In cases involving trademark squatters, the main remedies available to brand owners are filing an invalidation or opposition action against the squatter with the Taiwan Intellectual Property Office (“TIPO”) in an attempt to cancel or revoke the registration.
However, the statute of limitations bars a brand owner from filing an invalidation or opposition if five years have elapsed since registration of the mark. It is often the case that a brand owner does not discover the squatted mark soon enough and it is left without an administrative remedy.
A relatively recent judgment (2014) issued by the Taiwan Intellectual Property Court (the “IP Court”) held that Taiwan’s Civil Code and Fair Trade Act provide causes of action sounding in tort against a person who registers a trademark in bad faith. Min Gong Su Zi No, 5 (102). While the judgment does not create a precedent and was not appealed, it is significant because the statute of limitations in a tort action is two years from discovery of the harm or ten years from the time of the injury.
In other words, the door is open to seek alternative relief under the Civil Code and Fair Trade Act even after the statute of limitations for an invalidation or cancellation has run.
In the instant case, a mark was registered in Taiwan and 16 other jurisdictions despite having been registered for decades in leading European and North American jurisdictions. This conduct was held to be a intentional tort offending against good morals (Civil Code §184(1)) because it violated the Fair Trade Act’s catch-all prohibition against deceptive or obviously unfair conduct that interferes with the proper functioning of the market (Fair Trade Act §25).
The IP Court held that “the filing of these applications (by the Defendant) seems an attempt to free ride on the hard-won reputation of the Plaintiff’s mark for economic benefit and thus has adversely affected the trading order. This conduct violates business competition ethics and constitute violations of Article 24 of the Fair Trade Act.” The IP Court further held that the Defendant’s prior knowledge of the brand, and the effort and resources spent by the Plaintiff in attempting to cancel the registrations in multiple jurisdictions constituted dishonest commercial practice that caused the Plaintiff to suffer economic injury.
As a result, the IP Court awarded the plaintiff brand owner compensatory damages and issued an order directing the defendant to abandon its rights to the mark in Taiwan.
For more information on trademark enforcement matters in Taiwan, please contact Gary Kuo at firstname.lastname@example.org or +886 223112345 ext. 534.
 After February 2015 amendments to the FTA, Article 24 became Article 25.
From 21-25 May, 2016, Winkler Partners intellectual property team members will attend the 138th Annual Meeting of the International Trademark Association (INTA) in Orlando, Florida. According to the event website, this year’s meeting will include more than 300 educational events, workshops, talks by regional trademark offices, courses on international trademark law and advanced mediation training. Over 9,000 attendees are expected to attend.
Winkler Partners’ Peter Dernbach will be co-chairing this year’s annual meeting, with Turner Broadcasting System’s Rick McMurty. Peter was elected to the Board of Directors at INTA in 2015, and will serve through 2017.
Peter heads our IP practice and has substantial experience assisting clients in obtaining, enforcing and licensing their intellectual property rights. Other than his involvement with INTA, Peter is a member of the Marques China Team, has served as a panelist under ICANN’s UDRP system in more than 60 domain name disputes and co-chairs the IP & Licensing Committee at the American Chamber of Commerce Taipei.
Partners Christine Chen and Gary Kuo will also be attending along with members of our IP practice, Jason Yan, Mark Brown and Mark McVicar.
Christine Chen is an IP litigator and oversees our employment practice. Christine is noted for winning the largest payout in a trademark infringement case in Taiwanese legal history and regularly advises clients on employment and immigration matters pertaining to Taiwan.
Gary Kuo is an IP litigator focusing on anti-counterfeiting and competition law. He has also worked with the Taiwan Intellectual Property Office to revise Taiwan’s IP laws to better protect rights holders.
Jason Yan specializes in trademark clearance, prosecution and registry dispute issues. He manages trademark portfolios for some of the world’s leading brands, advising clients in a broad range of industries including beverage and food services, Internet providers, health and beauty products, and pharmaceuticals.
Mark Brown supports our intellectual property team with a particular focus on alcohol beverage trademarks. He has worked on several cases for some of the world’s largest alcohol and beverage companies on brand protection, geographical indications, enforcement, lobbying and regulatory matters, administrative and fair trade actions, and compliance in advertising and promotions.
