|
Taiwan: Licensing and intellectual property
(EIU Viewswire Via Thomson Dialog NewsEdge)COUNTRY BRIEFING
FROM THE ECONOMIST INTELLIGENCE UNIT
As Taiwans government and industries seek to upgrade local industrial performance and technical capabilities, technology licensing has been growing in importance, particularly in high-tech industries. At the same time, the increase in consumer spending power and changing consumption patterns have made the licensing of rights to produce brand-name consumer products much more important. Hence, revisions to the Trademark Law in 2003 reflect a more liberal policy towards trademark licensing and merchandising.
In most instances, licensing agreements are relatively straightforward, with local firms paying royalties or technical-service fees for the rights to use technologies, patents or trademarks. Since the rescinding of the Statute for Technical Co-operation in 1995, parties to a licensing agreement no longer need to obtain technical co-operation approval from the Investment Commission of the Ministry of Economic Affairs.
Trademark and service-mark licences are processed directly through the Intellectual Property Office, an agency of the Ministry of Economic Affairs. The number of such licences continues to increase, with 2,056 (for both foreign and domestic marks) approved during 2004.
Major licensers (for patents, trademarks or know-how) include the following: Interscan (Australia); Zenon Environmental (Canada); Peugeot and Total Lubricants International (France); Siemens and Volkswagen (Germany); Chi Tai Footwear (Hong Kong); Asahi Glass, Hitachi, Analog Devices, Mitsubishi, Matsushita, Nippon Telegraph and Telephone, Nissan, Toyota and Yasukawa (Japan); Metricom Asia (Singapore); Strapex Holding (Switzerland); Lite-on and Pilkington (UK); and American Standard, AT&T, Coca-Cola, DuPont, Monogen Bioresearch, Fairchild, General Electric, General Motors, Numerical Technology, International Power Machines, Inventa, Standard Oil, United Technologies and Westinghouse (US).
Conventions. Upon acceding to the World Trade Organisation on January1st 2002, Taiwan became subject to the WTOAgreement on Trade-Related Aspects of Intellectual Property (TRIPs). Taiwan has reciprocity on priority claim with Australia, Austria, France, Germany, Japan, New Zealand, Switzerland and the United States on copyrights (1993). InDecember 2002 Taiwan entered into a mutual co-operation agreement on intellectual property rights (IPR) protection with Guatemala that became effective on March1st 2002. It signed a bilateral agreement with Nicaragua in March 2003 tostrengthen IPR.
Basic laws. Patent Act, 194486 (amended 1986, 1993, 1994, 1997, 2001 and 2003, which came into effect only after joining the WTO); Enforcement Rules, 194787, 1994, 2002, 2004; Trademarks Act, 193089 (amended 1989, 1993, 1998, 2002 and 2003); Enforcement Rules, 193091, 1994, 1999, 2002 and 2003; Copyright Law, 192891 (amended 1992, 1993, 1998, 2001 and 2004); Enforcement Rules and numerous implementing laws, regulations (1992, 1993).
Patents
Types and duration. Patents of invention, 20 years from filing date; patents of addition, unexpired term of main patent (original term if main patent becomes invalid and patent of addition becomes an independent patent); new utility model (similar to patents of invention but involving less of an inventive step and structure only), 12 years from filing date; new design, 12 years from filing date.
Novelty. Item must not have appeared in print anywhere or been used publicly (if there is publication or public use for research or experiment, applications for invention, new utility models, and new design must be filed within six months).
Unpatentable. An invention must have industrial value to be patented. It must be both practically workable and developed to the point of being used industrially. The amended Patent Law specifically prohibits patents for new varieties of plants and animals, although the breeding processes for new varieties of plants are patentable. Also unpatentable are diagnostic, therapeutic or surgical methods for treating diseases of the human or animal body; scientific principles or mathematical methods; rules or methods for playing games or sports; other methods or schemes that can be executed only by means of reasoning and memory by humans; and inventions detrimental to public order, customs or health. Process patents include models directly produced thereby if names, origins and quantities of inputs and methods of manufacturing are detailed.
Fees. Patent right: assignment, inheritance, licensing, compulsory, pledge creation NT$3,500; new utility model, new design: re-examination, opposition action NT$4,500; invention: application, re-examination, opposition action, addition NT$6,000; patent certificate NT$2,500; cancellation of invention, extension of patent term NT$9,000; annuities NT$2,500 for first three years, NT$5,000 for fourth through sixth years, NT$10,000 for seventh through ninth years, NT$20,000 for tenth through 20th years. A discount of NT$500 is applied when English translation is available for both the cover of specification and the abstract attached to invention patent and new utility model patent applications.
