Content

WP ranked as top tier IP firm

Winkler Partners has been ranked as a top tier firm for intellectual property by the World Trademark Review. Only three law firms in Taiwan appear in the top tier for 2019.

In their annual WTR1000 report, The World Trademark Review says that our “successful record in disputes and major clearance and prosecution projects [that] really turns heads” and that we are “plugged into the international IP community in a way that few local firms are”. They also note that we offer an attentive and client-aligned service and are a reference point in Taiwan for top global brands across a broad variety of industries.

Individually, the World Trademark Review also recommends partners Peter Dernbach, Christine Chen and Gary Kuo for enforcement and litigation. Peter is described as a sophisticated international IP thinker who “inspires the team to win after win”, while Christine is noted for her broad litigation-based practice. Gary is noted for his understanding of what makes a strong brand as part of his litigation work. Peter is also recommended for prosecution and strategy.

You can read the full WTR1000 rankings for Taiwan here.

Frequently asked patent questions

1. Can a Patent Cooperation Treaty (PCT) application be filed as a national phase entry application in Taiwan?

No, a PCT application cannot be filed as a national phase entry application in Taiwan, because Taiwan is not party to the PCT. However, Taiwan is a member of the WTO, and a PCT application filed in a WTO member state can serve as the basis for a priority claim in Taiwan. Taiwan’s Patent Act allows for reciprocity with WTO member states and with countries that allow Taiwan nationals to claim priority. Please note that priority claims in Taiwan should be filed within twelve months of the filing date of the foreign application.

2. What categories of patents may be filed?

There are three categories of patents that may be filed in Taiwan:  Invention Patents, Utility Model Patents, and Design Patents.

3. What is the term of patent protection?

Terms of patent protection are assessed from the filing date of the application:

  • Invention Patent: 20 years
  • Utility Model Patent: 10 years
  • Design Patent: 12 years

4. Unpatentable items under the Taiwan Patent Act

  1. Animals, plants, and essential biological processes for the production of animals or plants, except for processes for producing microorganisms;
  2. Diagnostic, therapeutic and surgical methods for the treatment of humans or animals; or
  3. Inventions contrary to public order or morality

5. Does Taiwan’s Patent Act address innocuous disclosure?

Yes. For an Invention or Utility Model patent, an applicant may claim innocuous disclosure up to twelve months after the date of the occurrence of such disclosure; for a Design Patent, up to six months after the disclosure.

6. How long does it take for a patent to be granted?

Invention Patent applications are subject to substantive examination by the Taiwan Intellectual Property Office (TIPO) within three years from the filing date upon request by the applicant. The time frame from filing a request for examination through to a decision is typically 18-36 months.

Utility Model Patent applications are subject only to formal examination. The time frame from filing to a decision is generally about 6 months.

Design Patent applications are automatically subject to substantive examination upon filing. The TIPO will generally issue a decision within 10-12 months from the filing date.

7. Does Taiwan have a Patent Prosecution Highway (PPH)?

Yes. Taiwan uses the Patent Prosecution Highway (“PPH”) to expedite 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 United States Patent and Trademark Office (USPTO), the Japan Patent Office (JPO), the Korean Intellectual Property Office (KIPO) and the Spanish Patent and Trademark Office (SPTO). 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.

8. Does Taiwan have a Patent Document Exchange (PDX)?

Yes. Taiwan currently has PDX agreements in place with the KIPO and the JPO. 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 can be used 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.

9. Is accelerated examination available?

Yes. An applicant may request accelerated examination under any of the following conditions:

The Invention Patent application’s corresponding foreign application has been allowed upon substantive examination by a foreign patent office;

  1. The EPO, JPO, or USPTO has issued an examination opinion with applicable search report on the corresponding foreign application but has not yet allowed the application;
  2. The invention claimed in the Taiwan application is essential to commercial exploitation; or
  3. The invention is related to green energy.

10. Are post-grant amendments of an invention patent possible?

Post-grant amendments of an Invention Patent are allowed, but only to delete claims, narrow the scope of claims, correct errors, or clarify ambiguous statements. Except for an amendment to correct a translation error, a post-grant amendment may not extend the scope of the claims as published in the Patent Gazette.

11. What remedies are available for infringement?

A civil suit for patent infringement may be brought as an independent civil claim in Taiwan. Civil damages are based on:

Actual damages suffered by the patent owner;

  1. The benefit to the defendant arising from the infringement of patent rights; or
  2. Reasonable royalties that may be collected from exploiting the invention patent being licensed.

