Wang & Wang: Intellectual Property, Investment Law, in China, Taiwan

According to the statistics from the Ministry of Foreign Trade and Economic Cooperation (MOFTEC), China had 324,712 companies with foreign investment by the end of last year. Different levels of foreign trade and economic cooperation development zones attract a majority of foreign investment in China. In 1998, thirty-two state-level development zones attracted over US$10 billion of foreign direct investment in China, which is nearly 60% of the total foreign direct investment in 1998. This year, various special zones are being formed. For instance, in Beijing, a special valley for trade and investment in medical and biological areas is being constructed in the Beijing Economic and Technological Development Zone. In Shenzhen, a special software industrial park is under construction. In Guangzhou, the Guangzhou Economic and Technological Development Zone and Guangzhou High-Tech Industry Development Zone merged with each other late last year. The merged zone aims to lure more foreign investment in high- and new-technology industry, especially electronics, information technology, bio-engineering technology, medical science, optical, electrical and mechanical integration technology, and environmental protection technologies and equipment.

Taiwan

Directory of Well-Known Trademarks

Internet Service Provider Liability Limitation Bill to Amend the Copyright Law

Taiwan Intellectual Property Office (TIPO) Approves Amendment to
Standard for Examination of Distinctiveness of Trademarks

Taiwan Removed from US's 301 Watch List

Taiwan and China on USTR’S Watch List

Taiwan Applications Steady

TIPO’s Compulsory License of Patent Technology Rejected by High Court

Internet Service Provider (ISP) Liabilities Bill Under Review by the Taiwan Legislative Yuan

Amendment to Taiwan Customs Procedures Effect on September 1, 2008

Intellectual Property Case Adjudication Act and the Development of Intellectual Property Courts

Copyright Law Amendment

Status of Non-traditional Trademarks

Dissolution of Task Force for Raiding Pirates

Legal Issues about the Appearance Design of the 101 Building

Foreign Investment in Taiwan's Agricultural Technology Industry

Enforcement Rules of the Taiwan Trademark Law Amended

Taiwan Trademark Law Revised

Taiwan Copyright Law Revised

Taiwan Revised “Regulations on Promoting Industry”

Revised “Civil Procedure Code” Announced

Amendment to the Code of Criminal Procedure promulgated

Taiwan Finally Enters the WTO

Taiwan Releases Amendments to Copyright Law

Taiwan Patent Law Revised

Taiwan Legislative Yuan Approves Draft Optical Media Management Law

New Company Law to Take Effect in Taiwan

Merger and Acquisition Law

Amendments to the Trademark Law

Taiwan released Draft Amendment of the Trademark Law

Draft Amendment to Taiwan Patent Law

Early Disclosure of Invention Patents Effective October 26, 2002

New Enforcement Rules to the Patent Law

Taiwan released Draft Amendments to the Copyright Law

Domain Names in Taiwan

On March 25, 1999, the Administative Yuan passed the Amendment to the Statute for Upgraded Industry. According to the amendment, foreign investors in Taiwan shall benefit from tax deductions at different rates. For example, if an investor in the new industries (e.g. biotechnology industry, etc.) holds shares of such a company for more than three years, it shall enjoy a tax deduction by 10%.

New Developments in Contract Law

China's National People's Congress passed a new Contract Law on March 15, 1999. It will take effect on October 1, 1999. The Economic Contract Law, Foreign Economic Contract Law and Technology Contract Law will be abolished at that time, and will be replaced by the new Contract Law.

One of the major differences from the current contract law is that the new Contract Law provides protection (particularly protection of know-how) and technology transfer have been added to the new contract law. Contracts related to intellectual property shall also be governed by related specific rules under intellectual property laws and regulations.

New Regulations on Pharmaceuticals

China's State Drug Administration issued five regulations on April 28, 1999 to upgrade pharmaceutical administration in China to international practices. The five regulations include Regulations on the Administration of Imported Pharmaceuticals, Regulations on the Approval of Imitated Pharmaceuticals, Regulations on the Approval of New Pharmaceuticals, Regulations on the Protection of New Pharmaceuticals and Technology Transfer, and Regulations on the Approval of New Bio-Products. Foreign pharmaceutical companies will need to comply with the new regulations in the course of sales, research & development, or investment in pharmaceutical areas.

