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INTA representative visits WP

Last week, INTA’s Chief Representative for Asia Pacific, Seth Hays visited Winkler Partners to discuss the association’s plans for strengthening ties with trademark practitioners in Asia.

Among the discussion, Seth shared news of next year’s annual conference, which is being held in Singapore between 25-29 April. He hopes that brands, lawyers and IP professionals from across the region will take advantage of the opportunity to connect with over 10,000 expected attendees including lawyers, brand owners and other trademark professionals.

From left to right: Senior Consultant Jason Yan, IP Associate Betty Chen, Chief Representative Seth Hays, Partner Christine Chen

Seth joined INTA in 2011 and oversaw the opening of the Asia Pacific office in Singapore in 2016. His work involves policy development and advocacy, government affairs, recruiting local brands, and working with members on education and communications.

Hearings for patent invalidation cases

In Taiwan, patent invalidation proceedings usually involve the submission of written pleadings and defenses, as well as the submission of evidence. In March 2018, the Taiwan Intellectual Property Office (TIPO) implemented new guidelines for patent invalidation cases and introduced a hearing system into the process. The new system provides the opportunity for both parties to debate their position orally and also help TIPO to clarify legal issues.

Hearings for patent invalidation cases can be requested by either party. Alternatively, the TIPO has the discretion to request a hearing for a patent invalidation case. In general, the hearing will be open to the public; however, if either party believes it is inappropriate for the hearing to be open to the public, it may file a request to hold the hearing in private, providing its reasons to the TIPO. The hearing panel will consist of three examiners. During the hearing, both parties will have the opportunity to present oral arguments, and to question witnesses or appraisers. In past cases the invalidation decisions were rendered within one to two months after the hearing. If the party disagrees with the TIPO’s decision, they may file an appeal with the IP Court.

Prior to the implementation of the hearing system for patent invalidation cases, a proceeding would typically take about 15 months before a decision was rendered by the TIPO. The TIPO has held twelve patent invalidation hearings since the implementation of the hearing system. Notably, for all of these cases, a decision was rendered by the TIPO within one year. Therefore, requesting a hearing for a patent invalidation case may significantly reduce the duration of patent invalidation proceedings.

For more information regarding patents in Taiwan please contact Peter Dernbach at pdernbach@winklerpartners.com and Betty Chen at betty@winklerpartners.com.

When claiming trademark priority in Taiwan, choice of country can make a difference

When filing a trademark application in Taiwan, an applicant may use the first application filed in a foreign jurisdiction to serve as a basis for a priority claim under certain conditions. While the Taiwan Trademark Act allows an applicant to claim priority within 6 months of the first filing date of the foreign application, it is important to note that the Taiwan Intellectual Property Office (TIPO) will only grant a right of priority if the foreign application was filed in a member state of the World Trade Organization (WTO) or in a country that reciprocates recognition of priority rights with Taiwan, in accordance with Article 20 of the Taiwan Trademark Act:

“An applicant who has duly filed an application for trademark registration in a country which has reciprocal recognition of priority rights with the ROC, or filed such application with a member of the World Trade Organization (WTO), may claim a right of priority, for the purposes of registering the same trademark in the ROC for some or all the same goods or services, within six months from the day following the date of filing of the first such application.”

Taiwan does not have any such reciprocity agreements in place at this time with any states that are not also WTO members. As such, only foreign applications filed in WTO member states can serve as the basis for trademark priority claims in Taiwan. This restriction poses significant challenges to applicants seeking to claim priority in Taiwan using an application filed in a country that is party to the Paris Convention for the Protection of Industrial Property (Paris Convention) if that country is not also a WTO member state.[1]

Article 4 (A)(1) of the Paris Convention sets out when the right of priority can be invoked:

“Any person who has duly filed an application for a patent, or for the registration of a utility model, or of an industrial design, or of a trademark, in one of the countries of the Union, or his successor in title, shall enjoy, for the purpose of filing in the other countries, a right of priority during the periods hereinafter fixed.”

For trademarks, the priority period is 6 months from the first filing date in any country of the Union.

Taiwan’s current political status prevents it from becoming a contracting party to the Paris Convention. As it is not a party to the convention, the Taiwan trademark authorities are not bound by obligations under it. As a result, if the first application is filed in a country of the Union that is not also a member state of the WTO, the application cannot be used to claim priority for a further trademark application in Taiwan.

Countries of the Union which are not member states of the WTO include Algeria, Andorra, Azerbaijan, Bahamas, Belarus, Bhutan, Bosnia and Herzegovina, Comoros, Democratic People’s Republic of Korea, Equatorial Guinea, Haiti, Holy See, Iran, Iraq, Lebanon, Libya, Monaco, San Marino, Sao Tome and Principe, Serbia, Sudan, Syrian Arab Republic, Turkmenistan, and Uzbekistan.