Mark McVicar manages the trademark portfolios of multinational clients in a variety of industries including chemical, personal care, information technology, gaming, fashion and pharmaceuticals. Mark will also be running a session at this year’s INTA annual meeting on Cultural Intelligence.
If you are attending INTA this year, please don’t forget to introduce yourself. Full event details can be found here.
Partner Chen Hui-ling has contributed an article on Taiwan’s Personal Information Protection Act (PIPA) to Privacy Laws & Business‘ International Report. Privacy Laws & Business provides an independent privacy laws information service to many of the world’s largest companies, specialist lawyers and has over 2000 clients in 53 countries since its founding in 1987.
In her article, Hui-ling explains that the amendments that came into force on 15 March 2016 are a weakening of what some have called ‘the strictest privacy law in the world’, and go some way to striking a balance between data privacy and reasonable use. The amendments included the addition of several new types of sensitive information such as medical records that are not allowed to be collected, processed or used and outline ways in which consent may be granted by the data subject. She concludes by stating that while Taiwan’s recent amendments show that Taiwan is committed to meeting international standards, it is doing so cautiously and not taking the opportunity to innovate.
You can read the full article here.
For more information on data privacy matters in Taiwan, please contact Chen Hui-ling at email@example.com or +886 223112345 ext. 555.
Head of our intellectual property practice Peter Dernbach has been included in World Intellectual Property Review’s WIPR Leaders 2016. The WIPR Leaders list features “1408 individuals worldwide recognized by their peers as the best and the brightest in IP private practice”.
In order to complete the list, over 15,000 in-house counsel and private practice attorneys were surveyed with further research carried out examining notable cases and practice history, speaking engagements and involvement in the global IP community.
Peter has been with Winkler Partners since 2003 and currently serves on the Board of Directors for the International Trademark Association (INTA). Peter will also be co-chairing INTA’s Annual Meeting between 21-25 May 2016. In addition to his involvement in INTA, Peter serves as a domain dispute panelist under ICANN’s UDRP system, is a member of the Marques China team and co-chairs the Intellectual Property & Licensing Committee at the American Chamber of Commerce Taipei.
Winkler Partners has been named by Asian Legal Business Magazine as an Employer of Choice for 2016, the second year in a row. Only three law firms in Taiwan were given the award this year.
The report was conducted by surveying employees at law firms across Asia for their opinion on salaries, firm reputation, work life balance, career advancement opportunities and a variety of other criteria. Asian Legal Business notes that a Winkler Partners’ colleague stated, ‘I enjoy coming to work. My colleagues care about each other and our clients. Bottom line: I can have it all: high-quality clients and colleagues, and quality of life’.
We were previously recognized as the sole Employer of Choice in 2015 and before in 2010. You can view the entire article here.
Head of our IP Practice Peter Dernbach was recently interviewed on IP Fridays, a weekly podcast covering intellectual property topics hosted by Ken Suzan, of counsel at Barnes & Thornburg LLP in Minneapolis, USA, and Dr. Rolf Claessen, partner at Patent Attorneys Freischem in Cologne, Germany.
In the twenty minute interview, Peter discussed the upcoming International Trademark Association (INTA) Annual Meeting being held in Orlando 21-25 May, which Peter will be co-chairing together with Rick McMurtry of Turner Broadcasting. Peter said he is most excited about the substantive programming, as he knows how much work went into planning it and is confident that a range of diverse topics will be on offer to interest the nearly 10,000 trademark professionals expected to attend. Peter was also asked about the issues facing trademark lawyers and brands in recent years, and said that while progress has been made on several fronts, intellectual property rights in the digital world remains a significant challenge.
You can listen to the full podcast here.
This article briefly explores under what circumstances a Buyer involved in a corporate asset purchase might be subject to successor liability in Taiwan. This question would obviously be relevant to any foreign Buyer purchasing Taiwan corporate assets, whether in a one-off transaction or as part of a larger global acquisition.
Anyone that has been involved in an asset purchase in the United States has likely heard of successor liability. The doctrine of successor liability in the US derives generally from common law (both state and federal) and in a few specific areas from statute. For the more adventuresome soul, there are academic articles of over one hundred pages in length devoted to the myriad variations of successor liability. However, stated simply, successor liability refers to the body of judge-made law and statutes that creates exceptions to the general rule of no successor liability in the context of asset acquisitions. This simple definition will suffice for the purposes of this short article.
