China - Intellectual Property

National Copyright Administration (NCA) Announces Measures for Implementation of

Administrative Punishment for Copyright Infringement ("Copyright Measures")

Collective Copyright Management Organizations Established

State Administration of Commerce and Industry Announces New Procedures to

Ensure Successful Implementation of Antimonopoly Law

New Standards for 2009

Consumer Rights Protection Law to be Amended

Taiwan - Intellectual Property

Taiwan Intellectual Property Office Introduces Draft Amendments to the Taiwan Patent

Examination Guidelines

Taiwan Optical Disk Act Amended to Take Into Consideration the Severity of Individual


China & Taiwan - Foreign Investment

China Ministry of Commerce and Taiwan State Council Affairs Office Jointly

Promulgate Measures for Chinese Mainland Companies Investing in Taiwan



National Copyright Administration (NCA) Announces Measures for Implementation of Administrative Punishment for Copyright Infringement ("Copyright Measures")

Motivated by concerns about the administrative enforcement of copyrights, the NCA announced new Copyright Measures to take effect on June 15, 2009. The Measures aim to regulate the NCA's administrative department's copyright enforcement system, including punishment of copyright infringement, by:

1. Increasing the illegal acts that are subject to administrative punishments, to include acts that damage the public interest.

2. Implementing 3 levels of administrative punishment. They are 1) warning, 2) confiscation of infringing products, and 3) confiscation of equipment used for the installation or storage of infringing products.

Establishment of 4 Collective Copyright Management Organizations

The Chinese central government has approved the establishment of 4 collective copyright management organizations for the areas of music, video, literature, and photography. The organizations will manage copyright issues for copyright owners, and ensure that royalties will be paid for work that is used with the rights holder's permission. A copyright organization for film is also being planned. The NCAC has not yet released details about the organizations.

Establishment of similar organization on Taiwan since 1993 has had little effect on copyright piracy there.

New Product Standards for 2009

1. China Special Equipment Institute (CSEI) Announces Implementation

Guidelines forSpecial Equipment Safety Inspection Rules ("Inspection


Motivated by the need to coordinate the inspection work of the CSEI, the CSEI announced its Inspection Guidelines to take effect on June 1, 2009. The Inspection Guidelines outline the requirements and approval procedure, and set the rate of inspection.

2. General Administration of Quality Supervision, Inspection and Quarantine

(AQSIQ) Announces 2nd Amendment to Special Equipment Inspection and

Testing Organization Verification Rules ("Amendment")

Motivated by energy consumption and safety concerns, the AQSIQ amendment took effect this summer. As the amount of special equipment (such as air conditioning units, boilers, elevators, cableway transport mechanism, and large infrastructure equipment), installed in China rises, the number of industrial accidents is bound to increase. The Amendment aims to prevent and decrease such accidents. The Amendment also aims to promote economic development by ensuring the safety of the public and property.

3. Ministry of Environmental Protection (MEP) Announces Measures for

Environmental Management of New Chemical Substances ("Chemical


Motivated by environmental protection concerns, the MEP announced new Chemical Measures to take effect on October 15, 2009. The Measures are aimed at controlling the management of chemical materials, and coordinating the approval and follow-up supervision of chemical materials production. The Measures will aim to guarantee public health and protection of the ecology.

4. Ministry of Health Solicits Public Opinion for Draft Management Regulations

on Food Safety Risk Evaluation ("Draft Regulations")

Motivated by the "Sanlu Milk Powder" event, the Ministry of Health solicited public opinion on draft Regulations on June 9, 2009. The Regulations will supervise the evaluation of food safety and coordinate the enforcement of the Food Safety Law and its Implementation Rules. The Regulations focus on risk prevention, and aims to promote the public's confidence in food safety.

5. Standards Administration of China (SAC) Solicits Public Opinion

Motivated by the increase in consumer products introduced to the market, the SAC solicited for public opinion on new national standards for 1128 products in the summer of 2009. The Standards aim to provide a national standard system for quality and safety inspection of the list of products, which include electronic devices, nuclear apparatus, semiconductor materials and devices, packaging devices, among others. The SAC also aims to promote the scientific validity of these national standards, so they can be used routinely and effectively. Since the standards are so specialized, comments by trade associations will be considered, but consumer opinions will not be helpful.

6. Supreme People's Court Solicits Public Opinion on Draft Judicial

Interpretation Guidelines for the Amended China Patent Law ("Draft


China's 3rd amended Patent Law will take effect on October 1, 2009. In anticipation of future cases that will arise from application of the amended Patent Law, the IP Tribunal of the Supreme Court drafted Guidelines based on the Patent Law and Civil Procedure Law, as well as key issues found in handling patent related disputes.

Important technical revisions to the 3rd amended Patent Law include requiring patent applications to face an absolute novelty disclosure requirement, establishing statutory damages for patent infringements, and allowing import of medical apparatus or pharmaceuticals prior to expiration of a pharmaceutical patent.

Consumer Rights Protection Law to be Amended

The Consumer Rights Protection Law ("Law") has been in force since 2004. As part of the 5-year plan, the Standing Committee of the National People's Congress intends to amend it this year. The amended Law will:

1. Enlarge the definition of "consumer products", to include additional products

used in daily life such as automobiles, commercial residential buildings,

luxury products, and intangible services such as haircuts, body-building,

training courses.

2. Establish a "cooling off" period, which will allow consumers to return products

unconditionally within a reasonable period of time. The cooling off system will

apply to only 3 types of product transactions: 1) online sales, 2) sales

involving contracts that are signed after payment is made, and 3) sales

involving high purchase amounts, such as for a car or a house. This system

for refunds is especially targeted to products sold through direct TV sales,

such as infomercials.