Priority claims based on applications filed in any of the above states will not be recognized by the TIPO. This does not mean that an applicant who makes an initial filing in a non-WTO member state is barred from making a claim of priority in Taiwan altogether. In practice, if an applicant makes an initial filing in one of the above states, and then later files a trademark application in a WTO member state, the first filing in the WTO member state will be deemed to be the first filing date when the applicant makes a priority claim during a trademark application in Taiwan.

While Taiwan is not a contracting party to the Paris Convention, like all WTO members it is a party to the Agreement on Trade-related Aspects of Intellectual Property Rights (the TRIPS Agreement). Article 2.1 of the TRIPS Agreement stipulates that WTO member states shall comply with Articles 1 through 12, and Article 19, of the Paris Convention. Furthermore, at the International Patent Cooperation Union Assembly in 1999, the World Intellectual Property Organization (WIPO) released a Memorandum of the Secretariat specifically referring to Article 2.1 of the TRIPS Agreement and Article 4(A) of the Paris Convention, interpreting these to mean that WTO members are obliged to recognize priority claims based on applications filed in a country of the Union, even if that country is not a WTO member.

WIPO is an agency of the United Nations (UN), and Taiwan is not a member state of the UN due to its current political status. Accordingly, the WIPO Memorandum and WIPO’s interpretation of Article 2.1 of the TRIPS Agreement and Article 4 of the Paris Convention are not binding on Taiwan’s trademark authorities. However, Article 2.1 requires all WTO members to comply with Articles 1 through 12 and Article 19 of the Paris Convention. Does this mean the TIPO has obligations under the TRIPS Agreement to recognize priority claims based on trademark applications filed in any Paris Convention state, in accordance with Article 4 of the Convention? TIPO’s position is that since the WTO has not expressly interpreted Article 2.1 of the TRIPS Agreement and Article 4 of the Paris Convention to mean that all WTO members must recognize priority claims from all Paris Convention countries, Taiwan is therefore not required to recognize priority claims based on applications filed in Paris Convention countries which are not also WTO member states. Furthermore, as Taiwan is not a Paris Convention country to begin with, it is not in violation of the letter of Article 4 of the Paris Convention, which only provides that all Union countries shall grant priority rights to trademark applications filed in other Union countries.

Although WIPO interprets Article 2.1 of the TRIPS agreement and Article 4 of the Paris Convention as requiring all WTO member states to recognize priority claims from any Paris Convention countries, the TIPO currently only accepts the WTO’s interpretation of the TRIPS Agreement. While it is true that the WIPO’s interpretation has no legal effect in Taiwan, there is nothing to prevent the TIPO from choosing to adopt and affirm it. The TIPO should reconsider its stance on the WIPO interpretation, and should willingly implement it in order to bring Taiwan in line with international standards on this issue. A willingness to do so could also reflect well on Taiwan if it seeks to become a UN member state in the future. Taiwan should also amend Article 20 of the Taiwan Trademark Act to better conform with the obligations and practices set out by the WIPO. Pending such future changes, the situation remains quite complicated, and the most straightforward path to claiming priority in Taiwan at present is to base the claim on an application in a WTO member state.

For more information on trademark matters, please contact Jason Yan at jasonyan@winklerpartners.com.

Legal intern Amber Chou contributed to this article.


[1] The Paris Convention is an international agreement established in 1883 for the protection of industrial intellectual property. As of August 2019, there are 177 Contracting Parties to the Paris Convention. These Contracting Parties are referred to as the “countries of the Union” under the treaty.

Does abolishment of the recognition system allow foreign companies to freely obtain property in Taiwan?

Since the amended Company Act came into force, foreign companies that were organized and incorporated in accordance with the laws of a foreign country have legal capacity in Taiwan. Without having to be recognized or establish a branch, a foreign company now enjoys the same rights and obligations as a domestic company, including the right to file a complaint. As such, foreign companies that are the victim of fraud will be able to file criminal litigation seeking relief in Taiwan. However, foreign companies that wish to sign contracts, make price quotations, or engage in price negotiations, bids, and procurement projects, should still establish a Taiwan representative office, while those that wish to conduct business in Taiwan should establish a branch office.

