Recognizing that effective protection of intellectual property right serves not only as our commitment to the international community, but also as the drive to industrial and national competitiveness upgrading, the Executive Yuan has instructed the Ministry of Economic Affairs to continue implementing relevant intellectual property right protection affairs by formulating the “Comprehensive 3-year Action Plan (2003 to 2005) for IPR Protection” after the completion of the “2002 Action Year for IPR Protection” campaign.

Premier Yu Shyi-kun has held four interagency cabinet-level meetings on February 17, March 3, March 21, and April 23 in the first half of 2003, and has given total 65 instructions, where 60 have been accomplished, to all ministries on substantial implementation and enhancement toward a healthier IP protection regime that safeguards local interest and complies with worldwide standards. These accomplishments include: Completion on amendments to the Patent Law, Trademark Law, and Copyright Act; Establishment of the Integrated Enforcement Taskforce (IETF) in January 2003; Formulation of the IPR Specialty Coordination Committee of the Ministry of Justice to oversee the coordination among the prosecutorial, police, and investigative agencies in enforcing piracy distributions at night markets, plazas, and via flyers and the Internet; Launch of IP Specialty Group of the Ministry of Finance in March to enhance border control measures by effectively monitoring export of pirated optical disks; Increase of informant rewards to NT$10 million to spur public tip-off; and Intensified public dissemination and education through constant effort by the Government Information Office and the Ministry of Education.

Taiwan’s persistent efforts and achievements in carrying out adequate and effective IPR measures have been endorsed by representatives of right holder associations. Mr. Robin Lee, Secretary General of IFPI in Taiwan, in a coordination meeting held on July 22, 2003, mentioned that the piracy in night markets is decreasing. Representative from the MPA in Taiwan also mentioned that night markets are on their way to a piracy-free environment. In addition, intensive crackdowns result in increasing numbers of legal manufacturers receiving orders for legal ODs.

• Accomplishment of the Comprehensive 3-year Action Plan on IPR Protection

Fulfill International Responsibility Through Adequate IPR Protection
IPR LEGISLATIVE AMENDMENTS

In conjunction with our accession to the WTO, Taiwan conducted a thorough examination of all IPR-related legislation to bring the level of our IPR protection into conformity with the TRIPs Agreement as well as international conventions. The amended Patent Law was promulgated on February 6, 2003, and certain provisions entered into force on March 31. Under these new provisions, patent infringement cases are now governed entirely by civil litigation procedures. To comply with international trademark standards, the Amendment to the Trademark Law was promulgated on May 28, 2003 and will take effect on November 28.

To protect copyright use and to provide a healthier digital environment, the Amendments to the Copyright Act was passed by the Legislative Yuan on June 6, 2003, and promulgated on July 9. A total of 53 amendments were made, 13 of which being newly adopted. In terms of civil remedies, the amount of statutory compensation is increased from NT$1 million to NT$5 million (US$143,000) when the infringement is ruled as serious in nature. In the case of criminal penalties, fines have been increased to up to NT$8 million (US$230,000). The new Act also expands the scope of public crimes so as when unauthorized reproduction of optical disks with the intent to profit is established, complaints from copyright holders will no longer be required for enforcement agencies to initiate enforcement actions. These new amendments are expected to deter IPR infringements, balance the rights of copyright owners and users, and balance the benefits between public and private interests.

In addition, in order to strengthen the management mechanisms against illegal manufacturing plants and stamper and to protect the rights of legal manufacturers, the Amendment to the Optical Media Management Statute, which includes new management mechanisms, was sent to the Executive Yuan for review on March 5, 2003.

Reinforcing Government IPR Enforcement Mechanisms
COORDINATION TASKFORCE FOR IPR ENFORCEMENT & THREE WAREHOUSES FOR STORING SEIZED PIRATED GOODS

The Prosecutor’s Office of the Taiwan High Court of the Ministry of Justice is in charge of holding meetings for the Coordination Taskforce for IPR infringement. This Taskforce coordinates activities for all prosecutors’ authorities in the execution of IPR infringement cases, and the taskforce currently focuses crackdowns of infringements on the Internet, at night markets and through flyers.

