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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.

Proposed regulations governing Taiwan STOs

At the end of 2018 we wrote an article regarding crowdfunding in Taiwan. We questioned whether in the future Taiwan might allow companies to raise funds through ICOs conducted via crowdfunding channels. Current indications are that the Taiwan Financial Supervisory Commission (the “FSC”) intends to regulate such ICOs, commonly referred to as security token offerings (“STO”), separately from crowdfunding. However, the general regulatory framework to be applied to STOs bears a significant resemblance to the existing crowdfunding rules.

On April 12 of this year, the FSC held a forum to discuss the key elements of the proposed STO regulations. The following proposals were discussed:

  1. Exemption from registration. An STO through which an issuer attempts to raise NT$30 million (approximately US$1 million) or less (a “SmallCap STO”) would be exempted from the registration requirements of Article 22 of Taiwan’s Securities and Exchange Act. STOs in excess of NT$30 million would be subject to the requirements of Article 22 and required to enter Taiwan’s regulatory sandbox.
  2. Permissible securities. STOs would only be permitted with respect to two types of securities: (a) fixed-interest debt and (b) profit participation rights. It is important to note that profit participation rights are not tantamount to equity share rights. Profit participation rights would not convey any of the control rights associated with share ownership, but merely convey rights to economic participation.
  3. Permissible investors. Only professional investors would be allowed to invest in SmallCap STOs, and individual investors would be limited to investing NT$100,000 (approximately US$3,000) per STO.
  4. Exhange trading. It is envisioned that security tokens issued in an STO would be exchange tradeable. Trading of SmallCap STOs would have a daily trading volume limit of fifty percent (50%) of the original issue. Securities issued in other STOs may be tradeable in the future pursuant to regulations formulated in connection with Taiwan’s financial sandbox.

The FSC plans to formalize and adopt the new STO regulations by the end of June of this year. Members of the business and legislative communities have already begun calling for increasing the SmallCap STO monetary threshold as well as loosening other restrictions. We will continue to watch this space and keep our clients informed of significant developments.

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

Taiwan’s legislature passes marriage equality bill

Taiwan’s Legislative Yuan passed “The Enforcement Act of Judicial Yuan Interpretation No. 748″ allowing same-sex couples to register their marriages on 17 May. The name of the Act refers to Interpretation No. 748 made by Taiwan’s constitutional court in May 2017. Interpretation No. 748 held that not permitting same-sex marriage was unconstitutional on grounds that it violated the rights to equality before the law and freedom of marriage. The Enforcement Act of Judicial Yuan Interpretation No. 748 (the “Act”) implements Interpretation 748.

Article 2 of the Act provides that “two people of the same gender may establish a permanent, exclusive, and intimate union for the purpose of pursuing a common life”.  Article 4 of the Act details the mechanics of how to create such a union and states that it may be registered as a marriage at the local Household Registration Office.

While Article 20 of the Act permits second-parent adoptions by married same sex couples, joint adoptions of non-biologically related children are not permitted. It is likely that the constitutionality of not permitting married same sex couples to adopt will be challenged on grounds of the right to equality before the law.

Article 24(2) of the Act provides that in general any provision of another law other than the Civil Code applies to a same-sex marriage if it refers to ‘husband and wife’, ‘spouse’, or ‘marriage’ . As a result, the provisions of Taiwan’s choice of law rules regarding marriage apply to same-sex marriages. Under those rules, a transnational marriage (same-sex or otherwise) is valid only if it is valid under the laws of Taiwan and the laws of the foreign spouse’s country.

As a result, transnational same-sex marriages will be valid in Taiwan only if the foreign spouse comes from a jurisdiction that permits same-sex marriage. Conversely, such a marriage will not be recognized in Taiwan if the foreign spouse comes from one of the many countries such as Japan that currently do not permit same-sex marriage.

Since Hong Kong and Macau are treated as foreign countries for most purposes, it follows that same-sex marriages where one spouse is from Hong Kong or Macau probably will not be recognized. Due to China’s special status in Taiwanese law, it is currently uncertain whether same-sex marriages where one spouse is from the People’s Republic of China will be recognized.

The Act comes into force on 24 May 2019. Taiwan’s Chinese language media has reported that local Household Registration Offices are ready to start registering same-sex marriages on the same date.

