Facing another listing on the US Special 301 trade list, the Ministry of Economic Affairs yesterday outlined its latest move to tackle rampant piracy of intellectual property, with plans to control the import and transfer of compact-disc production equipment.
Under the plan all imports of CD-manufacturing equipment will require the approval of the ministry's Board of Foreign Trade, with transfers of second-hand equipment also requiring registration.
As well, the ministry's Intellectual Property Office (IPO) will require Taiwanese CD makers to print a source identification code on all CDs, CD-ROMs, VCDs and DVDs to help track CDs back to their source.
The move comes as Taiwan battles to stay off the US
Special 301 list which tracks countries which it considers deny adequate protection of intellectual property rights.
Last week Deputy US Trade Representative Claude Burcky lead a delegation to Taiwan for its annual Special 301 review. Another trip is expected at the end of March with a final determination on Taiwan's Special 301 status likely to be announced in April.
Taiwan's latest crackdown on CD piracy appears less than coincidental. Last year, US Trade Representative Charlene Barshefsky announced plans to focus on optical media piracy, which includes CDs, CD-ROMs, VCDs and DVDs.
But the government denied last week's USTR visit prompted the move to control CD manufacturing.
"We didn't draft this law under the instruction of the US. In fact we already started our study [of CD manufacturing] at the end of last year," said Jack Lu, Deputy Director of the ministry's Intellectual Property Office.
Lu also denied the US delegation was telling Taiwan how to handle the problem, but did say they are offering assistance.
"They suggested we refer to Hong Kong and Malaysian legislation as a guide."
Both Hong Kong and Malaysia currently have laws aimed at keeping tabs on CD manufacturing equipment.
While the details of the legislation have not been finalized, Lu said the proposal has the backing of a cross-section of government and would include judicial penalties such as fines.
The new legislation is aimed at acting on three fronts. First, by requiring permits for CD wafer and module equipment, allowing the government to monitor who has the ability to make CDs. Second, by tracking transfers, sale of second-hand equipment can be monitored.
According to Lu, the US$1.5 million cost of new equipment is too much for pirates, but they can manage to buy second-hand equipment much cheaper.
Finally, by requiring source identification codes on all CDs, the government can track where CDs came from.
This appears the most flawed part of the plan since, as one observer noted, pirates can just fake the source ID code.
But the new legislation does act as another signal to the US that Taiwan is taking IPR enforcement more seriously.
But observers in Taiwan are sceptical.
"It hasn't really improved," noted one IP lawyer who requested anonymity. "You can still go to the nightmarkets and see all the pirated CDs on sale."
The problem of enforcement also comes down to street level.
"I think many police are afraid of upsetting the wrong person, or perhaps they have their own arrangements with the retailers," the lawyer said.
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