Three new warehouses are now available for storing seized pirated optical disks and manufacturing equipment. There is one facility each in the northern, central and southern parts of Taiwan. The installation of these warehouses allows enforcement agencies to remove manufacturing equipment immediately during raids and store them at one of these locations to eliminate any possible re-utilization.

ESTABLISHMENT OF THE INTEGRATED ENFORCEMENT TASKFORCE (IETF)

To further combat illegal ODs, the National Police Administration (NPA) of the Ministry of Interior (MOI) established the IETF on January 1, 2003, which comprises a 220-member IPR Police Force and works in cooperation with the Optical Disk Enforcement Taskforce to implement raids and seize manufacturing devices, raw materials and products of underground plants. Premier Yu instructed MOI to achieve legalization of the IETF as early as possible.

• PIRACY ENFORCEMENT TEAMS CONSOLIDATED

The Ministry of Economic Affairs (MOEA) is currently consolidating the work of the taskforces responsible for coordinating investigations. The Anti-Counterfeiting Committee (ACC) has begun working under the same roof with the IETF and the Joint Optical Disk Enforcement (JODE) in April. It is expected that this integration will enhance the entire law enforcement team’s investigative and enforcement capabilities.

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 produce and sell pirated optical disks through night markets, the Internet, and newspaper advertisements. Pursuant to the “Plan for Strengthening Intellectual Property Right Protection”, 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. These raids form part of the plan to step up prosecution efforts aimed at those found to be producing or distributing pirated optical disks.

REWARD FOR INFORMANTS PROVIDING INFRINGEMENT LEADS INCREASED TO NT$10 MILLION

To encourage the public to provide more leads on IPR infringement activities, especially those on illegal optical disk manufacturers, the reward for informants has been increased to NT$10 million (approximately US$300,000). This new incentive is stipulated in the “MOEA Incentive Enforcement Rewards Program on Pirated Optical Disk Manufacturers”, promulgated on March 21, 2003. Also, to provide IPR enforcement officers with extra incentives, police officers who conduct crackdown activities and achieve outstanding results will receive a bonus of up to NT$2 million (approx. US$60,000), which is a ten-time increase from the original NT$200,000 (about US$6,000). This incentive measure is stipulated in the “MOEA Guidelines for Reward to Prosecution of counterfeit Goods”, issued on March 19, 2003.

Improving Border Control Mechanisms

To further enhance existing border control measures, customs authorities of the Ministry of Finance have begun, ex officio, in accordance with the “Guidelines on Taskforce Targeting Exportation of Pirated Optical Disks”, effective on March 6, 2003, confiscating immediately upon discovery any infringing goods or those suspected of being infringing. The objective of the Guidelines is to strengthen border control measures to combat exportation of pirated and counterfeit goods.

To carry on with existing IPR protection policies as well as to adopt new mechanisms set forth under the amended Trademark Law and Copyright Act, the Directorate General of Customs promulgated the “Enforcement Guideline on Trademark & Copyright Protection Measures by Customs” on June 10 and went into effect on July 1. The Guideline provides the legal basis for border control officers to enforce trademark and copyright infringements.

Concerning the false declaration of exported optical disks, the Ministry of Justice has ruled that in the case when a person files a false declaration for exported optical disks, such act would be considered forgery of documents, which is 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 decision.

System Developed to Monitor Infringement Cases by Ministry of Justice

The Ministry of Justice has developed a system for monitoring the judicial progress of those infringement cases judged to be “severe”. This system was finalized at the end of June and training on the use of the new system is being launched.

Actions to Reduce End-user Piracy

Determined to achieve a piracy-free environment, the government has taken the lead in eradicating end-user piracy at government offices. The Directorate General of Budget Accounting and Statistics of the Executive Yuan requested the government to increase budget for government procurement of computer software.

The Business Software Alliance indicated on June 3, 2003, that the software piracy rate in Taiwan fell by a full 10 percentage points, from 53% in 2001 to 43 % in 2002. These findings show that long-term education and public awareness programs on 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.