2018 Environmental Report

Since our founding, Winkler Partners has striven to have a positive impact on the environment, as well as an ongoing commitment to the professional development of our staff. In 2006, we established a Green Office Department, to undertake the greening of the office, implement methods to reduce our use of energy, promote the use of environmentally friendly products and services, design rainwater collection and conservation systems, reduce our carbon emissions and advocate for green office initiatives throughout our community by way of open visits to our office and roof garden. As part of that commitment, we will be publishing annual reports on how we are performing. At a glance, in 2018 we managed to:

  • Cut our total emissions by 1.4% over 2017′s total. Our total emissions for 2018 were 43 tons CO2e.
  • Generated 13,892 kilowatt hours of electricity via our solar panels. We saved a total of NT$48,604 (approx. US$1,574) from our energy bills. We were also able to sell 15% of the energy generated back to the grid for use by other customers, which earned us NT$16,011 (approx. US$ 518). Generating our own electricity reduced our carbon footprint by 7.7 tons.
  • Reduce overall electricity usage by 6%. Since 2004 we have reduced electricity usage by 61%. Anyone can make the same reductions by using air-conditioning sparingly, installing energy efficient lighting and setting computers to sleep.
  • Offset 50 tons of air travel emissions through UK-based B Corporation ClimateCare.
  • Reduce single-use cup and lunchbox container waste by 5%. Total waste however increased by 15%, mainly due to an increase in staff numbers.
  • Encourage people to go paperless. We reduced the amount of printing by 11%.

Goals for 2019

Planting trees is the best way we can reduce our negative impact on the environment. Working with Taiwan’s Forestry Bureau, we have committed to adopting an area of approximately 2.37 hectares in Xindian, New Taipei City, which will be reforested with 3,555 trees. The carbon storage potential (42.7 tons) of this reforestation project is roughly equivalent to our current carbon footprint. Below are some photos of WP colleagues planting trees.

We also plan to continue our energy saving initiatives to further reduce our carbon footprint by 3%. We will increase monitoring of air-conditioning/heating loss from open windows and doors. Staff training will also be increased in an effort to increase recycling and reduce waste. The full report is available in English here and in Chinese here. For inquiries regarding our energy saving initiatives or B Corporation certification, please contact James Hill at jhill@winkerpartners.com.

As part of our mission to contribute to the wider community, the general public is welcome to visit our roof garden to learn about urban farming and our green office program. To arrange a visit, please contact City Shen at +886 (0)2 2311-2345 ext. 346 or cshen@winkerpartners.com.

Do social media influencers need to disclose partnerships?

Social media influencers are the celebrities of the internet age, with their every movement watched closely by followers and media alike. This can have its advantages and disadvantages, as just recently a well-known influencer in Taiwan was fined by the Taipei City Department of Health for posting a review of an at-home cervical cancer test kit. The government determined that her behavior constituted advertising of a product with a medical purpose that had not received the necessary regulatory approvals. This incident gives one pause to reflect, if posting a written or video review of a product online can be construed as a form of advertising, how should consumers view articles or videos posted by influencers? Are they merely natural observations made by the influencer about certain products, or do they indicate some sort of partnership between the influencer and the companies behind those products? Also, if the influencer uses a less conspicuous approach to advertise a product in an online review, how can consumers’ rights and market order be safeguarded? This article will take a closer look at these questions from a legal point-of-view.

Disclosure of Material Connections in American Law

In order to address this new method of product promotion, the U.S. Federal Trade Commission in 2009 amended the Guides Concerning the Use of Endorsements and Testimonials in Advertising, adding posts and reviews made on social media to its regulatory scope. These amendments provide that if there is a material relationship between the poster and the producer or provider of the goods or services being reviewed, this could impact the credibility of the review and the poster must therefore provide a “Disclosure of Material Connections.” For example, when posting on social media, the poster can use hashtags, such as “#ad” or “#sponsored”, to indicate the nature of the post. On top of this, the producer or provider must also guarantee that such disclosure obligations are fulfilled. That being said, are there similar regulations and applications in Taiwan?

The obligation to disclose material relationships of endorsers and advertisers under Taiwanese law

Taiwan’s current laws and regulations do not contain anything specifically directed at the sharing of experiences by influencers or celebrities. However, if such sharing involves the influencer or celebrity’s opinions, trust, discovery, or personal experience with respect to a product or service, this could fall under the scope of an “endorsement/testimonial” provided in the Fair Trade Act (FTA).

