primarily
on the text of the 1996
Model Law on Electronic Commerce, drafted an adopted by the United Nations Commission
on International Trade Law (UNCITRAL). The bill contains thirteen
(13) provisions and expressly authorizes the use of any electronic signatures
(as opposed to mere "non-symmetrical digital signatures") in lieu of
traditional signatures and the establishment of "certification authorities"
(CA).
While the bill
is designed to respect the market as opposed to government-controlled
scheme, it nevertheless leaves many details open for further administrative
rules and actions. Also noticeably is the question of how this
bill can actually be implemented in a society deeply adapted to the
use of personal chokes or seals as the only means of authenticity, despite
the fact that the Civil Code clearly provides that personal signature
should take precedent over choke seal should there be any discrepancies.
Due to the presidential
election, however, this bill is not expected to be further addressed
until after the new president is inaugurated (May 20, 2000) and a new
cabinet is formed.
[Text of the Draft Electronic Signature Law/Bill
and Illustrations (HTTP and/or Microsoft Word version, in traditional Chinese/BIG 5 code.]
The Intellectual Property Office on October 2, 1999 formally
released the sixth draft of the Trademark Law Amendments for public
comments. The first public hearing was held on November 9 and more will
be scheduled this year.
This draft represents
the most far-reaching amendment since the 1993 revision. The draft expands
from the 79 provisions under the current law to 103 provisions and realigns
the sequence. Highlights of the proposed amendments include --
(1) expanding the definition and coverage of "trademarks" to encompass
three-dimensional shapes of the marks or trade dress; (2) allowing multi-categories
per application on the one hand and simply the over-all categorization
of marks on the other; (3) strengthening the protection of famous marks;
(4) streamlining the prosecution procedure, such as abolishing substantive
examination over trademark renewal and the registration of defensive
marks; (5) enhancing the right holder's substantive protection, such
as the introduction of dilution and/or tarnishing; and (6) establishing
an independent Trademark Review Board to examine validity disputes.
Unlike the 1997 Trademark Law Amendment which puts off the effective
date of certain provisions until the date Taiwan actually joins the
World Trade Organization,
each and every provision in the bill will be in full force as soon as
the it becomes law. Initially thought to provide some leverage
for Taiwan's accession to the WTO,
the tactics used in the 1997 Amendment apparently backfired. It
was widely criticized for half-step taking, lack of sincerity and undue
politicization. This latest draft is clearly an attempt to bring
Taiwan fully in line with the TRIPs Agreement.
[Chinese text of the Trademark Amendment Bill
and Illustrations (HTTP
version)]
In response to an extraordinary appeal, the Supreme
Court on February 3, 1999 handed down a judgment, apparently trying
to lay the issue of foreign corporation's power of attorney to rest.[3] In this case, the
Chief Prosecutor of the Supreme Court (the equivalent to Solicitor General
of the United States) filed an extraordinary appeal on behalf of the
plaintiff in EBCO Manufacturing Company (U.S.) v. Hua-chi Fountain
Machine, Ltd., et al. This is because the case was originally
filed as a criminal case under Taiwan's Copyright Law. There is only
one issue to be resolved, that is, whether an executive vice president
(EVP) of a foreign corporation is the proper agent to file a complaint
in Taiwan on behalf of that corporation? In other words, whether
the power of attorney issued to the EVP qualifies him as the legal representative
of the corporation, as Articles 108 and 208 of the Company Law provides
that only the chairman of the board may represent the company?
Here the Supreme Court overturned what could have been
a final ruling by the Taiwan High Court. The Court coined the
issue as a matter of choice of law. Since the Criminal Procedure
Law does not provide who may legally represent a foreign company, the
court must look into other statutes for guidance. Having surveyed
a number of statutory provisions, the court concluded that the issue
must be resolved in accordance with the law where the foreign company
was originally chartered (lex loci), not the law of Taiwan. The
court further differentiated this rule from Article 6 of the Treaty
of Friendship, Commerce and Navigation between the United States of
America and the Republic of China (November 4, 1946, 63 Stat. 1300,
1304-06). That article states, among other things, that the nationals,
corporations and associations of either party shall enjoy freedom of
access to the courts of justice in the territory of another party and
to exercise all rights and privileges in conformity with the applicable
laws and regulations on terms no less favorable than what they receive
at home. The court held that Article 6 means the applicable
procedural law in the prosecution of a litigation in Taiwan being
Taiwan's Civil and Criminal Procedure Law. Whether or not a party
is duly represented or whether a power of attorney is valid is a matter
of substantive law and should be determined by the law of the
foreign jurisdiction where the company was chartered.