Taiwan has a specialized Intellectual Property Court, which acts as the court of first instance for civil infringement claims.

12. Is border enforcement available?

Yes. Patent owners may apply to Customs to detain infringing imports or exports. The patent owner will need to post a security bond with Customs. The patent owner must also file an action for patent infringement within 12 days of filing the application to Customs.

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

Disability and employment in Taiwan

Taiwan encourages the meaningful inclusion of people with disabilities in the workforce, having enacted the People with Disabilities Rights Protection Act in 1980. The act was last amended in 2015. Companies meeting requirements set out in this act have a responsibility to create employment opportunities for people with disabilities.

Headcount
Companies employing over 67 people must employ at least one person with disabilities, with the total employed exceeding 1% of total headcount. Companies can choose not to meet this requirement and instead contribute to local employment funds for people with disabilities in amounts equal to the monthly minimum wage per number of vacant positions. In practice however, it is not common for businesses to simply contribute funds to avoid this requirement. According to Ministry of Labor statistics, only 12.1% of private companies failed to meet this quota in 2017.

Penalties
Companies failing to meet the 1% quota without a valid reason are liable for fines ranging from NT$20,000 (approx. US$700) to NT$100,000 (approx. US$3,510). Violators will also be named and shamed.

Hiring
To avoid violating anti-discrimination laws, when hiring, it is recommended that companies use inclusionary language such as “position suitable for people with disabilities” (工作內容適合身心障礙者) or “priority consideration for applicants with disabilities” (身心障礙者優先) in job advertisements.

Salary
Companies that employ people with disabilities shall abide by the principle of “same pay for same work” and treat them without any discrimination. Similarly, wages paid must not fall below the minimum wage set by the government (currently NT$23,100 a month or NT$150 an hour).

Accessibility
Places of business, like public areas, buildings and transportation, must allow the free entry of guide dogs, hearing dogs, mobility assistance dogs or those currently under training. Taiwan’s building code requires commercial buildings to meet requirements for disability friendly facilities such as wheelchair ramps, elevators and toilets for the disabled. Meeting these requirements is the responsibility of the building developers and owners, and not likely to affect businesses that rent offices in such buildings.

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

Digital currency regulation in Taiwan

Digital currency has been around since currency account balances were first stored on digital machines (i.e., computers). Later, banks effected electronic transfers of this digital currency. Credit card and debit cards then allowed consumers to make purchases using digital currency. Early digital currency was digitized fiat currency issued by governments and held with and transferred among financial institutions and consumers. Over the past two decades, advances in technology have allowed currencies to be issued by organizations other than governments and transferred and held by organizations other than financial institutions.

As technology advances, market participants are increasing in number and becoming more decentralized. Financial market regulators are struggling to keep pace with the financial products and services that technological innovation is making possible.

Some regulators have moved more swiftly than others to address market changes resulting from this technological innovation. Although Taiwan’s financial and banking regulators have not moved as rapidly as, say, their counterparts in Singapore, in recent months an encouraging trend is taking shape. Possibly taking cues from the Monetary Authority of Singapore, Taiwan appears to be consolidating the regulation of digital currency related issues under a single regulatory body, the Financial Supervisory Commission (the “FSC”). Placing primary responsibility for the regulation of digital currencies in the hands of a central authority will likely result in a more comprehensive, cohesive regulatory landscape.

Recent legislative amendments to the Money Laundering Control Act (the “MLCA”) are already paving the way for the FSC to regulate cryptocurrency transactions more closely. Passed in November 2018, the amended MCLA states that platforms selling virtual currency (“VCP”) fall under the purview of the MCLA and shall be regulated as financial institutions. As the FSC is the primary regulator with respect to other financial institutions, it is expected that it will also oversee VCPs.

The FSC has already begun exerting its influence over virtual currency exchange by prohibiting Taiwan banks from entering into cryptocurrency transactions in which the identity of the e-wallet holder is unknown.

FSC Chairman Wellington Koo recently announced that the FSC will also be moving forward to provide guidance on security token offerings. Mr. Koo promised such guidance by the end of June of this year.

In addition to regulation of cryptocurrencies, the trend towards a more unified, consolidated approach to digital currency regulation is evident in the electronic payment area. Currently, electronic stored value cards (電子票證) are regulated separately from other forms of electronic payment (電子支付). The FSC expects to send a draft comprehensive electronic payment law to the Legislative Yuan as early as March of this year. This draft law will place the regulation of all forms of electronic payment (including electronic stored value cards) under the same regime.

