Strengthening intellectual property rights is one of the most effective ways of encouraging investment, both foreign and domestic. A sophisticated and up-to-date intellectual property regime has become an essential component of any modern economy, and strong protections send a very clear signal to investors that they are dealing with a forward looking jurisdiction.
Taiwan has done well in this regard. For example, establishment of the IP Court in 2008 was an important milestone in the development of a sound and effective intellectual property regime in Taiwan. The Committee would like to express our sincere appreciation to all the judges and clerks of the IP Court for their efforts, including the improvement in the rate of granting evidence-preservation orders. The approval rate for such applications was once only 11%, but according to IP Court statistics, it rose from 14% in 2012 to a peak of 69% in 2016 before declining slightly to 63% in 2017. We commend the IP Court for adopting an appropriate standard when reviewing such applications, in order to help protect the interests of rights-holders and to improve IPR protection more broadly.
While significant and commendable progress of this kind has occurred in recent years, several major shortcomings need urgent attention in order to keep Taiwan from falling behind the global standard. To that end, our recommendations for this year’s White Paper are specifically aimed at helping Taiwan to keep its competitive edge, open up new possibilities for economic growth, and encourage the kinds of innovation that will be crucial for Taiwan’s economy in the coming decades.
Suggestion 1: Provide a clear-cut government commitment to combat online copyright infringements.
Copyright protection against piracy over the internet and on mobile devices remains a significant issue for all copyright holders. Stream-ripping apps and websites that facilitate infringement, pirated content distributed through social media platforms, as well as apps for illicit streaming devices (ISDs) used to disseminate illegal content, have become the fastest-growing challenge to Taiwan’s copyright regime in recent years. They have put enormous pressure on the ability of legitimate rights-holders to survive commercially in Taiwan. Foreign websites are the major sources of pirated content.
Taiwan’s government has consistently ignored the international trend of combating online piracy, adopted in at least 40 countries or territories around the world. A recent example is Greece’s administrative approach, adopted in early 2017, of inviting ISPs to voluntarily cooperate in blocking overseas infringement on Bit Torrent websites. As of March 2018, Japan is also considering measures to cut off access to websites offering free pirated versions of publications such as manga and magazines. In Australia, blocked websites have seen their traffic decrease by 53.4%, with overall usage of the top 250 unauthorized websites decreasing by 25.4% from October 2016 through November 2017. But despite this clear international trend, rights-holders in Taiwan still have no administrative or effective judicial remedies available to them when confronted with infringement by such websites.
In September 2017, an amendment to the Copyright Act was proposed in the Legislative Yuan to provide a legal remedy for copyright infringement from offshore websites. Unfortunately, it failed due to strong protests from netizens claiming that “freedom of speech” and “freedom of information” were at issue. However, such arguments are unpersuasive when the offshore websites in question carry only pirated content.
A strong commitment from Taiwan’s government for dealing with online piracy is urgently needed. Copyright holders look forward to an effective solution, whether by means of an administrative or judicial approach.
Suggestion 2: Reconsider the proposed Copyright Act amendments and make necessary revisions.
The draft amendments of the Copyright Act recently approved by the Executive Yuan fail to provide adequate tools for effectively tackling the problem of copyright piracy, and would move Taiwan further away from international norms, raising questions about Taiwan’s commitment to its existing international obligations. Review of the draft amendments should be postponed until the following issues have also been addressed:
2.1 Ensure that the penal provisions are not lower than those set out in the current Copyright Act.
Even though the use of optical disks has decreased over time, they are still available on the market, sometimes in the form of high quality counterfeit disks. Other physical media are also available, such as hard disks and SD cards. Furthermore, the reproduction and distribution offence under the Executive Yuan’s draft amendment may be broad enough to cover various means of reproduction and distribution, but the level of monetary penalty stipulated therein (NT$750,000) is significantly lower than that currently in force for the reproduction onto and distribution of infringing optical disks. The Committee also notes that the minimum imprisonment of six months for the unauthorized reproduction of work with intent to sell or rent has been removed. We see no justification for these revisions.
2.2 Remove the term “home-use facilities” in the draft amendment as excessively vague.
Due to advances in technology, it is difficult to distinguish home reception facilities from commercial facilities. Many supposed “home-use facilities” are in practice used in commercial contexts, providing entertainment to a large audience. It is also common practice in Taiwan for commercial premises to use home reception facilities for broadcasting works to the public, so it is clear that this exception would not apply only to certain special cases. Given the lack of any effective means of controlling the use of “home use facilities” for commercial purposes, this exception could also conflict with a normal exploitation of the work, and could unreasonably prejudice the legitimate interests of the author. Likewise, the exemption for such uses in the draft amendment would constitute a breach of the Agreement on Trade-related Aspects of Intellectual Property Rights (TRIPS) under the World Trade Organization.