This issue has plagued the U.S.-Taiwan trade relationship
in recent times because some courts in Taiwan have strictly interpreted
and applied the Company Law, thereby resulting cases filed by foreign
firms being dismissed outright unless the company's CEO personally executed
and filed the necessary paperwork. Precious time often lost in
an infringement suit and many foreign firms have cried foul for this
rule. Although the Ministry of Justice has issued Circulars to
interpret the statutes differently, courts are certainly not bound by
these internal rules designed for the prosecutors. Frustrated,
the U.S. Trade Representative eventually cited this issue as one of
the main causes for U.S. re-enlisting Taiwan on the 1999 Special 301
"Watch List." With the coming of this judgment, this issue may
be a thing of the past.
__________________________
[3] Criminal Judgment
of the Supreme Court, (88) Tai Fei Tzu Ti No. 35 (February 3,
1999).
On January 20, 1999, the Science and Technology Basic Law was signed
into law. The purpose of this statute is to lay out the fundamental
principles and guidelines for the government (Executive Yuan) to design
its strategies for the development of science and technology (both natural
and social sciences), especially on funding level, balance with environmental
protection, and the titles of intellectual property rights.
With regard to intellectual property rights, Article 6 specifically
precludes the application of the State-owned Property Law and allows
a university or research institution to hold titles on any or all of
the rights derived from a government-sponsored research project.
As a result, universities and research institutions may engage in commercialization
of their research results and freely alienate their intellectual property
rights with any interested parties in the private sector. However, as
of the end January 2000, exactly a year since the enactment of this
statute, the National Science Council has yet to promulgate the necessary
implementing rules, although a new draft has been circulated around
different related agencies and there is a strong likelihood that its
implementation is imminent.
The latest draft seeks to significantly reduce the government's control
over how technology transfer may be conducted. However, the government
retains the right of first use and there is still a front-load charge
out of the royalty payments.
This fundamental change of technology transfer policy was, in a significant
part, inspired by the U.S. experiences, especially the enactment of
two laws, the so-called Bayh-Dole Act of 1980 (University
and Small Business Patent Procedures Act, Public Law No. 96-517)
and Stevenson-Wydler Technology Innovation Act of 1980 (Public
Law No. 96-480). In 20 years, technology cooperation and development
among federal laboratories, universities, research institutions and
business sector mushroomed in the United States. The consensus
is that this rapid growth (especially in biotechnology) could not have
happened but for the enactment of these two laws. Prior to 1980,
the U.S. government by and large held the titles of intellectual property
rights and that means all rights belonged to the public domain and no
exclusive licensing was possible without special legal authority.
[Chinese
text of the Science and Technology Basic Law
(BIG 5 code)]
On March 31, 2000, the United States Trade Representative (USTR) issued
its 2000 National Trade Estimate on Foreign Trade Barriers (NTE)
report, which includes, among other things, the latest U.S. official
findings on Taiwan's intellectual property protection and trade practices.
The USTR specifically identify the weak judicial system as the source
of problematic enforcement of intellectual property protection.
The report suggests that judges are ill-equipped to handle intellectual
property issues, and often times even render poor judgments.
On the other hand, Taiwan is identified as the largest
source of imported counterfeiting goods to the United States, particularly
in the area of optical media products such as CDs, VCDs, CD-ROMs and
DVDs. For the first time, the lack of adequate protection over trade
dress has been raised as an issue to be resolved.
As of March 29, 2000, a USTR delegation was in Taipei negotiating with
officials of the Board of Foreign Trade and Intellectual Property Office
of the Ministry of Economic Affairs on those issues and concerns.
[Text of USTR's
2000 National Trade Estimate Report on Foreign Trade
Barriers: Taiwan 
(PDF version)]
*This list is
intended to serve as a starting point for those who wish to conduct international
comparative researches on intellectual property and/or trade law issues.
As many of these sites also provide extensive links to other sites, our
list is not an attempt to duplicate their efforts, rather to compliment
them. Special indications are made for sites that are bilingual, multilingual
or in foreign language.
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