R.O.C. Amends Its Software Export Monitoring System

September 23, 1996

On August 6, 1996, the Ministry of Economic Affairs announced its new revisions to the Computer Software Export Monitoring System (CSEMS). The Export Monitoring System was first implemented in 1993, as a result of demands made by the United States Trade Representative (USTR) during 301 negotiations with the Republic of China.

The task of implementing the System was delegated to the Institute for Information Industry (Triple I). The purpose of this program is to seize infringing export software before it leaves Taiwan. However, this plan has not been very successful in practice. From July of 1993 to March of 1996, 61,907 computer products were inspected. However, of that number, only 41 cases of suspected infringing products were discovered. None of the suspects were actually charged with a substantive copyright violation.

The ineffectiveness of this program appears to be due to the simplicity of evasion. The export inspection is triggered by registering for a Triple I export license. At least 30% of all licensed goods are inspected by Triple I. If any infringing goods are found, Triple I contacts the copyright owner and temporarily seizes the goods. Infringers bypass the system by simply failing to register. If software is not registered it is not inspected, and given the volume of goods which pass through Taiwan's international airport, unlikely to be noticed.

CSEMS adds a heavy burden to legitimate exporters of computer software. Although it costs nothing for an export permit, each shipment of software needs one. The permit must be applied for in person, and the application takes approximately 2 hours to complete. It then takes another 2 to 3 days to inspect the goods. Each year, when the US and Taiwan enter into a new round of Intellectual Property negotiations, the software industry puts pressure on the Bureau of Foreign Trade (BOFT) to abandon the system.

This year the US agreed to accept a slight revision to the system. Now, only computer, printer, and video game software are required to have permits. This will speed the export process a little bit. However, as long as the program exists, it will continue to be opposed by Taiwan's legitimate exporters and ignored by Taiwan's infringers.

Protection of Well-Known Marks in the PRC

September 18, 1996

As you may be aware, China promised that it would provide broad protection for famous marks in the 1995 Sino-US IP Agreement. The long awaited regulations on well-known mark verification were finally promulgated. The following are the main points of the Regulations on Determination and Administration of Well- Known Marks ("Regulations"):

The Regulations provide a set of criteria that direct the trademark authorities in determining well-known marks. The trademark authorities may verify a well-known mark based on serial factors:

nationwide sales volume of the trademarked goods;

the extent of use of the mark on the goods within a three-year period;

the duration and extent of advertising and publicity for the mark;

the global extent of registered and protection for the mark; and

the extent of worldwide use of the mark.

Under the Regulations, The China Trademark Office is designated as the agency to verify famous marks. Once a registered mark is authenticated as well- known, the owner of the mark is entitled to block any applications for registration of other marks or request cancellation of any registered marks which would create confusion with the well-known mark. The prohibition on using famous marks extends broadly even to dissimilar goods. However, the Regulations set forth a statutory limitation, requiring the owner to file a petition for cancellation within two years from the date of constructive knowledge of such registration.

The Regulations still do not satisfy the 1995 Sino-US IP Agreement, which requires China to protect unregistered famous marks, nor have they met the requirements set forth in the Paris Convention with respect to the famous mark protection. Furthermore, the statutory limitation in the Regulations is not in compliance with that in the 1995 Sino-US IP Agreement. In accordance with the Agreement, an internationally recognized owner of a well-known mark enjoys at least five-year's time to act against a similar mark. As a signatory to the Paris Convention and the bilateral agreement, China is obliged to protect famous marks, including unregistered famous marks. Accordingly, the Trademark Law is still subject to revision.

New Domestic Sales Regulations in Guangdong Province

August 15, 1996

The Guangdong Province of the People's Republic of China recently announced new regulations regarding the percentage of domestic sales foreign-owned companies and Sino-foreign joint ventures can make.

Until now, foreign companies have been competing with their PRC based subsidiaries in world markets, as PRC subsidiaries have been prevented from conducting substantial sales in China. Before the implementation of the new regulations, foreign based companies were permitted to sell only 10 percent domestically; joint ventures between foreign companies and China were allowed to sell just 30 percent of their products in Guangdong. The new regulations allow for increases in the domestic sales ratio up to 100 percent, depending on the products involved.

