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WP closed for public holiday

Winkler Partners will be closed on Monday, 27 and Tuesday, 28 February for a public holiday. Please direct any urgent matters to info@winklerpartners.com which will be monitored regularly. We will return to normal working hours on Wednesday, 1 March.

Please note that government offices in Taiwan will also be closed for the holiday. Any specified governmental deadline that falls on the above dates will be automatically extended to the next working day, Wednesday, 1 March, 2017.

Personal information concerns when conducting due diligence

Transactional attorneys are intimately familiar with due diligence requests (“DDR”). A prospective buyer (“Buyer”) will typically deliver to a target company (“Target”) a DDR which includes a section requesting information related to a Target’s employees and the circumstances of their employment. In Taiwan, we advise Buyers to take steps to ensure they do not inadvertently collect such employees’ personal information, thus violating Taiwan’s Personal Information Protection Act (“PIPA”).[1]

PIPA permits personal information to be collected and processed only in situations where there exists: (i) a specified purpose for such collection and processing; and (ii) one or more of six qualifying conditions.

Purpose

Although the specified purpose must be reasonable, the data collector or processor is largely left free to determine the purpose for collecting or processing any personal information. There is no indication that due diligence associated with an acquisition transaction would not be considered a reasonable purpose for the collection or processing of personal information under PIPA.

Qualifying Conditions

Unlike the purpose requirement, the list of qualifying conditions is strictly limited to the specific conditions delineated in the statute. In the context of an acquisition transaction, the relevant qualifying conditions would likely be one or more of the following:

  1. a contractual or contract-like relationship between data processor or collector and the data subject; or
  2. the data subject’s consent.

Contract or contract-like relationship

In an acquisition context, a Buyer, as data collector, is not in direct privity of contract with Target’s employees; therefore, no direct contractual relationship exists between the data collector and the data subject. However, PIPA and related regulations allow for a less formal contract-like relationship to suffice as a qualifying condition for personal data collection. Such relationships are typically found to exist in pre-contract negotiations or contract formation processes. For example, a contract-like relationship would exist between an employer and a potential employee during the hiring process, prior to any contract actually being signed. Given that Buyers normally do not negotiate with a Target’s employees during the pre-signing phase of a transaction, it is extremely doubtful that any contract-like relationship would be found to exist which would justify the collection of Target employees’ personal information.

We note that this reading of the PIPA creates a slight tension with Taiwan’s Business Merger and Acquisition Act (“BMAA”) pursuant to which a Buyer may negotiate with a Target to determine which of Target’s employees will be retained post-closing. However, the intention of the BMAA to allow such negotiations is not a basis to find that a Buyer has a contract-like relationship with a Target’s employees sufficient to justify collection of their personal information.

Consent

If there is neither a contractual nor contract-like relationship between the Buyer and Target’s employees, the only remaining qualifying condition that would allow for the collection of the employees’ personal information would be receipt of consent from the employees themselves. In the vast majority of cases, this is both impractical and undesirable as Buyers normally wish to keep transactions as confidential as possible.

Personal information

Absent a clear cut path to the legal collection of Target employees’ personal information, we encourage prospective Buyers to take steps to ensure that no personal information is collected from Taiwan data subjects.

In Taiwan, personal information is defined as any information that can directly or indirectly identify a natural person. Buyers should, therefore, request any Target to redact employees’ names, national identification numbers, addresses, and any other information that could identify an employee from all employment agreements before disclosing such agreements. Similarly, payroll information can be disclosed only if employees’ names and other identifying information are redacted.

We recommend that any DDR sent by a Buyer to a Taiwan Target clearly request that any and all employee information to be provided pursuant to such a DDR must not contain employees’ personal information. For more information on data protection and privacy matters in Taiwan, please contact Chen Hui-ling at hchen@winklerpartners.com and Daniel Chen at dchen@winklerpartners.com.


[1] It is important to note that a Buyer’s liability extends to the acts of its agents and professional advisors. So, a Buyer would remain liable even if a DDR were sent out on its behalf by its lawyers or other professional advisors.

Regulations amended to strengthen border control measures protecting trademarks

The Taiwan Customs Administration, Ministry of Finance, amended the Regulations Governing Customs Measures in Protecting Rights and Interests in Trademarks (“the Regulations”) on 30 December 2016. The amendment is aimed at providing more complete protection for the rights of trademark holders and strengthening border control measures by Taiwan Customs against trademark-infringing goods. It also is designed to harmonize with Taiwan’s policies of promoting e-government and streamlining administrative procedures. The amended Regulations entered into full force from 1 January 2017.

