Asian Patent Attorneys Association

ASIAN PATENT ATTORNEYS ASSOCIATION

Recognised Group of Taiwan

Report to the Anti-Counterfeiting Committee

50th Council in Fukuoka, October 25, 2004

By: Joyce I-Wen Ho ()

RECENT CHANGES AND DEVELOPMENTS IN TAIWAN’S ANTICOUNTERFEITING LAWS AND PRACTICES (2004)

The Taiwanese government has announced a three-year plan to improve the protection of intellectual property. The plan is designed to increase the legal enforcement and public awareness of IP rights, with the aim of cultivating a superior environment for IP protection. Based on such a plan, the Taiwanese government has amended or promulgated in 2004 new laws and regulations regarding intellectual property rights.

Patent Act

The Taiwan Patent Act has been amended several times in the past. The latest amendments were made on January 3, 2003 (the 2003 Amendments). The 2003 Amendments came into force as of July 1, 2004, except for the provisions concerning the decriminalization of patent infringement which had earlier taken effect on March 31, 2003.

Of the 2003 Amendments, the decriminalization of patent infringement is perhaps the most important one, as it has been resulted in significant changes to the litigation practice in Taiwan. Without criminal procedures such as the search and seizure procedures under the Criminal Procedure Law as a powerful means to enforce patent rights, more and more Taiwanese patent owners tend to institute the civil injunction procedure to seek provisional protection for their patent rights by enjoining the alleged infringer from producing and selling the alleged infringing products. According to an unofficial statistic over the past one year, more than half of the patent infringement disputes in Taiwan involve the filing with the court of a preliminary injunction order (“PIO”) before or after the civil litigation procedure. To obtain a PIO from the court in Taiwan, a patent owner usually will be required to deposit a security bond for possible damages arising from such order.

Another important change from the 2003 Amendments is the simplification of the examination procedure for utility model applications. Under the new law, only the formality examination is required for utility model applications. As no time-consuming substantive examination is involved, a utility model application may be granted in a short time-frame (approximately six months) if all the formality requirements are met. The new law also requires the patentee of the utility model to provide a Technical Assessment Report issued by the Taiwan Intellectual Property Office while exercising the patent right. If a utility model patent is rendered void, for example, through the invalidation proceeding, the patentee will be liable for the damages incurred by his previous exercise of the patent right unless the right was exercised without negligence (e.g., based on the Technical Assessment Report).

Copyright Act

On August 24, 2004 the Legislative Yuan passed the latest amendments to the Copyright Law. The Amendments were promulgated on September 1, 2004 and became effective as of September 3, 2004. Twelve articles were amended, and one article was added. In general, the new amendments provide more protection to the digital and internet industries, enable the customs authorities to detain infringing products on their initiative, and resolve the difficulties encountered by the enforcement authorities when enforcing the Copyright Law. The important amendments relating to copyright protection are as follows:

1. Technological Protection Measures (Anti-Copying Measures)

Technological protection measures adopted by the copyright holder to prohibit unauthorized access to his works shall not be disabled, destroyed or otherwise circumvented without the copyright holder’s authorization. Further, except for the specific circumstances listed in the Copyright Law, unauthorized manufacture, import, or provision of equipment, tools, technology or information with the function of disabling, destroying or circumventing such technological measures are also prohibited.

2. Detention of Pirated Products by Customs Authorities

In addition to the mechanism for copyright holder to apply to the customs authorities to seize pirated products, the newly amended Act granted the customs authorities the power to detain, on their initiative, imported/exported goods that appear to be pirated products. The customs authorities shall notify the Copyright holders and importers/exporters of such detained goods within one business day of the detention. If the goods detained are not verified to be infringing products within a certain period of time (four hours for exports by air and one business day for all other goods), they would be released. For goods that have been verified to be infringing products, if the copyright holder fails to apply for border seizure following the procedure stated in the Copyright Law or to initiate related civil or criminal litigation within three business days, the goods detained would also be released.

3. Penalties for Illegal Reproduction

The previous regulations of the Copyright Act, which were enacted in 2003, imposed different penalties for illegal reproduction with intent to profit and illegal reproduction without such intent but exceeding certain thresholds (5 copies or NT$30,000). Because in practice the above-mentioned criteria, intent and quantity, are difficult to determine, the newly amended Act deleted such criteria for the determination of penalties.

To effectively deter illegal reproduction and distribution of pirated optical disks, the new amendments increase the minimum penalty for illegal reproduction of optical disks for sale or lease, or for the purpose of sale or lease, to six-month imprisonment.

