January 2024
Jane Tsai, Albert Yen,Tina Lee
In the context of economic globalization, foreign direct investment (FDI) brings significant benefits in terms of capital, technology, and employment opportunities, thereby promoting the development of the economy. Regarding the attractiveness of foreign direct investment, the protection of intellectual property rights becomes an influencing factor, particularly in knowledge-intensive industries. Therefore, for economies intending to focus on the development of knowledge-intensive industries, the robustness of intellectual property law system and its trustworthiness to foreign investors become crucial. Since Taiwan joined the World Trade Organization (WTO) in 2002, with the subsequent rapid growth of its technology sector, its intellectual property law system has seen numerous adjustments and reforms, evidencing its gradual maturation. Below, we briefly highlight key aspects of Taiwan’s intellectual property law system that are pertinent to foreign investors considering investment in Taiwan:
1.Taiwan places great importance on the protection of trade secrets, holding those who infringe upon trade secrets criminally responsible.
In 2013, Taiwan amended the Trade Secrets Act, stipulating that individuals who violate trade secrets through theft, embezzlement, fraud, threat, unauthorized reproduction, or other wrongful means shall be subject to imprisonment for up to five years or detention, along with a fine ranging from NT$1 million to NT$10 million (Article 13-1 of the Trade Secrets Act). Moreover, individuals intending to commit trade secret infringement for use in foreign jurisdictions, mainland China, Hong Kong, or Macau may face an increased penalty of imprisonment for one to ten years, along with a fine ranging from NT$3 million to NT$50 million (Article 13-2 of the Trade Secrets Act). Taiwan has recently amended the National Security Act, establishing a hierarchical protection system for trade secrets, and introducing enhanced penalties for offenses related to trade secrets involving national core key technologies.
2. Company names should be translated into Chinese according to regulations. To avoid infringement and protect the company’s brand, it is recommended to simultaneously assess the Chinese translation of the company name for trademark planning.
According to the Taiwan’s Company Act, if a foreign company establishes a branch office in Taiwan, the company name should be translated into Chinese (Article 370 of the Company Act). To prevent potential conflicts with registered trademarks in Taiwan and concerns about infringing on others’ trademark rights, it is advisable for investors to check whether the company name has been a well-known registered trademark before applying for company registration. Additionally, it is recommended to apply for trademark registration for the Chinese translation of the company name to protect the company’s brand.
3. It is advisable to clarify the use pattern to determine the type of copyright license required.
Considering the nature of various types of works, Taiwan’s Copyright Act establishes different rights for different types of creative works. For example, literary works enjoy property rights such as reproduction, adaptation, and distribution, but rights like public presentation and public performance are not involved until literary works transform into audiovisual works. As the Copyright Act presumes that unspecified parts in the particulars of the license are not granted (Paragraph 1, Article 37 of the Copyright Act), investors are advised to clearly clarify their actual utilization needs and patterns for others’ works. They should then establish explicit particulars on the content of copyright license to avoid potential infringement concerns.
4. Types, subject matters, and term of patents
Under the current Taiwan’s Patent Act, patents are classified into three types: invention patents, utility model patents, and design patents. Invention and utility model patents protect “technical ideas,” with invention patents having a broader scope covering “substances” without a specific spatial form, “objects” with a specific spatial form, and “methods.” The term of these patents is twenty years from the application date. In contrast, utility model patents cover only the shape or structure of an article or combination of articles, with a term of ten years from the application date. Design patents, distinct from invention and utility model patents, protect the “visual effects” rather than technical ideas, such as the shape, pattern, color, or any combination thereof, of an article as a whole or in part, with a term of fifteen years from the application date.
5. Investors exercising intellectual property rights in Taiwan should be mindful of compliance with competition law
The essence of intellectual property rights is to grant the right to exclude others from implementation in order to encourage innovation, naturally leading to a relationship of both conflict and complementarity with competition law. According to Article 45 of the Fair Trade Act in Taiwan, proper conducts in connection with the exercise of intellectual property rights are not subject to the provisions of the Fair Trade Act. The term “proper conducts” can be interpreted by referring to the principles established by the Fair Trade Commission (hereinafter referred to as the “Commission”) for handling cases related to warning letters involving copyright, trademark, or patent rights, as well as for handling cases related to technology licensing agreements. The former requires businesses to follow specific procedures before issuing warning letters to prevent the unfair competition or anti-competitive effects achieved through the misuse of warning letters. The latter outlines how the Commission will review technology licensing cases (including patent licensing, proprietary technology licensing, or mixed licensing of patents and proprietary technology) and provides examples to explain some types of “non-violation of the Fair Trade Act” and “prohibited activities.”
6. Customs measures in Taiwan are also important means for protecting intellectual property rights
In the protection of intellectual property rights, rights holders can apply for protective measures with Taiwan Customs in accordance with the Trademark Act, Copyright Act, Patent Act, and relevant regulations such as the “Regulations Governing Customs Measures in Protecting the Rights and Interests of Trademark.” These measures include actions like detention of goods suspected of infringement, inspection of detained goods, providing information related to infringing goods, or taking samples of suspected infringing goods. For the protection of trademark rights, there is also an “advice protection” mechanism, allowing rights holders to apply for logging the trademark information on the customs database. This enables the customs to proactively notify trademark owners when goods suspected of infringement are detected for further investigation. Prior to initiating legal proceedings, in addition to applying for interim measures such as provisional attachment, provisional injunction, or provisional injunction maintaining a temporary status quo through the court, the aforementioned customs measures are also important means for protecting intellectual property rights, deserving investors’ attention.
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