On April 30, 1993, the United States Trade Representative (USTR) placed Taiwan on the “priority watch list” of countries that failed to protect United States intellectual property rights.’ Although countries on the priority watch list are not as egregious in violating United States intellectual property rights as those identified as “priority foreign countries,” Taiwan was targeted for an immediate action plan, requiring it to take specific actions before July 31, 1993, or else risk being the subject of a trade sanction. Under the intense pressure from the United States, the ruling party of Taiwan rammed through the legislature the first law governing the island’s booming cable-television industry on July 16, 1993. The authority of the USTR to target trading partners of the United States for their unsatisfactory protection of United States intellectual property rights comes from the Special 301 provision of the Omnibus Trade and Competitiveness Act of 1988. The Special 301 provision is designed to use the threat of unilateral retaliation by the United States to pressure its trade partners to reform their currently deficient intellectual property practices. The idea is the carrot and the stick, where the carrot is the right to export to the United States as a most favored nation, and the stick is the trade sanction. This paper will trace and analyze the interaction between the United States and Taiwan in the process of resolving disputes on intellectual property protection, and will discuss the implications of Taiwan’s experience, which can be useful for understanding conflicts over intellectual property protection in other countries.