China and Taiwan under the TRIPS Agreement on Patent Rights

China and Taiwan under the TRIPS Agreement on Patent Rights


Antonio L. Kho, Jr.[1]




The paper compares the patent laws of  China  and Taiwan  in the

light of  the provisions of the TRIPS  agreement on patent.


To show the performance of China and Taiwan  in the enforcement

of intellectual property rights on patent, the study relies on the records  of

infringement, cases filed before judicial authorities, the complaints filed

against both countries before  the Dispute Settlement Board ( DSB ) and the

review of the US  Trade Representatives (USTR) on the compliance of  both

countries to the agreement.

While the patent laws of China and Taiwan are both compliant

substantially to the provisions of the agreement on patent, their

enforcement records differed.


             Key terms:     TRIPS     patent         infringement     compliance               enforcement




            Only twenty days separated China’s and Taiwan’s accession to the World Trade Organization(WTO). China became a member on December 11, 2001, while Taiwan became a member on January 1 of 2002. While China came in with the status of a state, Taiwan to include Penghu, Kinmen and Matsu came in as a separate customer territory. Unlike the membership in the United Nations which requires one to be a state, membership in WTO just requires one to be a separate custom territory having complete autonomy in the conduct of its own trade policies.[2]  This rule is obviously resorted to in order to recognize other customs territories’ role in international trade. This includes Macao and HongKong who both became members on January of 1995 way ahead of China.  Furthermore, while China came in with the status of a developing country, a distinction that will determine the timetable of implementation of WTO’s commitments by China, Taiwan came in as a newly industrializing area. Which means that in terms of the general implementation of WTO’s rules, Taiwan is not afforded the schedule of delayed implementation like the other developing countries.


[1] International fellow, National Sun Yat-sen University and Assistant Professor, Wenzao Ursuline College of Languages, Taiwan.

[2] Par. 1 of  Article XII on Accession of  Marrakesh Agreement Establishing WTO, April 15, 1994 

           There is , however, an exemption to this rule. In so far as the implementation of  the provisions on the Trade Related Intellectual Property Rights(TRIPS) is concerned, China despite its status as a developing country has to implement the rules of  the TRIPS agreement in the schedule provided for  developed countries .  It has not been afforded the time to gradually implement the agreement. Taiwan with its relatively advanced economy is also required to implement the provisions of the TRIPS agreement shortly. Since the accession of China and Taiwan came almost at the same time and both are required to immediately implement the TRIPS agreement and aside from the insistence of China that Taiwan is its province, it would be interesting to examine their records on this regard. For the purpose of this study, the writer will be focusing on one aspect of the intellectual property rights, the TRIPS agreement on patent rights as they impact on both China and Taiwan. Ineluctably, examining their performance would lead to comparing how both of them comply with their obligations under the agreement.

            The study will be divided into three parts: first is the review of the TRIPS provisions related to patent rights since they will serve as the bases for evaluation of both countries’ performance along this area. This will likewise set the boundaries of the patent regime that is necessary for a clear analysis for its impact on the intellectual property rights of China and Taiwan. Second  is the review of the impact of the TRIPS agreement on the intellectual property rights on patent protections both in China and Taiwan; and third is to examine their records on the enforcement of the intellectual property rights on patent in their respective jurisdiction. It should be noted that Taiwan has adopted the strategy of positioning Taiwan as a regional center for research and development, and as such protecting the intellectual property rights assumes a significant part of the strategy. Being considered the “factory of the world”, China is likewise positioning itself to become also a center for research and development.

Theories of Patent

            There are several theories on the grant of a patent. One is the reward doctrine which is usually used to explain the function of the patent system. This doctrine maintains that patent is a reward given to an individual who makes a contribution to society by inventing and disclosing an invention. Miller calls it a “bargain theory” because it is the exchange of new invention with reward as an incentive. The strength of this theory according to Miller is that it is “supported by common sense and the theory underlying the free enterprise system”.[3]  Another theory of patent is that it “operates as titles of security” that gives the inventor to “prospect the market for commercial opportunities.”.[4] This is called the prospect theory. But according to Carvalho, both theories however can not provide a valid explanation of the function of patent as they do not rely on direct effects but the “secondary effects” of patent.

            According to Carvalho the functions of patent could be explained by the elements of patent itself. First, patent represents a technical evaluation that the invention is “new, non-obvious, susceptible of industrial application, and represent a conceptual unity”. Second, patents are subject to identical standards and shall be available to any invention in all fields of technology, and third, patents further social goals and not to reward individuals.[5]Society benefits from the new inventions when they are developed into a new product, commercialized and disclosed to the public.[6] The function of patent which   produces direct effect is that it  provides inventors with the “right of exclusion from the

               [3] Arthur R. Miller, Intellectual Property: Patents, Trademarks, and Copyrights,  (  USA: West Publishing Co., 1990 ) 14.

[4] Nuno Pires de Carvalho, The TRIPS Regime of patent Rights (London/ Hague and New York, 2002: Kluwer Law International, 2002) 2.

[5] ibid. 2-3.

[6] Roger D. Blair and Thomas F. Cotter, Intellectual Property: Economic and Legal Dimensions of Rights and Remedies, (, Cambridge: Cambridge University Press, 2005) 13.

use, production, sales, or import of product or technology in question for a period of time, after which use of and other rights over the product or technology become part of public domain.”[7]  This right serves as an incentive for inventors to spend their time, money and resources for their ideas. The exclusive right gives the inventor the opportunity to recover his cost and correct the problem of “free riders” who want to make use of the invention as a minimum of cost.[8] A cursory reading of the TRIPS Agreement will indicate that it has adopted the “exclusionary” theory.


Since inventions may be subject to ownership under the patent law, the owner can file a suit against someone who is suspected of “literally infringed” by making, using, or selling without the permission of the owner.[9] Patent rights are considered assets so their use could be licensed and transferred. But the question is for how long could an inventor enjoy this monopoly rights?

 While the inventor incurs cost for the invention, the society also incurs cost for granting that right. Blair and Cotter have cited the social costs for the grant of patent: First, there are the systemic costs of processing, enforcing, and maintaining the patent rights. There must be a patent office and courts to resolve patent infringement cases. Second, the patent system will potentially inhibit future inventions based on the patented invention. Third is the cost related to duplication of efforts for the patent. Since only one will be given the patent, the costs as the result of “race” will be wasted. On the other hand, the race could result to unintended benefits by the discovery of something new.  And fourth is the cost associated with monopoly rights. Monopoly rights could be “troubling” because “monopolies  transfer  wealth from the consumers to the monopolists” and the “outcome may be undesirable”  to one’s concept of distributive justice. Furthermore, monopoly is “allocatively  inefficient” because monopolist maximizes profit by increasing its price at a reduced output and social welfare decreases. The monopolist is better off at the expense of the consumer. Despite of the criticism it is

[7] Andrew Mertha, The Politics of Piracy: Intellectual Property in Contemporary China, ( Ithaca and London Cornell University Press, , 2005) 17.

[8] Blair 17.

[9]  Blair 10.


argued that  in the end the consumer is better off than when the invention is not invented because the monopoly would just be temporary.[10]


So the issue now is how long should the inventor enjoy the exclusive right of his invention? According to Blair and Cotter, there is “little theoretical  and no empirical evidence addressing the issue of what is the optimal scope and duration of patent rights.”[11]Miller echoes that there is no one effective theory than other  to conclude about the “optimum amount of incentives to promote invention”.[12] Ideally, the issue is how to maximize the social benefits over the social cost.  and But the grant of award is uniform because of the impracticality of measuring the technical and economic value of the invention before the award is given. [13]


The TRIPS Agreement  


            This section reviews the salient features of the TRIPS agreement. The TRIPS agreement was put into effect on January 1, 1995. It improved on the already existing obligations and protection under the World Intellectual Property Organization (WIPO). It has two objectives  laid down  in its  preamble, namely, to reduce the  distortions and the impediments of trade; and  to promote effective and adequate protection of intellectual property rights; and to insure that in coming up with measures and procedures to enforce the intellectual property rights they do not by themselves become barriers to international trade.  This agreement was an improvement of the


Scope and Basic Principles 

            The Agreement on Trade-Related Aspects of Intellectual Property Rights, Including Trade in Counterfeit Goods of the World Trade Organization( WTO) provides the scope and establishes the Current TRIPS regime on Intellectual Property Rights. The

[10] ibid. 17-19.