However, of the various rights an unrecognized foreign company can now enjoy, do these include the right to acquire or set up rights in real property? Prior to the 2018 amendments, an unrecognized foreign company without a Taiwan branch could not acquire real estate, or mortgage or pledge personal property. Now, foreign companies, within the extent permitted by law, have the same legal capacity as domestic companies. Although the same scope of activities representative offices and branches can undertake still apply, there remain some questions as to whether an unrecognized foreign company can directly exercise the above-mentioned property rights. We inquired with the competent authorities about this issue and received replies addressing the following topics:

Registration of Property Rights (including registration as title holder and registration of mortgages)

Prior to 2018’s amendments, foreign legal persons who wished to acquire or register real property rights needed to be recognized in accordance with the laws of Taiwan and were required to attach their recognition certificate to the application. The Ministry of the Interior has indicated, however, that foreign companies no longer need to undergo the recognition process to obtain such rights.

Nonetheless, the “Operation Directions for Foreigners to Acquire Land Rights in the Republic of China” amended on 21 March 2019 and letters of interpretation issued by the competent authority still require foreign companies attach their registration documents and that they do so in the name of the head company. A foreign company still needs to establish at least a branch in Taiwan before it can apply for real property registration, and would need its responsible person in Taiwan to file the application on its behalf. This means, that in principle a foreign company can purchase property without a Taiwan branch, but in reality they are still required to form a branch to register their real property rights. We urge the government to revise the Operation Directions for Foreigners to Acquire Land Rights in the Republic of China to remove this restriction.

Registration of Mortgages in Personal Property

Before the Company Act amendments took force, unrecognized foreign legal persons were not permitted to register mortgages in personal property, except in cases where Taiwan had signed a treaty with the home jurisdiction of the foreign legal person containing special provisions that allow for such registration. Now, the Financial Supervisory Commission has explained, a foreign company can register mortgages in personal property in its own name without needing to be recognized by the government. The “evidentiary documentation for contract parties” required for registration will instead be determined by the registration authority on a case-by-case basis. Other than foreign companies, there are no special regulations for other forms of foreign legal person. Registration of mortgages in personal property by non-company foreign legal persons is governed by other legislation, which requires that they first obtain legal personhood.

Pledges of Personal Property

Previously, unrecognized foreign companies had no legal capacity and thus had no rights to pledge personal property. The Ministry of Economic Affairs has stated that now, foreign companies have legal capacity without being recognized by the Taiwan government. Therefore, recognition is no longer required to make pledges.

Although foreign companies have legal capacity without being recognized under the new amendments, a foreign company that has not established a branch cannot acquire or set up rights in real property. The regulations need to be revised to remove this minor administrative obstacle. We believe that such revisions will go some way to making Taiwan an even more attractive place to purchase property.

For more information on this topic, please email Christine Chen at cchen@winklerpartners.com.

Taiwan benefit corporation legislation proposals

We last wrote about benefit corporation legislation in Taiwan back in 2017, and since then there has been some movement on this topic. On 6 July 2018, the Legislative Yuan requested that the Ministry of Economic Affairs (MOEA) coordinate with stakeholders to evaluate whether a special chapter covering social enterprises and benefit corporations should be added to the existing Company Act or whether separate legislation should be introduced. The MOEA was given a year to produce a report on this topic and present it to the Legislative Yuan before August 2019. A summary of the report’s key points is outlined below:

Social Innovation Enterprise as a catch-all term

In their report, the MOEA use the term “social innovation enterprise” (社會創新組職) as an umbrella term for all organizations with a declared social or environmental purpose, whether they are companies, sole proprietorships, partnerships or cooperatives.

No special chapter in the Company Act

  • The Company Act is for companies, and is unsuitable for different organizations
  • The Company Act states that a company is a profit-making enterprise and that the responsible person should give priority to the maximization of shareholders’ interests. If the interests of third parties other than shareholders are pursued, this might violate the company’s obligations
Difficulty in passing special legislation

  • Social innovation enterprises come in many forms, which agency would provide oversight?
  • How should the responsible person implement social or environmental obligations? How would violations of the law be handled?
  • Should these enterprises be required to allocate surpluses for social good?
  • Should third-party standards be used or should such enterprises be certified by a third party? As there is no consensus across industry, the MOEA believes that legislation would be difficult to implement.
Administrative guidance in the short term

  • Issuing guidance through administrative notices provides for flexibility, and could quickly be revised or updated according to the operational needs of different types of business.
  • Strengthening and expanding an existing platform for social enterprises (Social Innovation Enterprise Registration Database). This would provide resources and support for enterprises with a declared social or environmental goal, while building consensus for possible legislation further down the road.

We will monitor developments as the MOEA continues its dialogue with business and academia on benefit corporation legislation in Taiwan.

For more information on this topic, email Christine Chen at cchen@winklerpartners.com.

