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UNCLAS SECTION 01 OF 04 TAIPEI 003690
SIPDIS
STATE FOR EAP/RSP/TC AND EB/IPC AREIAS, STATE PASS AIT/W
AND USTR, USTR FOR SKI AND BPECK, DOC FOR KSCHLEGELMILCH,
USPTO FOR JURBAN/DLASHLEY-JOHNSON, AND LOC FOR STEPP
E.O. 12958: N/A
TAGS: ECON ETRD KIPR TW IPR
SUBJECT: TAIWAN SPECIAL 301 OCR: AIT VIEWS
REF: A. TAIPEI 0533
B. TAIPEI 1600
C. TAIPEI 2672
D. TAIPEI 2877
E. TAIPEI 3093
F. TAIPEI 3198
1. (SBU)Summary: Taiwan authorities charged with protecting
Intellectual Property Rights have made substantial progress
since the last review in March 2004. AIT recommends reducing
Taiwan's current Special 301 classification from the Priority
Watch List to the Watch List. Further reductions might be
warranted once Taiwan meets its WTO commitments to protect
pharmaceutical data, deter on-line piracy, control illegal
copying on University campuses, and improve the judicial
process to ease prosecution of IPR cases. Taiwan will also
need to continue effective enforcement actions against
counterfeiting activities. End Summary.
2. (U) The period from March to November 2004 has seen
Taiwan authorities take significant actions to improve the
environment for IPR protection in Taiwan and to continue
positive enforcement activities. Most significant of these
improvements was the passage of amendments to the copyright
law that addressed serious shortcomings in the legal
environment for copyrighted materials. Taiwan also created
new protections for pharmaceuticals, and stepped up
enforcement actions to protect optical media,
pharmaceuticals, and branded goods. Increased surveillance
by Customs authorities is credited by Taiwan officials with
further limiting exports of counterfeit products, and new
powers for those authorities
should increase their effectiveness. Taiwan
institutionalized what had previously been an ad hoc joint
task force focusing on retail Optical Disk piracy enforcement
and plans to expand its membership, and is drafting plans to
create a specialized IPR court. The Department of Health
(DOH) drafted and submitted to the Legislative Yuan (LY) a
Data Exclusivity (DE) law. Problems still remain,
specifically, the failure of the LY to pass DE legislation,
the continued operation of P2P sites, continued digital and
print piracy on university campuses, and protracted legal
procedures that discourage resolution of IPR complaints.
Legal Environment: Copyright amendments
----------------------------------------
3. (U) On August 24, responding to high level lobbying from
the government, Taiwan's LY passed amendments to the
copyright law that plugged many of the holes left by the 2003
attempt at copyright reform. The new law granted Taiwan
Customs ex officio authority to impound suspected counterfeit
goods, provided protection for "anti-piracy measures",
created minimum sentences for those convicted of commercial
piracy, and eliminated arbitrary personal use provisions.
Those convicted of violating IPR with commercial intent will
now receive a sentence of six months to five years and be
fined between USD15,000 and USD150,000. Non-commercial
piracy is punishable by up to three years in prison and/or a
fine of up to USD22,000. Industry pronounced itself mostly
pleased, but noted that the amendments did not address the
issue of internet piracy.
Stiffer penalties for pharmaceutical piracy
-------------------------------------------
4. (U) On March 30, Taiwan passed amendments to the
Pharmaceutical law that increased penalties for producing,
distributing or selling counterfeit products. Penalties for
producing or importing counterfeit drugs now include
imprisonment for up to twelve years and a fine of up to
USD750,000, under certain circumstances. This is up from the
former maximum penalty of a USD4,500 fine. The penalty for
sale or distribution of counterfeit pharmaceuticals is now up
to seven years in jail and a fine of up to USD150,000.
Changes to Patent and Trademark laws and regulations
--------------------------------------------- -------
5. (U) The Patent Act was amended in February 2003 and
revisions took effect in July 2004. The changes make patent
applications easier to file, including instituting an
e-filing system, simplified patent litigation procedures, and
adopting a post-grant dispute filing system. Trademark
examiners were made subject to new regulations requiring them
to take into account usage in determining whether the mark is
likely to cause confusion. The examination standards for
three-dimensional shapes, colors and sounds took effect July
1, 2004.