3. Introduce a recall system for management of defective products.

4. Increase the punishment for advertising fraud, such as broadcast of misleading advertisements. In addition to holding

manufacturers and distribution companies responsible, the Law will require that the spokesman for the advertisement

also be held responsible. Punishment will also beincreased for advertisements deemed not suitable for children that

are aired during the primetime hours between 7 p.m. and 9 p.m.

5. Introduce a preliminary mechanism for examination of standard form

contracts. As standard form contracts are formulated for repeated use by the

drafter, and the other party is not allowed to revise any of its provision of such

contract before execution, consumers who sign them are at a disadvantage.

The Law aims to provide a way to examine these contracts to protect

consumers' rights and interests.

State Administration of Industry and Commerce (SAIC) Issues New Procedures

to Ensure Successful Implementation of the Anti-Monopoly Law

China's Anti-monopoly Law took effect in 2008, but the SAIC announced 2 new sets of Procedures for implementation of the Anti-monopoly Law. The Law and Procedures are aimed at protecting fair competition and the interest of consumers, and promoting the development of China's socialist market economy.

The 1st set of Procedures ("the Administrative Procedures") provide that if the SAIC finds government agencies abuse their power and encourage monopolies by eliminating or restricting market competition, the SAIC can alert the State Council to take action to stop this behavior. Similarly, if the SAIC finds that organizations in charge of national public affairs are found to abuse their powers to encourage monopolies, the SAIC can alert the management institutes of these organizations to stop this behavior.

The 2nd set of Procedures ("the Agreement Provisions") provides for specific procedures for AICs to act on complaints against monopoly agreements and abuses of dominant market status. According to the Provisions, if one guild or trade association organizes business in its related industry to arrange for a monopoly, the guild or trade association is liable for a fine up to RMB 500,000 (US$73,530) as a penalty. If the situation is serious, the SAIC can request that the guild's registration be cancelled. The SAIC will consider promulgating guild regulations that prohibit competition.



Taiwan Intellectual Property Office Introduces Draft Amendments to Patent

Examination Guidelines

The Taiwan Intellectual Property Office (TIPO) held 2 public hearings in the summer of 2009 to present draft amendments to the Patent Examination Guidelines. The Amendments would change provisions of the Guidelines specifically related to substantive examination of invention patents and formal examination of utility model patents.

For substantive examination of invention patents, documents in any foreign language may not be used as grounds for amending errors in an application. The Guidelines add regulations on image files submitted as evidence. For utility model patents, provisions not related to formality examination and provisions related to the determination of whether a correction exceeds the scope of notification will be deleted.

Taiwan Optical Disk Act Amended to Take Into Consideration the Severity of

Individual Violations

First adopted in 2001, the Optical Disk Act ("ODA") was aimed at curbing illegal imprinting of pirated optical discs in factories by requiring businesses to apply in advance for any changes made to pre-recorded Optical Disk manufacturing license information, and to inscribe Source Identification (SID) Codes on all manufactured disks or stampers. Under the old ODA, businesses' failure to follow these procedures risked fines between NT$1,500,000 to NT$3,000,000 (US$49,500 to US$99,000).

The newly amended ODA takes effect on May 27, 2009, and takes into consideration the relative severity of individual violations. Now, failure to apply for amendment of licensing information will result in fines if the application is not filed within a time limit of 15 days. The amended ODA also reduces by 1/3 the original fine amount if non-compliance is due to simple negligence, as shown by written authorization from the IPR rights owner.


China Ministry of Commerce (MOC) and Taiwan State Council Affairs Office

(SCAO) Jointly Promulgate Measures for Chinese Mainland Companies

Investing or Establishing Non-business Entities in Taiwan ("Measures")

The China MOC and the Taiwan SCAO jointly announced the Measures for Chinese Mainland companies' investment and establishment of non-business entities in Taiwan. A non-business entity includes such non-profit establishments as schools, hospitals, scientific research institutes, and libraries. The Measures are aimed at promoting peaceful development of relations and cross-straits cooperation by providing that:

1. Chinese mainland companies investing or establishing non-business entities in

Taiwan should aim for mutual benefits and basic market economic principles

without compromising national security and re-unification.

2. Chinese mainland companies investing in or establishing non-business entities in

Taiwan should focus on cross-straits economic development, and encourage a

pattern of mutual cooperation and benefits.

3. Chinese mainland companies investing in or establishing non-business entities in

Taiwan should know and obey local laws and regulations and bear necessary social


4. The MOC should be in charge of approving the investment or establishment of non-

business entities in Taiwan in accordance with Measures for Overseas Investment


5. The MOC will solicit opinions from the SCAO to proceed with the approval work in

accordance with Measures for Overseas Investment Management.

6. The MOC will issue Certificates of Enterprise Overseas Investment or Certificates of

Enterprise Overseas Institution to approved projects.

7. Chinese mainland companies should be confined strictly to their approved business

scope. Upon registration, Chinese mainland companies should submit relevant

registration documents to the MOC and SCAO within 15 working days.

8. Where Taiwan entities invested in invested by Chinese mainland companies need to

be changed or terminated, they should follow Measures for Overseas Investment

Management for the relevant procedures.

9. The MOC and the SCAO will supervise the overall status of Chinese mainland

companies investing in or establishing non-business entities in Taiwan.

10. Where Chinese mainland companies violate relevant regulations to invest in or

establish non-business entities in Taiwan, the Ministry of Commerce together with

the Taiwan Affairs Office of the State Council should impose penalties in

accordance with relevant regulations.

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