Below are some key points of the amendment:

1. The amended Regulations provide for protection on a per-registration rather than per-design basis

Among the protective measures under the Regulations are a mechanism for trademark rights holders to apply, by a notice to Customs, for protection of registered trademarks (“protection-upon-notice”), and a mechanism for rights holders to file complaints with Customs about specific goods suspected of infringing trademark. In the past, applications for protection-upon-notice of registered trademarks were required to be submitted on a per-design basis, with the result that multiple registrations of a single trademark design would be bundled into a single protection-upon-notice case. But as different registrations may have different protection periods and scopes of protection, a need to differentiate between registrations was recognized. The amended Regulations, in Article 3.1, therefore expressly require trademark rights holders seeking protection to apply on a per-registration rather than per-design basis and to separately record with Customs the information for each trademark registration number.

2. The protection-upon-notice period is lengthened, and renewal procedures are simplified

Before the amendment, Customs would grant approval for protection-upon-notice for a one-year term only, and trademark rights holders were required to apply for renewal annually. To simplify matters, Article 4.1 of the amended Regulations revises the protection-upon-notice period to “from the date of approval by Customs to the expiration of the trademark rights term”, eliminating the need for annual renewal applications. A trademark rights owner who applies for and obtains renewal of an expiring trademark now needs merely to present Customs with documentary proof of the renewed trademark term to update the information on record with Customs and renew the protection of the registration.

3. The amendment specifies the obligation of the trademark rights holder or agent to cooperate with Customs, and allows Customs to terminate the protection period if unable to contact the rights holder or if an offshore rights holder no longer has a Taiwan agent

To strengthen the obligation of trademark rights holders or their agents to cooperate in trademark protection, the amendment newly provides, in Article 5, that Customs may terminate the protection-upon-notice period early in either of the following circumstances: (1) Customs is unable to contact the trademark rights holder or the rights holder’s agent using the information submitted in the application for protection-upon-notice; (2) a trademark rights holder without a domicile or place of business or no longer has an agent in Taiwan because its relationship with its agent has been terminated or is extinguished by some other cause.

4.   When a trademark rights holder files a complaint against specific import or export goods suspected of infringement, Customs is now required to notify the trademark rights holder of the acceptance of the complaint or the reasons for non-acceptance of the complaint.

When a trademark rights holder takes the initiative to file a complaint against import or export goods suspected to infringe the holder’s trademark rights, under Article 6.2 of the amended Regulations, Customs is required to notify the trademark rights holder of whether the complaint is accepted, and when Customs declines to accept a complaint, it is further required to specify the reasons for non-acceptance.

5.   The amendment permits Customs, upon application, to provide photographs of suspected infringing items to trademark rights holders to help them assess whether products are genuine or counterfeit, to expedite handling procedures

To help trademark rights holders judge more quickly whether to proceed to Customs to assess suspected infringing goods, Article 7.5 of the amended Regulations permits Customs, upon application, to provide photographs of suspected infringing items to trademark rights holders. Rights holders may not, however, base their determination of whether there is infringement simply on photographs of import or export goods provided by Customs.

6. A trademark rights holder who lacks a domicile or a place of business in Taiwan is required to designate an agent to act on the rights holders’ behalf in exercising the trademark protections under the Regulations

In principle, a trademark rights holder may choose at its own discretion whether to designate an agent to act on its behalf to exercise the protections under the Regulations. The exception is a trademark rights holder who has neither a domicile nor a place of business in Taiwan. Under the amended Regulations, such a rights holder is required to appoint an agent to liaise with and carry out infringement assessments at Customs, and receive service of documents or notices from Customs.

7. The amendment newly provides that a recorded exclusive licensee has standing equivalent to a trademark rights holder

The amended Regulations provide, in Article 15, that a recorded exclusive licensee is entitled to enjoy, in the licensee’s own name, the border control measures implemented by Customs for trademark protection under the Regulations, and is further entitled to exclude applications by third parties for those protective measures. This amendment brings the Regulations into harmony with the provisions of the Trademark Act concerning exclusive licensees.

In addition to lengthening the period of protection in cases of protection-upon-notice, the amended Regulations offer greater convenience to trademark rights holders by allowing them to use electronic means to apply for protection-upon-notice and to query information related to their applications. Rights holders nevertheless should remain mindful, as the expiration of a trademark term approaches, to present Customs with documentary proof of trademark term renewal, in order to renew the term of the protection and ensure that their trademark rights remain safeguarded. Foreign holders of Taiwan trademark rights who do not have a domicile or place of business in Taiwan should also pay special attention to the new provisions regarding the compulsory use of an agent when such rights holders apply for protections under the Regulations.

