IPR Toolkit: Purpose

As in other parts of Asia, the protection of Intellectual Property Rights (IPR) is of foremost importance to foreign businesses operating in the Taiwan market.  The Economic Section of the American Institute in Taiwan has created this IPR Toolkit to provide general information on Taiwan's IPR regulations and enforcement mechanisms.  The purpose of this website is to provide U.S. firms with an overview of Taiwan's current IPR environment as well as the resources available to foreign companies in Taiwan.  This website is not intended to serve as a substitute for legal advice.

Taiwan's Current IPR Environment

As a condition of its accession to the WTO in 2002, Taiwan made a commitment to comply with the WTO Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPs).  Over the past several years, Taiwan has taken steps to address compliance issues.  The Executive Yuan declared an "IPR Action Year" in 2002 during which authorities conducted IPR public awareness campaigns and offered training opportunities to IPR enforcement bodies, judges, and prosecutors.  To continue these efforts, the Executive Yuan declared a three-year "IPR Action Plan" to further promote and develop its IPR regime from 2003 to 2005.

Recently, Taiwan has conducted rigorous reviews of its IPR legislation and has amended its Patent, Copyright, and Trademark laws to clarify IPR ownership rights and strengthen criminal sentences for IPR violations.  In addition, it has expanded its IPR enforcement measures.  In 2001, the Legislative Yuan approved the Optical Media Law, which now requires CD manufacturing plants to use Source Identification Codes in production.  In 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. In 2004, the IETF was made permanent and now has a staff of over 220 dedicated to investigating intellectual property related crimes.

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 estimated that in 2004, U.S. industries lost over U.S. $315 million 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 or counterfeit products available in Taiwan. Both foreign and domestic companies are the targets of IPR violations.

Most recently, the Internet has taken off as a popular sales venue for counterfeit and pirated goods.  Software and DVDs, for example, are now regularly produced on a "burn to order" basis with orders coming through online requests.  In addition, online sales of counterfeit products such as clothing, shoes, and accessories are gaining popularity as a result of increased raids on traditional sales venues such as night markets.  As distribution channels continue to migrate to the Internet, it is becoming increasingly difficult to identify the source of pirated and counterfeit products in Taiwan.

Although some counterfeit products continue to be produced in Taiwan, a wide variety of counterfeit and pirated products available to Taiwan consumers are produced by Taiwan nationals working in China, Malaysia, Vietnam, and other countries in the region.  These products are imported to Taiwan, often through criminal syndicates operating across borders. 

Special 301

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 that it would move Taiwan from the Special 301 Priority Watch List to the Watch List during an interim review in January 2005.  According to the most recent annual review announced on April 29, 2005, Taiwan will remain on the Special 301 Watch List.  USTR noted that Internet piracy of copyrighted works and corporate end-use piracy of business software remain areas of concern.  Additional areas of concern include the lack of coordinated efforts to address illegal copying of textbooks and production of counterfeit pharmaceuticals.

Copyright

Taiwan's Copyright Act dates back to articles adopted by the Republic of China in 1928.  The Copyright Act underwent significant revisions in the 1970s, late 1980s and early 1990s. Most recently, the Copyright Act was amended in 2003 and again in 2004.  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

Taiwan's legal recognition of trademarks has its origins in the Republic of China's 1930 Trademark Act.  In 1949, the Republic of China's National Bureau of Standards moved to Taiwan and became Taiwan's official trademark authorization body in 1954.  Amendments to the Trademark Act were infrequent until the 1980s and 1990s.  Taiwan most recently amended its Trademark Act in 2003. 

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's first Patent Act was drafted in 1944, and underwent major revisions in 1979 and 1986.  In an effort to comply with TRIPs, Taiwan approved amendments to the Patent Act in 2001 and made further improvements in 2003.  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.

Industry Specific Issues

Illegal reproduction and distribution of music, film, software, video games, and other copyrighted or trademarked materials remains a major source of concern in Taiwan.  Taiwan has developed more rigorous policies targeting producers and distributors of pirated items over the past several years.  Nonetheless, illegal sales of infringing goods continue through methods such as Internet-based "Peer-to-Peer" (P2P) file sharing and underground "burn to order" services. 

Illicit pharmaceutical production is also of concern in Taiwan.  The International Pharmaceutical Research Manufacturers Association (IRPMA) estimates that nearly twenty-five percent of pharmaceutical products on the Taiwan market may be counterfeit or unlicensed.  Mainland China appears to be a frequent source of illicit pharmaceuticals. 

Taiwan's IPR Enforcement System

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/or 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. 

Currently, complaints must be filed in the jurisdiction in which the infringement occurred.  This may change in the future, as Taiwan is considering the introduction of a specialized IP court. 

What the U.S. Government Can Do in IPR Infringement Cases

Because intellectual property rights are private rights, the U.S. government can provide only limited direct assistance. In many cases, the U.S. government can provide companies with basic information on the Taiwan legal system, including lists of local investigative firms and attorneys. However, the U.S. government 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 blatant 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 on this website.