April~June 2003
Quarterly Report on Taiwan's Intellectual Property Rights Protection

"Standing strong throughout the outbreak, we unite as a whole, where the light of innovation and creation nourishes the island, creating an IPR protection environment that allows us to march toward a better tomorrow. "

-Tsai, Lien-sheng, Director General 
                               Intellectual Property Office (TIPO)

• Executive Summary
   
  Taiwan recognizes that adequate and effective protection of intellectual property rights requires a comprehensive approach covering both legislative and enforcement fronts. The protection of intellectual property rights tops our national agenda. Accordingly, our government has taken aggressive measure to strengthen the current IPR regime.

Improvements to IPR Laws Continue
 
With respect to legislative enhancements, which focus on updating our laws to reflect the most recent international trends, the Legislative Yuan passed the Amendment to the Copyright Law on June 6. This step was in addition to the earlier promulgation of the amended Patent Law and Trademark Law, which occurred in February and May, respectively. 
 
Further, in response to the growth of cyber crime with the advent of digitization, the Legislative Yuan acted on June 3 to pass the Amendment to Penalty Articles Governing Computer-generated Crimes under the Criminal Code. 
 
To tighten border control measures, especially with respect to the importing and exporting of goods, the Executive Yuan on June 3 finalized draft amendments to Article 37 and Article 39 bis to provide the Customs Service with the proper legal basis for enforcement actions under the Customs Enforcement Statute. The draft amendments were sent to the Legislative Yuan for approval on June 6, 2003.

• Enforcement Milestones

Past Efforts Yield Impressive Results
 
On June 3, 2003, the Business Software Alliance (BSA) released the "Eighth Annual BSA Global Software Piracy Study." This study shows that the software piracy rate in Taiwan fell by a full 10 percentage points, from 53% in 2001 to 43% in 2002. In fact, according to the BSA, Taiwan registered the second largest decrease in such piracy within the Asia/Pacific region, just after Japan. From the BSA's annual assessments, Taiwan has achieved a full 29-point drop in the rate of software piracy, from the 72% rate recorded in 1994, to the 2002 figure of 43%. These findings reflect the Taiwan government's steady progress in improving IPR protection for business software.

Premier Issues Significant Instructions to Achieve Better IPR Protection at Cabinet-Level Meetings
 
IPremier Yu convened an inter-agency Cabinet-level meeting on April 23, 2003, to examine the adequacy and effectiveness of IPR protection measures being implemented by the relevant agencies during the first quarter of 2003. At this meeting, Premier Yu reviewed the enforcement results and issued the following instructions:

• To achieve legalization of the Integrated Enforcement Taskforce of the Ministry of Interior; 

• To prevent illegal goods from being exported and to tighten border control measures, the Ministry of Finance was asked to complete the drafting of amendments to paragraph 2, Article 37 of the Customs Enforcement Statute; and

• To discourage freight forwarders and customs brokers from falsely completing export declarations for shipments of optical disks, the Ministry of Justice has concluded that such an action is an act of forgery. The Ministry of Finance was asked to provide the information to all exporters, forwarders and relevant industries and associations. 

• Status
   
  - The Ministry of Finance formulated amendments to Articles 37 and 39-1 of the Customs Enforcement Statute. 
  - The Executive Yuan passed the draft amendments on June 3, 2003, which were sent to the Legislative Yuan for approval. 
  - The Directorate General of Customs, MOF instructed its affiliated departments on May 19 to provide training programs to related associations in order to ensure correct declarations. 
   

• TRIPS Consistent Laws & Regulations
   
  THE PASSAGE OF THE AMENDMENTS TO THE COPYRIGHT LAW
   
  In order to strengthen copyright protection, increase civil remedies and criminal penalties, and to expand the scope of copyright infringement as a public offense, the Amendments to the Copyright Law was passed by the Legislative Yuan on June 6, 2003.
   
  The following are highlights from the Amendments that the President will promulgate in the near future:
   

  1. Right of Remuneration for Public Performances
     The amended Law accords a right of remuneration for public performances to right holders of sound recordings and performers. (Article 26.3.4)
      

  2. Protection for Electronic Rights Management Information 
     The amended Law affords protection to electronic rights management information ("ERMI"). The Law also provides for sufficient civil remedies and criminal penalties for violations of protection to ERMI.（Article 3, 80bis, 90quarter, 96bis）
      

  3. Prohibition on the Use of Infringing Copies of Computer Programs for Business Purposes
     The amended Law explicitly prohibits the use of infringing copies of computer programs for business purposes. Under the amended Law, the use of computer software that is known to be infringing may not be used for any business purpose, including internal operations. (Article 87(5) )
      

  4. Increase of Civil Remedies Up to NT$ 5 Million (US$ 143,000)
     Regarding civil remedies, the amount of statutory compensation is increased from NT$ 1 million to NT$ 5 million when the infringement is ruled as serious in nature. （Article 88）
      

  5. Fines for Criminal Penalties Up to NT$ 8 Million (US$250,000)
     In the case of criminal penalties, the major changes are summarized as follows: 

  1. The fines are increased up to NT$ 8 Million (US$ 250,000). The 
     various levels of fines are set out in Articles 91, 91bis, and 94. 