Joint ventures that have invested in excess of US$15 million and that are comprised of at least a 50 percent foreign partnership, may now sell all of their products in the Guangdong market. Investments of US$5 million to US$15 million may sell between 50 and 60 percent of their production in the local market.

US-China Trade War over Chinese Pirating Business

June 21, 1996

The United States and China signed an agreement averting a trade war over Chinese pirating of software, music and movies, and US imports of silk and other Chinese-made luxury products. The US lifted sanctions after finding that China has taken significant concrete steps to enforce its 1995 Action Plan, particularly by closing CD factories and some 5000 mini- theaters, seizures of pirate CDs by Chinese customs, and renewed agreements to allow US music and film makers to enter cooperative projects and distribute in China.

By agreeing to lift sanctions, the US also avoided Chinese retaliation on US agricultural products, such as cotton and vegetable oils, auto and auto parts, telecommunications equipment, and audiovisual products. Although it did not put a dollar value on the list, officials in Beijing predicted that the value of Chinese sanctions would exceed U.S. sanctions. In addition, China threatened that it would halt shipments of U.S. aircraft to China as part of its counter measures.

The new agreement cannot be viewed as resolving the issue of Chinese piracy, but as one more step in a long march.

New MOU Grants Priority to US Trademark and Patent Holders

May 13, 1996

The United States (US) and the Republic of China (Taiwan) signed a new Memorandum of Understanding (MOU) on April 10, 1996 in Washington, D.C. The MOU gives United States trademark and patent holders added protection under Taiwan law.

Taiwan's Trademark and Patent laws grants priority filing rights to nationals of countries which have a reciprocal agreement with Taiwan. Effective from April 10, 1996, if trademark or patent holders apply for patents or trademarks in Taiwan within a certain period of time, their rights will be protected effective from the date of their US registration. The priority right will block others who apply for the same patent or trademark after the US filing date.

Additionally, Taiwan's Patent Law, through the MOU, allows US nationals the opportunity to register patents for new microorganism species, which is prohibited for nationals of jurisdictions without such a bilateral agreement.

The provisions of the MOU offer US nationals a substantial amount of protection previously unavailable. However, to take advantage of this protection US trademark and patent holders must think globally from the time the right is first registered in the US. If the rights holder waits too long, they will loose this opportunity.

If you would like to take advantage of these new rights or have questions regarding any intellectual property matter in the Republic of China, please contact us.

R.O.C. Moves to Enlarge Trademark Protection

April 8, 1996

In an effort to promote Taiwan's effort to join the World Trade Organization (WTO), a group of government bodies led by the Ministry of Economic Affairs (MOEA) took the initiative to ease at least one of the restrictions imposed by the trademark law. In late January 1996 this group agreed to present a joint proposal to the Executive Yuan (EY) to expand the definition of "interested parties" under Taiwan's Trademark Law to include a foreign company's local agents, importers, and affiliates.

Under the current law, the term "interested party" refers to those persons who currently have a legal right which may be harmed by another's trademark registration. This is defined so that only a trademark owner, not its local agents, importers or affiliates, have a "legal right" under the current law. Expanding the definition of interested parties to include these groups will give them a method by which they can protect their contract-based interest in a trademark. This change will not become effective until it is approved by the Executive Yuan.

China Anti-Dumping Law

April 3, 1996

China is taking an aggressive step against developed countries to protect the interests of its own manufacturing industry. China will revise its draft anti-dumping law as early as late March of 1996. China has been targeted in more than 200 anti-dumping cases for its exportation of low- priced products to developed countries. China accuses those nations of implementing trade protectionism in the name of fair competition. A China trade official denounced the use of production figures from third countries to estimate production costs in China. He stated that figures ignore China's low cost labor, and thus inflate the true cost of production, creating the false impression that China is engaged in dumping.

In order to retaliate, the Chinese government recently announced that it would revise its anti-dumping law to protect the interests of Chinese manufacturers. The amended draft is expected to be submitted to the State Council for its review by the end of March, 1996.

