The Greater China IP Updates – March 2023

Tax Cuts No Guarantee for Taiwan to Maintain Taiwan’s Chipmaking Lead

Tax cuts passed by the Legislature in January, 2023, are just one step of many that need to be done to prepare Taiwan’s semiconductor manufacturers for future competition with other companies in the chipmaking field. Lawmakers passed amendments to the Statute for Industrial Innovation offering income tax cuts of up to 50% from Jan. 1, 2023 to Dec. 31, 2029 for companies that meet the requirements that are engaged in work that innovates technologies domestically and occupy a critical position in international supply chains. The intention is that semiconductor manufacturers will continue to invest in Taiwan and help cement its standing as the world’s second largest semiconductor supplier. Experts at the Taiwan Institute of Economic Research say that one area to expand on is wafer fabrication. Currently, Taiwan has a relatively low output of materials and equipment for wafer fabrication, which are mostly imported, and if it wants to have more control over supply chains, it must work to address that weakness. Another aspect to global competitiveness is that, as other economies such as South Korea, Japan, Europe and the U.S. pick up the pace to bolster their own positions in their respective semiconductor supply chains, it is highly likely that they will try to poach semiconductor engineers from Taiwan. Offers of competitive salaries, good social welfare terms and green cards could prove enticing for research and development personnel and executives at Taiwanese semiconductor companies. The College of Semiconductor Research sponsored by the public and private sectors is well placed to help Taiwan produce future skilled workers and counterbalance any potential brain drain in the future. However, the government needs to remain vigilant and responsive in its policies to benefit the tech sector

Draft Amendment to Taiwan’s IP Case Adjudication Act Passed

The draft amendment to the IP Case Adjudication Act was passed on January 12, 2023. The implementation date has yet to be decided. The most significant features are as follows:

1. Civil disputes relating to patents, software copyrights and trade secrets shall be represented by lawyers from now on. That rule will apply to other civil cases unless the value of the claims is too low.
2. Efficiency of civil suits trials shall be improved by the court discussing with the involved parties the planning of the trial, and in patent litigation cases, the judge shall disclose his or her interpretation of any disputed claim terms, ex officio or upon the request of a party, and in a timely manner.
3. Judges may now disclose all or part of the contents of the Reports drafted by Technical Examination Officers which hitherto were not previously disclosed. Involved parties may be given the opportunity to debate the Reports.
4. To deal with the complexities of handling a patent infringement lawsuit when the disputed patent claims have been amended, patentees will be tasked with making a report to the court. Otherwise, they can only claim their rights based on pre-amendment claims.
5. The court may, upon request, designate a neutral technical expert to carry out the verification task in evidence gathering proceedings.
6. The IPC Court will have exclusive jurisdiction over criminal as well as lawsuits relating to trade secrets infringement.
7. The defendants burden of proof has been emphasized more than previously. If plaintiffs have shown a prima facie showing of infringement, defendants will have to make a concrete defense and provide the facts and evidence.

Further developments are expected as the Judicial Yuan has a plan to change administrative litigations for patent and trademark disputes to quasi-civil litigation proceedings by using an adversarial system.

Taiwan Updates Regulation on Trademarking Health Foods

According to the regulations laid down by the Taiwan Food and Drug Administration (TDFA) of the Ministry of Health and Welfare, the word “health” cannot be used as a label on food products that have not obtained a license. For the correct implementation and for the safety of the public, this licensing process has to be coordinated with the trademark application process for such products. The TDFA states that if the word “health” in Chinese or English appears in the registered trademark, logo, brand, series name of a product, and it is parallel or side by side with the product name, although it is not part of the product name, it will be deemed as a violation of the Regulations. Only the food product that has been issued with a health food registration license will be permitted to use the word “health” in the product name. From a trademark point of view, the Taiwan Intellectual Property Office will order applicants to delete the word. There is some tolerance for phrases like “delicious and healthy” if it’s clear that such a phrase is not part of the product name. In summary, the first step for health food producers is to apply for a license from the TFDA before considering a trademark.

Taiwan Intellectual Property Office Launches New Inquiry System for Patent Trademark Certificates and Rights

TIPO has made available the Inquiry System for Patent and Trademark Certificates and Rights service since 2017, allowing users to search the latest rights status using an array of search criteria, such as certificate number, application number, rights holders or agents, publication date, and patent title or trademark name. Additionally, users can scan the codes on patent and trademark certificates for immediate access to information. TIPO has also redesigned the website of the service with a focus on a user-friendly interface to improve efficiency and service quality. For example, the new service offers optimized operation for enhanced convenience 3 and mobile device compatibility, unlimited search results, and customizable display of search result pages.

China Issues Draft Amendment to the Trademark Law

On January 13, 2023, China’s National Intellectual Property Administration issued the Draft Amendment to the Trademark Law and opened it up for comments. 23 new articles were added and 45 articles were substantially revised. Many of the amendments focus on reducing malicious registrations of trademarks and also introduces a system to force the transfer of maliciously squatted trademarks. Some of the main points are as follows:

1. Article 14 emphasizes that trademarks applied for registration must not violate public order.
2. Article 22 clarifies the specific circumstances of malicious application for trademark registration.
3. Articles 45 to 47 establish a system of forced transfer of maliciously squatted trademarks.
4. Article 48 clarifies that after a maliciously registered trademark is declared invalid, the applicant shall bear legal liabilities for the infringement.
5. Article 67 increases the amount of fines for malicious registration of trademarks.
6. Article 32 states that fabricating, concealing important facts or deliberately providing false materials and similar dishonest behavior will be punished.
7. Article 61 states that trademark registrants will now be required to file statements of use every five years and will be subject to spot checks.

China Updates Interim Measures For Examination Related to the Implementation of the 2021 Amended Patent Law

When the 4th Amendment to the China Patent Law took effect, the China National Intellectual Property Administration (CNIPA) also announced the Interim Measures for Examination Related to the Implementation of the 2021 Amended Patent Law. Amendments, however, to the Implementation Regulations are still ongoing. Recently, on 5 January 2023, the CNIPA issued new Interim Measures, and the most significant are listed as follows:

1. For Design Patent Applications on Partial Designs, the applicant must submit to the Patent Office the drawing(s) of the whole product and identify the claimed partial design(s) by using dotted and solid lines. If the partial design is a 3-dimensional design, the drawings must include a 3-dimensional drawing clearly showing the partial design.
2. For Design Patent Applications, the applicant can now claim a domestic priority claim for the said design patent application. Also, if the earlier filed application is a design 4 patent application, it shall be considered as having been withdrawn as of the later filed design patent application being filed. If the earlier patent application is an invention patent application or a utility model application, the applicant can file a design patent application with a domestic priority claim to the said invention or utility model application, which covers the same design shown in the related drawings.
3. If an applicant is not satisfied with a decision issued by the CNIPA, he or she may apply for administration reconsideration or reexamination, or file an administrative suit pursuant to the relevant laws and regulations.
4. As of the date of implementing the Interim Measures, in the case of a patent application filed on or after 1 June, 2021, the applicant may, via paper filing or electronic filing, file a declaration as to the novelty grace period. Likewise, a patentee may, via paper filing or electronic filing, file a declaration for open licensing of its patent once the date of implementing the Interim Measures occurs. Finally, an accused infringer may, pursuant to Article 66 of the Patent Law, file an application via paper filing or electronic filing for issuance of a patent right evaluation report issued by the CNIPA.