  2. The amended Law contains a new confiscation provision. (Article 98) 

  3. The amended Law introduces a new forfeiture provision to be enforced by police authorities. (Article 98bis)

  6. Copyright Infringement as a Public Offense
     The amended Law incorporates copyright infringement as a public offense in Articles 91.3 and Article 91bis. Article 94 is also relevant（in the case of "vocational infringement"）. Specifically, the amended Law provides that, when unauthorized reproduction is made for the purpose of profit-making or for sale in the format of an optical disk, complaints from the copyright holder prior to initiating enforcement actions will no longer be required. (Article 100) 

  The amended Copyright Law of June 6, in which most of the suggestions given by the U.S. were adopted. Although the Article on Technology Protection was eliminated, but Article 358 of the Criminal Code covers computer-generated crimes, which the Legislative Yuan interprets it to include protection for technology-related copyrights. Though the provision of confiscation, ex officio, of imported/exported infringing goods was not passed, however, actual enforcement actions are by no means affected. We believe that with our effort, we will be effective in deterring IPR infringements.
  
  AMENDMENTS TO THE OPTICAL MEDIA MANAGEMENT STATUTE
   
  Optical disks have become one of the most frequent and common means of IPR infringements. In response to such offenses, the Optical Media Management Statute took effect more than 18 months ago. The Amendment to that Statute includes new management mechanisms addressing a number of key reforms, including: 

  • Guidelines on stamper management;

  • Nullification of manufacturing permits; 

  • Guidelines for changes of possession or status of manufacturing devices; 

  • Removal and seizure of pirated manufacturing devices and products; 

  • Authorization for cutting off of power and water supplies to illegal manufacturing plants; and

  • Provision for more explicit and severe levels of penalties. 

The draft Amendment was sent to the Executive Yuan for review on March 5, 2003.

AMENDMENTS TO THE TRADEMARK LAW
 
In order to comply with international trademark standards and to allow sound and 3-dimensional shapes to be registered as trademarks, the Amendments to the Trademark Law were passed on April 29, 2003, by the Legislative Yuan and promulgated on May 28, 2003. The Amendments take effect on November 28. Major elements and key changes include: 

1. Adding sounds and 3-dimensional shapes to what may be registered as trademarks; 

2. Specifying the legal basis for acceptance of an electronic trademark application;

3. Enhancing protection provided to famous trademarks; 

4. Adopting a new system under which anyone may file opposition to the granting of a trademark within 3 months after public notice of registration is provided;

5. Enhancing the protection provided to geographical indications for wines and spirits; and 

6. Specifying border control measures applicable to trademark-infringing goods.

AMENDMENTS TO THE PATENT LAW
 
The amended Patent Law was promulgated on February 6, 2003. Changes regarding penalties were adopted in Articles 83, 125, 126, and 128-131. With the entry into force of these new provisions on March 31, patent infringement cases are now governed entirely under civil litigation procedures. Changes in other articles as modified by these Amendments shall take effect as of the date announced by the Executive Yuan.

ADDITIONAL RELATED REGULATIONS
 
--Governing Computer-generated Crimes under the Criminal Code
To provide means for the adequate protection of computers, safeguard the use of electromagnetic records, and enable computers to fulfill their operational purposes, Articles were formulated and adopted as part of the Amendments to the Criminal Code. The changes were incorporated in the penalty chapter. Practices addressed in the Amendments include interference with computer use, and covers activities such as forced entry into computers without cause; the acquisition, deletion, or alternation of electromagnetic records without cause; and the production of programming for use in committing computer-generated crimes. 
On June 3, 2003, the Legislative Yuan passed the above Amendments to the Criminal Code. The statutory changes are expected to have a significant impact on the prevention of cyber crimes in Taiwan. 

--Infringing Goods for Export/Import Subject to Fines Up to Triple the Price of the Goods and Provide for Confiscation under the Customs Enforcement Statute
In order to prevent the exportation of infringing goods by means of false declarations, Article 37, paragraph 2 of the Customs Enforcement Statute will be amended to delete the provision for minimum fines, and increase the maximum statutory penalty up to 1 million NT Dollars. To tighten border control measures on both exports and imports, the Executive Yuan passed draft amendments to Article 39 bis. This Article establishes the legal basis for future border enforcement measures by providing that, " Goods, which are imported or exported by freight or parcel post service, or via passenger baggage, that have infringed patent rights, trademark rights, or copyrights shall be fined in an equivalent to up to a threefold amount of market value of such goods, and be confiscated." The said draft amendments were sent to the Legislative Yuan for approval on June 6, 2003.  