[11] ibid. 23.

[12] Miller 18.

[13] Carvalho 5.

term “intellectual property” would refer to all intellectual property covered from Sections 1 to 7 of Part II of the agreement: Copyright and Related Rights (sec. 1); Trademarks (sec. 2); Geographical Indication (sec. 3); Industrial Designs(sec.4); Patents (sec.5); Lay-out Design( Topographies) of Integrated Circuits (sec.6) and Protection of Undisclosed Information (sec. 7).[14] Technically, Section 7 is not an intellectual protection but only a protection against unfair competition.[15]


            The TRIPS Agreement is mainly divided into seven parts : [1] General provisions and Basic Principles that are applicable to all provisions of the WTO agreement; [2] Standards Concerning the Availability, Scope and Use of Intellectual Property Rights mentioned above; [3] Enforcement of Intellectual Property Rights; [4] Acquisition and Maintenance of Intellectual Property Rights and Related Inter-Partes procedures; [5] Dispute Prevention and Settlement  ; [6] transitional Arrangements and [7]lastly Institutional Arrangements; Final provisions.


Part I of the WTO document lays down the scope of obligations of the Members of the TRIPS agreement.  Members are required to give effect to the provisions of the agreement but they are not obliged to implement in their domestic law  a more extensive protection than what is required in the TRIPS agreement. In other words, the agreement just require Members to provide the minimum protection to intellectual property rights; and they are free to determine the appropriate method in implementing the provisions of the agreement within their own legal system and practice.[16]


Part I likewise spells out the basic principles of the agreement which deal on non-discrimination of Members in their conduct of trade with other Members, that the Members should be treated equally. The first principle is National treatment in which the imported and locally produced goods should be treated equally.[17] The wordings of the Agreement is “ [each] Member shall accord to the nationals of other Members treatment

           [14] GATT, Final Act Embodying The Results of The Uruguay Round of Multilateral Trade, 1994 negotiations, Annex 1C or the Trips Agreement.

         [15] Carvalho,  25.

          [6]Article 1

[17] Article 3

no less favorable than that it accords to its nationals with regard to protection of intellectual property”.[18]  The second principle enunciated  is the Most-favored-nation (MFN) where when you grant a favor to someone you have to grant same favors to all Members.[19]   So when a Member discriminates, an aggrieved party can raise it up before the Dispute Settlement Board (DSB) or any other means appropriate.  


Standards, Scope and Use of Intellectual property Rights on Patent

            The second part of the TRIPS Agreement provides a standard of protection for the intellectual property rights, their availability or how it is acquired, their requirement of use, and the cancellation of use or how rights are being lost.


            Since the subject of this study is about patent, the paper is going to concentrate on Section 5 of TRIPS Agreement and its related provisions. Section 5 covers from Articles 27 to 34 of the Agreement.


            Patents shall be available for any inventions, whether products or processes, in all fields of technology provided that it is new, and it involves an inventive step and useful. An “inventive step”  is synonymous with the term “non-obvious”. Patent is made available and patent rights shall be enjoyable without  discrimination as to place of invention, field of technology and their origins whether they are imported or produced locally.[20]



            However, there are two types of inventions that may not be patentable. First, a Member may  exclude from patentability of inventions in its territory in order to protect human life, animal or plant life or health or the environment. The exclusion of patentability from exploitation should not be based however on what is just prohibited by the domestic law of the Member.<!–[if !supportFootnotes]–>[21]<!–[endif]–> Secondly, a Member may exclude from patentability the [a] diagnostic, therapeutic and surgical methods for the treatment of humans or

                [18] Article 2 par. 1

[19] Article 4

[20] Par. 1, Article 27 pf TRIPS Agreement

[21] ibid. par. 2 Article 27

animals; [b] plants and animals and essentially biological processes for the production of plants and animals other than non-biological and microbiological processes. A Member shall however provide protection for plant varieties either by patents or by effective sui generic system or combination of both.[22]

Conditions on Patent application

            There are preconditions for the application for patent. Under Article 29 of the TRIPS agreement, an applicant for patent shall disclose the invention in sufficiently clear and complete manner. It requires the applicant to indicate on how best mode for carrying out the invention. The applicant may be required by Member to provide information about corresponding foreign application and grant. Unlike copyrights and trade secrets, patents together with industrial designs, integrated circuits, geographical indications and trademark have to be registered in order to receive protection. It is only what is described in the application that receives protection.


Rights conferred

            The TRIPS agreement has conferred certain rights to the patent holder. In case the patent is on the product, the owner of the patent is given the rights to prevent others from making, using, offering for sale, selling, importation and distribution of the product unless the owner gives his consent. [23] In case the patent is on the process, the right holder can prevent third parties from using, offering for sale, selling, or importing products obtained directly by the use of the product.[24]  Aside from the rights provided above, the owner of the patent has the right to assign, transfer the patent by succession and enter into licensing agreement with third parties.[25]


Exceptions to the Rights

            There are three conditions under which Members may provide exceptions to the rights conferred, namely, it should be limited, it should not unreasonably conflict with the

                [22] ibid. par. 3(a) & 3(b) Article 27

[23]ibid. par.1(a) Article 28

[24] ibid. par. 1(b) Article 28

[25] ibid. par. 2 Article 28

normal exploitation of the patent, and it does not unreasonably prejudice the legitimate interest of the owner of patent, taking into account the legitimate interest of third parties.[26] The phrase “taking into account the interest of the third parties” would mean balancing the rights of the patent holder and his obligation to others.   The three conditions should be present for exception to be allowed. Otherwise, the exception will be disallowed. 


            As a rule, the use of the patent should have the consent of the patent holder. The exception to this rights is use in the grant of  compulsory licenses by government to third parties authorized by the government or the use by the government itself. The TRIPS Agreement enumerated the conditions under which the compulsory licenses will be resorted to, namely, [a] the use should be considered in its individual merits; [b] if the proposed user failed to get the authorization from the right holder after a reasonable period of time. In case of  national emergency, the proposed user can use the subject matter of the patent by just informing the right holder;[c] the use shall be limited for the purpose;[d] the use shall be non-exclusive;[e] the use shall not be assignable; [f] its use should  be predominantly for the supply of domestic market; [g] its use is subject to the adequate protection of the legitimate interests of  persons so authorized, and it has to be terminated if the reasons for it has ceased to exist;[h] the right holder shall be paid adequately; [i] the legal validity of the decision for authorization is subject to judicial review; and [j] the decision regarding payment for the use is also subject to judicial review. [27]

Term of Protection, Revocation/Forfeiture of Patent           

            The patent holder is given a protection for a period of twenty years counted from the date of filing.[28]


            The TRIPS Agreement provides that an opportunity shall be made available for the judicial review of the decision to revoke or forfeit a patent.[29]  While  Article 32 does

[26] ibid. Article 30

[27] ibid. Par (a )to (j) Article 31

[28] ibid. Article 33

[29] Ibid. Article 32

not provide the grounds for revocation or forfeiture, they are provided in other provisions of the Agreement. Patent could be revoked if it does not fulfill the requirement that the invention is new, involves an inventive step and capable of  industrial application.[30] ; that the applicant for patent did not disclose the invention sufficiently clear and complete for the invention to be performed by a skilled person and the applicant as required did not indicate the best mode for carrying out the invention; and when it is necessary to protect public order, morality, human, animal or plant life or health.[31]



Process Patent: Burden of Proof

            In a civil proceedings regarding the infringement of  right on process patent, the judicial authority has the authority to order the defendant to prove that the process used in obtaining the product is different from the patented processes.[32] This is what Carvalho called the “reverse burden of proof” because normally it is the complainant who has the burden of proof. In this case it is the respondent who has the burden to prove that he has not committed any infringement.