For more information on trademark and IP protection and enforcement matters in Taiwan, please contact Gary Kuo at gkuo@winklerpartners.com.

This is a translation by Paul Cox, of the original Chinese article found here.

Exemptions to Taiwan’s work permit requirements: the Consultation Mechanism

Taiwan’s work permit requirements may appear to be inflexible but little-known exemptions are readily available for two requirements: minimum employer capitalization/revenue and minimum post-graduate work experience.

The Basic Requirements

Most foreign professionals in Taiwan other than teachers are employed in Class A professional and technical work.

To hire a foreign professional for Class A work, the foreign job candidate’s prospective employer must apply for a work permit from the Ministry of Labor’s Workforce Development Agency (the “WDA”).

In general, four basic requirements must be met:

  1. the capitalization/revenue requirement for the employer
  2. education/experience requirements for the employee
  3. the job must be a professional or technical job, and
  4. a minimum monthly salary of NT $47,971

Exemptions are available for the capitalization/revenue requirement and the work experience requirement. No exemptions are available for jobs that do not fall within the scope of professional and technical work. There are also no exemptions to the minimum monthly salary of NT$47,791 for foreign professionals who hold a non-Taiwan degree.

Capitalization/revenue requirement

To hire a Class A foreign professional, the employer must be a new business with NT$5 million in registered capital or an existing business with NT$10 million in revenue in the preceding year (or average NT$10 million revenue over the past three years).

Education and Experience Requirement

To be hired, a foreign professional must generally have a college degree and two years of related post-graduate work experience.

Exemptions

Exemptions are available through what the Ministry of Labor calls the “Consultation Mechanism.”[1]

If an employer does not meet the capital/revenue requirement, the employer should attach this form (in Chinese) to the work permit application.

If the job candidate does not have two years of post-college work experience relevant to the job, the employer should attach this form (in Chinese) to the work permit application.

Please note that foreign job candidates generally cannot apply for work permits or exemptions on their own. Their employer must apply for permission to hire the job candidate.

High Approval Rates

Exemptions under the Consultation Mechanism have been available since 2010. Partial statistics from the WDA show that exemptions are granted in response to most applications. Between 2010 and 2015, 176 employers applied for exemptions to minimum capital/revenue requirements. 156 (89%) of these applications were approved. Similarly, 50 employers applied for exemptions to the two year work experience requirement during the same period. 47 of the applications were approved, yielding a 94% approval rate.

While approval rates are high, the number of applications is strikingly low. This is probably explained by the fact that until recently the WDA did not have clear guidance on the Consultation Mechanism either in English or Chinese.

EZ WORK Taiwan: Information on Consultation Mechanism and Work Permits in General

In late 2016 however, the WDA added a new section to its excellent EZ WORK Taiwan website that gives comprehensive information about the Consultation Mechanism in both Chinese and English. Foreign professional job candidates can familiarize themselves with the Consultation Mechanism in English here. Since HR departments at Taiwanese companies are unlikely to be familiar with the Consultation Mechanism, job candidates can refer prospective employers to the same information in Chinese here.

More generally, the EZ WORK Taiwan website provides comprehensive information in both English and Chinese for Class A professional and technical work permits as well as bilingual information about other types of professional work permits including those for teachers, artists, and performers. Again, referring prospective employers to the Chinese side of the site can be very useful especially if you are the first foreign hire at a given company.

Special Rules for Graduates of Taiwanese Universities and Qualified Startups

It should be noted that special rules apply to foreign graduates of Taiwanese universities and to employees at qualified startups. These special rules are outside the scope of this article but more information about the Points System for foreign graduates of Taiwanese universities can be found here. Employees of qualified startups are not subject to the two year experience requirement.


[1] 會商機制 (huishang jizhi)

Summer 2017 internship

Winkler Partners is looking for a law student intern for summer 2017. 1Ls and 2Ls are all welcome.

The basic qualifications include good analytic, research, and writing skills. The successful candidate will probably be a native speaker of English or someone primarily educated in English who is currently a law student.

The successful candidate will also likely be able to speak Mandarin or Taiwanese and must be able to read traditional Chinese with reasonable proficiency. We will consider candidates who speak other Chinese languages such as Cantonese if the candidate can read traditional Chinese.

Duties would include curating social media sites, writing updates on legal topics, and light case work for 30-40 hours per week. The internship is (very) modestly paid but the successful candidate will need to cover at least travel costs to Taipei.

We regret that Taiwan’s laws currently preclude us from obtaining work authorization for candidates with Chinese citizenship (including Hong Kong and Macau) unless the candidate is a dual national. Offers to successful candidates will be conditioned on our ability to receive work authorization.

