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WP recognized as Employer of Choice

Winkler Partners has been named by Asian Legal Business Magazine as an Employer of Choice for 2018, the fourth year in a row. Only three law firms in Taiwan were given the award this year.

The survey was conducted in February 2018 by asking employees at law firms across Asia for their opinion on salaries, firm reputation, work life balance, career advancement opportunities among other criteria. Asian Legal Business notes that a Winkler Partners’ colleague stated that the firm ‘is the ‘healthiest’ place I have ever worked. The firm cares deeply about its people, community and clients’.

We were previously recognized as one of three Taiwan-based law firms in 2016 and 2017, and as the sole Employer of Choice in 2015. You can view the entire article here.

Contratos con empresas en Taiwán – consideraciones importantes

This is a Spanish translation of our English article “Tips on entering into manufacturing supply agreements with Taiwanese companies”, which you can find here. Esta es la traducción al español de nuestro artículo en inglés “Tips on entering into manufacturing supply agreements with Taiwanese companies”, el cuál se encuentra disponible aquí.

Como dueño de una marca internacional o empresa importadora de diversos productos, tienes un proveedor en Taiwán? Muchas empresas lo tienen, dado que Taiwán tiene trayectoria de ser líder en servicios de manufactura y productos para marcas y empresas alrededor del mundo en diferentes industrias, desde artefactos y componentes tecnológicos a prendas y accesorios deportivos.

Para la negociación de contratos de suministro de productos o servicios de manufactura, muchas marcas y empresas internacionales (“Contratante”) prefieren utilizar un contrato estándar con el deseo de que dicho contrato pueda cubrir todos los aspectos de la relación contractual con sus proveedores a nivel mundial.  En base a nuestra experiencia, el uso de un contrato estándar es un muy buen comienzo, sin embargo, éste debe ser adecuado para su uso en Taiwán para garantizar su cumplimiento con las leyes y normativas aplicables, y así, maximizar la protección de los derechos del Contratante. Debajo proporcionamos algunos consejos a tomar en cuenta para la negociación de contratos con empresas taiwanesas.

1. Detalles que no pueden pasar desapercibidos

Sin importar si el Contratante modifica un contrato estándar o decide preparar un contrato completamente nuevo, los siguientes detalles deben ser considerados con sumo cuidado: (i) protección y título de propiedad intelectual, especialmente en los casos de contratos con fabricantes de equipos originales (OEM por sus siglas en inglés) o fabricantes de diseño original (ODM por sus siglas en inglés); (ii) confidencialidad; (iii) protección de datos; (iv) ley aplicable; (v) foro de resolución de controversias; y (vi) requisitos de formalidad del contrato.

A modo de ejemplo, los contratos estándares usualmente citan a los diversos convenios internacionales como ley aplicable para la protección de la propiedad intelectual. Sin embargo, es importante dar a conocer que Taiwán no es miembro de muchas convenciones internacionales. Pese a que las leyes de Taiwán proporcionan protecciones similares a las de los convenios internacionales, los contratos deben ser modificados para reflejar la terminología y contenido propicio de acuerdo a las leyes y regulaciones taiwanesas.

Otro ejemplo es que las partes de un contrato de suministro (especialmente los de suministro de productos o servicios de manufactura) frecuentemente eligen el arbitraje como el mecanismo de resolución de controversias y la sede del arbitraje la disponen en una jurisdicción neutral. Dado que Taiwán no es miembro del Convenio sobre el Reconocimiento y la Ejecución de las Sentencias Arbitrales Extranjeras (Convención de Nueva York), tratar de ejecutar una sentencia arbitral extranjera en Taiwán resulta ser significativamente más complicado que en otras jurisdicciones. Es por esto que en el caso de no existir circunstancias especiales, es siempre recomendable disponer la sede arbitral en Taiwán.

2. Cubrir todas las bases

Por razón de las tendencias actuales en la operación de negocios, muchas empresas taiwanesas operan fábricas o trabajan con subcontratistas en otras jurisdicciones, particularmente en China y cada vez más, en países del Sudeste Asiático, como ser Vietnam. Por tanto, se recomienda que cualquier contrato que se suscriba con un proveedor taiwanés también tenga alcance a todas aquellas entidades relacionadas al proveedor.

3. El sello de aprobación

Muchos países tienen su propia forma de operar negocios y Taiwán no es la excepción. Por ejemplo, las empresas extranjeras generalmente pasan por alto algunas formalidades que se tienen que llevar a cabo para que un contrato obtenga plena validez en Taiwán.  En la mayoría de los países, la sola la firma de los representantes autorizados de cada parte es suficiente para que un contrato tenga efecto legal. En Taiwán, para evitar circunstancias en las que la parte taiwanesa niegue o ponga en duda la eficacia del contrato, el sello de la empresa y del representante legal tienen que ser puestos en el contrato al momento de la firma. Taiwán exige a todas las empresas que registren estos dos sellos en la base de datos de la autoridad competente como los sellos autorizados de la empresa. Este procedimiento puede parecer trivial a muchos, pero proporciona una capa adicional de protección al Contratante.

