This record is a partial extract of the original cable. The full text of the original cable is not available.

C O N F I D E N T I A L SECTION 01 OF 02 TAIPEI 003953 
 
SIPDIS 
 
STATE FOR EAP/RSP/TC AND EB/TPP/MTA/IPC, STATE PASS AIT/W 
AND USTR, USTR FOR KI, PECK AND FREEMAN 
 
E.O. 12958: DECL: 12/10/2014 
TAGS: KIPR ECON TW IPR
SUBJECT: SPECIAL 301 OCR: WHY WATCH LIST MOVES US FORWARD 
 
REF: A. TAIPEI 3093 
 
     ¶B. TAIPEI 3690 
 
Classified By: AIT/T Deputy Director David Keegan, Reason 1.4b 
 
¶1.  (C) Summary: AIT/T supports downgrading Taiwan from the 
Priority Watch List to the Watch List in the current out of 
cycle review.  Doing so will reinforce Taiwan's reorientation 
towards protecting intellectual property and provide a timely 
public relations victory for advocates of strong IPR 
protection within the government.  Failure to move Taiwan 
from the PWL to the WL will devalue the 301 process in the 
eyes of Taiwan officials and will not lead to improved 
protection of intellectual property, including pharmaceutical 
data.  With legislative elections held December 11 and a new 
cabinet expected to be named early in 2005, those officials 
who have been most committed to IP protection risk losing 
credibility at a time when changes in personnel are being 
actively considered.  End Summary. 
 
¶2.  (C) Taiwan's improved record of intellectual property 
(IP) protection over the past year plus is incontrovertible. 
From stepped up enforcement actions targeting optical media 
piracy and counterfeit pharmaceuticals, to changes in the law 
that provide greater protection for copyrighted works and 
stiffer penalties for those involved in the manufacture, 
transport and sale of bogus medicines, Taiwan authorities 
have consistently taken actions designed to improve the 
environment for IP in Taiwan.  Much work remains to be done: 
the judicial process continues to be slow and decisions 
uneven, illicit copying on campus continues, Taiwan is 
struggling to control internet piracy and a bill to protect 
pharmaceutical data has not yet been passed by the 
Legislative Yuan (LY).  However, Taiwan authorities are 
taking measures to address all of these concerns.  The 
government is conducting regular IP training for judges and 
prosecutors and establishing a specialized IP court. 
Further, they are working with industry to increase both IP 
education and enforcement on campuses, pressing cases against 
internet pirates Kuro and EZPeer in the courts, and vowing to 
push for speedy passage of Data Exclusivity (DE) legislation 
in the LY. 
 
¶3.  (C) More and more, government and industry leaders are 
telling AIT that strong IP protection is in the best 
interests of Taiwan's consumers and necessary for Taiwan's 
continued economic development.  Government officials and 
business leaders agree the future of Taiwan's economy will 
depend upon promoting innovative research and development, 
creating media content, and providing goods and services that 
rely on intellectual property.  These same leaders still care 
about Taiwan's Special 301 ranking and see in it 
international acknowledgment of their efforts.  Failure to 
recognize the obvious  improvement in Taiwan's intellectual 
property climate is not likely to turn Taiwan from its 
current pro-IP path in the long term, but will have the 
unintended effect of damaging the credibility of those who 
have argued that Taiwan needs to improve its IP protection 
regime to combat its international reputation as a haven for 
pirates.  In addition, the credibility of the Special 301 
process will be strengthened by a decision to downgrade 
Taiwan to the Watch List.  Taiwan authorities are more likely 
to continue to be motivated by the Special 301 annual review 
if they believe their positive actions will be recognized. 
 
¶4.  (C) Data Exclusivity is a key point of contention in the 
discussion of Taiwan's Special 301 status.  Industry argues 
that Taiwan's failure to pass a DE bill during the current LY 
session betrays a lack of commitment to data protection and 
Taiwan should remain on the PWL as an inducement to passing 
this important legislation.  DE is clearly a WTO TRIPS 
obligation, a position Taiwan's Ministry of Health has been 
slow to accept.  Taiwan's influential domestic pharmaceutical 
industry has strongly opposed DE protection since the issue 
was brought to the fore in late 2003.  In spite of 
bureaucratic intransigence and the opposition of local 
industry, the Taiwan government drafted and submitted to an 
LY preoccupied with a controversial military budget and 
upcoming elections a bill that addresses most of the concerns 
of the international research pharmaceutical industry. 
During Trade and Investment Framework Agreement (TIFA) talks 
held in Washington November 29-30, Taiwan officials, 
including Deputy Minister of Economic Affairs Steve Chen, 
clarified questionable terms to the general approval of 
representatives from USPTO and committed the Taiwan 
government to push for passage of the bill after December 11 
elections and, if needed, re-submission of the bill to the 
next Legislative Yuan in February 2005. 
 
¶5.  (C) Taiwan's Special 301 status will not significantly 
influence the government in its decision whether to lobby 
strongly for early passage of the DE bill.  The bill 
originates from the Department of Health, which is primarily 
motivated by perceptions of public safety and consumer 
benefit.  They have moved this bill forward despite the 
opposition of local industry because the Taiwan leadership is 
seeking to improve the US/Taiwan trade relationship in 
pursuit of a Free Trade Agreement.  The leadership justifies 
their support of the bill to local industry by pointing to 
the potential benefits for the development of Taiwan's own 
research pharmaceutical industry.  The DOH is not motivated 
by international perceptions of Taiwan's intellectual 
property regime.  Conditioning Taiwan's 301 status on the 
passage of the DE bill by the date of the regular cycle 
review is unlikely to prove a successful strategy.  Not only 
is DOH relatively unconcerned about PWL/WL status, but the 
installation of the new LY in February means there is 
realistically very little time for consideration of the bill 
before an April deadline for the 301 decision. 
 
¶6.  (C) Our goal must be to promote continued improvements in 
Taiwan's IPR environment.  That objective is best 
accomplished by recognizing Taiwan's efforts since the last 
301 review to pass amendments to the copyright law that are 
acceptable to US stakeholders, institutionalize enforcement 
efforts, and continue to expand training and education for 
students, judges, and prosecutors.  Not to do so risks the 
standing of some of the strongest supporters of intellectual 
property protection in the government at a time when cabinet 
and senior level positions are likely to change, risks the 
credibility of the 301 process, and is not likely to enhance 
efforts to protect IPR. 
PAAL