The “Statement on the Fair Trade Commission’s Directions Regarding Advertising Endorsement and Testimonials” (hereinafter “Endorsements and Testimonials Statement”) clarifies these concepts, explaining that the terms “endorsements/testimonials” not only refer to those commercial endorsements made by celebrities, but also include experience sharing by average consumers. Moreover, “endorser” as regulated under the FTA, refers to an individual or organization who offers their reflection on a product or service, or their personal experience using that product or service. Therefore, anyone from a well-known personality, to a professional individual or organization, to an average consumer, can be considered an “endorser”. Given this, if an influencer or celebrity shares their experience with or opinions on a certain product or service with the public and such behavior is advertising in nature and is likely to affect market order and consumer interests, it will be governed by the provisions of the FTA.

Because fans and consumers are savvy to the interests and recommendations made by influencers and celebrities and purchase products and services based on these, this therefore represents their trust in the personal experience such influencers or celebrities have had with the recommended products or services. If it were to come to light that an influencer or celebrity was receiving free products or services from the producing company, or if there was another material relationship between the two, this could possibly affect consumers’ desire to purchase the product.

According to the “Truthful Representations Principle” described in the Endorsements and Testimonials Statement, if a “material relationship between the endorser and the advertiser that cannot be reasonably expected by the general public” exists, such a relationship should be fully disclosed in the testimonial. If it is not disclosed, depending on the particulars of each case, the testimonial could be considered a false or misleading representation relevant to goods or services sufficient to influence trading decisions, and thus be in violation of Article 21 of the FTA. It could otherwise be deemed a violation of the blanket provision regarding unfair practices in Article 25.

In addition, the “Obligation to Disclose Material Relationships” is specifically discussed in Point 5 of the Endorsements and Testimonials Statement. This item explicitly states that if an endorsement or testimonial is posted on social network websites (including online blog posts and posts in forums), any material relationship between the endorser and the advertiser that cannot be reasonably expected by the general public, which is not fully disclosed in the advertisement, and is sufficient to affect trading order, is in violation of Article 25 of the FTA.

We can better understand the term “material relationship that cannot be reasonably expected by the general public” by taking a look at the 2013 incident in which it came to light that the Taiwan subsidiary of South Korean electronics manufacturer Samsung was paying Taiwanese netizens to post negative online review and comments about HTC products on message boards and blogs, scrub the internet of negative news and reviews regarding Samsung’s products, and contrast Samsung’s products with those of their most prominent competitors by highlighting the deficiencies of the competitors’ products. Because consumers viewing these message boards and blogs would assume that the posts were the opinions or recommendations of average consumers like themselves, they would be unable to reasonably expect that there was a material relationship between the poster and the company. That these facts were concealed by Samsung significantly affected the credibility of the posts, and given Samsung’s long-term use of this particular approach, the FTC fined the company NT$10 million (approximately US$320,000) as a warning.

Influencers and celebrities should timely disclose their material relationships with companies

In order to maintain the impression of neutrality, and boost the credibility of their online posts, influencers and celebrities recommending certain products or services will frequently downplay the material relationship they have with the providers of those products or services. However, when there is such a relationship between the two sides, the articles, pictures, or videos posted are no longer purely experience sharing, and are rather closer to advertisements in nature. Given this, the FTA specifically includes experience sharing by celebrities or average consumers in the scope of “endorsements and testimonials,” and requires that any material relationship between the experience sharer and the company behind the product or service that cannot be reasonably expected by the general public be disclosed.

A great number of consumers are accustomed to buying products or perusing services based on the tastes and preferences of influencers or celebrities they follow online. Accordingly, if these tastemakers do not sufficiently disclose their material relationships with companies whose products or services they are reviewing, average consumers may go out and make purchases based on the mistaken belief that such reviews were made objectively in good faith. Based on previous cases, influencers or celebrities that conceal such relationships could be punished by the FTC if it is determined that the concealment is severe enough to affect market order. Moreover, if it is determined that they clearly knew or were capable of knowing that their endorsement or testimonial is misleading but still made it, the influencer and the company could also be held jointly and severally liable for civil damages.