Further movement on Taiwan STO regulations

We published an earlier article regarding proposed regulations to be promulgated by the Taiwan Financial Supervisory Commission (the “FSC”) concerning security token offerings (“STO”).  At the end of June, the FSC released more information on what the final regulations may include.

The latest proposals do not vary significantly from the earlier proposed regulations except with respect to the two issues set out below:

  1. Increase in individual investor limit.  The cap on the amount an individual professional investor can invest in a single STO was raised from NT$100,000 (approximately US$3,000) to NT$300,000 (approximately US$9,000).
  2. Addition of limitations on STO platforms.  The more substantial change from the proposed regulations was the addition of limitations on the dollar amount and frequency of STOs allowed to be conducted on individual STO platforms.  The latest proposals provide that an individual platform may conduct STOs only up to an accumulated volume of NT$100 million (approximately US$3 million).  After a platform has conducted STOs aggregating NT$100 million, it may no longer conduct STOs.  Each STO platform must also wait at least one year between each STO conducted.  These two additional limitations will very likely dissuade most, if not all, potential STO platform providers from entering the market.

We will continue to watch this space in hopes that more business-friendly regulations will eventually materialize.

For more information, please contact Gregory Buxton at gbuxton@winklerpartners.com.

WP welcomes new associate

Winkler Partners recently welcomed a new member to our legal team.

Renee Hsu joins Winkler Partners in support of our corporate transactional practice, with a focus on capital markets, mergers and acquisitions and commercial transactions. She also has experience resolving disputes involving financial derivative products and intellectual property infringement. Renee previously worked in the legal department of a national research institute and is admitted to practice in Taiwan.

TIPO announces directions on third-party opinions regarding trademark applications

The Taiwan Intellectual Property Office (TIPO) has released “Operational Directions on Trademark Applications Submitted by Third Parties”, which allow third parties to provide written opinions to the TIPO regarding pending trademark applications. The TIPO hopes that this will lead to more objective decisions. The Directions are effective as of 20 June 2019.

According to the Directions, a third party must submit its opinion to the TIPO in hard copy form, and they may do so anonymously. If evidence or opinions provided are not submitted as hard copies, or are submitted on compact disc or in the form of computer records, such material may not be referred to by the TIPO during their examinations.

The third party’s opinion should also indicate the grounds on why the trademark shouldn’t be registered and should include related evidence. For example:

1. Where the mark lacks distinctiveness: the third party should provide an explanation of how the industry uses words, pictures, or symbols, which are similar to the mark in question, and submit evidence related to their opinions.

2. Where the mark is identical or similar to another person’s already filed trademark: the third party must submit objective, publicly credible evidence, and:

(a) Evidence of use must demonstrate that the earlier mark is in use for marketing purposes ;

(b) Evidence of use of the earlier mark must indicate the date and the user of the mark, and must conform to standard commercial practices;

(c) Newspaper and magazine materials are acceptable, but they must contain complete information, including the source, volume/issue, date of publication, and page number(s).

(d) Online material is acceptable, but accuracy and objectivity of such information should be cautiously employed.

3. Where the applicant has the intent to counterfeit or imitate the other person’s marks: the third party must provide evidence that the applicant has an existing contractual, regional, transactional, or other material relationship with the owner of the earlier mark that is allegedly being imitated. Such evidence could include the following:

(a) Correspondence, transaction documents, or purchase information showing a relationship between the applicant and the owner of the earlier mark;

(b) Documentary evidence showing a dependent or contractual relationship between the applicant and the owner of the earlier mark;

(c) Evidence showing that the place of business of the applicant is in close proximity to the place of business of the earlier mark’s owner;

(d) Evidence showing that the applicant was once a shareholder, representative, manager, or employee of the earlier mark’s owner, or vice versa; or

(e) Other evidence proving that the applicant was aware of the existence of the earlier mark. If they were aware, this could be covered by the blanket provision regarding “other relationships”. Where the applicant is a competitor of the earlier mark’s owner, evidence may be submitted to the examiner showing the time period, region, and scope of actual use of the trademark, as well as the accumulated goodwill of the earlier mark’s owner.

4. Where the mark is identical or similar to a well-known mark: a third party may refer to the “Examination Guidelines for the Protection of Well-known Trademarks” to determine what kind of evidence should be submitted.

5. The mark in issue involves infringement of another party’s copyrights, patent rights, or other rights: When arguing infringement of this kind, a third party should submit documentary evidence of a final civil judgment, or documents showing that a complaint citing the applicant’s infringement has been lodged with a court of relevant jurisdiction. If no final judgment has been handed down, the trademark application may be suspended pending the issuance of such judgment.