As a threshold matter, it is important to note that Taiwan is a civil law jurisdiction. Therefore, most law related to successor liability is derived from statute. Apart from this distinction, the analysis in Taiwan begins, as it does in the US, with the general doctrine that no liability is transferred to Buyer in an asset acquisition.
Again, as in the US, there is the obvious exception that liabilities may be transferred to Buyer if Buyer has assumed such liabilities. Although Taiwan courts have decided cases on the express assumption of liabilities, the courts offer little guidance on the exact contractual language which would specifically disclaim the transfer of such liabilities.
Theoretically, Taiwan also has successor liability based on a de facto merger rule. Taiwan’s Civil Code provides that a court may re-characterize an asset purchase transaction as a merger if the court determines that despite taking the form of an asset purchase, the substantive result of such transaction is a merger of Buyer’s and Seller’s businesses. If a de facto merger is deemed to have occurred, Buyer would inherit all liabilities of Seller. However, to date Taiwan courts have not heard a related case. It is unclear what factors would be instructive as to whether an ostensible asset purchase rose to the level of a de facto merger.
In addition to rules related to express assumption of liabilities and de facto mergers, Taiwan has a number of statutory provisions in its Civil Code designed to provide relief to any person (“Creditor”) (i) originally owed an obligation (financial or otherwise) by Seller and (ii) who has been denied the ability to enforce such obligation due to a spurious or disingenuous asset sale, i.e. a fraudulent transfer. It is important to note that the definition of Creditors for the purposes of Taiwan law in this area is very broad. It is not limited to financial creditors, but would include a wide range of persons who have valid claims to enforce monetary or performance obligations against Seller, e.g., employees who are owed back pay or pension amounts, product liability claimants, etc.
In addition to the general anti-fraud provisions of Taiwan’s Civil Code, Taiwan’s Business Mergers and Acquisitions Act (“BMAA”) contains a procedural mechanism to inhibit fraudulent transfers. Pursuant to the BMAA, any Seller intending to transfer all or substantially all of its assets must notify its Creditors of such transfer. Seller must then allow Creditors thirty days to object to the transfer. If Seller fails to provide notice and allow sufficient time for Creditors’ response or does not otherwise provide for the settlement of obligations owed to its Creditors, the asset sale would be invalid with respect to later objecting Creditors. Such Creditors could theoretically enforce their rights against the purchased assets, even after such assets were transferred to Buyer. Any such enforcement action would likely encounter a considerable number of substantive and procedural difficulties but is theoretically possible. Again, there exist no Taiwan judicial opinions on point in this area.
In short, Taiwan statutes provide a theoretical basis for successor liability in Taiwan. However, there is limited judicial guidance as to specific application. Under these circumstances, Buyers would do well to foreclose the possibility of inadvertently acquiring unwanted liabilities by (i) conducting thorough legal diligence to identify potential unwanted liabilities; (ii) entering into well-drafted purchase agreements pursuant to which (A) Seller makes adequate representations and warranties with respect to, and (B) Buyer expressly excludes the assumption of, any such liabilities; (iii) refraining from conduct that would indicate Buyer’s assumption of any excluded liabilities; (iv) ensuring that Seller properly notifies all of its Creditors of any proposed sale of all or substantially all of its assets; (v) having Seller make adequate indemnifications; and (vi) if possible, providing for an escrow fund against which indemnification obligations may be claimed.
For more information on mergers, acquisitions, and foreign investment matters in Taiwan, please contact Gregory Buxton at firstname.lastname@example.org or +886 223112345 ext. 548.
Amendments to Articles 6-8, 11, 15, 16, 19, 20, 41, 45, 53, and 54 of Taiwan’s Personal Information Protection Act (“PIPA“) took force on 15 March 2016. The most important change is that Taiwan now has enhanced protection for special categories of sensitive data. At the same time, compliance with Taiwan’s data protection rules has been made easier by relaxing the consent requirement for ordinary personal data and reducing the risk of criminal liability for violations of the PIPA.