Therefore, to reduce any possible legal risk and safeguard the trust fans and followers have in their idols, influencers and celebrities should disclose any material relationships they have.

For more information on social media and advertising in Taiwan, please contact Peter Dernbach at pdernbach@winklerpartners.com and Ling-ying Hsu at lhsu@winklerpartners.com.

Taiwan’s regulatory fintech sandbox: one year on

The Financial Supervisory Committee (FSC) announced this week that their application target for the first year of the regulatory sandbox has been achieved. So far, 11 applications for the experimentation or testing of new forms of fintech have been filed since the sandbox was launched under the Financial Technology Development and Innovative Experimentation Act in April 2018. Of these applications, three are from the financial sector, and include banking, securities, and insurance innovations; three are from outside the financial sector, but are related to banking and securities; and the other six applications have yet to be revealed to the public. Only one application has been rejected.

In addition, the FSC is considering implementing a separate “trial operation” track specifically for financial sector businesses. Those applicants who qualify can test out their new ventures on this track, as long as these do not involve amending the current laws and regulations, and would thus not be required to enter the sandbox.

These developments are welcome news for companies, both domestic and international, that are looking to take part in Taiwan’s push for innovation and growth. If you or your company would like to know more about the regulatory sandbox, take a look at our overview article from last year here.

If you have specific questions about whether your business qualifies for the sandbox and how to apply, please contact Christine Chen at cchen@winklerpartners.com.

Employment law changes made for dispatch workers and APRC holders

Amendments to Taiwan’s Labor Standards Act (“LSA”) passed the legislature on 26 April 2019. These amendments aim to keep pace with the rise of the gig economy and an increasingly atypical workforce. Currently, there are around 150,000 dispatch employees in Taiwan. In order to provide greater protection for these dispatched employees, two key provisions were passed:

Firstly, dispatch agencies can now only sign permanent employment contracts with dispatch employees. Such a restriction prevents agencies from using fixed-term contracts to circumvent their obligations to provide statutory severance pay. In the past, agencies would sign fixed-term contracts with dispatch employees based on the period of the dispatch project. Thus, the agency could terminate the dispatched employees on the end date of the fixed-term contracts, which meant that they did not need to have a statutory cause for termination or pay the dispatched employees severance pay. This loophole has now been closed.

Secondly, if agencies do not pay wages on time, dispatch employees can request that the client enterprise pay them instead. Client enterprises can then ask for reimbursement from the dispatch agency or deduct it from the expenses payable as outlined in the contracts they’ve signed with the agency. This measure would effectively mitigate the risk that dispatched employees would not receive their wages from the dispatch agency. It could also encourage the client enterprise to select well-operating agencies to prevent any costs being incurred from paying wages to the dispatched employees.

In separate amendments made to the Labor Pensions Act, eligibility for pensions under this act has been extended to all permanent residents (APRC holders), regardless of how they gained permanent residency status (through marriage, professional employment etc). Previously, only permanent residents married to Taiwanese nationals or those on certain work permits were able to join the pension scheme under the LPA. This change will affect how other payments, such as severance, are calculated. Any seniority accrued under the old (Labor Standards Act) pension scheme will remain the same, but seniority under the LPA will only begin to count from the time the employee decides to switch to the new pension scheme. This issue was a long standing concern of the foreign community in Taiwan, as it was seen as an obstacle to people settling here long term. The government expects 15,000 permanent residents will be positively affected by these changes.

These amendments are likely to have a significant impact on the dispatch industry, and we will continue to monitor developments once these changes go into force. Similarly, the inclusion of all permanent residents in the pension scheme will go some way to ensuring foreign nationals living and working in Taiwan receive equal treatment to their Taiwanese colleagues and neighbors.

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

Labor Dispute Act: three takeaways for employers

Taiwan’s Labor Dispute Act (“LDA”) was announced on 5 December 2018 and even though related laws, regulations and implementation dates have yet to be set, it is likely that it will come into force sometime in 2019.

The core principles of the LDA are speed, appropriateness, professionalism, effectiveness and fairness, with the given aims of readjusting the structure of the employee-employer relationship, reducing the barrier to litigation for employees and strengthening their employment rights.

