Taiwan

• Pages: 579-608

579

Chapter XVIII

TAIWAN

A. Introduction

The importance of protecting intellectual property rights has been

widely accepted in Taiwan. In contrast, the concept that IP rights should

be balanced against other public interests is less well recognized. Both

the Taiwan Fair Trade Commission (TFTC) and Taiwanese courts are

reluctant to restrain the exercise of IP rights to accomplish the goal of

safeguarding competition. Although the TFTC has promulgated

guidelines clarifying the enforcement of unfair competition policies by

the Commission with respect to the licensing of intellectual property,1

there are only a few Commission and court decisions in this regard.

B. The Sources and Basics of Taiwan’s Fair Trade Law

1. Basic Statutory Scheme

The Fair Trade Act (FTA) is the primary law regulating antitrust and

unfair competition issues in Taiwan.2 It consists primarily of two sets of

regulations: rules regulating typical antitrust conduct including

monopolies, business mergers, concerted actions,3 and rules regulating

unfair competition practices such as price-fixing, unfair trade practices,

counterfeit commodities, misrepresentations and misleading

advertisements, multilevel sales, and deceptive or unfair business

conduct.4 An enterprise that violates the FTA can be ordered to cease the

violation and to pay administrative fines. 5 In some cases, criminal

penalties, including imprisonment, may be imposed.6

1. TAIWAN FAIR TRADE COMMISSION, GUIDELINES ON TECHNOLOGY

LICENSING ARRANGEMENTS,available at

http:www.ftc.gov.tw/internet/English/doc/docDetail.aspx?uid=746&

docid=10254 (LICENSING GUIDELINES).

2. Fair Trade Act, art. 1.

3. Id. arts. 10-17.

4. Id. arts. 18-24.

5. Id. arts. 40-42.

6. Id. arts. 35-37.

580 Antitrust Issues in International IP Licensing Transactions

The TFTC is the primary agency responsible for enforcing the FTA.

The FTA also sets forth the TFTC’s scope of authority and investigation

procedures. 7 In addition to enforcing the FTA, the TFTC also is

responsible for formulating fair trade policies and regulations consistent

with the FTA and investigating business activities and economic

circumstances.

The TFTC has promulgated several guidelines setting forth the

criteria to be followed by enterprises and standards governing the

TFTC’s application of the FTA to different categories of cases.8

2. The Basics of the Fair Trade Act

The FTA identifies two primary categories of violations: typical

antitrust conduct and unfair competition.

a. Antitrust conduct

(1) Unilateral Conduct

Similar to the antitrust statutes of many other countries, the FTA

does not punish an enterprise simply for being a monopoly. Rather, it

prohibits a monopolistic enterprise from abusing its monopoly power.9

Pursuant to the FTA, an enterprise that faces no competition or holds

a dominant position (permitting it to exclude competition in a relevant

market) would constitute a monopolistic enterprise. 10 Two or more

enterprises also jointly may form a monopoly under the FTA if they do

not compete against one another and, as a group, face no competition or

possess a dominant position permitting them to exclude competition in a

relevant market.11

The FTA further provides a more specific definition of the term

“monopolistic enterprise,” making it clear that an enterprise will not be

deemed to be a monopolistic enterprise unless: (a) its market share in the

relevant market is 50 percent or greater; (b) in the case of two enterprises,

their combined market share in a relevant market is two-thirds or more;

or (c) in the case of three enterprises, their combined market share in a

7. Id. arts. 25-28.

8. Available at http://www.ftc.gov.tw/internet/english/doc/docList.aspx?

uid=183.

9. Fair Trade Act, art. 10.

10. Id. art. 5, § 1.

11. Id. art. 5, § 2.