Part I Chapter 5 Chinese Taipei

Chapter 5

CHINESE TAIPEI

TARIFFS

High-tariff products

In 2001, the simple average of tariff rates in Chinese Taipei for all products was 7.01 percent. The breakdown for industrial products was 5.78 percent (of which the tariff rate of 83 percent of industrial products was less than 10 percent), and for agricultural products 14.01 percent (of which the tariff rate for some 40 or so products ranged from 40 to 50 percent). On accession, Chinese Taipei made tariff offers on approximately 8,200 items and after a transitional period (until 2004 for most items and until 2011 for some items such as automobiles and parts), committed to lowering the average on tariff offer items to 5.5 percent (4.15 percent for industrial products and 12.86 percent for agricultural products). Japan expects that the lowering of tariffs based on the tariff offer schedule will be implemented as a matter of course. In the area of industrial products we also hope that there will be a further lowering of rates for items where the final tariff offer rate is comparatively high, such as special purpose vehicles (maximum 30 percent), freight vehicles (maximum 25 percent), and ordinary and small passenger vehicles (17.5 percent), as well as a reduction in the transitional period for automobiles and parts.

TRADE IN SERVICES

Telecommunications

Chinese Taipei’s Telecommunications Law limits foreign direct investment in telecommunications companies and total foreign investment, including indirect investment, to 60%. Chinese Taipei separated the telecommunications operations from the Ministry of

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Telecommunications (similar to the former Ministry of Posts and Telecommunications in Japan) and incorporated it as “Chunghwa Telecom” (similar to the pre-privatization NTT). This public corporation was privatized in 2001 with a 20% limit on foreign investment. Japan looks for a relaxation in these restrictions.

TRADE-RELATED ASPECTS OF INTELLECTUAL PROPERTY RIGHTS (TRIPS)

In Chinese Taipei, intellectual property protection is governed substantively by the Copyright Law, Trademark Law, and Patent Law (including discovery patents, new application patents, and design patents), Seeds and Seedling Law, Integrated Circuit Design Protection Law, Trade Secrets Law, and Fair Trade Law, and procedurally by the Criminal Code, Criminal Litigation Law, Customs Law, and Trade Law. The intellectual property protection system has continually been improved in Chinese Taipei as the country has move towards accession to the WTO and legislated related laws from 1994 through 2001, which bring the system in line with the TRIPS Agreement. Based on these efforts, Chinese Taipei committed to fully apply the provisions of the TRIPS Agreement from the date of WTO accession without a transition period. On the issue of enforcement, which had been considered a problem by member countries in the past, Chinese Taipei has pointed to remedial measures it has taken including stiffer fines for violators, suspensions of violators’ businesses under the Fair Trade Law of February 1999, and the training of judges and other officials. Chinese Taipei also established a task force comprised of officials from related ministries to formulate an action plan on enforcement. In general, Chinese Taipei has made steady progress in improving the intellectual property legal system to bring it in conformity with the TRIPS Agreement, although there are still some areas which need to be rectified. Aside from creating and strengthening systems, administrative improvements, such as greater surveillance, are needed to combat the distribution of illegal products such as counterfeit and pirated goods. In September 2002, the WTO TRIPS Council conducted a legislative review of Chinese Taipei. During the review, Japan commented on requests it received from the International Intellectual Property Protection Forum (*) and pointed to a number of issues (discussed below) where changes are required. Japan needs to continue to monitor Chinese Taipei’s future efforts and how Chinese Taipei discloses the status quo through means such as the WTO review of its statutes. If improvements are not evident, Japan will need to consider seeking remedies through WTO conflict resolution procedures.

(*) At the time of the legislative review, the International Intellectual Property

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Protection Forum provided the government with industry requests on improvements to be sought in Chinese Taipei’s legal system and its enforcement, when compared to the TRIPS Agreement. (See Chapter 3 on China’s intellectual property protection for further discussion of the Forum.)

1) Defects of the “application to sell” provision arising from the patent holder’s exclusive rights

Article 28.1(a) and (b) of the TRIPS Agreement stipulates in regard to patents on products or processes that the patent holder should have exclusive rights “to prevent third parties not having the owner’s consent from the acts of: making, using, offering for sale, selling, or importing for these purposes” that products or the product obtained directly from the process. Article 56 of the Chinese Taipei’s previous Patent Law only stipulated that a patent holder who has received a patent over a thing has “exclusive rights to prevent manufacture, sale, use, or import for these purposes.” This was in conflict with Article 28 of the TRIPS Agreement since it did not include exclusive rights for the patent holder over “offering for sale.” During the legislative review in September 2002, Chinese Taipei indicated that amendments to the Patent Law explicitly adding “application for sale” to Article 56 and related provisions would be brought before the Legislature. The Legislature passed the amendments on January 3, 2003, resolving the conflict with the Agreement.