Pese a que un contrato estándar probablemente pueda ser suficiente en muchos casos, un contrato propiamente adecuado puede maximizar la protección al Contratante. En general, las leyes taiwanesas se encuentran alineadas con la mayoría de los estándares internacionales; sin embargo, resulta siempre mejor el contratar a un abogado local para la revisión de cualquier contrato a ser suscrito con partes taiwanesas. Un abogado local podrá confirmar si el contrato como tal cumple con las leyes de Taiwán, y a su vez, plantear la mejor forma para modificar el contrato.

Para más información sobre temas de contractuales en Taiwán, por favor contáctese con Roxana Cheng rcheng@winkerpertners.com.

WP welcomes new associates

We recently welcomed several new members to our legal and consulting teams.

Hsin-hsin Cheng joins Winkler Partners from a well-known Taiwanese law firm where she handled civil and criminal matters. Hsin-hsin will be focusing on data protection, intellectual property enforcement and employment matters. She is a member of the Taipei Bar.

Autumn Chiu will be supporting our intellectual property team with prosecution and protection matters. She previously worked at an intellectual property law firm in Taiwan helping clients obtain trademark registrations in the United States, the European Union, Japan, Korea and Singapore.

Woang-ling Huang joins Winkler Partners with a focus on trademark prosecution and intellectual property-related disputes. She previously worked in-house at a Taiwanese conglomerate focusing on trademark strategy and disputes involving copyright and patents in several Asian, North American and European markets.

Peter Lavelle joins our intellectual property team with a focus on trademarks. He previously worked at intellectual property firms in Canada and China. Peter is a barrister and solicitor with the Law Society of Upper Canada. He also interned at Winkler Partners in 2014 as part of our international intern program.

Jeremy Olivier joins Winkler Partners Consulting with a focus on corporate services, including assisting clients with business management matters.

Tips on entering into manufacturing supply agreements with Taiwanese companies

As an international brand owner, do you have a supplier located in Taiwan? Most brand owners do, as Taiwan has long been known as a leading provider of manufacturing services to companies worldwide operating in a variety of industries, from tech gadgets and components to sporting goods and garments.

In negotiating supply agreements, most international brand owners would prefer to use a standard agreement hoping that such an agreement will cover all aspects of their relationship with their suppliers worldwide. Based on our experience, while this is often an appropriate starting point, the standard supply agreement should still be tailored for its use in Taiwan in order to comply with the applicable laws and regulations and maximize the protection to a brand owner’s rights. Here, we outline a few tips to pay close attention to when negotiating a supply agreement and in dealing with a Taiwanese supplier in general.

1. The devil is in the details

Regardless of whether you alter your standard agreement or decide to draft a completely new document, you should pay particular attention to (i) intellectual property protection and ownership (especially in the case of original design manufacturer (ODM) and original equipment manufacturer (OEM) arrangements); (ii) confidentiality; (iii) data protection; (iv) governing law; (v) dispute resolution forum; and (vi) contract formality requirements.

By way of example, standard agreements usually cite international conventions as a basis for the protection of their intellectual property. However, Taiwan is not a member to most international conventions, and although Taiwanese laws do provide similar protections as those provided by international conventions, supply agreements must be tailored to reflect the terminology and content in accordance with Taiwan laws and regulations.

Another example would be that parties to supply agreements often choose arbitration as the dispute resolution mechanism and set the seat of arbitration at a neutral location. Because Taiwan is not a member to the Convention on the Recognition and Enforcement of Foreign Arbitral Awards (New York Convention), trying to enforce a foreign arbitral award in Taiwan proves to be much more cumbersome and time consuming than in other jurisdictions. This is why absent any special circumstances; it is always advisable to set the arbitration forum in Taiwan.

2. Cover all the bases

In light of current business operation trends, many Taiwanese suppliers maintain factories or work with subcontractors in other jurisdictions, particularly in China and increasingly, South East Asian countries such as Vietnam. Hence, it is advisable that any agreement entered into with a Taiwanese supplier must also cover any such entities.

3. A stamp of approval

Most countries have unique approaches to conducting business and Taiwan is no different. By way of illustration, foreign companies often overlook certain formalities in order for an agreement to have full force and effect in Taiwan, since in many countries, only the signature of the authorized representative of each party is needed for an agreement to take effect. In Taiwan, in order to avoid any circumstance whereby the Taiwanese supplier might challenge the contract, the company chop of the supplier and the seal of its chairman must be affixed on the agreement at the time of execution. The authorities in Taiwan require all companies to record these two chops in a database as the registered and authorized chops of the company. While it may seem archaic to some, this small step provides an additional layer of protection.

