By Mary L. Williamson and Kim Newby

Summary: The following is the first in a two-part series provided by Preston Gates & Ellis LLP, a Seattle law firm specializing in international trade issues. It was originally published in AsiaLaw, October 1996, “Special Supplement AsiaLaw: A Legal Guide to Doing Business in Asia.” It’s reprinted here with the permission of the authors. No one should act upon this information without seeking legal counsel.

Issues involving Asian intellectual property protection loom large in both headlines and corporate boardrooms. Asian states that are at the heart of the global economy are experiencing the same increased emphasis on protecting and benefiting from intangible assets that’s occurring throughout the world. Understanding how to protect and profit from intellectual property rights—whether they be a famed brand name, a popular software program, or a patented biotechnology processes—is a key element of doing business in Asia today.

Trade liberalization
Legal protections for intellectual property are generally improving throughout Asia, as well as becoming more consistent across countries. This trend is being driven both by multilateral treaties and by international commercial and diplomatic pressures. The advent of the World Trade Organization (WTO) and its associated “Agreement on Trade-Related Aspects of Intellectual Property Rights,” commonly referred to as the “TRIPs Agreement,” are key factors in promoting increased uniformity among national approaches to protecting intellectual property rights. All countries that choose to participate in the WTO (and thereby gain economic benefits of agreements since the 1995 Uruguay Round of trade liberalization) must accede to the TRIPs Agreement. The treaty provides that less developed countries, including many Asian economies, may implement its required intellectual property protections over a number of years. The general rule is four years, but less developed countries may take up to a maximum of 11 years to implement certain patent-related measures.

The TRIPs Agreement both incorporates and builds on existing multilateral agreements concerning intellectual property, including most prominently the Berne Convention (copyrights) and the Paris Convention (patents and industrial property). Other key international conventions involving intellectual property subject matter include the Madrid Agreement and the 1997 Madrid Protocol (for trademarks). Bilateral arrangements also play an important role in this area.

Enactment of intellectual property laws and accession to relevant treaties is only half the equation, however. Enforcement of intellectual property rights is equally critical and, on this score, significant and well-publicized problems exist. Challenges range from identifying mechanisms through which complaints may be brought to preparing translations of relevant documents. In this realm, too, advances are being made and the trend seems likely to favor intellectual property rights holders, in part because local businesses will come to appreciate the value of their own intangible assets and the need for regular mechanisms to protect them.

Legal protection standards
The term “intellectual property rights” is generally used to encompass copyrights, patents, trade and service marks, trade secrets, mask work rights (for semiconductor chip designs), industrial designs, and a variety of related or “neighboring” rights such as moral rights. These rights are territorial in nature, meaning an owner or licensee must file or otherwise qualify for and obtain intellectual property protection on a country-by-country basis. The principle of territoriality makes it vital to plan ahead in order to protect the value of intellectual property rights in the international commercial context. Following is a discussion of issues related to intellectual property protection in investment and commercial transactions in Asia.

Most Asian countries, with the notable exceptions of Korea and Taiwan, are members of the Berne Convention for the Protection of Literary and Artistic Works, which is the principal international convention governing copyrights. Under this convention, a copyright arises automatically in an author’s work at the time of its creation, and generally extends for the life of the author plus 50 years. Berne Convention countries accord national treatment to copyright holders from other member countries. The agreement was revised five times since its inception in 1886 (most recently in 1971), and several Asian states have entered into one or more of its versions subject to various reservations (e.g., Macau under Portugal’s reservation concerning cinematographic works). Taiwan isn’t a member of the Berne Convention or any international intellectual property rights conventions, including the TRIPs Agreement. Taiwan, however, has entered into bilateral agreements with various nations regarding intellectual property protection.

Aside from international conventions, each country has developed its own legal framework for copyrights. For instance, in Taiwan all intellectual property laws contain a reciprocity limitation that extends protection only to owners of rights from countries that protect Taiwanese intellectual property rights. Hong Kong was in an interesting position as it prepared for its change in sovereignty in 1997. Until then, the Copyright Act of 1956 of the United Kingdom was in force, as amended by the Copyright (Computer Software) (Amendment) Act of 1985 and supplemented by the Copyright Ordinance of 1992. To date, copyright protection has been relatively broad and well-enforced, leading some rights holders to seek redress in Hong Kong (as well as Macau) concerning infringing products shipped through Hong Kong’s ports. However, because laws extended to Hong Kong through the UK parliament are no longer in force, Hong Kong copyright laws are currently under revision at the local level.