Taiwan is proceeding cautiously into the digital currency world. However, recent announcements by the FSC indicate that under their guidance the pace of change may quicken in 2019. We will continue to monitor the developments in this area closely.

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

Jeremy Olivier also contributed to this update.

A quick look at Taiwan’s Cyber Security Management Act Enforcement Rules

The Cyber Security Management Act Enforcement Rules (the “Enforcement Rules”) define reporting requirements, duties regarding subcontracting, the content of information security policies, major security incidents, and responses to security incidents. The Enforcement Rules were issued by Taiwan’s Executive Yuan under authority delegated to the executive branch by the Legislature in the Cyber Security Management Act. Please see this article summarizing the Act itself. Here, we outline several points in the Enforcement Rules that companies should be aware of.

Improvement Reports

Article 3 of the Enforcement Rules lists the required content of an improvement report following a cyber security audit that discovers deficiencies.

Subcontracting Standard of Care

Article 4 defines the standard of care with respect to subcontracting in considerable detail. In total, there are nine factors that must be considered when using subcontractors to develop or maintain information systems. For example, the contractor must require independent third party certification or do its own security testing for a customized system if the subcontract is worth more than NT$10 million (approx. US$330,000). Enforcement Rules §4(1)(3).

Information Security Policies

Information Security Policies must cover a total of 13 topics including core services and be filed with the appropriate agency. Enforcement Rules §6. Core services are defined in Article 7 by reference to the companion Regulations for Classification of Cyber Security Regulations (the “Classification Regulations”). For example, a service is a core service if it involves nationwide services to members of the public. Enforcement Rules §7(1)(4); Classification Regulations §4(3).

Reporting Security Incidents and Significant Security Incidents

Article 8 of the Enforcement Regulations sets out requirements for reporting security incidents while Article 10 defines significant security incidents as Level 3 and Level 4 Security Incidents as defined in Article 2 of the Regulations for Reporting and Responding to Cyber Security Incidents (the “Cyber Security Incident Reporting Regulations”). For example, a security incident that results in an interruption to core operations in critical infrastructure that cannot be restored within a tolerable period is considered a significant security incident because it is a Level 4 Security Incident. Enforcement Regulations §8; Cyber Security Incident Reporting Regulations §2(4)(3).

The Enforcement Rules came into effect on 1 January 2019.

New rules on extensions of residence in Taiwan

The Taiwan Ministry of the Interior amended its rules on extensions of residence on 5 December 2018 with immediate effect.

Under the new rules, most holders of an Alien Resident Permit (“ARC”) for the purpose of professional work in Taiwan can extend their residence for up to one year after his or her ARC expires. Regulations Governing Visiting, Residency, and Permanent Residency of Aliens (the “Regulations” §22). Under the old rules, the Ministry permitted only one extension of up to six months.

The new rules also permit a foreign graduate of a Taiwanese university to extend his or her residence for up to one year following graduation. Regulations §22-1. Overseas Chinese graduates are also eligible for similar extensions of residence after graduation. Regulations Governing Residence and Permanent Residence of Nationals without Household Registration in Taiwan §18(3).[1]

Classes of Foreign Professionals Eligible For Extensions

Eligible classes of foreign professionals include:

  1. Professionals and technical workers (Class A),
  2. Directors and Officers of foreign-invested businesses (Class B),
  3. Language teachers at public and private schools and universities (Class C),
  4. Teachers at cram (buxiban) schools (Class D),
  5. Coaches and athletes (Class E),
  6. Artists (Class F) and missionaries, and
  7. Crew members of merchant vessels.

Others eligible for the extensions include consultants and researchers at government agencies, research institutes, certain types of visiting academics, foreign investors, and persons specially approved for residence by the Ministry of Foreign Affairs.

A professional ARC holder can also apply on behalf of immediate family members (spouse and minor children) for extensions of residence.

How to Apply

An eligible ARC holder must apply for an initial extension of six months before his or her original ARC expires. A second extension of up to six months can be applied for before the initial extension expires. Applications may be filed at a National Immigration Agency service center no earlier than 30 days before expiration. Regulations §8(1).