Other Government IPR Enforcement Mechanisms
ASSISTING ENTERPRISES IN ESTABLISHING IPR MANAGEMENT TECHNIQUE

To assist private enterprises in establishing suitable IPR management techniques and in commercializing their patents to strengthen Taiwan’s image and global competitiveness, MOEA sponsors the Symbol of Excellence campaign and Patent Commercialization seminars to encourage innovation and technology improvement.

CAMPUS EDUCATIONAL PROMOTIONS

To engendering the understanding of and respect for IPR on university campuses and from the general public, the Ministry of Education has developed a system of IPR training and manpower database in April 2003. It is expected that the legal concept of IPR will be firmly planted in the mind of all students.

INTERNATIONAL COOPERATION

To strengthen international cooperation through exchanges that would boost international understanding of Taiwan’s efforts in IPR protection enhancement, TIPO, MOEA and the European Economic and Trade Office in Taiwan will hold an IPR Protection and Enforcement seminar in October 2003. To reinforce the understanding to the amendments of the Trademark Law and Copyright Act and to enhance enforcement, TIPO, BOFT and AIT will hold a Copyright and Trademark Protection and Enforcement in the Information Age Conference in December of 2003.

Enforcement Results
OVER 900 OPTICAL DISK PLANT INSPECTIONS IN 19 MONTHS

From January through July 2003, the Joint Optical Disk Enforcement Taskforce (JODE) conducted 607 nationwide random inspections on optical disk manufacturers, compared with 98 such inspections for the same period in 2002. Of these, 417 took place during the day and 190 took place at night. In total, 21 optical disk plants, with 16 manufacturing and 5 packaging plants were shut down, and 18 sets of manufacturing equipment were confiscated/seized.

EFFECTIVE ENFORCEMENT UNDERTAKEN BY NATIONAL POLICE ADMINISTRATION

As of July 31 this year, the National Police Administration has reported 2,926 instances of IPR infringement raids and inspections, and arrested a total of 3,622 suspects. The total value of the pirated and counterfeit goods seized as a result of these raids was estimated at more than NT$6 billion (US$179 million).

Between January and July, the figures for infringement cases and suspects, compared to those for the same period in 2002, decreased by 7.87% and 6.46%, respectively. This demonstrates a decline in IPR infringement incidences.

INTEGRATED ENFORCEMENT TASKFORCE (IETF)

As of July 31 this year, a total of 1,213 infringements cases involving a total infringing value of NT$3.17 billion (US$92 million) were reported and with 530 suspects arrested. During this period, more than 1,283,276 pieces of pirated optical disks containing musical, audio-visual, and computer games material were confiscated, along with 311 burners.

MORE SEVERE PENALTIES IN IPR CASES

As of the end of July, according to statistic report by the Ministry of Justice, 2,072 suspects were convicted of IPR-infringing activities, marking an increase of 31.72% over the 1,573 convictions issued during the same period in 2002. Of the 2,072 convictions, 330 defendants (15.92% of total convictions) were sentenced to six months or longer imprisonment. This is a 27.90% increase from the 72 convictions of the same category during the same period in 2002. Through the end of July 2003, the affirmed guilty rate is 84.89%, a slight increase from the 83.38% rate achieved for the same period in 2002.

QUICKER PROSECUTION PROCEDURES FOR HANDLING IPR INFRINGEMENT CASES

The Ministry of Justice determined that the time limitation for prosecutors to process 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 July of this year, the average processing time needed for the handling of IPR infringement cases by prosecutors was 78.48 days, a marked shortened processing time than the same period in 2002 (100.67 days).

• Issues Related to the Amendments of Copyright Act

THE PASSAGE OF THE ADMENDMENTS TO THE COPYRIGHT ACT

The passage of the Amendments to the Copyright Act marks a key and important step toward further strengthening the protection of intellectual property rights in Taiwan. The new legislation both updates Taiwan’s legal framework in the copyright area and clarifies the authority of law enforcement agencies in carrying out specific actions designed to curtail the piracy and infringement of copyrighted materials, including optical disks. The Amendments of Copyright Act, which went into effective on July 9, 2003, has 53 amendments, where 13 are newly adopted.