6. Other objective, concrete evidence showing that the disputed application should be denied registration according to the Trademark Act.

After the TIPO receives a third-party opinion, they may request that the applicant provide a response. However, if the examiner does not notify the applicant of a third-party opinion, that opinion cannot be used as basis for rejection.

Lastly, as third parties are not parties to the trademark application, the TIPO will not notify the third party about their opinions, nor notify them of any decisions. If a third party disagrees with the TIPO’s decision on a given application, they may file a separate opposition or invalidation action against the trademark in issue.

The Directions can be found on the TIPO’s website (in Chinese) here.

For more information on trademark matters in Taiwan, please contact Peter Dernbach at pdernbach@winklerpartners.com and Jesimy Yu at jesimy@winklerpartners.com.

Further liberalization of Taiwan’s foreign investment rules

Taiwan’s Executive Yuan has approved draft bills to amend the Statute for Investment by Foreign Nationals and the Statute for Investment by Overseas Chinese in an effort to simplify Taiwan’s foreign investment approval process. If passed into law by the Legislative Yuan, it is expected that 85% of foreign investment in Taiwan would be subject to post-investment reporting rather than pre-investment approval. The draft bills simplify review procedures, shorten the review process, and strengthen regulation of foreign investment.

Review Procedure Simplification

Under the draft bills, investments would require pre-approval or post-investment reporting depending on the nature of the investment. Investments that would require pre-approval include:

  1. Investments above a certain amount or level of shareholding
  2. Industries in which investment is restricted by law
  3. The investor is a foreign government, government-related entity, or from a jurisdiction under sanctions.

It is expected that investments over US$1 million would require pre-approval. The level of shareholding that would require pre-approval is still under review.

Restricted industries include broadcasting, power transmission and distribution, and telecommunications. The complete list may be found in the Negative List for Investment by Overseas Chinese and Foreign Nationals last revised in February 2018.

Examples of sanctioned jurisdictions include Cuba, Iran, and North Korea.

All other types of investment would be subject to post-investment reporting.

Shortened Review Process

The draft bills would also tighten deadlines for regulatory approval. The Ministry of Economic Affairs would be required to notify investors within five days if application documents are incomplete. After accepting an application, the Ministry would have one month to rule on the application unless other agencies need to be consulted. If other agencies are involved, the deadline for a decision would be two months.

Strengthened Foreign Investment Regulation

The bills would also strengthen the regulator’s post-investment regulatory powers. If irregularities requiring review are discovered in an investment following reporting of the investment, the regulator could order the investor to apply for approval. The investor could also be ordered to withdraw the investment if it is discovered that the investment affects national security. Currently the regulator’s powers are limited to ordering withdrawal of the investment or cancellation of the right to settle foreign exchange.

Registered foreign investors in listed securities would be subject to new fines of NT$240,000 (c. US$7,660) to NT$4.8 million (c. US$153,000) for violations of the Taiwan Financial Supervisory Commission’s securities regulations. Failure to remedy such violations could lead to suspension of investments in securities by the foreign investor for up to one year or revocation of the investor’s registration.

Failure to apply for equity investment approval when required would be subject to fines of NT$120,000 (c. US$3,800) to NT$600,000 (c.US$19,000) while failure to report an investment would be subject to fines of NT$60,000 (c. US$1,900) to NT$300,000 (c. US$9,600). Orders to rectify, suspending shareholder rights, and to stop or withdraw the investment could also apply.

The draft bills also would expand the definition of an investor to include foreign funds and partnerships. Currently investors include only natural and legal persons. The definition of investment would also be expanded to include agreements giving control over domestic sole proprietorships, partnerships, and companies as well as acquisition of domestic sole proprietorships, partnerships, or companies.

The Legislature is expected to review these bills during its 2019 fall session at the latest.

For more information on investing in Taiwan, please contact Christine Chen at cchen@winklerpartners.com.

WP secures registration of historic motion mark

Winkler Partners is happy to announce that we recently obtained a historic trademark registration on behalf of one of the world’s largest social media companies. Jason Yan, a Senior Consultant at Winkler Partners, successfully registered a motion mark, one of only several in Taiwan, which has the distinction of being Taiwan’s first motion mark to be registered in over ten trademark classes. It is also noteworthy for being the first design-only motion mark to be registered in Taiwan, as it does not incorporate any word or text elements.

Motion marks are a relatively new concept in Taiwan trademark practice, and consist of moving images that would previously have been considered unregistrable in Taiwan and most other jurisdictions. Winkler Partners is proud to offer excellent service in this emerging area of trademark practice. If you or your company are interested in applying for a motion mark, please contact us at info@winklerpartners.com.

 

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