It’s important to note that labor disputes that arise before the implementation of the LDA can still be dealt with under the new law, as long as they have not been completed (i.e. by settlement or final and binding judgment) by that date. Businesses employing people in Taiwan should therefore take advantage of this period and prepare ahead of time for the implementation of the LDA. Below, we outline three main points worth considering.

Scope

Employers should be aware that the scope given for disputes to be settled under the LDA is quite broad. The law defines disputes as civil in nature, covering the rights and obligations between employers and employers, or those where employment rights have been infringed upon.

However, due to the law’s basis for expanding the rights and obligations of both parties, the definition of “employee” and “employer” is relaxed, and the fact that related civil matters can be combined with or added to labor disputes, as well as allowing for counterclaims to be made during the litigation process mean that with this new scope comes increased risk. Two things that deserve special attention include:

  1. In addition to regular employers, recruitment agencies, dispatch employee companies, those that recruit people in trainee positions or similar roles are, under the LDA, considered employers. As an example, if there is a discrimination, sexual harassment or occupational safety dispute brought by a dispatched employee, then this falls within the scope of the LDA.
  2. Secondly, the court will consider the work rules, labor-management conference decisions, labor norms and so on as the basis for trials, alongside the rights and obligations provided for by law.

Review all relevant documents

Businesses should use this time to review labor contracts and work rules and ensure that all employee records are up to date and maintained according to the law. As businesses bear the responsibility for proof, they should determine that employee records are complete (employee lists, attendance records, salary information etc.) and make sure that all contracts, work rules and other internal guidelines clearly define the obligations and rights under the employee-employer relationship. Clear definitions of what constitutes “wages” and “work hours” should be given.

1. Wages

Disputes over wages occur when it is difficult to judge the amount of money that a company should provide to an employee. It is a recurring payment, for a service performed, or given as a favor (ex gratia payment), for example retention bonuses. The determination of wages will affect how salary, pensions and/or severance pay are calculated.

Under the LDA, employees are only required to prove that payments occurred as part of an employer-employee relationship. It is the responsibility of the employer to prove that bonus payments are not wages. Businesses should therefore set rules that cover bonus payments, including eligibility, payment conditions, calculations and payment terms to serve as evidence should any disputes arise in the future.

2. Work hours

Disputes over work hours usually involve the calculation of overtime. Whether or not the employee was granted permission to work outside of their normal work hours has in the past been difficult to determine. The LDA similarly provides that employees are considered to have obtained approval for any work conducted outside of their normal working hours. Employers are obligated to prove that approval was not obtained by the employee before overtime commenced.

Businesses should therefore include overtime application procedures in their employment contracts, in the work rules or other overtime guidelines. Attendance record control should also be strengthened to serve as evidence in the event a dispute arises.

Focus on prevention

Now that the cost of recourse through the courts has been lowered for employees, it is essential that employers are aware of the increased burden of proof they have to meet. To avoid costs associated with the lengthy mediation and litigation process, businesses should try to prevent cases reaching the courts. As an example, businesses should determine whether a cause for termination is lawful, and whether they have enough evidence to support their claims should a dispute be brought, and whether they have followed the law regarding terminations, before they terminate the employee. If a business is unsure, they should consult with legal counsel before they take any steps.

Once the LDA is implemented a judge will be appointed to take part in both the court-led mediation and litigation stages, and because the judge will disclose their impression in certain circumstances during mediation, it will be clear whether an employer will be successful or not during subsequent litigation. Mediation therefore will become the critical stage once the LDA is implemented. It goes without saying that it is advisable that businesses retain legal counsel before a dispute occurs or at least before the dispute enters the mediation phase.

Employees are ever more aware of their rights, and there are more avenues for recourse than before, once the LDA becomes law businesses should spend time considering how management of their employees can be adjusted to minimize disputes. By preventing disputes from occurring in the first place, the employee-employer relationship can be a harmonious one, which in turn is good for business.

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

Providers of set-top boxes and apps that infringe on others’ copyright will now face criminal penalties

On 16 April 2019, Taiwan’s Legislative Yuan passed amendments to Articles 87 and 93 of the Copyright Act, which provide that companies that offer set-top boxes or apps that allow consumers to link to websites or download content that infringes on the copyright of others can now face up to two years in prison or a criminal fine of up to NT$500,000 (approx. US$16,200) in lieu of a prison sentence.