The new Amendment addresses some of the major right holders’ concerns, for example, codifying a “temporary reproduction” as a “reproduction”, within the meaning of this term in the Act; explicitly prohibiting the use of infringing copies of computer programs for business purposes, including internal operations; increasing the level of fines, in the case of criminal penalties, up to NT$8 million (US$230,000); and defining copyright infringement as a public offense.

RESPONSE TO CONCERNS RAISED BY RIGHT HOLDER GROUPS

The Amendments to Copyright Act has always been a key in the negotiation of free trade agreement between the U.S. and Taiwan. With extensive work through both mutual and internal negotiations, the new Copyright Act was promulgated on July 9, 2003, and entered into force on July 11, 2003. Immediately after the passage of the new Act, the Economic Affairs Minister Yi-fu Lin wrote a letter to Ambassador Robert B. Zoellick, United States Trade Representative, to address the importance of the amendment in further strengthening IPR protection in Taiwan.

Some domestic and foreign copyright organizations have expressed concerns that changes made to the criminal penalties chapter of the Copyright Act will undermine the overall level of copyright protection provided by Taiwan. In response to such allegations, TIPO has convened two interagency meetings as well as a meeting with copyright holder associations in June and July. These meetings produced positive conclusions that have been consolidated to become the Enforcement/Interpretation Guidelines for the Copyright Act, promulgated on July 9, 2003.

TIPO has also made clarifications that are of concerns to right holder groups. The clarifications are as follows:

1. On the issue of the Copyright Amendment weakening penalties against piracy:

Concerns were raised that the removal of the minimum six-month jail term might weaken penalties against piracy. In practice, the penalties stipulated in the Amendment is not weakened but in fact has been strengthened with the following clarifications:

1) Inclusion of detention clause that is more effective toward deterring piracy

a) Based on past court sentences, judges are reluctant to sentence perpetrators to a six-month jail sentence. Instead, a fine is imposed. As a result, perpetrators pay the fine and business continues as usual.

b) By removing the six-month jail term threshold, the new Act is in fact providing judges the discretion to detain perpetrators for a short period of time (one to two months). This in turn, would have a more deterring effect on piracy.

2) Increase of fines

The amount of the fine has been increased from the original maximum NT$450,000 to NT$8,000,000. In addition, if the profit made from the infringement exceeds the maximum fine (NT$8,000,000), the amount of fine may be increased at the discretion of the presiding judge, within the limit of the profit made.

3) Public Crime

The new Act has stipulated that the reproduction for sale and/or public display of pirated optical disks is by nature of “intent to profit”. In such cases, the perpetrator has indeed committed a public crime and shall be prosecuted without any complaints having to be filed by right holders.

2. On the removal of the Technical Protection Measures (TPMs):

1) Article 358 of the Criminal Code (Hacker Penalty Provision) was introduced and passed by the Legislative Yuan (LY) prior to the introduction of the TPMs. Violations to Article 358 are governed by Article 184 of the Civil Code, and the infringers shall be liable for the inflicted damages. Both of these Articles are in compliance with the WCT and WPPT. When the LY received the TPM provisions, they considered the two as overlapping. After careful assessment, the LY came to the consensus that Article 358 can adequately and effectively cover technical protection. If Article 358 shall prove to be inadequate and ineffective in practice, we will introduce the TPMs when it is necessary.

2) In addition, we have reviewed legislation of other WTO members and found most of them to be rather conservative when it comes to specifying TPM provisions. We will monitor developments in these other members and review our own measures as changes occur elsewhere.

3. On Customs ex officio actions:

Our Legislators are of view that the existing laws and regulations authorizing Customs authorities to deal effectively with exports of pirated optical disks and other types of infringing goods are already in place. Therefore, they did not agree that it was necessary to add the authority to carry out ex officio actions to the Copyright Act. It is worthy of note that the amendment to the Customs Enforcement Statute, which has been forwarded to the LY for review, explicitly regulates this issue.