Enforcement of intellectual Property Rights

            The third part of the TRIPS Agreement is the provision of enforcement procedures in the national laws of the Members in order to insure effective action against any act of infringement of  the intellectual property rights. The procedures should include expeditious remedies to prevent infringement and remedies which could constitute as deterrence against further infringement. Likewise, these procedures should be applied in a manner as not to create barriers to legitimate trade and to provide safeguards against their abuse. Furthermore, the procedures should be fair and equitable; it should not unnecessarily complicated or costly, or would entail unreasonable time-limits or unwarranted delays[33].

               [30]<!–[endif]–> Ibid. Article 27.1

<!–[if !supportFootnotes]–>[31]<!–[endif]–> Ibid. par. 2 and 3 of Article 27.2

<!–[if !supportFootnotes]–>[32]<!–[endif]–> Ibid. par. 1 Article 34

<!–[if !supportFootnotes]–>[33]<!–[endif]–> Ibid. par. 2 Article 41

<!–[if !supportFootnotes]–>

            The procedures also lay down the manner in which decisions are promulgated. The decisions of a case made by any judicial or administrative bodies should preferably be in writing or reasoned; and the parties to a proceeding shall have the opportunity for review by a judicial authority of final administrative decisions made. In the case of criminal cases, there shall be no obligation to provide an opportunity for review of acquittals in criminal cases.<!–[if !supportFootnotes]–>[34]<!–[endif]–>


            The TRIPS Agreement provides the civil and administrative procedures and remedies available to the contending parties; their rights to timely written notice with sufficient details; and right to independent counsel.<!–[if !supportFootnotes]–>[35]<!–[endif]–> It likewise provides provision on injunction as an immediate remedy against  any infringement of  intellectual property rights or prevent any entry of imported goods to their jurisdiction that might be prejudicial to the intellectual property right holders .<!–[if !supportFootnotes]–>[36]<!–[endif]–> Under the agreement, the judicial authority is also empowered to award compensation for the damages incurred by the right holders as the results of the infringement; to direct the infringer to pay the right holder of the expenses as the result of the cases filed.  


            The members of the agreement shall provide for criminal procedures and penalties to be applied to cases of willful trademark counterfeiting or piracy on a commercial scale. The penalties would include imprisonment or monetary fines corresponding to the gravity of the crime. In appropriate cases, other remedies would include seizure, forfeiture and destruction of infringing goods. The agreement also provide that  the Members may provide for criminal procedures and penalties to be applied in other cases of infringement of intellectual property rights.<!–[if !supportFootnotes]–>[37]<!–[endif]–>         


            The fourth part lays down the conditions in the acquisition and maintenance of the intellectual property rights. It is essential that the  procedures and formalities be reasonable; and that the grant of permit or registration of the property right be within

                [34]<!–[endif]–> Ibid. par. 3 & 4 Article 41

<!–[if !supportFootnotes]–>[35]<!–[endif]–> Ibid. Article 42

<!–[if !supportFootnotes]–>[36]<!–[endif]–>Ibid. Article 44

<!–[if !supportFootnotes]–>[37]<!–[endif]–> ibid. Article 61

<!–[if !supportFootnotes]–>


reasonable period of time so it will not cut down the period of protection.<!–[if !supportFootnotes]–>[38]<!–[endif]–> Where procedures concerning acquisition and maintenance of property rights are provided in the national laws, administrative revocation like inter parties procedures of opposition, revocation and cancellation shall be consistent with par. 2 and 3 of Article 41 of the agreement.<!–[if !supportFootnotes]–>[39]<!–[endif]–>  Final decisions regarding these procedures shall subject to review by judicial or quasi judicial authority.<!–[if !supportFootnotes]–>[40]<!–[endif]–>



Dispute Settlement and Settlement

            The fifth part of the agreement provides the mechanism for the prevention and settlement of disputes involving intellectual property rights. It provides transparency in which laws, regulations, final judicial decisions and administrative rulings of general application pertaining to the subject matter of the TRIPS agreement shall be published and made public so the Members will be acquainted with them. Any agreement concerning a Member or its governmental agency with any other Member or its governmental agency shall also be published. It is also incumbent upon the Members to notify the Council for Trade-Related Aspects of Intellectual Property Rights of its laws and regulations. Upon written request, a Member shall be prepared to supply information on matters referred to above. Any Member is not however required to disclose confidential information that may impede law enforcement or contrary to the public interest or prejudicial to the commercial interests of a public or private enterprise.<!–[if !supportFootnotes]–>[41]<!–[endif]–>


            This part of the agreement lays down the objectives and nature of the dispute settlement mechanism. The objectives of the Dispute Settlement Understanding are: to have disputes settled positively and  to have security and predictability in the trading system. The manner in which disputes are settled should be done through consultations and not  adversarial.


Transitional Arrangements

                [38]<!–[endif]–> ibid. par. 2 Article 62

<!–[if !supportFootnotes]–>[39]<!–[endif]–> Ibid. par. 4 Article 62

<!–[if !supportFootnotes]–>[40]<!–[endif]–> Ibid. par. 5 Article 62

<!–[if !supportFootnotes]–>[41]<!–[endif]–> Ibid. Article 63

<!–[if !supportFootnotes]–>

            The sixth part of the TRIPS agreement  provides the  arrangements for Members  

during the transition from GATT to the Agreement establishing the WTO.  A developing country Member  is entitled to delay for another four years after the expiry of  one year after the entry into force the WTO agreement. This delay is also applicable to any Member that is in the process of  transforming its economy from a centrally planned economy into a market and free enterprise economy and it is facing problems in the making and implementation of intellectual property laws.<!–[if !supportFootnotes]–>[42]<!–[endif]–>  Reckoning from the establishment of WTO in 1995,  the period  expired in the year 2000.


            In the event that a developing country is obliged to extent protection to patent right holders in the areas of technology and these areas of technology are not so protected in its territory, the Member may delay the application of the provisions of the TRIPS Agreement on product patents to said areas of technology for additional period of five years.<!–[if !supportFootnotes]–>[43]<!–[endif]–> Counting from the establishment of WTO in the year 1995, this period has however expired in 2005. For a member country to avail of the transitional period, it has to make sure that any changes made in its domestic laws, regulations and practice shall not result in less consistency with the provisions of the TRIPS Agreement.<!–[if !supportFootnotes]–>[44]<!–[endif]–>  


            In case of the least developed countries, due to the difficulties in their economy, finances, and administrative ability, they are not required to implement the provisions of the TRIPS agreement for a period of Ten (10) years from the application of the agreement. <!–[if !supportFootnotes]–>[45]<!–[endif]–> Under the Doha Ministerial Conference in November of 2001, they have agreed to extend the exemptions on pharmaceutical patent protection for least-developed countries up to 2016.


