Establishing a Healthy Intelligent Property Policy Environment for Internalization of SMEs: Taiwan’s Policy Framework

Wayne Chen

          Intelligent property (IP) is a legal concept granted legislative status to intangible invention whose production and sale can be controlled and protected. As a result, IP incorporated much in contemporary business operations, industrialization policies and rules of trade in the international sphere. IP, including trademark, copyright, and patent, formed complex ideological systems with which related regulations contribute to innovation, technology dissemination and protection of intangible properties for enterprises across states. IP policy environment led by governments is therefore critical for both local companies and the pursuit of innovative growth of the state.

          However, given its intricate character, IP is often considered as an obscure jargon to enterprises, particularly to Small and Medium Enterprises (SMEs), in routine business operations, and IP may only show its effect on business and trade once SMEs start stepping into the global arena. This essay investigates IP policies the Taiwanese government is drafting and implementing.

National Intelligent Property Strategic Framework

國家智財戰略綱領

          In past decades, the Taiwanese government has been implementing abundant IP programs focusing on promoting IP education and awareness. In 1992, the Legislative Yuan passed the Copyright Act amendments and in 1999 copyright affairs and awareness programs expanded to patent and trademark areas under the jurisdiction of Taiwan Intellectual Property Office. Since 2000, several programs were initiated focusing on information exchange, patent licensing and business consultation services by a wide range of authorities, including Industrial Development Bureau, SME Administration and Council of Agriculture. In 2008, the IP court was established to adapt the legal system to the trend of IP.

          In 2007~2011, according to the United States Patent and Trademark Office, Taiwan was the 4th country after Japan, Germany and South Korea (as shown in Figure 1) received the most patent in US which is the biggest patent market in the world. However, patent income in Taiwan was relatively low. In 2010, the patent expense was US$4,943 million and the income was US$460 million. In 2011, the gap between income and expense further widened while the former increased to US$5,788 million and the income grew to US$838 million. Low add-in value of patents granted and surge in litigation over IPs (which are always very expensive) were 2 major challenges facing both Taiwanese government and enterprises, in response, the Ministry of Economic Affairs proposed the National Intelligent Property Strategic Framework in 2011 and the Framework was approved by the Executive Yuan in 2012.

          As a high-level policy umbrella, the Framework coordinates IP policies and promotes cross-cutting cooperation among official agencies. It aims to 1. create and utilize high-end patents; 2. enhance utilization of cultural content; 3. promote agricultural patent planning, policy, and protection; 4. mobilize IPs from academia and research institutes; 5. promote IP licensing and litigation protection; and, 6. foster IP manpower. Correspondently, its bureaucratic structure involves the Ministry of Economic Affairs, the Ministry of Culture, the Council of Agriculture, the National Science Council and the Ministry of Education. Two action plans were proposed along with the Framework, namely the establishment of Taiwanese industrial IP defense and the Industrial IP planning mechanism. It was planned to set up 2 companies: an IP Management Company (or known as the IP Bank) to build a patent pool, upon which member companies could receive defensive litigation protection, and another IP Service Company invests and enhances management capacity of enterprises on IP planning.

          The 2 action plans illustrate that the Taiwanese IP policies already progressed from education/awareness focus to enhancing IP planning capacity for industries, legal environment and regulatory reform. However, how the government can assist enterprises reduce patent risk is still in question. In prior to the Framework initiative put into effect in 2012, the Intellectual Property Innovation Cooperation (IPIC) was established in 2011 under the sponsorship of Industrial Technology Research Institute, one of the largest nonprofit R&D organization engaging in applied research and technical services. Reviewing the history of IPIC, 3 potential challenges were found facing government's engagement in IP litigations. The WTO antisubsidy regulations comes first, and requires governments to refraining from providing subsidies to an specific enterprise, industry, group of enterprises, or group of industries in the country. It is concerned that IP bank joined/ sponsored by governments may be considered as a form of subsidies and antisubsidy tax may apply as discipline. The second challenge is derived from the supply chain complexity via which lawsuits against foreign companies for the interest of one domestic enterprise may harm another local company associated with defendants. Furthermore, the excessive capital needed to create IP poor for member companies' IP protection is a critical challenge to government funds which are tangled with a wide range of budget laws and regulations.

Program for the Promotion of Invention Patent Industrialization
發明專利產業化推動方案

          In despite of these difficulties of the IP defensive mechanism, IP licensing and planning are two more promising policy areas of common interest. Consultation, business diagnosis and education have been provided by numerous programs in the past decades and benefited abundant companies on R&D activities and internationalization. To improve effectiveness and efficiency, in 2011, the Program for the Promotion of Invention Patent Industrialization was approved as one master program to coordinate government resources on commercialization of patents invented. Several ongoing projects are involved in the master program including Taiwan Technology Marketplace led by the Industrial Development Bureau; Patent Transaction Website, by Industrial Technology Research Institute; Taiwan Agriculture TechnoMart, by the Council of Agriculture; and, IP Technology Transfer Website by the Institute for Information Industry. Furthermore, 3 Universities: National Taiwan University of Science and Technology (Technology Transfer Center); National Chiao Tung University (Technology Licensing Office); and National Cheng King University (Center of Technology Licensing & Innovation Incubator), joined in facilitating IP commercialization and technology transfer.

          Taiwan's IP policy is on the one hand reinforcing existing works on IP commercialization by numerous consultation and education projects. On the other, IP planning and IP legal protection are two emerging domain the Taiwanese government attempt to expand its services and yet in a relative early stage. Considering more than 97% of local companies are SMEs which has limited knowledge of IP rules, the government plays an essential role to familiarize enterprises with the IP order in the global trade communities. This is one important need of the government to ensure industrial competitiveness in the era of economic integration and globalization.

(Dr. Wayne Chen is the Associate Research Fellow of CTPECC and TIER)