1. U.S. political influence in the legislative history of §87 (4)
Parallel imports also happen in Patent and Trademark regime, and it’s permissible under both Taiwan Patent Law34 and Trademark Law35; yet current framework of Taiwan Copyright
34 Taiwan’s Patent Law explicitly adopted international exhaustion doctrine since the amendment in 1997.
Article 57 of Patent Law provides, in relevant part:
c The invention patent right shall not extend to any of the following circumstances:
………..(6) Where the patented product manufactured by the patentee or under the patentee's consent is used or re-sold after such patented product was sold. The territory where the above stated manufacture or sale is conducted shall not be limited to within this country.
d The user referred to in items 2 and 5 of this article shall confine his continued use of the invention within the existing enterprise only. The territory where one is allowed to sell the patented product stated in item 6 shall be determined by the court based on the fact.
Under this provision, Taiwan Patent Law apparently adopted “international exhaustion doctrine” which allows parallel importation of patented products from a country where the product is manufactured under patentee’s consent.
35 Paragraph 2, Article 30 of Trademark Law of 2003 provided: “Where goods bearing a registered trademark are traded or circulated in the marketplace by the trademark right holder or by an authorized person, or are offered for auction or disposal by a relevant agency, the right holder shall not claim trademark rights on the said goods. However, the aforementioned shall not apply in case of preventing deterioration or damage of goods or any other fair reasons.” Even before the amendement on May 28, 2003, it’s well settled by conventional wisdom and numerous precedents that parallel imports of trademark products is lawful. In Zuai Kao Fa Yuan 81 Nen Tai Shan Tzu No. 444 Min Shi Pan Jue (No. 444 of Civil Judgment of the Taiwan Supreme Court, 1992), the Taiwan Supreme Court held that where the parallel importation of genuine trademarked goods has same quality as the products marketed by the trademark holder in Taiwan, and incurs no danger of misleading, confusing or concealing the consumers, those imports harm neither the good will of trademark holders nor the interest of consumers, it actually benefit the society by preventing the risk of monopolistic price controlled by trademark holder, thereby facilitates the competition and provides more options for consumers, which does not undermine the aim of Trademark Law, it’s therefore not an infringement. Likewise, in 1993, Taipei District Court, one of the biggest District Courts in Taiwan, ruled for defendant in 82 Nen Du Sue Tzu No. 1718 Hsi Shi Pan Jue (No. 1718 of Criminal Judgment of the Taipei District Court, 1993), a case regarding Nintendo computer game. The Court held that “the defendant’s computer games at issue are legitimate goods, the trademark on those goods is genuine mark, not pirated trademark, thereby defendant’s importation and exportation both do not constitute the infringement of trademark.” This judgment is available in the website of Judicial Yuan:
http://jirs.judicial.gov.tw/
Law apparently has rather different view from Patent Law and Trademark Law when dealing with this issue. Taiwan’s Copyright Law basically prohibited parallel imports after the amendment in 1993, which can be traced back to the fear of potential Special 301 trade sanction imposed by the United States during that period.36 Under U.S. Trade Act of 1974 (hereinafter “Trade Act”), the violation of intellectual property right is deemed as a type of anti-competitive conduct, and also a violation of Omnibus Trade and Competitive Act that adds “Special 301” to the original Section 301 of Trade Act in 1988. Special 301 is named for its close relationship with the special investigative proceedings under Section 301 of the Trade Act. According to this Act, the Office of the United States Trade Representative (USTR) is empowered to identify “Priority Foreign Country” if a trading partner “has committed the most onerous or egregious acts, policies or practices” in denying “adequate and effective protection of intellectual property rights”37, or denying “fair and equitable market
36 Taiwan and U.S. signed a memorandum of understanding in June 1992 requiring the Taiwan Executive branch to make its best efforts to work with the Legislative Yuan for passage of the U.S.-Taiwan Copyright Pact of 1989 by January 31, 1993. However, the Legislative Yuan refused to sign eight provisions, including the provision on creation of import rights, while ratifying this bilateral agreement. To its dismay, U.S. copyright industry thereby recommended USTR that immediate trade sanctions under “Special 301” be imposed on Taiwan. This threat aroused the Exectuive Yuan and the then-ruling party, KMT, to launch a lobby effort in the Legislative Yuan that eventually resulted in the withdrawal of refusion. The ban on parallel imports was accordingly enacted in consistent with the establishment of copyright owner’s import rights. See Robin Winkler, Taiwan:
Parallel Imports- The Debate Continues,IPASIA 5 (Aug. 6, 1993).