In recent years, a number of set-top boxes or apps that have been sold on the market provide users with a convenient channel to access websites that allow them to watch pirated content. By charging users monthly rental fees for or selling set-top boxes outright, providers of such products and services are able to reap big profits, a situation that has seriously affected the development of Taiwan’s film and television industry.

In order to implement broader protection of intellectual property rights in Taiwan, the recent amendments provide that the following three kinds of behavior will constitute copyright infringement:

  1. Launching apps that compile links to websites containing pirated content on Google Play, the Apple Store, or other platforms that allow people to download such apps.
  2. Providing advice on, assistance with, or a way to download and use computer programs that contain pirated content, rather than directly offering such computer programs. For example, a provider sells a set-top box that does not contain the above-mentioned programs, but gives guidance or pointers on how to install them.
  3. Manufacturing, importing or selling equipment that contains the above-mentioned programs.

These amendments specifically target providers of set-top boxes and apps. For infringing websites that such products and services link to, such websites constitute infringement of reproduction rights and public transmission rights, and the punishment for such behavior is already provided in Articles 91 and 92 of the Copyright Act.

In addition, while consumers who buy set-top boxes and apps that link to infringing content are not considered to have broken the law, the provider may be investigated for offering illegal content and the consumer could risk having their product or service disconnected or cut off.

It is hoped that the passing of these amendments will aid in ceasing infringement and promoting the development of the creative industries in Taiwan.

For more information on protecting and enforcing copyright in Taiwan, please contact Gary Kuo at gkuo@winklerpartners.com.

Can special features of a celebrity’s appearance be used to sell goods?

Given the special attention the public pays to famous people, many businesses have invited celebrities to endorse their products or services as a way of increasing their exposure and improving sales. However, the cost of obtaining such celebrity endorsements can be prohibitively expensive, forcing businesses to take a step back. In such cases, would it be acceptable to instead use some identifying aspect of the celebrity’s personality or appearance in an advertisement as a means of saving some money? For example, would using a cartoon character bearing the hairstyle and No. 17 basketball jersey sported by Jeremy Lin promoting a certain product produce the desired effect of influencing word of mouth and controlling costs? Would such an approach give rise to potential legal liabilities?

The Right of Publicity in the US and Taiwan

The “Right of Publicity” in the American legal system indicates the right of a person to prohibit others from misappropriating his or her name, image or likeness, gesture, voice, or other indicia of his or her personal identity for commercial purposes without first obtaining his or her consent. This right also enables the person in question to control and profit from the commercial use of his/her name, likeness and persona. Although there is no directly corresponding right in Taiwan, in practice, Taiwan’s courts do acknowledge infringement of an individual’s portrait rights, meaning a violation of that individual’s legal interests in his or her personality. Such individuals may also, in accordance with the Civil Code, claim relevant damages against the perpetrator. Until now, however, there have been no decided cases that deal with the specific situation in which the special features of a person’s appearance are used without their permission in Taiwan. This article will therefore rely on court judgments related to portrait rights as reference in discussing the legal risks of this approach.

Possible civil liability

According to Article 18, Paragraph 1 of the Civil Code, “when one’s personality is infringed upon, they may apply to the court for removal of the infringement; if there is a likelihood of infringement of one’s personality, they may apply for prevention of the infringement.” Article 195, Paragraph 1 also provides that “if a person has wrongfully damaged the body, health, reputation, liberty, credit, privacy, or chastity of another, or has wrongfully damaged other legal interests in another’s personality and the extent of such damage is severe, the injured person may claim a reasonable amount of monetary compensation, even if such injury is not a purely pecuniary loss.” Based on these provisions, in 2012 Taiwan’s Intellectual Property Court handed down Civil Judgment No. 101-Min-Zhu-Su-19, which referred to the American concept of the “Right of Publicity” in determining that portrait rights, when viewed in terms of the commercial use of an individual’s portrait, possess commercial value, and encompass both personality and economic rights. A party that engages in the unauthorized use of the rights holder’s name, image, or other aspect to obtain benefits is in violation of the rights holder’s publicity rights. This judgment also explained that portrait rights are the right of an individual to decide whether their image or likeness, exhibiting distinctive aspects of their personality, may be publicized, and that such rights involve personality interests. Therefore, portrait rights should be classified as the “personality rights” of Article 18 of the Civil Code, as well as the “other legal interests in one’s personality” of Article 195, Paragraph 1, and should be protected as such.