• Measures Taken by the Ministry of Justice （MOJ） to Streamline Judicial Ruling Procedures
   
  The Ministry of Justice determined that the time limitation applying to prosecutors for processing infringement cases should be 8 months. In 2002, the average case processing time was 74.85 days, and for IPR infringement cases, 115.07 days. Through the end of May of this year, the average processing time needed for the handling of IPR infringement cases by prosecutors was 81.14 days, shorter than in 2002.
   
  The Ministry of Justice has developed a system for monitoring the judicial progress of those infringement cases judged to be "severe" on a per-case basis. This system was finalized at the end of June, and training on the use of the new system is being launched in the near future. 
   
  The Amendment to the "Telecommunication Protection and Interception Act", drafted by the MOJ, and covering investigations of severe IPR infringements within its monitoring scope, was forwarded on May 15 to the Executive Yuan for review.
   
  Concerning the Power of Attorney issue, the Judicial Yuan reemphasized in June of this year its action in 2002 to issue notice to all levels of the courts that, with respect to issuing Powers of Attorney, foreigners should be treated the same as Taiwan nationals. Under this directive, therefore, it is not necessary to require foreigners to provide the certificate of POA through representative office as long as the other party does not question the genuineness and authenticity of documents being submitted. Based on a survey of foreign civil cases currently pending at all levels of the courts, in the 264 cases in which one of the parties is a foreign corporation, in 41 cases, including those where the other party is contesting the authenticity of the POA, the foreign corporation has been asked to provide the certificate of POA through the representative office as part of the legal proceeding. Thus, the POA issue has been raised in only 15.5% of all pending civil cases.
   

• More Severe Penalties in IPR Cases

Through the end of June, according to the report by the Ministry of Justice, 1,735 suspects were convicted of IPR-infringing activities, marking an increase of 29.28% over the 1,342 convictions issued during the same period in 2002. Of the 2003 convictions, 278 defendants (16.02% of total convictions) were sentenced to prison terms of longer than six months. This number represented an increase of 30.51% over those subject to this category of sentences during the same period in 2002. Through the end of June 2003, the affirmed guilty rate is 85.40%, higher than the 84.07% rate achieved for the same period in 2002.

• Other Government IPR Enforcement Measures

TIGHTENED BORDER CONTROLs - FALSE DECLARATION OF EXPORTED OPTICAL DISKS CONSIDERED DOCUMENT FORGERY
 
To further enhance existing border control measures, the customs authorities have begun, ex officio, confiscating any infringing goods or those suspected of being infringing, immediately upon discovery, in accordance with the "Guidelines on Taskforce Targeting Exportation of Pirated Optical Disks," approved on March 5, 2003. The Taskforce's mission is to strengthen border control measures in order to combat the export of pirated and counterfeit goods.
 
The Ministry of Justice has determined, in any instance where a person files a false declaration in respect of exported optical disks, such an act will be considered as forgery of documents, consistent with Article 215 of the Criminal Code. Therefore exporters, forwarders and brokers must ensure that their declarations are correct, so as to avoid legal liabilities and sanctions. The Directorate General of Customs instructed its affiliated departments on May 19 to provide export/import trade organizations and customs declaration agency associations with education and training programs to facilitate the enforcement of this determination. 
 
To carry on existing IPR protection policies as well as to adopt new mechanisms set forth under the amended Trademark Law and Copyright Law, the Directorate General of Customs promulgated the Enforcement Guideline on Trademark & Copyright Protection Measures by Customs on June 10. This Guideline provides the legal basis for border control officers to enforce IPR infringements on trademark and copyright.

OVER 750 OPTICAL DISK PLANT INSPECTIONS IN 18 MONTHS

In order to deter the manufacture of illegal optical disks more effectively, the Joint Optical Disk Enforcement Taskforce (JODE) has moved to broaden inspections to include all optical disk manufacturers, and encompassing suspicious locations within their scope. Nighttime inspections were increased, and specific individuals have been inspected intensively and repeatedly, at least once per week. 
 
From January through June 2003, JODE conducted 497 nationwide random inspections of optical disk manufacturers, compared with 297 such inspections for the whole of 2002. Of these, 142 took place during nighttime hours. In total, 21 optical disk plants were inspected, with 16 manufacturing and 5 packaging plants being shut down, and the confiscation/ seizure of 18 sets of manufacturing equipment.