Institutional Arrangements

            In insure compliance of the members with their obligations under the Agreement, The Council of Trade-Related Aspects of Intellectual Proper Rights has been tasked to

[42]<!–[endif]–> Ibid. par. 1-3 Article 65

                <!–[if !supportFootnotes]–>[43]<!–[endif]–> Ibid. par. 4 Article 65         

<!–[if !supportFootnotes]–>[44]<!–[endif]–> Ibid. par. 5 Article 65

<!–[if !supportFootnotes]–>[45]<!–[endif]–> Ibid. par. 1 Article 66

<!–[if !supportFootnotes]–>

monitor the operation of the Agreement. It shall provide the opportunities  for Members to consult with each other on matters related to trade aspect of  intellectual property rights. It shall assist members in regard to disputes settlement disputes.<!–[if !supportFootnotes]–>[46]<!–[endif]–>. In the case of developing country as mentioned in par. 2 of Article 65, the Council for Trade-Related Aspects of Intellectual Property Rights shall review the implementation of the TRIPS agreement after the transitional period. After the said period, the Council shall review the case two years after that date.<!–[if !supportFootnotes]–>[47]<!–[endif]–> 


            Members are likewise agreed to cooperate by exchanging information on trade in infringing goods. They have also agreed to promote cooperation between custom authorities in area of trade in counterfeit trademark goods and pirated copyright goods.<!–[if !supportFootnotes]–>[48]<!–[endif]–>


China and Taiwan under the TRIPS Agreement on Patent


            This section shall review the effects of the TRIPS Agreement on the intellectual property laws on patent of both China and Taiwan. It will try to show their similarities and differences in the light of the TRIPS agreement. It has to be pointed out that the present Patent Law of the Peoples Republic of China was approved in 1992 before the conclusion of the Uruguay Round in 1994 that brought about the creation of WTO. It is clear then that China has aligned its law on patent among others for the purpose of joining the world trade body. They  first started to join GATT the predecessor of WTO in 1986 and continued with WTO in 1995 up to 2001. In the case of Taiwan the present Patent Law was amended and promulgated in 2003 but took effect in 2004.   


On Objectives of the Intellectual Property Rights

            In regard to the objectives of the intellectual property rights, both China and Taiwan have substantially incorporated in their national laws the objectives of  TRIPS agreement, which are to protect patent rights, encourage inventions, and encourage their application and utilization in their respective jurisdictions. Yet despite of these

               [46]<!–[endif]–> Article 68

<!–[if !supportFootnotes]–>[47]<!–[endif]–> par. 1 Article 71

<!–[if !supportFootnotes]–>[48]<!–[endif]–> Article 69

<!–[if !supportFootnotes]–>

 similarities, they differ as to the end of this development. While Taiwan has the development of industries as one of the  end results, China considers these as means to “meet the end of socialist modernization”.<!–[if !supportFootnotes]–>[49]<!–[endif]–> China however did not define the meaning of socialist modernization. While Taiwan’s “development of industries”.<!–[if !supportFootnotes]–>[50]<!–[endif]–> can be subjected to objective measurement or evaluation, a characteristic of a good objective, China’s end objective is political or ideological. It serves as the catch all rationalization of its intellectual property law. It can be interpreted then that should the objectives of liberal international trade conflict with China’s socialist modernization objective, China will opt to uphold the political objective.



First, the patentable subject Matters of China and Taiwan are substantially the same as the one covered in the TRIPS Agreement. The TRIPS Agreement talks of any invention, product or process in all field of technology that is considered new, inventive and capable of industrial application.<!–[if !supportFootnotes]–>[51]<!–[endif]–> For China, any invention or utility model patent that is novel, inventive and useful is patentable.<!–[if !supportFootnotes]–>[52]<!–[endif]–> Its  law also allows  patent for design, provided that it is not identical to existing design at the time the application was filed before the Patent Office.<!–[if !supportFootnotes]–>[53]<!–[endif]–>



          In the case of Taiwan, the Patent authority which is the Ministry of Economic Affairs( MOEA) grants invention patent, utility model patent and design patent to applicants whch have complied with requirements.<!–[if !supportFootnotes]–>[54]<!–[endif]–> The law defines “invention” as any creation of technical concepts by utilizing rules of nature.<!–[if !supportFootnotes]–>[55]<!–[endif]–> Although the Patent Law did not directly spell out the characteristics of invention as what was done by China, it can be inferred from the law that it should be new, inventive and capable of use.

[49]<!–[endif]–> Article 1 of the Patent Law of  Peoples Republic of China ( PLPROC)

<!–[if !supportFootnotes]–>[50]<!–[endif]–> ibid.

<!–[if !supportFootnotes]–>[51]<!–[endif]–> Section 5,  Article 27 of the TRIPS agreement

<!–[if !supportFootnotes]–>[52]<!–[endif]–> Article 22 PLPROC

<!–[if !supportFootnotes]–>[53]<!–[endif]–> Article 23 PLPROC 

<!–[if !supportFootnotes]–>[54]<!–[endif]–> Article 2 Patent Act of Republic of China ( PAROC)

<!–[if !supportFootnotes]–>[55]<!–[endif]–> Article 21 PAROC

<!–[if !supportFootnotes]–>

          Secondly, the conditions for patent applications for invention are similar for China and Taiwan. Both require  specifications and drawings of the invention. Both laws adopted the language of the TRIPS agreement that the description should be described in “sufficiently clear and complete” manner. While China does not require a Chinese translation of the application, Taiwan requires Chinese translation.<!–[if !supportFootnotes]–>[56]<!–[endif]–> Without the translation, it could cause the dismissal of the application.  


            The period of publication for the application for a patent for invention is the same for China and Taiwan. The publication shall be done after the expiration of eighteen(18) months from the date of filing. While China used the word “publication”.<!–[if !supportFootnotes]–>[57]<!–[endif]–>, Taiwan used the words “laid-open”.<!–[if !supportFootnotes]–>[58]<!–[endif]–> The applicant in China and Taiwan can, however, request  for earlier publication.


            The period for “substantive examination” of the patent application for invention is also the same for China and Taiwan. Upon request of applicants of both China<!–[if !supportFootnotes]–>[59]<!–[endif]–>  and Taiwan<!–[if !supportFootnotes]–>[60]<!–[endif]–>, the substantive examination of patent application may be conducted within three(3) years from the date of filing of application.


            Under the TRIPS Agreement, the rights conferred to the patent holder is to prevent third parties not having his or its consent from making, using, offering for sale, selling or importing these products if it is a product patent. If  the patent is on process, to prevent the third parties from using, offering for sale selling or importing products obtained from the process.<!–[if !supportFootnotes]–>[61]<!–[endif]–>

The right holder can also assign, transfer, and conclude a licensing contract.


Both China and Taiwan confer rights for patent holders to prevent third parties from using their patents without their consent. China has specifically stipulated these

                [56]<!–[endif]–> Article 25 par. 4 PAROC

<!–[if !supportFootnotes]–>[57]<!–[endif]–> Article 34 PLPROC

<!–[if !supportFootnotes]–>[58]<!–[endif]–> Article 36 PAROC

<!–[if !supportFootnotes]–>[59]<!–[endif]–> Article 36 PLPROC

<!–[if !supportFootnotes]–>[60]<!–[endif]–> Article 37  PAROC

<!–[if !supportFootnotes]–>[61]<!–[endif]–> TRIPS,  Art. 28 par. 1(a) & par.1 (b)

<!–[if !supportFootnotes]–>

rights to prevent third parties from acts infringing  on the subject matter of invention or utility model and design.<!–[if !supportFootnotes]–>[62]<!–[endif]–> In cases of infringement in China, the right holder may request the administrative authorities for patent affairs to handle the matter, or the right holder can file a suit directly before the people’s court against the infringer.<!–[if !supportFootnotes]–>[63]<!–[endif]–> This right however should be exercised within two years from knowledge of the infringement.<!–[if !supportFootnotes]–>[64]<!–[endif]–> Beyond this period, the complaint filed before the court will be dismissed. 


In conformity with the TRIPS Agreement, China’s law allows assignment of patent application and patent right.It however makes a distinction between a right holder that is state-owned and an individual. If state owned, the assignment has to be approved by a “competent authorities at the next higher level” and if it is an individual assigning to a foreigner, the assignor must get the approval of the “relevant competent department under the State Council.<!–[if !supportFootnotes]–>[65]<!–[endif]–>   


The Patent Law of Taiwan also prevents third party from the using the patent without the consent of the owner. It gives owner exclusive rights to preclude others from “manufacturing, making an offer , selling, using or importing the patented article.<!–[if !supportFootnotes]–>[66]<!–[endif]–> This exclusive right to preclude extends to patented process.  In Taiwan’s law,  patent is assignable,  inheritable , it can also be entrusted and subject to licensing.<!–[if !supportFootnotes]–>[67]<!–[endif]–> While China distinguishes a foreigner and a Chinese national in so far as to whom the application for patent is going to be approved is concerned , the law of Taiwan  does not make that distinction. Taiwan has a unified system where all applications are filed before its Patent Office. 


