Intellectual property rights (IPR) protection has played a crucial role in maintaining Taiwan’s competitive position in the global economy. It is vital to continue the Taiwan government’s efforts to ensure a comprehensive and healthy legal environment that provides sufficient protection to rights-owners.
Some encouraging developments related to Taiwan’s IPR protection have occurred in the past year. For example, prosecutors indicted some defendants for copyright infringement through online piracy, and the Taiwan Intellectual Property Office (TIPO) diligently worked with the Taipei Association of Advertising Agencies and Taiwan Intellectual Property Alliance to cut off payment flows to pirate websites. In terms of trade secrets protection, the Judicial Yuan also strengthened court guidelines and reference documents for handling major trade secret cases. An amendment to the Trade Secrets Act was also enacted, enabling prosecutors to issue investigation confidentiality protective orders, which prevent the further disclosure of trade secrets during the investigation process. The Committee applauds all these efforts from the Taiwan government to protect IPR.
However, the Committee believes that further steps to provide adequate protection for intellectual property would greatly benefit Taiwan’s stakeholders. We saw little or no improvement on the issues brought up in last year’s White Paper – issues that remain of great concern. Offshore online copyright infringement continues to damage the market, and Taiwan still lacks effective enforcement measures either administratively or judicially for offshore online piracy. The recent draft amendment to the Copyright Act does not include any solutions for current piracy issues, and instead may even weaken the available protection for rights-owners. Further, a consistent method for calculating damages in trade-secrets cases is still lacking. In all these areas, the government needs to make a determined effort to work with industry to find viable solutions.
Below, the Committee presents suggestions for each of this year’s issues. We recognize that many countries face similar situations, and that the challenges are growing as trade in counterfeit and pirated goods increasingly moves in the direction of online purchases and small-scale shipments. The Committee hopes that the following suggestions will help facilitate increased cooperation between AmCham Taiwan members and the Taiwan authorities, enabling each side to benefit from the other’s expertise. We commend the continued efforts to make Taiwan one of the most efficient IPR enforcement systems in the Asian region.
Suggestion 1: Expand cross-agency cooperation to protect IPR in the pharmaceutical industry.
The issue of counterfeit drugs, which has plagued Taiwan for decades, severely damages the legal rights of trademark owners. In the digital era, this issue has entered a new stage. Distributors actively advertise, import, and sell counterfeit drugs via social media and other digital platforms. These activities not only violate pharmaceutical companies’ IPR, such as patents, trademarks, and trade secrets, but also put the health of Taiwanese consumers at risk.
The Committee is grateful to the Customs Administration for its continuous efforts to protect Taiwan’s border and to defend legal drugs from the intrusion of counterfeits. However, the Customs Administration lacks the authority to combat counterfeit drugs through other channels, such as online sales. Full protection requires cooperation and coordination among the Customs Administration, TIPO, and the Taiwan Food and Drug Administration (TFDA).
We were pleased to see TIPO’s commitment in its “2021-2023 IPR Action Plan” to raise public awareness of the importance of respecting IPR, and its pledge to utilize “all kinds of media and digital platforms to publish promotional material and advertisements” in furthering that cause. Therefore, the Committee suggests that TIPO set aside a section on its website to help the public distinguish trade-secret-protected pharmaceutical products from counterfeits.
In addition, the Committee hopes that TIPO will increase its coordination with TFDA on counterfeit drug issues. Pharmaceutical companies have tried to get permission from TFDA to educate the public on how to identify legal products through their trademarks. But TFDA has viewed this action as violating Article 24 of the Pharmaceutical Affairs Act, even though the trademark owners had no intention to advertise the medical efficacy of the medicaments. Such restrictions not only exceed the actual goal of Article 24, endangering the public’s health, but also bar private companies from protecting their own trademarks from being pirated and their value diluted. We urge TIPO to discuss this matter with TFDA and to appropriately ease the limitations on such educational advertisements.
Suggestion 2: Relax the timing for filing divisional applications and increase the number of office actions during examinations.
The patent prosecution process in Taiwan includes two stages: preliminary examination and re-examination. The Patent Act provides for divisional applications to be filed during the following periods: (i) any time before a decision of re-examination is rendered, or (ii) within three months after receipt of an allowance decision either at the first examination stage or the re-examination stage. Current draft amendments to the Patent Act (the Draft Amendments) remove the re-examination stage and preclude the filing of a divisional application during review by the Review Board. That is, the applicant is allowed to file a divisional application (i) any time before a decision of examination is rendered, or (ii) within three months after receipt of an allowance decision at the examination stage. If the application is rejected, there is no opportunity to file a divisional application.