2.3 Extend the copyright protection term to at least 70 years, consistent with the global trend.
Taiwan’s current 50-year copyright protection term is lower than the international standard of at least 70 years, which has already been adopted in more than 60 countries. Taiwan previously agreed to extend the term to 70 years in 2016 in line with its aspiration to join the Trans-Pacific Partnership (TPP), but put off legislative consideration of the change when the U.S. government announced its withdrawal from the TPP. It is clear that guaranteeing a longer potential economic life for a creative work would be a stronger incentive for producers to invest, thereby spurring economic growth as well as tax revenues, and should not merely be used as leverage for Taiwan’s participation in the international community. A longer term of protection would support the development of industry and the creation of new jobs. This revision should be included in an amendment to the Copyright Act as soon as possible.
2.4 Provide rights-holders with an effective remedy against online copyright infringements, similar to those employed in other parts of the world.
As outlined in Suggestion 1 above, Taiwan needs to provide rightsholders with a method of blocking access to foreign websites that host pirated content. Amendments to the Copyright Act should include an enforcement mechanism for this purpose.
Suggestion 3: Adopt effective enforcement measures to block counterfeit and infringing goods coming in from abroad.
The steady expansion of cross-border travel, transportation, and trade makes it necessary to place more emphasis on the interception of infringing goods coming from abroad. The Committee urges the government to implement measures to better control the importation of counterfeit and infringing goods by mail, express courier, and express mail. For example, Customs should increase the rate of inspections it conducts on imported goods, and the courier companies used most frequently by websites offering counterfeit and infringing goods should be checked more often by Customs. If they fail to improve, they should receive formal warnings or even be placed on a blacklist.
The Committee also finds that the number of cases involving the investigation of IPR infringement has been decreasing. According to Taiwan Intellectual Property Office (TIPO) statistics, the total number of IP infringement cases handled by the police authorities (including the Intellectual Property Rights Police) and by the Ministry of Justice Investigation Bureau decreased by 8.55% and 20.51% respectively from 2016 to 2017. Moreover, the number of inspections conducted by the Intellectual Property Rights Police and the number of police officers assigned to that unit both decreased by 28%.
These reductions are not due to a decline in IPR infringement, which remains a major problem in Taiwan, but rather indicate that IPR enforcement is not being properly prioritized. Given the declining rate of new cases being investigated, many rights-holders are at a disadvantage when seeking remedies, and prosecutors will also have difficulty charging infringers, owing to the lack of evidence. The Committee urges the government to facilitate IPR criminal investigations by ensuring that the investigative units have enough personnel, as well as sufficient budget to provide technological support.
Suggestion 4: For situations where damage is difficult to prove, raise the minimum compensation to NT$30,000 per infringement.
Article 88 III of the Copyright Act states that if it is too difficult for the injured party to prove actual damages, statutory compensation may be requested at an amount not less than NT$10,000 and not more than NT$1 million. Actual damage is often difficult to prove in software infringement cases – such as those involving hard disk loading – because judges can only rely on evidence seized during raids when calculating damages. Even though Article 88 tried to solve this problem for software owners, courts in Taiwan have consistently held that the damage equals the market price of the software in the disks seized during raids.
The courts’ reluctance to apply the statutory compensation clause makes Article 88 III ineffective in addressing this problem. As a result, copyright-holders’ losses are not properly compensated, because past lost royalty revenue is not taken into consideration. In order to properly calculate royalty revenue, we recommend raising the minimum bar for compensation of copyright owners’ loss. The minimum bar of NT$10,000 was set in 1992, and has never been adjusted. However, the maximum fine was NT$500,000 when introduced in 1992, and was doubled to NT$1 million in 2003. We believe it is time for the minimum bar to be raised to NT$30,000, in order to properly compensate copyright owners for past lost license fees.
In the current fourth draft of the Copyright Act amendments to Article 88 III (which is Art. 99II (4) in the draft), the requirement for “difficulty for the injured party to prove actual damages” has been removed, allowing copyright owners to claim statutory damages in the range of NT$10,000 to NT$1 million. While this change is an improvement in that it removes the obligation for the injured party to first prove difficulty when determining the actual damages, it does not clarify whether compensation is to be calculated on a “per infringement” or a “per case” basis.
The global standard is that copyright infringement damages are calculated on a “per infringement” basis. However, statements made by TIPO have indicated that it could be done on a “per case” basis, leaving flexibility for the judge. This situation should be further clarified. If statutory damage is construed as NT$10,000 to NT$1 million “per case,” it would be unfair because software prices can be almost NT$500,000 per copyright. Limiting a case to a maximum compensation of NT$1 million substantially limits software copyright owners’ rights to compensation under Article 99. We therefore suggest that the words “per infringement” be added to the draft amendment, or that this part of the legislation be otherwise clarified to ensure correct interpretation of the law in the future.