NATIONAL POLICE ADMINISTRATION UNDERTAKES EFFECTIVE ENFORCEMENT MEASURES AGAINST PRODUCERS AND DISTRIBUTORS OF PIRATED OPTICAL DISKS

As instructed by Premier Yu, the National Police Administration (NPA) undertook effective measures to clamp down on attempts to sell pirated optical disks through night markets, the internet, newspaper advertisements, and production of pirated disks by manufacturers. The NPA instructed its affiliated police authorities on May 6, 2003 to undertake twice-weekly raids on suspicious optical disk plants, warehouses, marketplaces, night markets and other business locations, pursuant to the "Plan for Strengthening Intellectual Property Right Protection". These raids form part of the plan to step up prosecution efforts aimed at those found to be producing or distributing pirated optical disks.

MOEA ISSUED NT$1.12 MILLION INFORMANT REWARDS

Minister of Economic Affairs Yi-fu LIN on June 25 issued rewards totaling NT$1.12 million to informants who provided tips leading to the crack down on operations by two underground optical disk manufacturers, both located in Taipei County. 
 
In accordance with the MOEA Infringement Enforcement Rewards Program, these rewards are granted to enforcement officers and informants whose information leads to the successful shutdown of underground optical disk plants that are equipped with optical disk injection molding machines, etching machines, stampers, finished pirated optical disks and other manufacturing devices. A maximum of NT$10 million reward can be granted. The amount of any individual reward is NT$ 1 million, plus a ten percent bonus based on the total value of the confiscated infringing equipment and materials. 
 
According to the terms of the reward program, the informants involved with these two raids are entitled to a total of NT$ 2.45 and 2.06 million, respectively, assuming that the defendants in both instances are found guilty. 
 
The public has responded positively to the program, as the number of tips regarding alleged infringements continues to climb since the program's inauguration in March. The toll free hotline for the public to use in reporting piracy-related activity is: 0800-016-597.

• Actions to Reduce End-User Piracy

TAIWAN'S PIRACY RATE FOR BUSINESS SOFTWARE FALLS BY AS MUCH AS TEN PERCENTAGE POINTS

The BSA indicates that long-term education and public awareness programs regarding the importance of improved IPR protection in Taiwan, together with effective anti-piracy efforts, have contributed substantially to the dramatic fall in the piracy rate for business software in 2002. The BSA's annual report, released on June 3, shows that the piracy rate in Taiwan decreased by a full ten percentage points, from 53% in 2001 to 43% in 2002. This compares favorably with the average piracy rate in the Asia Pacific region of 55% in 2002. Taiwan's piracy rate is now 12 percentage points below this average rate. Elsewhere in Asia, the study found software piracy rates of 92% in China; 56% in Hong Kong; 50% in Korea; 48% in Singapore, and 77% in Thailand.Taiwan was second only to Japan in the region by this measure.

The BSA results also substantiate the very significant and persistent efforts my government has undertaken to promote the use of authorized computer software among government agencies.

• LATEST ENFORCEMENT STATISTICS

National Police Administration (NPA):
 
As of June 30 this year, the National Police Administration has reported 2,459 instances of IPR infringement raids and inspections, and arrested a total of 3,044 suspects. The total value of the pirated and counterfeit goods seized as a result of these raids was estimated at more than NT$ 5 billion (US$ 144 million).
 
For the period January-June, the figures for infringement cases and suspects, compared to those for the same period in 2002, decreased somewhat by 9.66% and 7.95%, respectively. This also demonstrates the decline occurring in the incidence of IPR infringement.

Integrated Enforcement Taskforce (IETF):
 
For the first half of 2003, a total of 1,084 cases of infringements were recorded, involving a total value of infringing goods of NT$2.67 billion (US$ 77 million), with 417 suspects arrested. During this period, more than 1,220,903 pieces of pirated optical disks were confiscated, along with 242 burners. The disks contained musical, audio-visual, and computer games content. 
 
Directorate General of Customs, Ministry of Finance: 
 
Since the enactment of the Enforcement Guideline on Optical Disks Exportation issued on March 6, islandwide customs offices have confiscated a total of 403,914 pirated optical disks.

• Conclusion

As a member of the WTO, Taiwan will continue to improve its regime to provide adequate and effective protection of intellectual property rights, as well as taking into account in its policies the latest developments in IP-related treaties administered by the WIPO. My government firmly believes that the adequate implementation of a comprehensive legal framework, through strong enforcement actions and supplemented by educational and public awareness programs, are fundamental to bringing about the most healthy IP protection environment in Taiwan. 
 
Although the effects of the SARS epidemic affected many aspects of life on the island, but enforcement actions during the second quarter of 2003 were not hindered. We believe that the statistical reports contained in this submission show conclusively that we continue to make great progress in improving our IPR enforcement efforts. Our IPR enforcement team should be commended for its sustained success and continued hard work.

3F, 185 Hsinhai Rd., Sec. 2, Taipei 106, Taiwan
Tel:02-2738-0007 Fax:02-2735-2656
Website: http://www.tipo.gov.tw 
E-mail: ipo@mail.moeaipo.gov.tw
July, 2003