The proposed Amendments reduce the opportunity to file a divisional application and increase the burden on applicants in terms of the cost of prosecution and the difficulty involved in managing a patent family. The Committee suggests revising the Draft Amendments to enable applicants to file a divisional application when an application is still under review by the Review Board, within a certain time period after receipt of an allowance decision from the Review Board, or even before asserting civil infringement claims.
On the other hand, under current patent practice, if the examiner intends to reject the application at the preliminary examination, the examiner will issue a preliminary office action stating the reasons for rejection, so that the applicant has a chance to make amendments and submit a response. After reviewing the response, the examiner will issue a decision rejecting or allowing the application. Given the above, in most cases the applicant will have at least one chance to make a response before receiving a decision. During re-examination, the applicant will have further opportunity to communicate with the new examiner and make amendments and submit a response.
The Draft Amendments abandon the above-mentioned re-examination process. Instead, an applicant contesting the rejection decision needs to file a petition with the Board to review the case. Although there would still be a chance to submit post-filing data during Board review, reconsideration through another examination will be allowed only when amendments are submitted – and amendments are relatively constrained at the Board review stage. Therefore, applicants for pharmaceutical or biotechnical patents may be compelled to make decisions on amendments before obtaining experimental data, which will make it difficult for applicants to prepare a filing strategy in Taiwan. To make up for that deficiency, the Committee suggests adding the phrase “more than one office action can be issued before issuance of a decision” to Article 45 of the Draft Amendments, so that applicants can have a better chance to protect their technology through the patent system.
Suggestion 3: Find a way to effectively combat online piracy.
Overseas-based pirate websites and infringing APPs continued to run rampant in 2020. An adequate legal framework and effective government action to fix the problem are still lacking, leaving the legitimate interests of copyright holders in jeopardy.
Foreign-based websites and infringing APP developers illegally provide a huge amount of copyrighted content for streaming or downloading, or for free or paid streaming-ripping services targeting users in Taiwan. Due to the lack of jurisdiction or failure to identify domestic defendants, the Taiwan government has not adopted any concrete and effective measure to cope with the situation. Although the government deserves credit for enactment of Article 87.1(8) of the Copyright Act, this provision may be of limited usefulness as it requires providing evidence that the alleged offender “received benefit,” a difficult hurdle.
Nevertheless, at least 40 countries and territories have already implemented effective ways of dealing with foreign-based copyright infringement, through either administrative or judicial solutions. We urge the authorities to study those examples to see whether any would be appropriate models for Taiwan.
Although many of the infringing online services are located outside of Taiwan, a significant amount of such illegal activity occurs within Taiwan and should be subject to effective law-enforcement action.
While we understand that there are certain obstacles to reducing online piracy, including the difficulty of determining the actual owner or operator of the pirated websites, Taiwan needs to address the fact that it is falling behind the rest of the world on this issue. The Committee urges the government to use every available measure to tackle online piracy as soon as possible. Taiwan needs to fix the deficiencies in the current legal framework that leave rights-holders with no effective redress – either administrative or judicial – when confronted with online piracy from overseas.
Suggestion 4: Remedy serious shortcomings in the proposed Copyright Act during the legislative review process.
A Copyright Act has been approved by the Executive Yuan and was sent to the Legislative Yuan for review in April this year. The bill adopts most parts of the unsatisfactory Copyright Act that was submitted to the Legislative Yuan in the previous session last year. Examples of the shortcomings continued from the previous bill include unreasonable expansion of fair use of copyrighted material, weakened criminal sanctions against optical disc piracy, failure to extend the copyright protection term to conform with the global norm, and failure to provide a solution to the problem of foreign-based online piracy.
The current Copyright Act would constitute an unacceptable step backward for copyright protection. The Committee therefore suggests the following means to remedy the deficiencies in the draft amendments:
Maintain the current three-step test principles for application to all types of fair use.
Ensure that penal provisions are at least as high as those set out in the current Copyright Act and apply the criminal penalties against optical disc piracy to copyright offences involving digital storage media.
Extend the copyright protection term to at least 70 years in conformity with the international trend.
Provide an effective mechanism to address the problem of foreign-based online piracy and a framework to ensure adequate remedy and effective enforcement against online piracy.
We firmly urge the legislature to make these important changes during its review of the Copyright Act rather than pass a law that the international community will regard as a step backward in IPR protection.