Please send a resume, a brief writing sample, and a cover letter explaining your interest in an internship in Taiwan to personnel@winklerpartners.com by 1 March 2017.

Grand Justices rule pre-approval for cosmetics advertising unconstitutional

On 6 January 2017, Taiwan’s Constitutional Court ruled that pre-approval of cosmetics advertising content by local and central health authorities is unconstitutional, as it infringes on the protection of free speech granted by the Constitution. Article 24(2) and Article 30(1), of the Statue for Control of Cosmetic Hygiene have been repealed with immediate effect.

Article 24(2) of the statute states that, ‘Before publicizing or advertising any cosmetic product, the manufacturer or dealer thereof shall first submit to the central, municipal or county/city competent health authorities for its approval all the text, pictures and/or oral statements contained therein; and shall subsequently present the approval letter or certificate to the mass communication institutions concerned for their examination’; while Article 30(1) detailed the financial penalties for not obtaining approval prior to publication.

The ruling came after DHC, a Japanese cosmetics manufacturer, was fined NT$30,000 (approximately US$935) in 2010 for failing to obtain prior approval from Taipei City’s Department of Health. DHC later applied for a constitutional ruling after an appeal and subsequent administrative litigation failed.

Amendments to Labor Standards Act passed

After lengthy discussion and public debate, amendments to the Labor Standards Act (“LSA”) were passed after its third reading on 6 December 2016. The main changes that employment law practitioners, human resource managers, employers and employees must be aware of include:

Changes to annual leave

The qualifying threshold for taking paid annual leave has been reduced from one year of service to six months of service. Employees earn additional annual leave based on years of service up to a maximum of 30 days per year. Minimum annual leave allowances as of 1 January 2017, when the new rules go into effect, are:

  • More than six months but less than one year; 3 days
  • More than one year but less than two years; 7 days
  • More than two years but less than three years; 10 days
  • More than three years but less than five years; 14 days
  • More than five years but less than ten years; 15 days and
  • Over ten years; one extra day of annual leave per year up to a maximum of 30 days.

Unused annual paid leave days must be cashed out by the end of each year of service. Failure to do so may lead to an administrative fine of between NT$20,000 and NT$1 million (approximately US$630 and US$31,500).

Elimination of national holidays

Seven national holidays have been eliminated for private sector workers. This is to make up the difference in time away from work when Taiwan switched from a 48 hour workweek to a 40 hour workweek earlier this year. When remaining national holidays occur on rest days (usually a weekend), employers must provide another day off for employees. The national holidays which have been eliminated include:

  • The day after the Founding Day of the Republic of China (January 2);
  • Revolutionary Martyrs’ Day (March 29);
  • Confucius’ Birthday (September 28);
  • President Chiang Kai-shek’s Birthday (October 31);
  • Taiwan’s Retrocession Day (October 25);
  • Dr. Sun Yat-sen’s Birthday (November 12) and
  • Constitution Day (December 25).

Implementation of a five-day work, two-day rest week

The changes provide for two rest days in seven, an increase from one rest day in seven. This brings the rest of the private sector into line with the public sector and most office-based industries. Of the two rest days, one is a mandatory day off; the other is flexible. An employee cannot agree to work on the mandatory rest day. The employee may agree to work on the flexible rest day but higher overtime rates will apply.

Overtime on flexible rest days

Employees and employers need to be aware of the new overtime calculations for flexible rest days:

  • Between 0 and 2 hours; 1.34 times regular hourly wage
  • Between 3 and 12 hours; 1.67 times regular hourly wage

Actual time worked will now be calculated at the top end of three four-hour periods. Less than 4 hours worked will be counted as the employee having worked four hours; between four and eight hours will count as eight hours and between eight and twelve hours will count as twelve hours. In other words, if an employee agrees to work on a flexible rest day and only works one hour, she must be paid for four hours at the increased overtime rate.

The above amendments will come into force once they are promulgated by the President. The changes to annual leave and elimination of national holidays will come into force on 1 January, 2017.

For more information on employment law matters, please contact Christine Chen at cchen@winklerpartners.com.

Two strategies for speeding up patent applications

In this article, we explore two options available to intellectual property holders in expiditing patent applications in Taiwan.

Electronic Priority Document Exchange (“PDX”)

An Electronic Priority Document Exchange (“PDX”) agreement between the Taiwan Intellectual Property Office (TIPO) and its Korean counterpart, the Korea Intellectual Property Office (KIPO), went into effect on 1 January 2016. This agreement follows a similar agreement between the TIPO and the Japan Patent Office (JPO) that came into effect in December 2013.