Special Rules for Adult Children of Foreign Residents

The new rules continue to permit the adult children of foreign residents who grew up in Taiwan to apply for two three-year extensions of residency if they meet certain minimum residency requirements as minors and apply during the 30 days before expiration of a current ARC. Regulations §8(2).

Since February 2018, adult children of permanent foreign professional are also eligible to apply for work permits as adults if they meet certain minimum residency requirements as minors. Act for the Recruitment and Employment of Foreign Professionals §17. These work permits can be applied for when the eligible child turns 20.

For questions about immigration matters in Taiwan please contact Michael Fahey at mfahey@winklerpartners.com and Christine Chen at cchen@winklerpartners.com.


[1] 臺灣地區無戶籍國民申請入國居留定居許可辦法

WP welcomes new associates

Winkler Partners recently welcomed new members to our legal team.

Pei-hsu Wu joins Winkler Partners in support of our intellectual property practice, with a focus on dispute resolution. Pei-hsu will also be assisting our domestic and international clients in connection with employment, general corporate and company establishment inquiries. She previously interned at the Taipei District Court assisting the court with intellectual property-related civil matters.

Ta Yen Wu will be working alongside our intellectual property team on enforcement and conflict resolution matters and helping clients with general legal matters in connection with their interests in Taiwan. Before joining Winkler Partners, Ta Yen worked as a Litigation Counselor for the Civil Execution Department and Public Lodgment Office at the Taoyuan District Court.

New reporting requirement for Taiwanese companies

The recently amended Taiwan Company Act (2018) requires most companies to report their board members, registered managers, and major shareholders online by 31 January 2019. To report, log on to the Company Transparency Platform. This site is in Chinese only at the time of writing.

If the company’s registered representative (typically the chairman) is a foreign national without a Taiwan national health card or Digital Certificate IC card, the company will generally need to apply for a Business ID (公司工商憑證) card to use the Company Transparency Platform. Business ID cards can be applied for online from the Taiwan Ministry of Economic Affairs’ Certificate Authority. This site is currently only in Chinese. The company’s registered seals (chops) will be needed during the application process.

Private limited companies, closed companies, and companies limited by shares are subject to the reporting requirement unless they are an exempt business entity.

Business entities exempt from the reporting requirement include listed companies, reporting companies, branches of foreign companies, and representative offices.

Board members include directors and supervisors. Registered managers include the registered managers (such as the CEO or General Manager) of a Taiwan limited company or a company limited by shares. Companies do not need to report managers of branches.

A major shareholder is any shareholder who owns more than 10% of the company. Only one level of shareholders must be reported. Shareholders of parent or grandparent companies do not have to be reported

The following information must be reported about each individual:

  1. Names
  2. Nationality
  3. Date of birth or date of incorporation registration
  4. ID Number
  5. Shareholding or capital contribution

From 2020 on, these reports must be filed for the preceding calendar year between March 1st and March 31st of the following year. For example, you will need to report your company’s responsible persons and major shareholders in 2019 between March 1st and March 31st 2020.

Any changes to reported information must be reported within 15 days of the change.

Failure to report or false reports will trigger a letter to remedy the report by a deadline. Failure to remedy by deadline will result in a fine of NT$50,000 to NT$500,000. Failure to remedy after a second warning letter can result in a fine of NT$500,000 to NT$5 million. The director registered as the company’s representative is personally liable for these fines. In serious cases, the company’s registration can be revoked.

The new reporting requirement is part of Taiwan’s efforts to combat money laundering.

For questions about or assistance with reporting please contact Michael Fahey at mfahey@winklerpartners.com and Daniel Chen at dchen@winklerpartners.com.

Crowdfunding: a possible path for ICOs in Taiwan

Initial coin offerings (“ICOs”) have garnered a significant amount of recent media attention. Regulatory authorities, legislators, and legal practitioners, among others, are all involved in the ongoing discussions as to how ICOs are to be defined and regulated. While such discussions merit their own in-depth exposition and analysis, this article highlights a simple, pragmatic approach to providing a possible pathway for at least a subset of ICO transactions to move forward in Taiwan.

In Taiwan, the Financial Supervisory Commission (the “FSC”) has the authority to regulate any ICO it considers to involve an offering of securities to the public. The FSC has not delineated any specific test for determining whether an ICO would be deemed to be a public offering of securities. It would likely look to Taiwan Supreme Court Criminal Judgment No. 104-Tai-Shang-3215 (“Judgment 3215”) for guidance. Judgment 3215 sets out a test for securities broader than that in the analogous US case SEC v. W. J. Howey & Co., 328 U.S. 293, 301 (1946) and its progeny. Pursuant to Judgment 3215, an ICO would likely be considered a public offering of securities if the tokens or other digital rights being offered (i) had a stated value, (ii) were being purchased for investment purposes, and (iii) were tradable.