Compulsory licensing may be mandated in emergency conditions of the country or of a new profit-making use of a patent for enhancement of public benefit.
Trademarks
Duration. Ten years from date of registration, renewable for an indefinite number of ten-year periods with proof of use.
Legal effect. Rights based on registration, rather than use. However, bona fide prior user may continue to use a mark that is registered by another party.
Rights are limited to specified goods, rather than to a specified class of goods, as under the old law. Rights may be cancelled or renewal refused when a mark has not been used for a continuous period of three years without good cause. Renewal should be supported by proof of use written three years prior to filing the renewal application.
Not registrable. Any trademark design having the following features is not registrable: (1) Identical with or similar to the national flag, national emblem, national seal, military flags, military insignia, official seals, or medals of Taiwan or the national flag of any other nation; (2) identical or similar to the image or name of the late Sun Yat-sen or of a chief of state; (3) identical or similar to the Red Cross sign, or the name, emblem or badge of a domestic or famous international organisation; (4) identical or similar to the Chinese Standard Quality mark or any local or foreign mark of the same nature; (5) violating the public order or good morals; (6) likely to lead the public to misconceive or form a mistaken belief in the nature, quality or place of origin of the goods; (7) plagiarising another persons trademark or any other mark and thus likely to cause the public to form a mistaken belief; (8) identical or similar to a mark customarily used on the same goods; (9) identical or similar to a mark used by a government office of Taiwan or by a public show like an exhibition, or to a medal awarded by such government office or public show; (10) using any word, drawing, symbol, or a combination thereof, that is descriptive of the goods designated for use of the trademark sought for registration or is customarily used to signify the name, shape, quality or function of the goods; (11) using the image of another person or the name of anotherjuristic person, organisation or nationally famous firm, or the stage name, pen name or alias of another person without prior consent (this provision does not apply if the goods covered by the scope of business of such firm or juristic person are not the same goods or similar goods as those designated for use of the trademark sought for registration); (12)identical or similar to another persons registered trademark that has expired for less than two years (this provision does not apply if the registered trademark had not been used for three years immediately prior to its expiration; (13) using another persons registered trademark as a part of the applicants own trademark proposed for use on the same goods orsimilar goods.
Fees. Application, NT$4,000; extension, NT$4,000; opposition to pending application, NT$2,500; recording of licence, NT$2,000; rescission of registered mark, NT$5,000.
Copyrights
Types and duration. The author is the creator of the work. For copyrights yielded by an employment relationship, the employee is the author unless a contract exists specifying the employer as the author. If the employee is the author, the economic rights to the work stay vested in the employer. For a commissioned work, the commissioned person is the author and the economic rights to the work are vested in the commissioned person or the commissioner as provided by the agreement between the parties. Where no agreement exists, both the moral right and the economic right to the work are vested in the commissioned person, but the commissioner has the right of use.
Copyright accords moral rights in perpetuity and economic rights (that is, for reproduction; public broadcast, performance, presentation or display; making of derivative works; and leasing) for the life of the author plus another 50 years.
Economic rights owned by juristic persons or, in computer programs, sound recordings, and photographic and audiovisual works lasts for 50 years after the works are made public.
Legal effect. Based on Taiwans entry into the WTO, the works of nationals of all WTO member countries are comprehensively protected, though there is a two-year transitional period for parties that have used the works of others prior to Taiwans accession to the WTO.
Protection begins at creation; it extends merely to the expression of a work and not to the thoughts, order, production processes, system, operational methods, concepts, principles or discoveries expressed. The registration system has been abolished.
Protectable. Literary, musical, dramatic, choreographic, artistic (including computer-generated works of art), photographic, pictorial, architectural and audiovisual works; sound recordings; computer programs; and derivative works (such as translations).
Ineligible for protection are laws, regulations, official government documents and their translations by government organisations, slogans, common symbols, terms, formulae, numerical charts, forms and calendars, government-sponsored examination questions and news reports that are unadorned facts.
Fees. NT$3,800 maximum, depending on retail price (if applicable) of a copy of the work.
Source: Intellectual Property Office.
On January18th 2005, the United States Trade Representative (USTR) announced Taiwans upgrading to its Watch List of intellectual property (IP) rights violators. Taiwan had been on the more severe Special 301 Watch List since 2001. Despite the upgrade, some critical problems remain. Although the International Intellectual Property Alliance (IIPA), an IP rights protection watchdog based in the US, approved of the USTRs decision, it highlighted several areas in a 2005 report in which it felt Taiwan still needed to improve, notably general IP rights enforcement and Internet-based piracy. According to the IIPA, US manufacturers suffered losses estimated at US$320.4m in 2004 because of counterfeit products from Taiwan in the US market. The IIPA also claims that Taiwan has become a major transshipment centre for counterfeit products from countries in south-east Asia.