37 19 U.S.C. 2242 (a)(1)(A): A country “denies adequate and effective protection of intellectual property rights”
if it “denies adequate and effective means under the laws of the foreign country for persons who are not citizens or nationals of such foreign country to secure, exercise, and enforce rights relating to patents, process patents, registered trademarks, copyrights and mask works.” 19 U.S.C. 2242 (d)(2)
access to United States persons that rely on intellectual property protection.38” Once identified as a “Priority Foreign Country”, the USTR then initiates an unfair trade practice investigation according to the regular Section 301 procedure. If a violation of a trade agreement is found, the USTR is then authorized to “suspend, withdraw, or prevent the application of, benefits of trade agreement concessions”39 as a trade sanction. In order to monitor the adequacy of a country’s protection of U.S. intellectual property rights, the USTR also creates three other categories in increasing level of seriousness: countries of “Growing Concern” where the concern of U.S. intellectual property protection is just growing, countries on a “Watch List”
where U.S. needs to pay special attention because those countries maintain intellectual property barriers to market access., and countries on a “Priority Watch List” whose policies and practices meet some of the criteria for “Priority Foreign Country.” Taiwan has been
constantly on USTR’s hit list since the enactment of the “Special 301” provision.40 USTR
38 19 U.S.C. 2242 (a)(1) (B): A country “denies fair and equitable market access” if it: effectively denies access to a market for a product protected by a copyright or related right, patent, trademark, mask work, trade secret, or plant breeder’s right, through the use of laws, procedures, practices, or regulations which –
(A) violate provisions of international law or international agreements to which both the United States and the foreign country are parties, or
(B) constitute discriminatory non-tariff trade barriers. 19 U.S.C.2242 (d)(3)
39 See 19 U.S.C. 2411 (c)(1)(A)
40 According to the USTR’s annual report for 2005, Taiwan, along with Argentina, Bahamas, Brazil, Egupt, European Union, India, Indonesia, Korea, Kuwait, Lebanon, Pakistan, Republic of the Philippines, Russia, and Turkey, was listed on the “Watch List.” See OFFICE OF THE UNITED STATES TRADE REPRESENTATIVE,SPECIAL
301PRIORITY WATCH LIST(2005), available at
http://www.ustr.gov/assets/Document_Library/Reports_Publications/2005/2005_Special_301/asset_upload_file6 62_7650.pdf. In 2006, Taiwan remained on the Watch List even if U.S. also recognized Taiwan’s efforts to improve its IPR regine, such as increasing the number of seizures of pirated optical media, counterfeit
accordingly insisted that Taiwan needs to prohibit parallel importation of copyrighted works without prior authorization from copyright owner41. In response to the tremendous political and economic pressure from U.S., although import right is arguably regarded as an extension of distribution right, and Taiwan Copyright Law back then didn’t entitle copyright owner the distribution right, in 1993 the Taiwan Legislative Yuan enacted Article 87, Paragraph 4 which in principle prohibits the parallel importation with very few exceptions outlined in Article 87bis, thus implicitly conferred the copyright owner a new import right.42 Violation of this Article will lead to the confiscation of the excess copies under Article 90 and a maximum two-year imprisonment under Article 93 (3) of 1993.43
Article 87 of Taiwan’s Copyright Law provided: “Any of the following circumstances
pharmaceuticals, and prosecution of peer- to- peer internet service Kuro. The 2006 report suggested that the U.S. will continue to call on Taiwan to “strengthen border enforcement against transshipment of pirated and counterfeit goods, consider legislative amendments to address ISP liability, implement stronger criminal penalties for IPR infringement, and extend the term of copyright protection for works and sound recordings.”
Available at
http://www.ustr.gov/assets/Document_Library/Reports_Publications/2006/2006_Special_301_Review/asset_upl oad_file190_9339.pdf
41 WILLIAM P.ALFORD,TO STEAL A BOOK IS AN ELEGANT OFFENSE:INTELLECTUAL PROPERTY LAW IN CHINESE
CIVILIZATION 46 (1995).
42 Some Taiwanese scholars disagree that the prohibition of parallel imports implicitly creates an independent import right for copyright owner, arguing that the right to bar parallel imports is simply supplemental to
distribution right because this right can’t be independently transferred without the transfer of copyright itself. See Chang, Chong-Hsin, Comments On Related Regulations of Distribution Right In New Copyright Law, Vol. 1, Issue 2, NCCUINTELLECTUAL PROPERTY JOURNAL (2004) ; see also LUO MING-TUNG,COPYRIGHT LAW 204 (2004).