Despite the forgoing, the amendments emphasize that using a work only for personal reference or fair use of a work does not constitute infringement of copyright. This provision aims to balance the public interests and the protection of copyright.

Trademark Act

There is no amendment of the Trademark Act in 2004. However, there are two important Examination Guidelines promulgated by the Taiwan Intellectual Property Office in 2004.

1. The enactment of the Examination Guideline to Clarify the meaning of "likely to cause confusion" on May 1, 2004.

Pursuant to the Trademark Law promulgated on November 28, 2003, which added the phase for "likely to cause confusion" to many of its provisions, the Taiwan Intellectual Property Office announced the enactment of the Examination Standards to Clarify the meaning of "likely to cause confusion" on May 1, 2004, to give trademark examiners a guideline for determining the meaning of "likely to cause confusion". In the said Standards, trademark examiners are to take the usual usage of the trademark and the degree of its distinctiveness into consideration when determining whether the mark is likely to cause confusion. In other words, flexibility, instead of a set formula, should apply, for the examination procedure.
For example, it is not advisable to conclude that the Dutch Miffy and the Japanese My Melody will cause confusion simply because both trademarks use a bunny image. Also, coexisting identical or similar trademarks may influence the way a likely to cause confusion trademark is assessed. For example, Tatung Television and Tatung China, Pacific Construction and Pacific Kitchen Appliance, and Far Eastern Department Store and Far Eastern Air Transport are all trademarks with a long-standing history of coexistence. Therefore, it is important that each trademark case is individually examined to determine its distinctiveness, how well-known it is, and whether it is being used simultaneously.
If a trademark is found to have caused confusion with another trademark at the time of registration or after it is registered, the said Standards provide a few remedies to counter such problem. These might include reducing the designated categories of the goods or the services of such a trademark to eliminate the source of causing confusion, or dividing the mark so as to allow the part that is not under dispute to be accepted, or to reach an agreement with the right holder to allow for coexistence. These remedies give flexibility to rigid regulations without jeopardizing the fairness in trademark examination.

2. The Examination Guideline for 3D, Color, and Sound Marks were drafted and took effect on July 1, 2004

To be in line with international trends, 3D, color, and sound marks are now protected under the Trademark Act. The addition of these three types of marks for trademark registration is the most significant revision under the 2003 amendments. Since implementation of the 2003 amendments on November 28, 2003, the Taiwan Intellectual Property Office has received over 100 applications for 3D mark registration, around 60 applications for color mark registration, and over 20 for sound mark registration, making a combined total of approximately 200 applications. To ensure proper and transparent examination of 3D, color, and sound mark applications, the Examination Guideline for 3D, Color, and Sound Marks took effect on July 1, 2004.
In determining the distinctiveness of these marks, consideration is given to the consumer's recognition, the merchandise's characteristics, and how the mark is applied in the related market. For example, if the shape of the 3D mark is the shape of a figurine product or the shape of a bottled water product, that shape is inseparable from the product itself. From the view of the consumer, however, these shapes either serve as decorations or are for the practical purpose of the merchandise, and are not used to distinguish the origin of the product. Therefore, it is difficult to obtain trademark protection because of the lack of distinctiveness.
In addition to giving consideration to consumer's recognition, it is also important to take into account the characteristics of the product. For daily supplies such as toiletries, consumers pay more attention to the brand rather than to the shape of the packaging. Therefore, in order to leave a deep impression within a short period of time, the shape of the packaging must be eye-catching and can be used to identify the origin of the product or service. However, merchandise such as toys, clothing, or lighting fixtures are diverse in their designs and patterns and therefore, from the view of the consumer, such designs and patterns are for decoration purposes and are not used as identification of origin. Thus it is difficult to obtain trademark protection because of the lack of distinctiveness. Furthermore, if the 3D shape is being used on a regular basis by other relevant businesses, then that 3D shape is not distinctive and does not serve to identify origin.
Application for 3D, color, and sound marks should include drawings and descriptions of these marks so as to give a clear idea of the scope and object under consideration. This would also make it easier to establish the distinctiveness of the mark. Also, trademark applications for 3D marks whose shapes are functional shall be rejected. For example, if a 3D object has obtained a patent right or utility model right, such object would be considered as having a practical function. Unless the applicant can supply documentary proof that the object in question does not contain any necessary technological effect, the application will be rejected. This restriction is applied to prevent technological or functional creations from obtaining permanent protection under the Trademark Act that might adversely affect technological innovation and fair competition.

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