Exceptions to Rights Conferred

            The right of the patent owner to prevent the use of his or its patent has certain limitations as stipulated in the TRIPS Agreement. And these limitation or exceptions are

                [62]<!–[endif]–> Article 10 PLPROC

<!–[if !supportFootnotes]–>[63]<!–[endif]–> Article 60 PLPROC

<!–[if !supportFootnotes]–>[64]<!–[endif]–> Article 61 PLPROC

<!–[if !supportFootnotes]–>[65]<!–[endif]–> Article10. par. 2 & 3 PLPROC

<!–[if !supportFootnotes]–>[66]<!–[endif]–> Article 56 PAROC

<!–[if !supportFootnotes]–>[67]<!–[endif]–> Article 59 PAROC

<!–[if !supportFootnotes]–>

substantially incorporated in the laws of China and Taiwan. This explains why the provisions in their respective laws are quite similar to the  TRIPS’ provisions with few differences.


             First, compulsory licensing of patent in both countries is allowed only when there is the occurrence of national emergency or if it is required by public interest; second, if the applicant failed to reach an agreement with the patentee for the exploitation of patent; third, the patent holder will be compensated for the use; fourth, that the use of the patent is not exclusive; fifth, that the patent is not assignable; sixth, in case when the exploitation of the technically more advanced new invention is dependent on the exploitation of the earlier invention, the later patentee can apply for compulsory license to use the earlier patent. The term used by Taiwan to describe this situation is “cross licensing agreement”. as it was termed in the TRIPS Agreement.<!–[if !supportFootnotes]–>[68]<!–[endif]–>Furthermore, that the exploitation of the compulsory license shall be predominantly limited to the supply of domestic market, and lastly, that any decision made by the patent authority is subject to judicial or administrative review.


            While both China and Taiwan have many similarities, they have quite a few differences. While Taiwan is very clear that the compulsory licensing is a non-profit undertaking, China’s law is silent on this regard. In the case of China’s semiconductor technology, compulsory licensing is limited to non-commercial use, and to remedy an anti competitive practice as determined by judicial or administrative process.<!–[if !supportFootnotes]–>[69]<!–[endif]–> Taiwan is clearer on this regard. The compulsory licensing of patent on semiconductor shall not be for profit, and it shall be resorted to when a patentee has committed an act of unfair competition  that is confirmed by the Trade Commission under the Executive Yuan.<!–[if !supportFootnotes]–>[70]<!–[endif]–> The body that shall determine whether it is unfair or not is very specific in the case of Taiwan but not in the case of China. In the case of China,  it is not clear as which body has the prior jurisdiction on the matter.

                [68]<!–[endif]–> . par. l(ii)Art. 31 PAROC

<!–[if !supportFootnotes]–>[69]<!–[endif]–> Art. 72.3 PLPROC

<!–[if !supportFootnotes]–>[70]<!–[endif]–> Art. 76.7 PAROC

<!–[if !supportFootnotes]–>

Revocation or Forfeiture


            In case of revocation or forfeiture of patent, what is required by the TRIPS Agreement is the presence of opportunity for judicial review of the decision by the patent authority. Both China and Taiwan have provided the grounds and the procedures for revocation. But while China has incorporated in its  patent law the review of decisions of the patent authority by a judicial body like the people’s court, Taiwan does not provide for judicial review of the revocation of patent.


             Under China’s Patent Act, if a grant of a patent right is not in conformity with the provisions of the patent act, a party can file  a request for invalidation of a patent right after six(6) months from the grant of patent. And if the party is not satisfied with the decision of the Patent Reexamination Board (PEB) either  invalidating or upholding the patent right for the invention , the party may within three(3) months after receiving the notice of the decision  file a suit before the people’s court. However, if the request is on the invalidation of the patent right for a utility model or design, the decision of the Patent Reexamination Board (PEB) shall be final<!–[if !supportFootnotes]–>[71]<!–[endif]–> and therefore not subject to appeal to higher authorities. An invalidated patent right is deemed to be non-existent from the beginning.<!–[if !supportFootnotes]–>[72]<!–[endif]–>     


            While China’s patent law has devoted one separate chapter ( chapter V)  on Term, Termination and invalidation, Taiwan’s provisions on revocation has been tucked into different chapters according to the subject matter of patent. The revocation of invention patent is found in chapter 2 of the patent act which provided the grounds and procedures for invalidation; chapter 3 likewise provide for the grounds and procedure for revocation of utility model patent, and chapter 4 for design patent. Since Taiwan’s law provides for the extension of patent according to the provision of Article 52,  it has likewise provided for the revocation of the extension of patent.<!–[if !supportFootnotes]–>[73]<!–[endif]–> China does not provide for the same provision.

                [71]<!–[endif]–> Art. 49 PLPROC

<!–[if !supportFootnotes]–>[72]<!–[endif]–> Art. 50

<!–[if !supportFootnotes]–>[73]<!–[endif]–> Art. PAROC

<!–[if !supportFootnotes]–>

            Under Article 67 of Taiwan’s Patent Act, an invention patent may be revoked by the Patent Authority either by an invalidation action or ex officio and if recalled by the Patent Authority failed, a public notice shall be published revoking the patent certificate. China’s law talks only of invalidation action and nothing of ex officio action.           


            Unlike China which cite the grounds for invalidation of invention patent with the catch all phrase “not in conformity with provisions of the patent act”,<!–[if !supportFootnotes]–>[74]<!–[endif]–> Taiwan has specifically laid the grounds in Article 67 to be the invention that is  found to be in violation of  Paragraph One, Article 12 on joint ownership; Article 21 through 24 on the patentability of the invention; Article 26 on the description of the invention  or Paragraph  Four of Article 49 on making supplement or amendment to the patent application. For utility model the grounds for revocation are stipulated in Article 107, and for Design Patent  in Article 128.


            Under Article 73 of Taiwan’s Patent Act, the decision made by the Patent Authority on revocation of invention patent is not revocable if no administrative remedy has been resorted to by the patentee and where an irrevocable decision to dismiss the action instituted for administrative remedy has been rendered. It would appear then that the decision of the Patent Authority is no longer subject to judicial review on this matter. So while patentee in China can still seek judicial remedy in People’s Court, the patentee in Taiwan is apparently not provided that remedy.


            In case of civil proceedings involving an invention patent , the court  may suspend the trial process until a decision on the invalidation or revocation of patent has become final. And in the process of making a ruling on suspending the trial proceeding, the court shall look into the legitimacy of the cause of the invalidation.<!–[if !supportFootnotes]–>[75]<!–[endif]–> Would that mean that if the court found out that the cause of invalidation is not legitimate, it could overturn the irrevocable decision of the Patent Authority? Like China, an irrevocably revoked patent is non-existing from the beginning.

                [74]<!–[endif]–> Art. 48 PLPROC

<!–[if !supportFootnotes]–>[75]<!–[endif]–> Art. 90 PAROC

<!–[if !supportFootnotes]–>

 Terms of Protection

                        Under Article 33 of the TRIPS Agreement, the term of protection  available to patent shall not end before the expiration of a period of twenty( 20) years from the date of filing.<!–[if !supportFootnotes]–>[76]<!–[endif]–>This particular provision has been applied both by China and Taiwan in their respective national laws with some modification. China grants a 20-year protection to patent for invention and 10-year protection for utility model and design patent.<!–[if !supportFootnotes]–>[77]<!–[endif]–> The grant of a longer protection to invention patent encourages development of scientific knowledge which is the object of the patent law. 