According to the Business Software Alliance/IDC, the piracy rate for business software was 43% in 2004, unchanged from 2003. Losses from piracy, however, climbed to an estimated US$161m from US$139m in 2003. The BSA has thus shifted its focus to CD-ROM piracy. It has set up a hotline to disclose IP rights infringements (inTaiwan: (886.2) 2757-6638).
Taiwan created an Intellectual Property Office (IPO) in 1999 to cover all copyright and patent activities and an intellectual property rights enforcement regime. The IPO handles the screening, registration and protection of copyrights and is responsible for protecting industry secrets and cracking down on trademark violators.
There have been two major cases of US chipmakers suing their Taiwan counterparts in US courts. Intel sued VIA Technologies, a Taiwan chip manufacturer, for patent infringement in late 1999, alleging that VIA violated patents in developing a chipset for Advanced Micro Devices, an Intel rival. VIA introduced the chipset in June 1999, and Intel sued it shortly thereafter. The legal battle escalated over the last two years, with suits and countersuits in multiple countries, and was finally settled in mid-2003. The other case pits Atmel, a US chipmaker, against the domestic Winbond Electronics. The US International Trade Commission ruled in October 2000 that Winbond infringed an Atmel patent for non-volatile memory chips and ordered it to pay a fine, including royalty payments to Atmel. Winbond appealed against the ruling.
In March 1999 the IPO made public a list of criteria for which well-known trademarks or logos will receive strict government protection from infringers. Although such rules ostensibly already existed, the government wanted to show the World Trade Organisation that Taiwan was doing its utmost to end copyright infringement. Like many laws in Taiwan, though, it has been enforced inconsistently. The criteria essentially cover trademarks that are generally known by the public, regardless of whether they have been registered with the government. The IPO will mostly rely on sales figures to determine which trademarks or logos are widely known.
The Board of Foreign Trade (BOFT) implemented an inspection system for exports of software products in July 1998. Instead of simply receiving certification from the Institute for Information Industry and passing a counter-check by the Bureau of Commodity Inspection and Quarantine, software products are subject to inspection at inspection centres at major harbours and airports around Taiwan.
According to Taiwans Trade Law, the BOFT can impose administrative penalties against companies found guilty of infringing the intellectual property rights (IPR) of other enterprises and fine them NT$30,000300,000. TheBOFT can also suspend violators rights to import or export products for 112 months.
Taiwans improvements in IPR protection include both amendments of laws and regulations and improved enforcement efforts of local agencies. These include the following legislative and administrative measures:
The Fair Trade Law, enacted in 1992, tightens protection against anti-competitive activities and boosts protection for unregistered marks.
A comprehensive copyright law was passed in 1992 and revised in 1993 to include restrictions on parallel imports and revised again in 1998. Key provisions in this law include the following: granting of protection upon creation; entitlement to reciprocal protection for foreign authors (except US nationals, who receive national treatment); and expansion of police powers to seize infringements and to prosecute violators. The 1998 revision expands protection to foreign works from all member countries of the WTO; this became effective when Taiwan gained membership in the trade body in January 2002. Until that time, only works from France, Hong Kong, Switzerland, the UK and the United States enjoyed the protection of this law.
The Trademark Law was revised in 1993 and again in 1998. Innovations include adoption of the international classification system; provision for priority based on foreign filings; inclusion of certification and collective marks; reduction of formalities for application; relaxation of licensing restrictions; and provision for pledging trademark rights. The international classification system for goods and services was adopted in July 1994 as a minimum standard. The Civil Code was changed in 1996 to enhance the ability of foreign trademark owners to appeal for protection of their brands. New amendments to the Trademark Law, announced in 1997 and implemented when Taiwan entered the WTO, include sections stating that a particular combination of colours in a group of items can constitute a trademark, and protection will be extended to well-known marks; thus, registration applications for trademark designs similar enough to existing trademarks to cause the public to form a mistaken belief will berejected.
The Cable-Television Law, passed in July 1993 (along with implementing regulations issued later that year), increased protection for copyrighted materials. Cable-television operators must obtain permission from film producers before airing their works.
