US embassy cable - 05TAIPEI936

UNCLAS SECTION 01 OF 02 TAIPEI 000936 
 
SIPDIS 
 
STATE FOR EAP/RSP/TC, STATE PASS AIT/W AND USTR, USTR FOR 
KI AND FREEMAN, DOC PASS USPTO AND LOC FOR STEPP 
 
E.O. 12958: N/A 
TAGS: ECON, KIPR, TW, IPR 
SUBJECT: TAIWAN CUSTOMS MEETING NINTENDO'S CONCERNS ON EMS 
 
REF: 04 TAIPEI 4066 
 
1.  Summary: AIT met with Taiwan Customs and representatives 
of Nintendo to discuss measures designed to replace the 
recently abolished Export Monitoring System (EMS).  Nintendo, 
through the Entertainment Software Association (ESA) Special 
301 submission, had expressed concern that Taiwan Customs was 
unprepared to assume the responsibility for checking 
counterfeit game software and hardware.  Nintendo expressed 
particular concern that Taiwan Customs had declined to 
receive testing equipment previously used in conjunction with 
EMS to determine the legitimacy of exported products. 
Customs has agreed to work with Nintendo to hold a training 
session at the end of March to ensure all Customs inspectors 
are aware of their new responsibilities and Nintendo will 
provide eight new handheld testing devices for use by Taiwan 
Customs officials.  End Summary. 
 
============================== 
Abolishing the EMS: Background 
============================== 
 
2.  In an attempt to direct resources where they could be the 
most effective, Taiwan decided early in 2004 to abolish the 
EMS and transfer its USD 1 million budget to support other 
intellectual property enforcement activities, potentially 
including increasing the number of personnel attached to 
special investigation task forces and the establishment of a 
cyber-crime center.  According to the Taiwan Intellectual 
Property Office (TIPO), the EMS had uncovered one case of 
counterfeit products since 2001.  The ESA, and especially 
Nintendo, expressed concern that Taiwan Customs officials 
lacked experience and would be reluctant to make the concerns 
of the entertainment software industry a priority.  The EMS 
was officially abolished as of December 31, 2004. 
 
3.  At a November meeting held under the Trade and Investment 
Framework Agreement (TIFA), Taiwan officials announced that 
training of Customs officials had already begun and would 
continue into 2005.  One such training meeting in December 
2004, attended by AIT, was given mixed reviews by industry 
association representatives.  Representatives of the Business 
Software Association felt it addressed their concerns, ESA 
did not agree, noting that most of those present were senior 
officials, not staff charged with the new responsibilities. 
Comments from Nintendo to USTR in preparation for the annual 
Special 301 review highlighted their concern that the new 
system required rightsholders to spend time and money to 
reregister their copyrighted materials, Customs refusal to 
accept equipment previously used under the EMS program to 
test for counterfeit products, new requirements that company 
representatives file a complaint within a few hours of being 
notified of discovery of a potential copyright or trademark 
violation, and the lack of experience of Customs officials in 
carrying out inspections for counterfeit games and software. 
 
 
=========================================== 
Taiwan Customs Addressing Industry Concerns 
=========================================== 
 
4.  AIT met March 3 with Stella Liu, Director of 
International Programs, Taiwan Customs and Huang Tzu-tien 
from Shay and Partners, Nintendo,s representative in Taiwan 
to discuss ways in which Taiwan Customs could address the 
concerns raised by Nintendo.  Shay and Partners and Taiwan 
Customs reported that they had met March 2 to find ways to 
resolve these issues.  At that meeting, Customs agreed to 
organize a training seminar before the end of March for all 
staff level Customs officers at which Nintendo would have the 
opportunity to demonstrate how to recognize counterfeit 
products.  In addition, Nintendo training will be made 
available to Customs officials as needed. 
 
5.  Taiwan Customs continued to refuse to accept delivery of 
the testing equipment formerly used with the EMS program, 
complaining that it was too large, too technical, and 
outdated.  Instead, Nintendo agreed to provide eight new 
hand-held testing devices and training on their use to detect 
counterfeit products.  These hand held devices will be 
distributed to Customs officials around Taiwan. 
 
6.  Taiwan Customs acknowledged that the abolishment of the 
EMS meant that manufacturers needed to reregister their 
products with Customs and regretted that incompatible 
databases made it impossible for them to simply import the 
EMS data.  However, she noted that Customs did not charge 
rightsholders to conduct inspections.  Conversely, EMS 
inspections had always been fee based.  Nintendo,s 
representative agreed that these measures were positive steps 
to address industry concerns. 
PAAL