In our opinion, it is highly likely that the FSC would consider an enterprise raising funds through an offering of transferable tokens or other digital rights entitling the holder thereof to future distributions of enterprise profit as an offering of securities subject to regulation. In our experience, most enterprises that would wish to carry out such a fundraising effort do not meet the regulatory requirements to conduct a public offering in Taiwan or, even if they did meet such requirements, would likely find compliance with such requirements and navigation of the approval process overly burdensome and thus not cost-effective.

Observers in Taiwan have proposed that, at least with respect to smaller fundraising efforts, the FSC should allow enterprises wishing to conduct an ICO to avail themselves of Taiwan’s already established crowdfunding channels. The FSC has given no indications as to its determination on this proposal, but we remain hopeful that the FSC will allow certain ICOs to be conducted under the rubric of crowdfunding. Such a move would provide startup blockchain enterprises in Taiwan an additional capital raising option.

Interestingly, the FSC never directly promulgated crowdfunding regulations.  Instead, the FSC authorized the Taipei Exchange (the “TPEx”) to establish the Go Incubation Board for Startup and Acceleration Firms (the “GISA Board”) primarily to conduct equity crowdfunding activities.  The board allows small and medium-sized startups to conduct online fundraising activities in a cost and time effective manner. The GISA Board does not facilitate secondary market transactions. The TPEx operates the GISA Board pursuant to rules approved by the FSC.

The GISA Board began accepting registration applications in 2013. Since then, ninety-one (91) companies have successfully registered and forty-seven (47) companies are currently in the process of registration. In total, companies on the GISA Board have raised approximately NT$6.3 billion (approximately US$206.5 million) in funds.

In 2015, the FSC approved additional TPEx regulations that allowed private companies to establish crowdfunding platforms separate from the GISA Board. To date, Masterlink Securities Corp. and First Securities have each established their own online equity crowdfunding platforms (the “Crowdfunding Platforms”).

Over recent years, regulations governing crowdfunding offerings, whether conducted on the GISA Board or through Crowdfunding Platforms, have been relaxed. Such changes have allowed more companies and investors an opportunity to participate in crowdfunding offerings. GISA Board companies are no longer subject to a maximum capital threshold, and the maximum capital threshold for companies on the Crowdfunding Platforms has been raised from NT$30,000,000 to NT$50,000,000. The maximum annual investment limit per company has also been increased from NT$15,000,000 to NT$30,000,000 on both the GISA Board and Crowdfunding Platforms.

Given the interest in blockchain technologies and ICOs demonstrated by the Taiwanese media and government agencies, we are hopeful that the FSC can and will distinguish ICOs that are, in essence, securities offerings from those that have attributes more akin to currency or other digital assets. If this distinction can be made, Taiwan’s increasingly robust crowdfunding channels may become open for use by blockchain startups as a viable funding alternative. We continue to monitor the crowdfunding and ICO space and will keep our clients informed as to any significant developments.

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

Security interests in IP rights in Taiwan

Security interests in IP may be recorded with the Taiwan Intellectual Property Office (TIPO) as a pledge, either by the rights owner or by the pledgee. The recordal of IP security interests in Taiwan only applies to registered trademarks or granted patents. A pending trademark or patent application may not be the subject of a pledge. It should be noted that an unrecorded pledge may not be asserted against third parties. Also, where a pledge on IP rights is altered or extinguished, the same should also be recorded with the TIPO.

A short-form version security agreement is acceptable for recording a pledge. The value of the pledge must, however, be indicated in the agreement. The pledge documents need not be notarized or legalized.

In order to obtain a first priority security in IP rights, before recording a pledge, rights holders should first conduct searches for senior pledges on the register that may affect their rights. To maintain the validity of the IP rights pledged, the security agreement should specify which party is obligated to pay the renewal or annuity fees for said rights. A pledge of rights recorded with the TIPO remains effective in perpetuity unless it is terminated.

Acquiring a security interest in trademarks or patents by means of a pledge is a straightforward and inexpensive means of leveraging intellectual property assets in Taiwan.

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

 

Archives