1) Customs monitoring mechanism

The current border control mechanisms to deal with piracy and counterfeiting, including: the computer software Export Monitoring System (EMS), the Trademarks Monitoring System (TMS), the Copyright Authorization Documents Inspection System (CAVS), and the Chip Marking System that have already been in place for a number of years, will continue to be enforced. Moreover, with advancements in information technology tools that are now available, we are studying the feasibility of expanding the EMS to encompass inspections that would lead to seizures of both inbound and outbound pirated optical disks.

2) Reinforcement of border control

a) Reinforcement of border control has been of great concern to our Prime Minister Yu. Following the instructions from Prime Minister Yu at the January Cabinet-level meeting, Customs authorities on March 6, 2003, announced by an administrative order, the implementation of the Customs Enforcement Statute and Tariffs Measures. These measures are in compliance with Article 58 under the TRIP agreement governing ex officio action.

b) In practice, Customs is exercising the same degree of ex officio actions. Therefore, the removal of ex officio action from the Copyright Act does not impede Customs in enforcing border control measures, in acting upon their own initiative, and in suspending the release of goods.

3) Cooperation with US Customs

A bilateral cooperation between Taiwan Customs and U.S. Customs is in place. So far this year, U.S. Customs has not informed Taiwan Customs of any major crackdown or seizure of illegal optical disks entering the United States. Also, since the enactment of the Enforcement Guideline on Optical Disks Exportation issued on March 6, customs offices have confiscated a total of 403,914 pirated optical disks.

4. On the adequacy and effectiveness of the new Act in deterring pirated goods in night markets:

1) The act of “distribution” does not require actual transaction. As long as the pirated goods are publicly displayed or are made available for the public to acquire in night markets, such act constitutes distribution that is by nature of “intent to profit”. Accordingly, the perpetrator has committed a public crime and shall be prosecuted without any complaints filed by right holders.

2) In addition to actual transaction, the act of “distribution” also includes, but is not limited to, the following acts of “making available to the public”:

a) Public display of pirated goods;

b) Public distribution of flyers or catalogue with information of pirated goods; and

c) Free inclusion of pirated goods with purchase of other goods.

5. On parallel import:

The criminal penalty previously included in Article 93 for violating the prohibition on parallel imports of goods as described in Article 87(4) has been deleted. This change was not included in the original Executive Yuan (EY) version of the Copyright Act Amendments. However, we are convinced that this change will not affect U.S. interests. The distribution and rental of all parallel imports remain subject to criminal penalties, as provided for in Article 91bis and Article 92. This clarification has been included in the Enforcement/Interpretation Guidelines and has been sent to local right holder associations and relevant enforcement agencies for their reference.

6. On retroactivity provisions:

In the case of Article 106ter, the provisions contained in the EY version would have exempted the unauthorized copy of works made prior to Taiwan’s accession to the WTO from the prohibition of sale once the transitional period expires. This proposal was made in good faith to honor the consensus reached between the United States and Taiwan during our communications and talks over the past one year. The authority for the exemption for rental use of goods can be found in Article 70, paragraph 5.

• Conclusion

On account of effective coordination among the prosecutors, police, investigators, the Integrated Enforcement Taskforce (IET), and JODE, outstanding enforcement results in combating piracy were reflected under the “Comprehensive 3-year Action Plan on IPR Protection”. The new Copyright Act achieves important improvements in modernizing Taiwan’s protection of copyrights and prepares us for the many new developments that are taking place in the digital age era.

Beginning from July 11, 2003, enforcement agencies no longer need to wait for right holders to file for a complaint to raid and confiscate sale of pirated optical disks at night markets, since such act constitutes a violation of public crime under the new Copyright Act. In response to the new Act, the National Police Administration (NPA), on August 12, instructed the Integrated Enforcement Taskforce (IETF) to begin the first wave of island-wide night market raids. Results from the raids showed that the number and value of infringements have dropped significantly. The complaints initiated by the right holders have decreased as well. This proves that by stipulating the sale of pirated ODs at night markets a violation of public crime is effective in deterring sales of pirated disks at night markets and in improving our IPR environment. Random island-wide raids of this kind will continue to be carried out periodically.