2) Copyright Law a) Exhaustion of rental rights for cinematographic works Article 11 of the TRIPS Agreement stipulates, “In respect of at least computer programs and cinematographic works, a Member shall provide authors and their successors in title the right to authorize or to prohibit the commercial rental to the public of originals or copies of their copyright works.” Article 29 of Chinese Taipei’s Copyright Law grants rental rights to the copyright holders of cinematic works, but Article 60 provides for their exhaustion. Because of this, video rentals in Chinese Taipei are actually rentals of copies of copyrighted movies. Thus, in effect, rental rights for copyrighted cinematic works do not exist in Chinese Taipei. Article 11 of the TRIPS Agreement continues, “A Member shall be excepted from this obligation in respect of cinematographic works unless such rental has led to widespread copying of such works which is materially impairing the exclusive right of reproduction conferred in that Member on authors and their successors in title.” Chinese Taipei’s Copyright Law, therefore, does not immediately infringe on the TRIPS Agreement. However, the clause in the copyright law that exhausts rental rights means that Chinese Taipei still has difficulties in enforcement against piracy and the distribution of pirated videos is itself problematic in relation to the TRIPS Agreement. Furthermore, this clause impairs the

135 Part I Chapter 5 Chinese Taipei rights of copyright holders who seek redress for copyright infringements of cinematic works in Chinese Taipei. Japan looks forward to review of the provision. b) Transitional arrangements in conjunction with WTO accession Article 106ter of Chinese Taipei’s Copyright Law allows, a person who, by December 31, 2001, has begun exploitation, or has made a significant investment in the exploitation completed on or prior to December 31, 2001 (the date of accession) to continue to exploit such works for a period of two years from the date on which the WTO Agreement takes effect, i.e., December 31, 2003. This is as a transitional arrangement in conjunction with WTO accession. Article 70.2 of the TRIPS Agreement stipulates that for transitional arrangements, “copyright obligations with respect to existing works shall be solely determined under Article 18 of the Berne Convention.” The Berne Convention allows national laws to determine the specifics of transitional measure application, so Article 106ter of Chinese Taipei’s Copyright Law does not immediately infringe on the TRIPS Agreement. However, while Article 106ter allows continued use when a party “has begun the exploitation” or there has been “significant investment,” Chinese Taipei responded during the legislative review that all works legally reproduced which in the 2-year moratorium can be sold after expiry of the moratorium. This raises the concern that the transitional arrangements allow a far broader range of actions than is permitted. Japan will need to continue to monitor administrative and judicial developments after the expiration of the transitional period.

3) Non-criminal and lightened penalties on infringement

Although Chinese Taipei’s Patent Law was amended in 1994, 1997 and 2000 with the intention of conforming it to the provisions of the TRIPS Agreement, criminal penalties for infringement of intellectual property rights have been gradually decreased during that time. The amendment in October 2001 makes patent infringement no longer subject to penalty, and the amendment in January 2003 also makes utility models and industrial designs. Chinese Taipei’s reduction of the degree of patent protection after accession negotiations were concluded is inappropriate. Chinese Taipei’s revisions could significantly reduce the deterrent effect that punishment has on infringement. Decriminalization also makes it more difficult to use civil relief measures and therefore reduces the effectiveness of these measures. Japan seeks reinstatement of penalties for rights infringement. Offenses should be subject to prosecution on the basis of complaint and criminal penalties should be strengthened.

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4) Stronger protection of intellectual property rights through control of counterfeit and pirated products.

Despite various efforts undertaken by Chinese Taipei, as noted above, Japanese company representatives have been very clear in their demands for greater control to protect them from damage they are suffering from counterfeit and pirated products such pirated films, music and software. While Japan welcomes the fact that, in regard to pirated products, its works are able to receive automatic legal protection through amendments to the Copyright Law on Chinese Taipei’s accession to the WTO, Japan notes its copyrights, have suffered serious damage due to pirated products. Japan therefore seeks stronger systems, as well as greater efficacy of action in areas such as uncovering illegal products and punishment of violators. Japan looks forward to specific measures to redress these issues at the earliest possible date and improvements that will dispel the concerns of rights holders.

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