Taiwan on the other hand grants a 20-year protection to invention patent from date of application; 10-year protection to utility model; and 12-year protection to design patent. <!–[if !supportFootnotes]–>[78]<!–[endif]–>If the invention patent is on pharmaceuticals, agrichemical or process of processing the same, the applicant can apply for an extension of 2 to 5 years.<!–[if !supportFootnotes]–>[79]<!–[endif]–> If the patentee suffered damages as the result of war between Taiwan and a foreign country, the applicant may apply for an extension of 5 to 10 years.<!–[if !supportFootnotes]–>[80]<!–[endif]–> This particular provision on “war” is not found in China’s Patent Law.


Burden of Proof

            On the question of who has the burden of proof in judicial proceedings in cases concerning patent, the presumption is that the party producing the identical product is the infringer. The defendant has the burden of proof.  Because the burden of proof lies in the defendant instead in the plaintiff as normally the case in court litigation, the defendant has to present proof to the contrary. In the absence of proof by the defendant, he is deemed to have obtained the articles through the use of patented process.<!–[if !supportFootnotes]–>[81]<!–[endif]–> 


                 [76]<!–[endif]–> Art. 33 TRIPS

<!–[if !supportFootnotes]–>[77]<!–[endif]–> Art. 45 PLPROC

<!–[if !supportFootnotes]–>[78]<!–[endif]–> Art. 113.3 PAROC

<!–[if !supportFootnotes]–>[79]<!–[endif]–> Art. 52.1

<!–[if !supportFootnotes]–>[80]<!–[endif]–> Art. 63.1

<!–[if !supportFootnotes]–>[81]<!–[endif]–>  Art. 34  TRIPS 

<!–[if !supportFootnotes]–>

            Both China and Taiwan have incorporated this particular provision in their respective laws. In China, if  there is a dispute  on the  patent for invention process for manufacturing of new product, any entity or individual manufacturing the identical product  shall  furnish proof of process used  in the manufacture of its or his product.<!–[if !supportFootnotes]–>[82]<!–[endif]–>  Impliedly, if the entity or individual fails to present proof of process, it or he is deemed to have used the patented process.


            In the case of Taiwan, this reversed burden of proof is found in Article 87 of the Patent Act with qualification. The law qualifies that “where an article which is made by using a patented manufacturing process has never been seen in this country or outside the country before the filing of a patent application for the manufacturing process, an article identical thereto made by another person shall be inferred” to be using said process. This presumption can be overturned by proof that the process used is different from the patented process. And the proof or evidences or trade secrets presented by the defendant shall be protected by the Patent Authority


            Based on foregoing, it would appear that there is no substantial difference between what China and Taiwan can offer to inventors. So the question is if you were the applicant for patent to which patent office are you going to file it? In terms of legal protection, both offer the substantially the same protection. Would record of enforcement spell the difference? Is the prospect of big market for such patented product a major factor for patent application in a given place?   


 Growth in Patent Application

            According to the WIPO report, there were more 600,000 patents granted worldwide in year 2004 alone so much so that   patenting worldwide has reached more than 5.4 million patents by the end of 2004. Of the total, five patent offices, namely US, Japan, European office, Republic of Korea and China account for 75% of all patent applications and 74% of all patents granted. Japan has the largest patent applications with more than 400,000 in 2004, Republic of Korea as third largest and  China as the fourth

[82]<!–[endif]–> Art.60.2 PLPROC)

<!–[if !supportFootnotes]–>


largest with 110,000 patent applications. These patent applications include invention, utility model and design.


            As an indication of increasing internationalization of  patenting activity,  the filing of non-resident applicants have been  growing  by 7.4 % a year since 1995. <!–[if !supportFootnotes]–>[83]<!–[endif]–> In 2005, of the 130,000 invention patent applications in China, multinationals headquartered in developed countries accounted for 50% of the total applications.<!–[if !supportFootnotes]–>[84]<!–[endif]–>  These patent applications from the developed countries are mostly in electric transmission, mobile telecommunications, audio and visual technologies, semiconductors, pharmaceutical and computing technologies. In the case of  the applications for inventions, foreign  corporations accounted for 86% of the total while that from China accounted only 18%.<!–[if !supportFootnotes]–>[85]<!–[endif]–>   Patent for high technologies contribute only 2% of the total foreign trade and 99% of the Chinese companies have never applied for patents. It would appear that faced with the prospect of large market, foreigners are positioning themselves early in the game by filing the patents in China. By filing their applications in China, they hope to shorten the period of conversion from idea to market.     


            Compared to China, Taiwan’s patent applications in 2004 totaled 72,082, an increase of 9.64% from 65,742 applications in 2003. In terms of invention patent application however the growth is higher at 28.% in the same period. This indicates an increasing technological improvement on the part of Taiwan. Of  the total patent applications (invention, utility model and design), about 60% is accounted for by the ROC nationals and 40% is accounted for by foreigners.<!–[if !supportFootnotes]–>[86]<!–[endif]–>. In terms of invention patent applications however, the foreign nationals has a higher share of 25,172 cases or about 35% while that of ROC nationals is 16,747or  23.3% of the

                [83]<!–[endif]–> ibid.

<!–[if !supportFootnotes]–>[84]<!–[endif]–> Intellectual Property Office of Peoples Republic of China (SIPO), December 29, 2005

<!–[if !supportFootnotes]–>[85]<!–[endif]–> ibid.

<!–[if !supportFootnotes]–>[86]<!–[endif]–> Taiwan Intellectual Property Office (TIPO) Annual Report of 2004  17

<!–[if !supportFootnotes]–>

total patent applications.<!–[if !supportFootnotes]–>[87]<!–[endif]–> Japan is the biggest foreign patent applicant followed by U.S, a distant third is Republic of Korea, fourth is Germany  and fifth Netherlands. These five constitute 33.45% of the total 40% share of foreign nationals in patent applications.<!–[if !supportFootnotes]–>[88]<!–[endif]–> It is interesting to note that patent applications from Chinese nationals constitute 0.31% of the total.


             The patent applications for invention of foreigners in Taiwan are found in optics, semi- conductor applications and devices, electronic elements, electric communication techniques, basic elements, pharmaceutical, metal products and chemical products. Coincidentally, these are more or less the same areas where the local applicants applied for but in a lesser number than their foreign counterpart. It would appear that patent applications in Taiwan are in highly sophisticated technology which requires  highly trained personnel  to make the conversion from invention to marketable products possible.


Infringement, Prosecution and Enforcement of Patent Rights.


            The full extent of the infringement of patent in China and Taiwan may not be quantified but the information that is coming out could give us a good picture of its magnitude. And this information is understandably comes from the ones severely affected by it. There are reasons for this.  For one, official reports from China and Taiwan do not give us the details of such infringement. While both give us successes of IPR enforcement which represent only a fraction of the problem, they scantily give a clue as what is the total picture of the problem. There is no strong incentive for them to curb it unless pressured by the countries that are affected by it through WTO. or any other venue to air their complaints. According to report in July of 2005, there were 1,115 cases of patent infringements and 153 passing off of patents in China.<!–[if !supportFootnotes]–>[89]<!–[endif]–>  It is interesting to note  that 98% of patent litigation cases were filed by Chinese companies against Chinese companies.[Brook 10] It has been noted however that the number of foreigners as plaintiff is increasing.

                [87]<!–[endif]–> ibid.

<!–[if !supportFootnotes]–>[88]<!–[endif]–> ibid. 65

<!–[if !supportFootnotes]–>[89]<!–[endif]–> “Intellectual Property Statistics”,  (accessed 11 June 2007)  67

<!–[if !supportFootnotes]–>

In the case of Taiwan, there were 6,530 infringement cases filed before the court in 2006 and  5563 cases in 2005. Of these cases filed only 15 cases would fall under patent infringements in 2006 and only 12 in 2005. Ninety eight percent (98%) of these are infringements on copyright and trademark.<!–[if !supportFootnotes]–>[90]<!–[endif]–>  There is obviously a great difference between China and Taiwan in terms of patent infringement.