According to the judgment, portrait rights allow the rights holder to decide whether and how their image or likeness is used, involve personality interests, and are economic rights in nature in that they possess commercial value when used in certain ways. However, celebrities should also have the right to decide whether to publicize the special or identifiable aspects of their appearance or personality, and to control the commercial use of these aspects. Such rights should therefore also be classified as the “personality rights” and “other legal interests in one’s personality” provided in the Civil Code.

Accordingly, using the identifiable gesture, voice, or other special feature of a celebrity’s appearance in an advertisement to sell products without their permission is likely to be considered an infringement of that celebrity’s personality rights and interests. The celebrity in question may request removal of the infringement, in accordance with Article 18 of the Civil Code, and if the infringement is severe, may claim emotional distress damages under Article 195, Paragraph 1. There is currently no clear definition of “severe infringement” of personality interests in Taiwan, and no consensus on what would constitute such infringement in practice, either. However, as expressed in the above-mentioned judgment, and in the Taiwan Taipei District Court’s Civil Judgment No. 96-Su-2645, if the person whose portrait rights were infringed is a public personality, using their image for commercial purposes without their permission is undoubtedly a case of “severe infringement”, in that such image possesses considerable economic value.

In addition, the commercial value in a celebrity’s image or persona also entails his or her economic rights in those characteristics (referring to the holdings of the Intellectual Property Court’s Civil Judgments No. 101-Min-Zhu-Su-19 and No. 105-Min-Zhu-Su-38). Celebrities may thus, in accordance with Article 184 of the Civil Code, also request compensation for economic loss if the identifiable aspects of their appearance or personality are used without their permission. Furthermore, as economic rights are used to understand the infringement of a person’s publicity rights, such infringement would be akin to someone using that person’s property to obtain benefits without having first received the property owner’s permission. In this case, the benefits obtained by the infringing individual from such use rightfully belong to the property owner, who can, by claiming unjust enrichment, request the return of those benefits to them (see the Taiwan Taipei District Court’s Civil Judgment No. 96-Su-2645 and the Intellectual Property Court’s Civil Judgment No. 105-Min-Zhu-Su-38).

Possible liability under the Fair Trade Act

Furthermore, would using a celebrity’s gesture, voice, or other distinguishing aspect of their personality in an advertisement constitute a violation of the Fair Trade Act? The Taipei High Administrative Court’s Administrative Judgment No. 89-Su-3144 held that whether the content of an advertisement is false or misleading depends on the awareness of the party being advertised to and should be determined based on the full content of the advertisement, rather than on certain parts. Also, according to the Taiwan High Court’s Civil Judgment No. 96-Chong-Shang-323, if the advertising company uses a celebrity’s image for a commercial without having received that celebrity’s prior authorization and such use is sufficient to cause consumers to mistakenly believe that the celebrity is endorsing the advertising company’s products, this is a blatant violation of the legal principle that the representations in an advertisement must be truthful, expressed in Article 21 of the Fair Trade Act. Given the above, an advertisement whose content, when considered in its entirety, contains an unauthorized use of the special gesture, voice, or other aspect of a celebrity’s appearance, could be found to constitute false endorsement and therefore a violation of Article 21. If the advertisement involves other deceptive behavior or free-rides on the commercial reputation of another, this could also be deemed a violation of Article 25.

Conclusion

Although in practice there have been no relevant court judgments in Taiwan that specifically discuss the use of a celebrity or famous person’s gesture, voice, or other distinguishing aspects of their personality in advertising, when considering those judgments that deal with portrait rights, one can conclude that such special features are the celebrity’s legal interests in his or her personality protected under the Civil Code. Furthermore, portrait rights also involve the celebrity’s economic rights in those features. Given the forgoing, if such features are infringed upon, the celebrity may request both emotional distress damages and compensation for economic loss. Lastly, advertising that has not received the authorization of the celebrity it depicts could be considered false advertising under the Fair Trade Act and violate fair trade standards. Therefore, companies looking to keep marketing budgets low should think twice before adopting this inexpensive but highly risky method.

For more information on publicity rights in Taiwan, please contact Peter Dernbach at pdernbach@winklerpartners.com and Ling-ying Hsu at lhsu@winklerpartners.com.

 

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