The Patent Law, revised in 1994, allows a standard patent term of 20 years (only for patents issued after the law was issued, and with special provisions for pharmaceuticals, agrochemicals or processes for preparing these); patentability extends to beverages, food and micro-organisms. The Patent Law also includes a priority provision based on foreign applications and reciprocity. Article 78 limits the circumstances in which the Intellectual Property Office may grant a compulsory licence; one example is when the applicant seeks to use the patent for the public benefit and without profit. Since Taiwan has not been permitted to subscribe to the Bern Convention, absolute novelty is a condition for granting a patent.
The Law for Protection of Layout Designs of Integrated Circuits was passed in 1996 to protect designs of integrated circuits.
The Trade Secret Law was promulgated in 1996 to safeguard trade secrets, preserve industrial ethics and competitive order, and balance public interest. This law defines trade secrets as methods, technologies, manufacturing processes, formulae, programmes, designs or other information used in production sales or management.
The Science and Technology Basic Law was enacted in 1998. It mandates that results and IPR stemming from research-and-development projects either wholly or partially subsidised by the government belong to the enterprise undertaking the research and not to the government.
The Legislative Yuan approved a number of revisions to the Patent Law in October 2001 that went into effect when Taiwan entered the WTO on January1st 2002. Major changes include the introduction of an advanced publicising system under which inventors or researchers may provide new revisions of and improvements to their inventions within one year of filing their patent applications. The inventor is allowed priority rights. The revised law also recognises patents based on the locality of the patents granted; hence, foreign inventors and researchers can own their patents retroactive to the date on which the patent was granted in other areas. It further extends the duration of a patent (including those obtained before 1994) from 15 to 20 years.
In order to comply with international trademark standards and to allow sounds and three-dimensional shapes to be registered as trademarks, amendments to the Trademark Law were passed by the Legislative Yuan on April29th 2003, effective from November28th2003.
Amendments to the Copyright Law entered into force on July11th 2003. But observers such as the Taiwan Anti-Piracy Coalition criticised the changes, saying that they actually weakened IPR. The biggest concern arose over the loose definition of copyright violation and lax stipulations for enforcement. In August 2004, therefore, a special session of parliament adopted amendments correcting many of the perceived deficiencies of the 2003 law. The 2004 changes protect digital content and stipulate fines and jail terms for those found guilty of infringing right-registered digital-content products. The new version of the law overrides the provision of the 2003 law that stated that circulating fewer than five copies of a product or circulating copies valued at under NT$30,000 was not a violation of the law.Taiwan has signed bilateral agreements on protection of IPR with Australia, France, Germany, Japan, Paraguay, South Korea, Switzerland and the US; others are being negotiated despite their lessened importance since Taiwans WTO entry.
Of the WTO-related revisions to Taiwans Patent Law announced in April 1997, one section, on enforcement of IPR, lets patent owners and exclusive licensees request the destruction of goods or disposal of counterfeit products, raw materials and instruments used to make pirated goods. Moreover, the amended Patent Law eliminates reciprocity requirements for micro-organisms, the extension of patent-protection terms and the granting of exclusive import rights, and it limits compulsory licensing for semiconductor technology to non-commercial use. The revised Patent Law also provides for longer terms of protection for industrial design, in line with the ten-year minimum that is the norm in other developed countries. After Taiwan joined the WTO, it became bound by its regulations affecting intellectual property.
Violators of the Trademark Law face a maximum prison sentence of three years and a fine of NT$200,000 for knowingly copying trademarks (three years and/or NT$1m for copying unregistered but famous trademarks). Imitation of a product carries a maximum penalty of one year in prison and a fine of NT$50,000; reproducing a work without authorisation involves a maximum prison sentence of three years and a fine of NT$200,000. The authorities may confiscate all copied works, along with the equipment used to make the counterfeit trademarks (though machinery used to make the products would probably not be confiscated).
Under a revised Copyright Law passed in June 2003, convicted violators of IPR face a maximum imprisonment of five years plus fines of up to NT$500,000, regardless of whether their intent was to earn profit. The maximum fine for persons engaged in selling or importing pirated products to earn profit was raised by NT$200,000. Repeat offenders who reproduce, sell and import pirated products as a part of regular business operations face imprisonment of 17 years and a maximum fine of NT$1m. Despite the changes, public prosecutors and other law-enforcement agents still handle piracy cases only after complaints are filed (aswith the previous policy).
The Intellectual Property Office (IPO) is responsible for screening, registering and protecting patent rights, trademarks and copyrights. Patents are examined to determine the value of productive use. Where the applicants country has a reciprocal arrangement with Taiwan, the applicant may claim a 12-month priority period. There may also be an examination for novelty. The applicant must defend the claim within a specified period, or the application will be cancelled. There is a three-month opposition period following the publication of a patent.