Nature of patent infringement

            The reported patent infringements in China are as varied as the products produced in the country, from car to truck to pharmaceutical products to communications. It appears however that infringement on car patent is more rampant.    For example, the General Motors South Korean subsidiary GM Daewoo has filed a suit against a Chinese company Chery for design patent infringement. GM accuses the Chinese car company of copying its car Spark, a model manufactured by GM Daewoo. A judicial resolution was avoided when parties reached a settlement and all claims against Chery were withdrawn.<!–[if !supportFootnotes]–>[91]<!–[endif]–>  


            Another example involves MAN AG, Europe’s third largest, who filed a suit against the Chinese Industrial and automotive group Zonda before Beijing’s intermediate court. MAN AG accuses Zonda of copying of a coach named Starliner developed by the German company. Its design is protected by international patent and is likewise protected in China because the design patent  has also been a registered in China.<!–[if !supportFootnotes]–>[92]<!–[endif]–> 


            The third case involves pharmaceutical patent. Aida pharmaceuticals, a Chinese  manufacturer of antibiotic product , has filed a complaint against  four companies for patent infringement. The defendants have been accused of manufacturing and marketing a counterfeit transfusion form of Etimicin Sulfate, an antibiotic developed and patented by Aida Pharmaceuticals. In this case, Aida Pharmaceutical won the case before the intermediate Court of Hainan. Aside from the compensatory damage  awarded, all


<!–[if !supportFootnotes]–>[91]<!–[endif]–> “MAN Files Design Patent Suit Against China’s Zonda”,   www. China view. cn. (Accessed 11 June 2007)

<!–[if !supportFootnotes]–>[92]<!–[endif]–> ibid.

<!–[if !supportFootnotes]–>

remaining stocks were ordered destroyed by the court and an apology is issued by the defendants.<!–[if !supportFootnotes]–>[93]<!–[endif]–>


      Fourth example is in telecommunication. The telecommunications case involves Nokia against two Chinese phone manufacturers based in Shenzhen, China. Nokia files a suit against Shenzhen Telsda Mobile Communication and Song Xun Da Zhong Ke Electronics for copying Nokia’s  7260 mobile phone model, a legally protected industrial design. The two distributors of the product were made as co-defendants in the case. In the case, Nokia is asking for monetary damages and a cease and desist order in the manufacturing and selling of the mobile phone. The case is pending resolution.<!–[if !supportFootnotes]–>[94]<!–[endif]–>

             While many cases land in court or before administrative bodies, there are cases that are settled out of court. This is resorted to in order to avoid a long and expensive litigation and avoid a judicial decision on record for patent infringement. An example of this is DuPont, a leading chemical company, against Trustchem Co. Ltd., a Chinese company. The case stemmed from the illegal sales of agricultural products containing rimsulfuron which are protected by a DuPont patent in China. Rimsulfuron is an active ingredient in crop protection herbicides that are marketed around the world under the Titus(R), Matrix(R) and Resolve(R) trademarks. Both companies agreed to settle out of court with Trustchem paying monetary compensation and an apology for losses incurred by DuPont for the actions of Trustchem.<!–[if !supportFootnotes]–>[95]<!–[endif]–> These illustrative cases try to point out the depth and breath of possible patent infringement in China. 

            The reported patent infringements of Taiwan are ironically in areas where it is reputed to be ahead in the  technology. One example is the patent infringement lawsuit filed by Fairchild Semiconductor against Taiwan-based Alpha-Omega Semiconductor, Ltd.(AOS) for infringing at four Fairchild U.S. Patent, and where Fairchild is seeking financial damages and injunction against AOS from selling and importing infringing

                 [93]<!–[endif]–> Gloria Gamat, “China’s Aida Pharmaceuticals Won Etimicin Sulfate Patent Lawsuit”, Pharma Gazette, Fe. 5, 2007

<!–[if !supportFootnotes]–>[94]<!–[endif]–> “Nokia Sues Two Chinese Companies”, Nordic Wireless Watch, July 1, 2007

<!–[if !supportFootnotes]–>[95]<!–[endif]–> “DuPont Settles Patent Infringement Case”,, August 1, 2007 ( Accessed  16 June 2007)

<!–[if !supportFootnotes]–>

            AOS products into the U.S. Another is the case wherein Hewlett-Packard, the world’s largest PC vendor sued  its competitor, Acer considered the fourth largest,  for infringement of five patents.  Hewlett-Packard claims that Acer infringed on its patent that are related to optical drive, clock frequency switching, and power consumption.<!–[if !supportFootnotes]–>[96]<!–[endif]–>

             Both China and China have provided the  judicial and administrative remedies for individuals or corporate entities to prevent and recover the loss and damages suffered as a result of patent infringement. For complainants who are not satisfied with judicial and administrative remedies in both China and Taiwan, they have the option to elevate their complaints to the Dispute Settlement Board of WTO. Others who can not find resolutions to the infringement of intellectual property rights have resorted to applying institutional pressure to infringing parties. While both China and Taiwan have their shares of infringement violations, it would appear that China has been a subject to a greater number of complaints under the Dispute Settlement Board (DSB) of the WTO than  Taiwan.

 Dispute Settlement

            Both China and Taiwan have been parties in varying circumstances to disputes before the Dispute Settlement Board after their accession to WTO. The latest count of complaints raised against China before the Dispute Settlement Board (DSB)total to eight (8) cases. Out of the eight, one case is directly concerned with “Measures Affecting the Protection and Enforcement of Intellectual Property Rights”. In this case the complainant is the United States who initially requested for consultation 10 April, 2007 but later on joined by Japan, Canada, the European Communities and Mexico. The United States claims that China’s actions are not consistent with at least eight (8)  provisions of the TRIP agreements, namely, Article 41.1 on the Enforcement of Intellectual Property rights, and  Article 61 on Criminal Procedures. The complaints raised the lack of criminal procedures and penalties for commercial scale counterfeiting and piracy. Secondly, the requirement for the release of infringing goods to channels of commerce are inconsistent

[96]<!–[endif]–> Dan Nystedt, “HP sues Acer for Patent Infringement”, Infoworld, March 25, 2007 ( Accessed  16 June 2007)


with  Article 46 and Article 59 on Remedies under the TRIPS Agreement. Thirdly, the denial of copyright and related rights protection and enforcement to creative works, sound recordings and performances that have not been authorized for publication and distribution within China under  Articles 9.1 and 14 of the TRIPS agreement; and the grant of more favorable protection to Chinese performers that are inconsistent to Article 3.1 on National Treatment and Article 4 on Most-Favored-Nation Treatment of the TRIPS Agreement. No panel has yet been established to hear the case nor a settlement  has been reached.<!–[if !supportFootnotes]–>[97]<!–[endif]–>   

             The other (2) two complaints raised against China are on the issue of discrimination which is the basic principle of WTO. U.S and Mexico have separately requested for consultation regarding measures adopted by China regarding the granting of refunds, reductions or exemptions owed to the government by enterprises in China. They were joined in by Australia, the European Communities and  Japan. It is alleged by U.S and later on Mexico  that the granting of refund, reductions, and exemption to Chinese companies  violate Article 2 of the Trade-Related Investment Measures ( TRIM) of  the agreement. The DSB has so far deferred the establishment of a panel.<!–[if !supportFootnotes]–>[98]<!–[endif]–> 


On the other hand, Taiwan has two cases before the DSB not as a respondent but a complainant. Furthermore they are not related to intellectual property rights. One  dispute concerns the definitive safeguard measures imposed by the United States in the form of an increase in duties on imports of certain flat steel, hot-rolled bar, cold-finished bar, rebar, certain tubular products, carbon and alloy fittings and flanges, stainless steel bar, stainless steel rod, tin mill products and stainless steel wire, and in the form of a tariff rate quota on imports of slabs.<!–[if !supportFootnotes]–>[99]<!–[endif]–> The second is Taiwan has requested consultations with India concerning the provisional and definitive anti-dumping measures imposed by India on the following seven imported products, namely, Acrylic fibers; Analgin;

                [97]<!–[endif]–>WTO-DSB, “China-Measures Affecting the Protection and Enforcement of Intellectual Property Right”. ( Accessed 3 December 2007)

<!–[if !supportFootnotes]–>[98]<!–[endif]–> WTO-DSB, “ China-Certain Measures Granting Refunds, Reductions or Exemptions from Taxes and Other Payment” ( Accessed 3 December 2007)

<!–[if !supportFootnotes]–>[99]<!–[endif]–> WTO-DSB, “US-Definitive Safeguards Measures on Imports of Certain Steel Products”, ( Accessed 3 December 2007)

<!–[if !supportFootnotes]–>

Potassium permanganate; Paracetamol; Sodium nitrite; Caustic soda; and Green veneer tape. So far there is no panel established to hear the complaint.<!–[if !supportFootnotes]–>[100]<!–[endif]–> In area of  TRIPS agreement, Taiwan has a better record than China. This is not however to conclude that China has indeed violated any provision of the agreement because these cases are still pending. What is clear is Taiwan has so far steered itself clear of any controversy before the DSB.