China Trademark and Patent Application Statistics - 1995

March 28, 1996

Trademark applications and registrations in China have been escalating in the past few years. According to the Trademark Office, 538,725 trademarks were registered by the end of 1995, ranking China among the top ten countries for volume of trademark registrations. The Trademark Office further disclosed that 86,780 out of the 538,725 trademarks were foreign trademarks. In 1995, the Trademark Office received 166,098 applications for trademark registration, of which the domestic applications numbered 144,558 while foreign applications reached 21,540. Meanwhile, the Trademark Office approved 70,217 registrations in that year, among which 16,564 were foreign trademarks. It appears that the application to registration ratio is 49% for domestic marks, and 77% for foreign marks.

Foreign patent applications in China have significantly increased ever since China became the member of the Patent Cooperation Treaty. The China Patent Office recently reported that 83,045 applications were filed last year, of which 68,880 were home applications and 14,165 were foreign applications. The statistics from the China Patent Office revealed the number of specific applications as follows: (1) New Invention: 21,636, (2) Utility Model: 43,741, and (3) Design Patent: 17,668.

China Intellectual Property Enforcement

March 20, 1996

As you may be aware, the US is evaluating China's performance in enforcing intellectual property rights. As you must have read, this is a delicate time for US-Sino relations. China imposed martial law on March 1, 1996, and is conducting war games in the Taiwan Straits, and has imposed controls on foreign news agencies operating in China. China has responded to US complaints of unfair trade practices with its own report on the successes of its IPR efforts. In addition, the government has released enforcement statistics to demonstrate the scope and breadth of its efforts.

I. Enforcement Statistics

1. Court cases

The Supreme People's Court reported that approximately 1,600 intellectual property cases were handled in 1995, out of a total of 4,500,000 court cases. Over 6,500 cases involved a foreign party. Of the 1,600, 59% involved patent rights, 23% copyright, and 18% trademark rights. The low number of copyright and trademark cases is remarkable given the size of China's court system and total number of cases handled. Foreign companies are still extremely wary of entering a Chinese court.

2. Administrative Cases

The State Council's Working Conference on Intellectual Property Rights recently announced that Chinese administrative authorities seized 20 millions pirated CDS, 800,000 cassettes, 480,000 and 40,000 software programs in 1995. In addition, the administrative authorities handled 9,000 trademark infringement cases in the past year. Most foreign rights holders still prefer to deal with administrative authorities to protect their rights.

II. China's Response to US Complaints: The Report on Protecting Intellectual Property Rights

The Chinese government states in the report that China has kept its promise to authorize the State Council's Working Conference on Intellectual Property Rights ("WCIPR") to ensure fairness and uniformity in the enforcement of intellectual property rights. Since February of 1995, China has taken the following major steps:

The WCIPR set up coordination offices in the 30 provinces to carry out the action plan;

Both central and local joint inspection groups were established to undertake nationwide inspections;

The joint inspection groups conducted investigations and inspections of the thirty-four CD plants by the end of July 1, 1995. As a result, the three CD plants were closed due to their failure to meet the registration requirements and IPR violations. However, the other thirty-one plants, were allowed to renew their licenses. They have been put under "tight supervision," with outside monitors visiting each plant;

In August and November of 1995, the Press and Publication Administration issued circulars on using unique identifiers (SID Codes) on audio-video and electronic publication products;

In January of 1996, the Ministry of Culture and the Ministry of Radio, Film and Television promulgated a circular prohibiting national performance of VCDs and Laser discs;

The State Council promulgated the Regulations on Customs Protection of Intellectual Property Rights that became effective on October 1, 1995. From October 1 to December 31, 1995, Chinese Customs recorded 98 intellectual property works with the Customs database. In addition, Customs handled 1,084 cases nationwide, including infringement of copyright (1028 cases), trademark (46 cases) and patent (10 cases) between September 1994 and December 1995;

In August, 1995, the Press and Publication Administration required all CD plants to use SID source identification codes on CDS. The requirement for title verification has also been imposed by the State Copyright Administration ("SCA"). All publication contracts with foreign publishers are required to record with the SCA before April 1, 1996; and

The State Council set up about 80 patent administrative offices in provinces, major cities and special economic zones to mediate patent disputes.