Sensitive Personal Data
The legislative rationale for enhanced protection of sensitive personal data is that “unregulated collection, processing, and use of certain types of personal data…[is likely to]… give rise to social disquiet and cause irreparable harm to the data subject.” PIPA §6 Legislative Comment (1). For purposes of this overview, processing will be used as a collective shorthand for the collection, processing, and using personal data although it should be kept in mind that the PIPA defines each of these acts separately. A data subject simply means the natural person who is identified by the personal data. PIPA §2.
Categories of Sensitive Data
Article 6 enumerates the following special categories of sensitive data:
- medical records,
- medical treatment [data],
- genetic data
- health examination results, and
- criminal records.
Precise definitions of these terms are given in the Enforcement Rules of the Personal Information Protection Act (the “Enforcement Rules“). For example, ‘sexuality’ means sexual orientation and practices. Enforcement Rules §4.
Processing these six categories of sensitive data is prohibited and subject to criminal and civil liability unless an exception applies.
The PIPA permits the following exceptions to the general prohibition on the processing of sensitive personal data:
- another law expressly permits processing,
- there is a statutory duty or obligation to process sensitive personal data,
- voluntary disclosure by the data subject or other lawful disclosure, or
- for purposes of medical, public health, and criminology research by government agencies or academic institutions
- assisting in a statutory duty or obligation to collect, process, or use the sensitive personal data, and
- valid written consent by the data subject. PIPA §§6(1)(1)-(6).
PIPA §6(1)(5) and §6(1)(6) are new exceptions. PIPA §6(1)(5) is best understood as complementing §6(1)(2). Under §6(1)(2), a public agency’s statutory authority and duties may make it necessary for the agency to process sensitive personal data. For example, municipal health authorities have a duty to assess the risk of domestic violence under §8(9) of the Domestic Violence Prevention Act. To carry out this duty, a municipal health authority may collect and process medical treatment records obtained from a hospital pursuant §6(1)(2). The hospital may assist the municipal health authority in carrying out this duty by providing the medical treatment records under §6(1)(5).
Sensitive data may now be processed with written consent from the data subject. Consent is not valid if the processing of the sensitive data exceeds the scope of the consented purpose or if obtained under duress. §6(1)(6) Written consent may be in the form of an electronic record. Enforcement Rules §14. With the addition of a consent exception for the processing of sensitive data, Taiwan’s rules for sensitive data are more consistent with those found in leading European jurisdictions such as Germany.
Ordinary Personal Data
Previously written consent was required to collect ordinary personal data. As of 15 March 2016, any “declaration of assent” to an initial processing of data is valid so long as the data subject has been informed of the purpose of the data processing and their rights under the PIPA. In other words, written, oral, or even implied consent to the initial processing of data is valid. PIPA §7(1).
Similarly, written consent is no longer required for processing data for a new purpose beyond the original purpose so long as the data subject has been informed of the new purpose and the possible consequences of not consenting. This consent must however be given in an independent declaration. PIPA §7(2).
Presumption of Consent
One of the most important new changes to the PIPA is the creation of a presumption of consent to an initial processing of data where:
- the data controller has informed the data subject of the purpose of the data processing and their rights under the PIPA
- the data subject does not reject the request to process the data subject’s personal data
- the data subject nonetheless provides their personal data to the data controller. PIPA §7(3).
No such presumption arises to extended processing of ordinary personal data beyond the scope of the initial purpose.
Although the relaxed consent requirements and the presumption of consent should make it easier for data controllers to comply with the PIPA, it should be noted that the burden of proof with respect to consent remains with the data controller at all times. §7(4)
Finally, criminal liability no longer attaches for processing personal data in violation of the PIPA where the data controller or processor merely has general intent with respect to the prohibited conduct. Previously, a data controller or processor who generally intended to collect, process, or use personal data in violation of the PIPA could face up to two years in prison. Now the data controller or processor must have a specific intent in the form of an unlawful purpose or to harm the rights and interests of another to trigger criminal liability (up to five years’ imprisonment).
This is a Spanish translation of our English article “Setting up a business in Taiwan: the basics”, which you can find here.
Esta es la traducción al español de nuestro artículo en inglés “Setting up a business in Taiwan: the basics”, el cuál se encuentra disponible aquí.