Patent applications should be sent to the IPO. A written application must include the following (all in Chinese or with a Chinese translation): petition, stating full details of patent and, if the applicant is an employer, assignee or heir, the inventor; power of attorney, signed by applicant; inventors oath; assignment; legalised certificate of applicants nationality or corporate status; specification, in triplicate, describing nature, object and usefulness of invention (and construction and manner of use, for mechanical inventions and chemical inventions) and ending in one or more claims; drawings, in triplicate; and filing fees. A model or specimens may be required. Power of attorney, oath and assignment, and specification must be filed with application; other documents may be filed at alater date.
According to the IPO, the Ministry of Economic Affairs received 72,082 applications for patents in 2004, an increase of 9.64% on 2003. Electronics and information-technology firms filed most of the applications. Of all the patent applications for 2004, 43,020 were local, 12,956 came from Japan and 8,231 came from the US.
Foreign applicants may take out patents only through an authorised Taiwan patent lawyer. The number of patent applications has increased steadily each year, largely because of concerns about intellectual property rights and expanding research-and-development outlays in high technology.
Trademark and service-mark applications take six months to be examined. Separate registrations are required for each mark (principal mark; associated mark, that is, a similar mark on same goods as principal mark; or defensive mark, that is, a same mark on goods similar to or in similar class as the principal mark) in each class. The World Intellectual Property Organisation system, adopted in July 1994, operates as a minimum standard; the IPO sometimes requires more-specific classification. An application must include a power of attorney designating a resident of Taiwan as trademark agent, a legalised certificate of nationality or corporate status, proof of business scope, specimens of the mark, an application form and official fees.
Copyright registration is optional; foreign authors, however, must publish their works in Taiwan to claim protection and registration. Previously, only works by British, French, Hong Kong, Swiss and US nationals (and, sometimes, nationals of Spain and South Korea) were covered. Now that Taiwan has entered the World Trade Organisation, the works of all member states are covered.
International Business Machines (US) and AU Optronics (AUO) signed a patent assignment agreement on June30th 2005 transferring to AUO about 170 patents related to thin-film transistor liquid-crystal display (TFT-LCD) technology that the US computer giant had developed. IBM and AUO also entered into a cross-licensing agreement on the same day to license to each other the relevant products under other patents owned by both companies. Financial details of the agreement were not disclosed.
Osram, a German lamp manufacturer, and Ya Hsin Industrial (YHI), a local electronics firm, signed a licensing agreement on September15th 2005. YHI obtained the licence for white LED technology from Osram, allowing it to enter the promising LED-lighting industry, which is growing by more than 20% annually.
On November25th 2005 the Intellectual Property Office approved a request from Taiwans Department of Health for a compulsory licence to manufacture Tamiflu, a drug that could be used to control avian flu. Tamiflu is manufactured by Roche, a Swiss pharmaceuticals giant. Under the conditional agreement, Taiwan will manufacture Tamiflu only to meet its own needs; it will not manufacture Tamiflu locally until it runs out of the drug supplied by Roche; and the Department of Health must come to an agreement with Roche about the payment of patent costs. Although the local subsidiary of Roche plans to increase imports of the original drug from the companys Swiss headquarters, the agreement is the first instance of a country producing a drug under special licence in preparation for an emergency outbreak.
Royalties are usually based on net sales but are sometimes related to output. Minimum royalties are permitted. Royalties are on an upward trend, though most are still 5%. Those on advanced technology involving computers and other strategic industries can go as high as 10%.
Most licensing arrangements in Taiwan run for five years. Longer periods are possible, depending on the nature of the products or processes involved and the importance the government attaches to them as opportunities for future technological development.
Royalties paid for technical co-operation agreements are subject to income tax. If the licenser wishes to remit (after-tax) royalties outside Taiwan, the Regulations Governing Exchange Settlement for Outward Remittance by the Private Sector applies.
The present Trademark Law requires that the parties to a trademark licence agreement register the licence with Taiwans Intellectual Property Office. Tie-in agreements linking the transfer of technology between companies to a requisite purchase of products from the owner are illegal under Article 19 of the Fair Trade Law if the owner has no reasonable purpose for linking the transfer to the purchase of those products and if the owners influence in the market for such products is considerable.
[ Back To TMCnet.com's Homepage ]
|
Find Solutions for Enterprises, SMBs & Service Providers at the INTERNET TELEPHONY Conference and EXPO West, September 16-18, 2008. Los Angeles, California.