Establishment of an IPR Court
-----------------------------
6. (U) After several months of consideration, the Judicial
Yuan has decided to support the creation of a specialized IP
court. Debate has centered on whether such a court would
have power to adjudicate criminal, civil and administrative
cases, whether the court should be at a district or appellate
level, and whether judges should be permanently assigned or
rotated through the court. Ministry of Justice contacts
inform AIT that the Judicial Yuan will formally propose the
Court in next Legislative session.
Illegal Photocopying
--------------------
7. (U) Although illegal photocopying continues to be a
problem on university campuses, the American Association of
Publishers (AAP) tells AIT it is generally satisfied with the
increased awareness and level of cooperation they are
receiving from enforcement officials. In conjunction with
AAP, the National Police conducted a series of raids and
inspections in mid and late September around many of the
major universities in Taiwan in an attempt to discourage
illegal photocopying of textbooks at the beginning of the new
fall term. AAP plans to work with the Ministry of Education
to develop policy guidelines that
discourage illegal photocopying.
Enforcement Actions: Legalization of the IETF
---------------------------------------------
8. (U) On November 1, 2004 Taiwan officially
institutionalized what had been an ad hoc anti-piracy task
force. The Integrated Enforcement Task Force (IETF) is a
220-person police detail committed to combating retail
optical disk piracy. During the first nine months of 2004,
the IETF conducted 2,964 inspections, made almost 800 arrests
for optical media piracy, and confiscated over 590,000
illegal CDs. Despite this record of improved enforcement,
stakeholders were concerned that the ad hoc nature of the
task force was detrimental to recruitment of personnel and
betrayed a lack of commitment to continued enforcement
actions. The task force is now a permanent body that falls
under the jurisdiction of the national police but will be
funded by the Ministry of Economic Affairs. There are
reportedly plans to increase the number of personnel to 600
by 2006.
Major Blow to Optical Media Piracy
----------------------------------
9. (U) In May, Taiwan police, Coast Guard, and Ministry of
Justice (MOJ) officials conducted a series of raids in the
Taichung area that resulted in the seizure of over 400,000
illegal CDs, 400 CD burners, and one unlicensed CD injection
machine. Eight suspects were arrested and seven were
indicted. The suspects could face sentences as long as five
years inprisonment. According to the Taichung Prosecutors
Office, the suspects were eligible for bail and are currently
not in custody. Police estimate the group was responsible
for as much as ten percent of all counterfeit optical media
produced in Taiwan.
Attacking Counterfeit Pharmaceuticals
-------------------------------------
10. (U) The MOJ has made the investigation of pharmaceutical
cases a top priority. In October, Taichung enforcement
authorities raided nine separate locations in Central and
Southern Taiwan and seized almost one million counterfeit
tablets of Viagra, Reductil, and Stilnox. Four persons were
arrested, including a licensed pharmacist. Subsequent
investigation suggests the tablets were produced in China and
smuggled into Taiwan, but that the high-quality packaging and
printing was done in Taiwan. The Ministry of Justice
Investigation Bureau (MJIB) has assured AIT that the
investigation into the source of the tablets, as well as the
printing and packaging materials, continues. MOJ and DOH
inspections of pharmacies in the weeks following the arrests
showed a marked decrease in the incidents of counterfeit
pharmaceutical products for retail sale, according to MOJ
sources.
Additional Enforcement Actions
------------------------------
11. (U) In June, the IETF uncovered an optical disk piracy
operation outside of Taipei that resulted in the confiscation
of over 15,000 illegal optical disks,
including software, games, VCDs, pornography, and music.
Twenty seven CD burners and 4 computers were also seized. In
addition to the actions by IETF, the National Police
Administration, through September reported over 3,000 raids
on suspected IP violators and arrested over 3,000 suspects
for IP related crimes. The Joint Optical Disc Enforcement
Task Force (JODE) conducted over 800 raids during the same
time period, including 300 at night. They found six
instances
of illegal optical disk manufacturing, closed eight illegal
manufacturing plants, seized five optical disk machines and
over 100,000 optical disks. Taiwan Customs seized over
64,000 illegal optical disks through September 2004,
including more than 16,000 pirated PS2 optical disks.