Taiwán se encuentra altamente calificada en la Lista de Competitividad Global del Foro Económico Mundial y en la Lista de Facilidad de Hacer Negocios del Banco Mundial. Con fuertes lazos comerciales, aéreos, y de transporte con China, Japón, el Sudeste Asiático y Silicon Valley, Taiwán es un núcleo conveniente para hacer negocios con el resto de Asia y otros países. Internamente, Taiwán también cuenta con un sistema sofisticado de transporte doméstico. Taiwán alberga un sector de investigación y desarrollo robusto, una infraestructura avanzada, un clima político estable con libertad de prensa, un marco legal sólido y un personal dinámico y altamente preparado. Estos factores hacen que el número de empresas internacionales que prefieren constituir su matriz regional en Taiwán vaya incrementando considerablemente.
Las empresas que desean establecer operaciones comerciales en Taiwán por lo general optan por uno de los siguientes tipos societarios: una oficina de representación, una sucursal, una sociedad de responsabilidad limitada, o una sociedad anónima. A continuación presentamos una breve introducción de estos tipos societarios y las circunstancias en las que cada uno es generalmente aplicable.
Oficina de Representación
Muchas entidades extranjeras prefieren establecer una Oficina de Representación en Taiwán como primer paso antes de tomar el compromiso más grande de establecer una sucursal o subsidiaria. El establecimiento de una Oficina de Representación es una de las formas más sencillas de instaurar una presencia comercial en Taiwán. Sin embargo, una Oficina de Representación se encuentra muy limitada en las actividades que puede desarrollar. Una Oficina de Representación solo puede operar como el agente de su empresa matriz extranjera y no posee personalidad jurídica independiente. La Oficina de Representación no puede ejercer actividades comerciales de lucro ni actuar como principal en cualquier transacción comercial doméstica. Tampoco se encuentra permitida de vender o proporcionar servicios en Taiwán. Por lo general, una Oficina de Representación funciona como agente de ventas o compras para empresas internacionales que no tienen presencia en Taiwán. Las Oficinas de Representación también son utilizadas en Taiwán para proporcionar soporte técnico, capacitación, como también supervisión de controles de calidad.
Una empresa extranjera también puede optar por constituir una Sucursal para el manejo de sus negocios en Taiwán. Así como una Oficina de Representación, una Sucursal no tiene personería jurídica independiente, por lo que no tiene accionistas, directores ni supervisores, características que son propias de una subsidiaria. Por tanto, los costos de mantenimiento de una Sucursal son más bajos que los de una subsidiaria. La mayor ventaja de establecer una Sucursal en lugar de una subsidiaria es que todas las utilidades después de impuestos pueden ser legalmente remitidos a la matriz extranjera sin incurrir en impuestos adicionales en Taiwán. Asimismo, la mayor desventaja de una Sucursal es que es una extensión de su matriz extranjera, y por tanto, la matriz queda legalmente responsable por todos los actos de la Sucursal. El establecimiento de una Sucursal es más apropiado en situaciones donde considerables montos de dinero van a ser expatriados al país de la matriz desde Taiwán. Las Sucursales también son utilizadas en proyectos infraestructurales de gran escala ya que el gobierno Taiwanés y la mayoría de las contrapartes comerciales precisan tener acceso a los bienes de la matriz extranjera en caso de que la Sucursal taiwanesa incurra en incumplimiento de contrato.
Además de las Oficinas de Representación y Sucursales, las cuales son meramente extensiones de la empresa matriz extranjera, las empresas extranjeras también pueden optar por establecer una subsidiaria en Taiwán. El vehículo societario más simple para el establecimiento de una subsidiaria es la Sociedad Limitada. Las Sociedades Limitadas en Taiwán tienen una estructura similar a las sociedades de responsabilidad limitada de los Estados Unidos. Las Sociedades Limitadas taiwanesas están compuestas por uno o más socios, donde cada socio es responsable hasta el monto de su aporte al capital de la empresa. La Sociedad Limitada, a diferencia de la Sociedad Anónima (descrita a continuación), provee más flexibilidad en la estructura de su gobierno corporativo. El costo de esta flexibilidad, sin embargo, son las limitaciones que existen en la transferencia de los intereses sobre la Sociedad Limitada. Si un director desea transferir sus intereses en la compañía, dicha transferencia debe ser aprobada por todos los demás socios de la compañía. Cualquier otro socio que desee transferir sus intereses en la compañía debe obtener la aprobación de la mayoría de los demás socios. Por lo general las empresas extranjeras optan por establecer una subsidiaria en Taiwán por medio de una Sociedad Limitada cuando la subsidiaria va a estar bajo el control total de la empresa extranjera.