Software protection as a form of copyright protection has been an important issue over the past few years. As an integral part of global technological advancement, software is now specifically accorded copyright protection in all key Asian jurisdictions. This trend of software copyright protection can be seen in China where recently the former Computer Software Registration Centre merged into the State Copyright Administration, further highlighting that uniform copyright law standards govern all forms of expressive works, both technological and artistic.

One issue to be aware of when investing in Asia is that the treatment of so-called “moral rights” in copyrighted works favors individual authors in many Asian states. Therefore, a prudent course of action is to seek waivers as well as or in place of assignments of moral rights, since moral rights may not be deemed alienable from their possessor. Similarly, in China, Taiwan and other jurisdictions, copyrights may accrue to individual employees rather than their employer even when a work is prepared in the course of employment—and so care should be taken in acquiring title or license rights from the appropriate persons or entities with respect to copyrighted works.

International standards for according patent protection, as expressed in the Paris Convention, typically govern patent law in Asia. Consequently, inventions that meet established thresholds of inventiveness, novelty, and practical or industrial usefulness may be eligible for patent protection. The TRIPs Agreement will bring even greater uniformity in this area by requiring WTO member states accede to the most recent draft of the Paris Convention. WTO members must also implement a patent protection term of 20 years, offer patent protection for both products and processes, and limit compulsory licensing laws and policies.

Consistent with these multilateral developments, the scope of coverage for patents has been expanding in much of Asia. As a prime example, China has modified its patent law to lengthen the protection period to 20 years (10 years for utility models and design patents), and to extend protection to pharmaceutical products, food, beverages, and flavorings. The law also provides that oppositions to and revocations of a patent grant must be conducted within the first six months after the original grant is made. Korea has also enacted a number of significant changes to bring it into compliance with the TRIPs Agreement. These have included permitting publication of applications before the standard 18-month period has run, including “offering for sale” as an exclusive right of patent holders, and eliminating a bar on patenting inventions related to materials produced by nuclear transformations.

In addition, Japan has enacted important substantive and procedural changes in its patent law in response to both its accession to the TRIPs Agreement and bilateral commitments made with the United States. The Japanese Patent Office is now accepting English-language patent applications. It will record an effective filing date upon receipt of the application in English, although a Japanese translation of the English submission must be filed within two months thereafter. Pursuant to the TRIPs Agreement, offers to sell or supply can now constitute infringement in Japan, and the scope of compulsory licensing of unworked or other patents has been narrowed.

The process for obtaining a patent in Hong Kong is rather anomalous and deserves mention. To date, Hong Kong has operated under a re-registration system in which the United Kingdom Patent Office determines what patent grants to make, and then such grants may be extended to Hong Kong without the need for re-examination. Under this system, the patent laws of the United Kingdom governed the rights granted by re-registration. In anticipation of the 1997 change in sovereignty, Hong Kong has begun to draft its own patent law that allows patent grants from the United Kingdom, the European Patent Office as well as China to be re-registered in Hong Kong. With the new re-registration system, a local Hong Kong patent law would also be enacted to replace the use of United Kingdom laws to protect Hong Kong patent rights. On the other hand, few changes are necessary to existing Hong Kong patent laws in order to conform to the TRIPs Agreement requirements.

The importance of bilateral agreements to patent protection has also been recently showcased in the region. Taiwan entered into a bilateral agreement with the United States in April 1996, under which applicants for patents and trademarks in either jurisdiction may claim priorities in the other jurisdiction, based on the date of their first filing. In the patent context, however, reciprocity is required not only for the home country of the patent applicant but also with respect to the country in which the first corresponding basic application is filed. The applicant for both patents (U.S. and Taiwan) and the invention disclosed must also be the same.

In this article, we touched on basic issues of international trade, trade bodies and trade liberalization as well as particulars of copyright and patent law as they relate to Asian countries. Next month, we’ll discuss trademarks, trade secrets, unfair competition and enforcement of intellectual and other proprietary property rights.

About the authors
Mary L. Williamson is a member of Preston Gates & Ellis LLP’s Technology and Intellectual Property Department and chairs the firm’s International Practice Group. She earned her master’s degree in international studies at Johns Hopkins University and her law degree from Stanford University. She operates out of the firm’s Seattle office.

Kim Newby also holds a master’s degree in international studies from Johns Hopkins, but earned her law degree from Valparaiso University in Indiana. She has been working with Preston Gates & Ellis’ resident partners in Hong Kong since 1990. Before that, she was with the U.S. Department of Commerce in Washington, D.C., Hong Kong and Dalian, P.R.C.


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