Customs also seized substantial amounts of counterfeit
branded goods, including purses and clothing, perfume and
other trademarked goods. Most of these products allegedly
originated in China.
Public Education and Training
-----------------------------
12. (U) The Ministry of Economic Affairs has created a
reward program for informants in optical disk piracy cases.
At an awards ceremony in June 2004, MOEA paid over NT$17
million to informants and law enforcement for tips that led
to the closure of five illegal optical media plants and
confiscation of nine injection molders, 19 other pieces of
heavy manufacturing equipment and over 630,000 pirated disks.
13. (U) In April 2004, TIPO began to publish a weekly IPR
column in one of Taiwan's most important business dailies.
The column aims to educate business people on IPR related
concepts. Since April 2004, IPR promotion advertisements
have been posted in public areas such as the subway and in
airports and broadcast on television.
14. (U) Training for law enforcement personnel, prosecutors
and judges is occurring regularly. In May, TIPO conducted
training for 137 new IETF officers. Representatives from the
US Department of Justice and the FBI in September held a
seminar for law enforcement on combating cyber-crime. In
April, the Ministry of Justice and Chiao Tung University
conducted training on IPR crimes for prosecutors. TIPO, in
cooperation with Taiwan National Politics University's IPR
Center, will host additional training for judges and
prosecutors November 25-26.
Unfinished business: DE protection...
-------------------------------------
15. (SBU) During AUSTR Charles Freeman's July visit to
Taiwan, the DOH committed to draft and submit to the LY a
bill to protect research-based pharmaceutical and chemical
data. After consultations with a resistant local industry,
DOH finally submitted the draft bill to the Executive Yuan
for submission to the LY Procedure Committee in late
September. However, due to political disputes in the LY tied
to the upcoming LY elections in December, the Procedure
Committee has not yet assigned the bill to the Environment,
Science and Health Committee for consideration. With the LY
in recess until after the December 11 elections and the LY
session scheduled to conclude in late January, it will be
difficult to pass this bill in the current session.
16. (SBU) The draft bill does address most of industry's
concerns for Data Exclusivity (DE). New chemical entities
would be granted a five-year period of DE protection. New
indications would be protected for three years under the
draft bill. The innovative research pharmaceutical industry
has raised concerns about one provision that would require
new products to register in Taiwan within three years of its
initial sale in another market or face the loss of DE
protection in Taiwan. Industry worries that three years will
not allow them to complete Taiwan's complex registration
requirements. In an October 11 letter, the Minister of
Health, assured AIT that companies need only file for
registration within three years to avail themselves of DE
protection. He wrote that there is no need to complete the
registration procedure within three years to benefit from the
provisions of the proposed law.
...and Internet Piracy
----------------------
17. (U) Although indictments against Peer to Peer (P2P) file
sharing companies EZPeer and Kuro were filed in December
2003, the legal process to restrict the use of these services
for copyright infringing file trading between subscribers is
glacially slow. The cases are still under consideration by
the Taiwan courts. In response to a lawsuit brought by the
International Federation of Phonographic Industries (IFPI),
the P2P sites posted a list of songs that users were urged
not to download, but the operators of the sites did not make
any efforts to prevent the sharing of the specified
copyrighted works. The Taipei prosecutors office has made
the this case a priority, assigning two expert prosecutors to
handle the case, but is still awaiting judicial action.
While Taiwan enforcement authorities are becoming
increasingly aware of the problem of internet piracy, they
have yet to articulate a coherent strategy for dealing with
this threat.
18. (SBU) AIT Assessment: As a result of a united USG
interagency front, the IPR environment in Taiwan is steadily
improving. Many of the issues highlighted in the 2004
Special 301 Review have been addressed, including better
cooperation to combat photocopying, effective efforts to
resolve conflicts over power of attorney requirements, and
institutionalization of the Integrated Enforcement Task
Force. Taiwan's efforts to address serious problems warrant
its removal from the Priority Watch List. However, work
remains to be done in several areas, including passing
legislation to protect pharmaceutical data and addressing
growing concerns about internet piracy and the slow legal
process for protecting IPR. Until these remaining concerns
are addressed, it is premature to consider dropping Taiwan
from the Special 301 Watch List. End Comment.
PAAL