Sociedad Limitada por Acciones
Inversores internacionales y empresarios optan por establecer una subsidiaria mediante una Sociedad Limitada por Acciones cuando existe la posibilidad de vender parte de sus intereses en la subsidiaria taiwanesa. Una Sociedad Limitada por Acciones tiene una estructura similar a la de una corporación en Estados Unidos. La responsabilidad de los accionistas queda limitada al aporte de cada accionista al capital de la sociedad, donde dicho aporte es representado por acciones. Una Sociedad Limitada por Acciones está sujeta a ciertos requisitos corporativos: debe tener accionistas (por lo menos dos personas naturales o una persona jurídica), directores (por lo menos tres) y un supervisor (por lo menos uno). Una Sociedad Limitada por Acciones, a diferencia de una Sociedad Limitada, está habilitada para convertirse en pública y cotizar en bolsa.
We strongly encourage any foreign individual, company or corporation (a “Foreign Buyer”) that is contemplating the acquisition of either (i) a Taiwan company Target (a “Taiwan Target”) or (ii) an offshore Target (an “Offshore Target”) that has a Taiwan subsidiary, to consider the effects of Taiwan’s foreign investment regulations on the planned transaction. While Taiwan’s foreign investment regulations can directly impact the structure of such an acquisition, an equally important, but often overlooked, issue is the effect these regulations may have on post-acquisition reorganization and operation of the Target.
Pursuant to Taiwan’s Statute for Investment by Foreign Nationals, any direct acquisition of a Taiwan Target by a Foreign Buyer requires Foreign Investment Approval (“FIA”). In addition to the obvious effect that obtaining the FIA would have on the timing of the acquisition, the related FIA regulations may also affect the transaction structure. For instance, the FIA regulations make it practically impossible to structure a direct acquisition of a Taiwan Target with any type of holdback, earn out or other form of deferred payment mechanism. (See our article here for more information on the effects of the FIA process on deferred payment mechanisms as well as a convenient workaround.)
In a large global acquisition, Foreign Buyer may be transacting with an offshore Seller to purchase an Offshore Target that has subsidiaries worldwide, including in Taiwan. Under these circumstances, FIA is typically not required in Taiwan. A common exception to this general rule arises when (i) Offshore Target’s Taiwan subsidiary has minority shareholders and (ii) these minority shareholders will have their shares purchased by either the Offshore Target or the Foreign Buyer as part of the transaction. FIA is required under these circumstances as there is a direct transfer of Taiwan assets (i.e., the shares in the Taiwan subsidiary) to a foreign purchaser.
Whether FIA is required for Foreign Buyer’s initial acquisition, Foreign Buyer should always consider the impact of the FIA regulations on any expected post-acquisition transactions in Taiwan. Common post-acquisition transactions that require prior FIA include:
(a) injecting equity capital into the Taiwanese subsidiary;
(b) providing a loan to the Taiwanese subsidiary for a term exceeding one year;
(c) investing in another company through the Taiwanese subsidiary;
(d) transferring some or all of the shares in the Taiwanese subsidiary to another person, including any post-acquisition restructuring of Foreign Buyer and related companies which results in the transfer of shares of the Taiwan subsidiary; and
(e) reducing the capital of, or winding down, the Taiwanese subsidiary.
As stated above, any foreign corporation or individual that is contemplating the purchase of a Taiwan Target or an Offshore Target that holds a Taiwan subsidiary should first evaluate Taiwan’s foreign investment regulations, with respect to not only the structuring of the initial acquisition, but also the post-acquisition operations and reorganization of the Target.
For more information on mergers, acquisitions, and foreign investment matters in Taiwan, please contact Gregory Buxton at email@example.com or +886 223112345 ext. 548.