TIPS^®  Taiwan Intellectual Property Special

「Dispute Resolution Act on Millenium Bug」Limits the Y2K Compensation

The Legislative Yuan (the Congress) enacted the 「Dispute Resolution Act on Millenium Bug」(“Y2K Act”) on December 30, 1999. The major provision of the Y2K Act is to limit a defendant’s compensation liability in a Y2K action, which prescribes that the Court may reduce the amount of compensation or grant no damage at all, under the circumstances that:

The enterprise has manifested in the description of the product and/or service the probability of the Y2K failure, and has set forth the remedial method to resolve such emergent failure.

The enterprise has publish an announcement in the newspaper or other information made available to the user/purchaser for consecutive 15 days prior to the occurrence of the Y2K failure, in which set forth the remedial method to resolve such emergent failure.

The enterprise has taken due care to adopt reasonable and necessary protective measure to prevent from such failure and damages.

The aggrieved party has not avoided the occurrence of the failure and damages which he could reasonably have avoided in light of the information of the remedial method of such Y2K failure.

The enterprise is obligated to compensate the plaintiff for the actual damages but not for the expected interests if such failure was not caused by the enterprise’s intention or gross negligence. Also, the amount of the punitive damage shall not exceed double of the actual damage.

Moreover, the Y2K has set forth a “pre-litigation” procedure, which prescribes that the plaintiff may not file suit unless he has provided the prospective defendant a written notice requesting the prospective defendant to exclude the failure, remedy the problem, and/or compensate the damages within 30 days.

Most important, this Act applies to any Y2K action for a Y2K failure occurring before January 1, 2003 and also applies to the contract effected prior to the promulgation of this Act.