            In July 2005, the Quality-Brands Protection Committee Newsletter reported  that the special campaign launched in China has resulted in the arrest of 882 and prosecution of 844 individuals who have violated the intellectual property rights.<!–[if !supportFootnotes]–>[101]<!–[endif]–> And yet despite of this  campaign, China remains to be number one in the Priority Watch List of U.S. “Special 301”  under the amended Trade Act of 1974. Under the Special 301 provisions, the US Trade Representatives ( USTR) must identify the countries that deny adequate and effective protection to intellectual property rights.  According to the report the overall piracy and counterfeiting in China remained to be unacceptably high in 2005. The levels of piracy across all lines of copyright business are between 85 to 93 percent. And the share of china of the infringing goods seized at the US border is more than ten times that any other country.<!–[if !supportFootnotes]–>[102]<!–[endif]–>


            In regard to patent laws, while it is observed that China has been compliant with the TRIPS Agreement, the scope of patentable subject matter in its law is narrow so much so that patent application for transgenic plants and animals is “virtually unobtainable” Another concern is the unfair commercial use of undisclosed information submitted by pharmaceutical companies to Chinese authority for the approval of marketing their products.<!–[if !supportFootnotes]–>[103]<!–[endif]–>  The weak enforcement comes from the over-reliance on administrative remedies than on criminal prosecutions. According to the report, the threshold for criminal prosecution remains high that it makes it impossible for the authorities to prosecute commercial infringers.  China agreed to increase criminal prosecutions in order

                [100]<!–[endif]–> WTO-DSB,” India- Anti Dumping Measures on Certain Products from the Separate Custom Territory of Taiwan, Penghu, Kinmen and Matsu, ( Accessed 3 December 2007)

<!–[if !supportFootnotes]–>[101]<!–[endif]–> “Intellectual Property Statistics”,  67 ( Accessed 11 June 2007) 

<!–[if !supportFootnotes]–>[102]<!–[endif]–> United States Trade Representative (USTR), 2006 Special 301 Report  24

<!–[if !supportFootnotes]–>[103]<!–[endif]–> ibid. 25

to discourage IPR infringement. Furthermore, in civil litigation on patent infringement, a single case takes four to seven years to complete thereby rendering meaningless the adoption of measures that will comply with TRIPS Agreement.<!–[if !supportFootnotes]–>[104]<!–[endif]–>


            In the annual review conducted by the U.S. Trade Representatives on China’s compliance to the TRIPS from 2003 to 2006, the comments have been consistent, that China’s problem is in enforcement. The reviews have reported  the  lack of coordination in the enforcement  among central, provincial and local agencies, lack of training, lack of transparency, local protectionism, corruption, lack of political will by Chinese government, lack of resources devoted for enforcement, high threshold for criminal prosecution and weak punishment. <!–[if !supportFootnotes]–>[105]<!–[endif]–>It is to be noted that in spite of the reforms, the problems remained to be substantially the same throughout these years for China. In the case for Taiwan, it has shown great improvement in the enforcement of intellectual property rights.  


            While China is still on the Priority Watch List ( PWL), Taiwan has been deleted  from the Priority Watch List ( WL) and downgraded to just being in the Watch list in 2006 . The labels indicate the varying degree of gravity of the IPR infringement.  “Priority” means you are under the close watch by U.S for severe IPR infringement. Being on the “watch” list simply means that IPR infringement is less severe. In the case of Taiwan, it has improved from being in a Priority Watch list since 2001 to just simply in the Watch list in late 2004 due to the recognition of its improved IPR enforcement.<!–[if !supportFootnotes]–>[106]<!–[endif]–> US has called Taiwan to  strengthen IPR enforcement actions against piracy and counterfeiting by establishing an IP court; allocate more resources to combat IPR infringement; strengthen border enforcement against transshipment of pirated and counterfeit goods; and implement stronger criminal penalties against IPR violations. In regard to patent, the Special 301 report has not made any comment on it. In fact U.S has commended Taiwan for amending its Pharmaceutical law to provide a five-year term

[104]<!–[endif]–> United Sates Trade Representative (USTR), 2004 Report to Congress on China’s WTO Compliance. December 2004  67

<!–[if !supportFootnotes]–>[105]<!–[endif]–> 2003, 2004 and 2006 Reports of USTR

<!–[if !supportFootnotes]–>[106]<!–[endif]–> United States Trade Representative (USTR), 2005 Special 301 Report  47

<!–[if !supportFootnotes]–>

of protection against unfair commercial use of undisclosed information submitted by the pharmaceutical companies seeking  approval  for marketing their products. <!–[if !supportFootnotes]–>[107]<!–[endif]–> This  concern for the unfair commercial use of undisclosed test data and information has been expressed against China.




            The Patent laws of China and Taiwan appear to be substantially similar and convergent with the provisions of the TRIPS Agreement under WTO. The protections granted to the patent holders do not show much difference. But when it comes to enforcements of patent and other intellectual property rights they produced different outcome. The indicators of weak enforcement are the cases filed before the court, the complaints lodged before the Dispute Settlement Board ( DSB) of WTO and the annual evaluation of  U.S Trade Representatives. Their differences are effectively summarized in their status under the Special 301 Priority Watch. While both China and Taiwan were initially under the “Priority Watch” list after their respective accession to WTO , Taiwan was able to improve on its label but that of  China’s remained to be the same. 

[107]<!–[endif]–> 2006 Special 301 Report  24



Blair. Roger D. and Thomas F. Cotter, Intellectual Property: Economic and Legal          

Dimensions of Rights and Remedies, Cambridge: Cambridge University Press, 2005.

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            Pharma Gazette, Fe. 5, 2007

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                  — 2004 Special 301 Report . www. ustr. gov.


                             — 2003 Special 301 Report . www. ustr. gov.

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                                                                        Compliance, December 11, 2006

        —2004 Report to Congress on China’s WTO

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Protection and Enforcement of Intellectual Property Right.”   (Accessed 3 December 2007)

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            and Other Payment” ( Accessed 3 December 2007)

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   ( Accessed 3 December 2007)

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About the Contributor


Antonio L. Kho,Jr. is presently an International Fellow at National Sun Yat-sen University (NSYSU) and Assistant Professor at Wenzao College of Languages in Taiwan teaching law and business subjects.

             Formerly the Legal Officer of the Manila Economic and Cultural Office ( MECO), the Philippine Representative Office in Kaohsiung, Taiwan. Earlier, he served as the City Administrator of Bacolod City.

             He is a former member of the faculty of UNO-R and USLS graduate schools of Management, and National Kaohsiung Normal University in Taiwan.

            The Contributor finished his Ph.D. in Economics from the University of Santo Tomas (UST) Benemeritus;  M.A.(scholar) from the University of Asia and the Pacific (UAP) and A.B.(scholar) from the University of St. La Salle ( USLS). He is also a graduate of Bachelor of Laws (cum laude) from the University of Negros Occidental-Recoletos ( UNO-R). He passed the Bar Exams in the same year after graduation.  

            He is a “St. La Salle” Awardee  in 2001.