43 Article 93 of 1993 stated that in addition to the prison sentence, a fine of a maimum of five hundred thousand New Taiwan Dollars may be imposed.
shall be deemed as an infringement upon copyright or plate right, unless this Law provided otherwise… (4) import [ing] any originals or [lawful] copies of a work without copyright owner’s authorization” In comparison to Paragraph 3 in this Article which prohibits the importation of any “unlawful” copies or pirated works, Paragraph 4 is commonly interpreted as a ban on parallel importation of “lawful” copies.
Yet it is worth noting that back to the year of 1992, one group that exercised particular influence upon the USTR is the International Intellectual Property Alliance (IIPA) which represented eight major copyright organizations and served as a coalition of movie producers, software publishers, and record companies44. As part of its lobby efforts, IIPA testified before the U.S. Congress that piracy in Taiwan costs the U.S. motion picture, televisions, sound recordings, publishing, and computer software industries the loss of $669 million in 199245, which makes Taiwan the largest violator that year. They also stated that this $669 million loss consisted of approximately $585 million in piracy of computer software.
However, in my opinion, since parallel imports are not pirated goods and there is no evidence that people who purchase a pirated good would buy parallel imports if illegal copies were not
44 Each year, IIPA’s list of offending countries often becomes the basis for US. trade action under Section 301.
See John Maggs, Group Releases “Hit List” of Countries Seen as Lax on Copyright Protection, J.COM.(1993), 2A (1), available at Westlaw, JOC dialog database.
45 Edward G. Durney, Copyright Law in China and Taiwan, 367 PLI/ Pat 311, Global Intellectual Property Series 1993: Protecting Trademarks and Copyrights Successful Strategies, Patents, Copyrights, Trademarks and
Literary Property Course Handbook Series, Sep. – Oct. 1993 at 9, Practicing Law Institute, available at Westlaw, PLI DATABASE (Sep.-Oct. 1993)
available, the justification for a ban on parallel imports should be based on the loss resulted from parallel imports, rather than from piracy. Although the U.S. media estimated two decades ago that sales of parallel imports accounted for approximately six billion dolloars of total retail sales in the United States46, so far there is no reliable estimate of profits lost from the retail sales of parallel imports in Taiwan. IIPA actually confused the American public and U.S. Congress by failing to establish a trustworthy statistics that proves those parallel imports contributed to this $669 million loss. USTR, as a matter of fact, mistakenly relied on those piracy loss figures to support a conclusion that parallel imports is a primary factor in Taiwan’s inadequate protection of U.S. intellectual property rights.47
2. Exemptions for parallel imports– Art. 87bis, Art. 59bis & Art. 60
There are two types of exemptions for parallel imports to enjoy lawful status in Taiwan.
One is quantitative exemptions in Art. 87bis which allows a certain amount of parallel imports to enter into Taiwan under specific circumstances; the other is exhaustion exemptions under Art. 59bis and Art. 60 which, though do not exempt parallel imports themselves, do exempt certain types of distribution after parallel importation, based on exhaustion doctrine. The quantitative exemptions under Article 87bis are rather limited; they apply only when the
46 See Doris R. Perl, Note, The Use of Copyright Law to Block the Importatino of Gray-Market Goods: The Black and White of It All, 23LOY.L.A.L.REV. 646, n. 12 (quoting that the estimates of annual retail sales of parallel imports in 1984 accounted for approximately $6 billion in U.S. domestic retail sales, from Boyer, The Assault on the Right to Buy Cheap Imports,Fortune, Jan. 7, 1985, at 89)
47 The same opinion can be found in Soojin Kim, In Pursuit of Profit Maximization by Restricting Parallel Imports: The U.S. Copyright Owner and Taiwan Copyright Law, 5PAC.RIM L.&POL’Y J.205, 218 (1995)
imported goods are fewer than “certain amount”, and only when they are for governmental use, for the purpose of preserving data in educational, academic or religious institutions, for preserving data in the library, for personal use without the intent to distribute, or when the copyrighted products are attached to lawfully imported commodity or machines. 48 Furthermore, according to “The Meaning of Certain Amount in Article 87bis” (hereinafter
“The Meaning of Certain Amount”) promulgated by the Ministry of Interior Affair, the so called “certain amount” refers to that importers may import no more than one copy when the imports are audio-visual goods intended to be preserved for academic, educational or religious purpose, or for personal use without the intent to distribute. Only when the imports are non-audiovisual goods intended for preserving materials in non-profit academic or religious library can importers be allowed to bring no more than five copies.49 Consequently,
48 Article 87bis provides: Article 87(4) doesn’t apply in the following situations:
(1) Certain amount of copies of work intended to be used by central or local governments, but not including copies for use in schools or other educational institutions, or copies of any audiovisual work imported for purposes other than archival use.