Both agreements permit applicants filing invention or utility model patents with the TIPO (the ‘Office of First Filing’, or OFF) to obtain an access code that they can then use to file priority documents with either the KIPO or the JPO (the ‘Office of Second Filing’, or OSF). Similarly, applicants filing in Korea or Japan can obtain an access code for a priority filing in Taiwan. The TIPO requests that these codes be received within 16 months of the first filing date.

These agreements can help applicants receive expedited review of patent applications claiming priority among these three jurisdictions. In 2015, 12,284 invention patents were filed by Japanese applicants in Taiwan, the largest number originating in a foreign jurisdiction. In the same year, there were 1,614 filings from Korean applicants, placing them third behind the United States. According to statistics from the JPO, Korea accounted for 10.8% of all patent applications made in Japan in 2013, showing that the PDX agreements between the three intellectual property offices can potentially serve a considerable number of applicants.

The Patent Prosecution Highway (“PPH”)

The Patent Prosecution Highway (“PPH”) is aimed at expediting the examination process for corresponding applications filed in different intellectual property offices around the world. The PPH program can only be used for invention patents, and does not apply to utility model or design patent applications. To date, the TIPO has collaborated with the USPTO, the JPO, the KIPO and the Spanish Patent and Trademark Office (SPTO).

Under the PPH, an applicant who receives a ruling from their OFF that their application is allowable or patentable, may then request OSFs in which the patent application is pending to fast-track the examination of corresponding claims.

Cooperation through the PPH program allows OSFs to exploit the patent search and examination results of OFFs, allowing applicants to reach final dispositions more quickly and efficiently than under standard examination prosecution procedures. The TIPO says that applications using the PPH program on average receive their first office actions within two months from the date of the PPH request, and a decision within six months, compared to a normal time frame of 18-36 months. For applicants filing numerous patents in many jurisdictions around the world concurrently, this is clearly advantageous.

For more information on patent matters, please contact Peter Dernbach at pdernbach@winklerpartners.com or Betty Chen at betty@winklerpartners.com.

WP recommended by The Legal 500

Five of Winkler Partners’ practice areas have been recommended by The Legal 500 as part of their research into legal service providers in the Asia Pacific region. Our insurance practice, led by partner Chen Hui-ling was ranked in the top tier for the fifth consecutive year, and noted for a particular strength in D&O insurance. The Legal 500 notes that Hui-ling “has vast experience in the industry and has represented international insurance companies seeking to integrate Taiwan into their Greater China operations”.

Head of our employment practice partner Christine Chen was noted for “an excellent pedigree representing international corporates in employment disputes and also has a wide ranging advisory practice”. Our employment practice was ranked in the second tier overall. Our intellectual property practice was also highly recommended, with practice head partner Peter Dernbach listed as a Leading Individual. The Legal 500 mentions that we handle trademark enforcement and/or prosecution work for a high proportion of the world’s leading brands and also perform patent prosecution work. Partner Gary Kuo is recommended for his IP litigation work.

Finally our dispute resolution and corporate/M&A work were also recommended. The Legal 500 notes that we represent international clients across an array of commercial litigation matters, including the enforcement of foreign judgments and that our corporate practice, led by Gregory Buxton together with Chen Hui-ling, has a particular focus on inbound investment and venture capital deals.

The Legal 500 has been ranking law firms worldwide for over 25 years, with a special attention to practice area teams who are providing the most cutting edge and innovative advice to corporate counsel. You can read the latest Legal 500 Asia Pacific rankings here.

2016 Taiwan employment law overview

Winkler Partners’ Christine Chen has contributed an overview of employment and employee benefits in Taiwan to Thomson Reuters’ Practical Law.

These resources are drafted in a question and answer format that allows practitioners to easily compare Taiwanese employment laws to the corresponding laws in other jurisdictions. The overview covers all recent amendments to employment law in Taiwan, including the October 2016 increases in the minimum wage, the May 2016 amendments to the Act for Gender Equality in Employment as well as future proposals for reform.

Practical Law provides similar resources for many jurisdictions around the world. A full list of contents, including employment laws in other countries, can be viewed here. A useful country Q&A tool is also available, allowing practitioners to compare employment and employee benefits across two or more jurisdictions at the same time.

Christine regularly provides information on Taiwan’s employment legislation, most recently for the World Bank’s Doing Business report and Littler Mendelson’s Guide to International Employment and Labor Law.

For more information on employment and employee benefit matters in Taiwan, please contact Christine Chen at cchen@winklerpartners.com or +886 223112345 ext. 307.

 

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