(2) Certain amount of copies of any audiovisual work for archival purposes of an organization operated for scholarly, educational, or religious purposes and not for private gain; copies of any other work for library lending or archival purposes of such organization where use is in conformity with provisions of Article 48.
(3) Certain amount of copies of a work for private use of importer, if such importation is not for distribution, or by any person arriving from outside the territory if such copy forms a part of such person's personal baggage.
(4) Work incorporated into any goods, machinery, or equipment otherwise legally imported where such work cannot be copied during the ordinary operation or use of the goods, machinery, or equipment.
(5) Instructional or operational manual, accompanying any goods, machinery, or equipment otherwise legally imported.
However, prohibition applies where importation of such work is an essential object of the act of importation of the goods, machinery, or equipment.
49 The Taiwan Ministry of Interior Affair in 1993 issued an administrative regulation “The Meaning of Certain Amount in Article 87bis” defining the meaning of “certain amount” in Article 87bis, which provides : “Certain amount of copyrighted products in article 87bis (2) and (3) means the following: (1) for the importation of
after 1993, no individual may bring into Taiwan more than one copy of any copyrighted work from the United States, unless it’s for use in the academic, educational or religious library.
Violators are not only subject to criminal penalty50 but also may be penalized by confiscation of the excessive copies pursuant to Article 90bis.51
3. Problems of Parallel Imports Ban remained after 2003 Amendment
a. Who qualifies as the claimant remained unclear
Under Taiwan’s copyright regime, once an original work is created, the author enjoys two types of copyright - one is his moral rights as to publish the work, to show he is the author, to prevent any revision of the work and destruction of the integrity of his work which might damage his reputation, etc.52; those rights are attached to the author’s personality, thus may not be assigned. The other is a bundle of property rights as to reproduce, publicly
audio-visual copyrighted goods intended for preserving them in academic, educational, or religious library, no more than one copy is permissible; (2) for the importation of copyrighted goods other than audio-visual goods intended for the same purpose, no more than five copies are permissible; (3) for the importation of a copy for personal use without the intent to distribute, no more than one copy each time is permissible; (4)imported as a part of individual’s luggage, no more than one copy each time is permissible. ”
50 The old version of Article 93 provides, in relevant part, that “[i]n any of the following circumstances, a sentence of up to two-year imprisonment, detention or fine of no more than $500,000 New Taiwan Dollars shall be imposed, or in addition to criminal penalty, a fine of no more than five hundred thousand New Taiwan Dollars…. (2) infringement of another person’s property rights by any of the means specified in paragraph 2,3,4,5,6 of Article 87”
51 Article 90bis provides, in pertinent part, that “copyright owner or plate right holder may request custom to confiscate imports or exports that infringe their copyright or plate right”
52 Article 15 provides the author with the right to publish his work; Article 16 provides the right to name himself as the legitimate author; Article 17 provides that the right to prevent any change of the work which might damage author’s reputation.
perform and distribute his work, etc., which are articulated in Art. 22-29, and may be assigned as a whole or in part under Art. 36.53 An author therefore may assign the distribution right in Article 28bis to one person while assigning other exclusive rights to another. Theoretically speaking, there could conceivably be many copyright property owners corresponding to different property rights, yet the ambiguous language of Article 87 leaves unanswered the question of who qualifies as the claimants to sue parallel importers. It appears to me that Article 87 does not limit the potential claimants to the holder of distribution right, yet it is not clear whether the claimants must own all of the rights enumerated in Art. 22-29 to have standing for an action; namely, whether only holder of the right related to distribution has standing; or standing requirement is satisfied as long as a holder owns any of the enumerated rights.
The lastest case in U.S. regarding this issue is Brilliance Audio, Inc. v. Haights
Cross Communications, Inc.
54, where the 6th Circuirt held that a rental or lease agreement which does not transfer title will not trigger the first sale soctrine and therefore the lessee is not free to sell the leased copy. This suggests that U.S. courts took the position that the first sale doctrine applies only to the distribution right, and does not limit any of the copyright owner’s other exclusive rights under Section 106 of Copyright Act of 1976.
53 Article 36 of Copyright Law provides, in relevant part: “(1)The property rights of a copyright owner may, in whole or in part, be assigned to another person, or jointly owned with another person; (2) The assignee’s property right is confined to the scope of the assignment”
54 474 F.3d 365 (6th Cir. 2007).
b. Imbalance of penalty
Another legal issue is the imbalance of penalty on parallel importors and the distributors of those imports. Under Copyright Law of 1993, the violation of Article 87 (4)
Another legal issue is the imbalance of penalty on parallel importors and the distributors of those imports. Under Copyright Law of 1993, the violation of Article 87 (4)