Although a standard supply agreement would probably be sufficient in most cases, a properly localized agreement can maximize the protection afforded to a brand owner. In general, Taiwanese laws are in line with most international standards; however, it is still best to retain local counsel to review any supply agreements to be executed with Taiwanese parties. They will be able to confirm whether the agreement as-is complies with Taiwan law, and at the same time, raise any issues or concerns and provide advice on how best the agreement can be altered. As supply agreements are, particularly those related to manufacturing, one of the most common types of commercial agreements seen in Taiwan, experienced counsel will be well versed in the specifics of contract and intellectual property law in the country.

For more information on contract matters in Taiwan, please contact Ling-ying Hsu at lhsu@winklerpartners.com, Roxana Cheng at rcheng@winkerpertners.com, or Peter Dernbach at pdernbach@winklerpartners.com.

Merger control FAQ (part 3 – procedural issues)

This article is the third in our series on merger control in Taiwan. This installment focuses on procedural questions related to merger control filings, including timing and content of the filings. For the first article on basic questions related to covered transactions and market share filing thresholds, click here. For the second article on relevant market definition, click here. The fourth and final installment in the series will wrap up with some thoughts on the reviewing agency and other insights into the application and approval process.

1. Is there an expedited filing procedure for merger control filings in Taiwan?  If so, what are the relevant qualifications?

Yes. Regulated transaction participants may apply to the Fair Trade Commission (the “FTC”) for expedited review of their transaction provided the following conditions are met in respect of the specified type of transaction:

  • horizontal mergers – (i) the combined market share of the participants is less than 20% or (ii) the combined market share of the participants is less than 25% and the market share of one of the participants is less than 5%; provided that, such rules do not apply or are modified under certain circumstances related to high levels of market concentration;
  • vertical mergers – the aggregate market share of the participants in each relevant market is less than 25%;
  • conglomerate mergers – there is no significant potential competition between the participants; or
  • related party mergers/acquisitions – one of the participants directly owns at least 1/3, but less than 1/2, of the voting rights or equity capital of the other participant.

It is important to note that expedited review is not available for transactions involving a financial holding company. The FTC may also decide not to grant expedited review if it determines that: (i) a transaction involves significant public interest, (ii) the relevant market is difficult to identify, (iii) the participants’ market shares are difficult to assess, or (iv) there are other significant concerns related to possible competition-limiting effects such as high market concentration or market entry barriers.

If the FTC rejects an application for expedited review, the transaction participants must resubmit a full, general review application.

2. What information is required in a merger control filing, and how long does it typically take to compile such information?

Transaction participants should expect to spend at least three to four weeks preparing a merger control application due to the volume of information required by the FTC and the fact that all information provided must be in Chinese.

An expedited review application requires financial information for the last two fiscal years and information regarding each participant’s three main products or services and its three primary competitors. A general review application requires financial information for the last three fiscal years and information regarding each participant’s five main products or services and its five primary competitors. Each of the expedited and general review filings, require among other things:  (i) information on the type of merger (horizontal, vertical, or conglomerate) and whether it is extraterritorial, (ii) a description of the business of each participant, (iii) an overview of the relevant market(s), (iv) a description of market entry barriers, and (v) an explanation of the overall positive and negative economic impacts of the proposed transaction.

3. When is the earliest time a filing may be made?

A filing may be made before there is a binding transaction. However, the application must establish that there is a high likelihood that the transaction will proceed. Otherwise, there is a risk that the FTC may not commence its review.

4. How long does it typically take to “clear” a transaction?

The FTC’s default review period under the general application process is 30 business days. Transaction participants may not close the relevant transaction during this review period.

The review period commences only upon receipt of written notification from the FTC that the relevant application is complete (i.e., no further requests for information will be made by the FTC). It typically takes a minimum of four to six weeks from the time of initial submission of an application to get the application in form acceptable to the FTC such that the review period can commence.

The FTC may adjust the duration of the review period as it deems necessary provided that the total review period does not extend longer than 90 business days. Should the FTC alter the duration of the default 30 business day review period, it will notify the transaction participants in writing. Larger, more complex transactions typically have review periods of 60 business days or more.

5. Who makes the filing?

As a general rule, each transaction participant must be party to the filing. In certain related party transactions, the ultimate controlling entities are required to file. A financial holding company must also file if it or any of its subsidiaries participate in the transaction.

6. Are there fees with respect to merger control filings?

No.

For more information on mergers and acquisitions in Taiwan, please contact Gregory A. Buxton at gbuxton@winklerpartners.com.

A look at likely changes to divisional invention applications

Taiwan’s Intellectual Property Office (TIPO) has proposed further changes to the Patent Act that if passed would benefit patent applicants, and bring Taiwan’s patent regime further in line with the international community. In this article, we will outline one of the possible changes, divisional applications.

The Status Quo

Under Taiwan’s patent laws, invention patent applications that involve two or more inventions may be divided into separate divisional applications, at the request of either the TIPO or the applicant. The applicant may file a divisional application in either of the following circumstances:

1. Within 30 days of receiving the notice of allowance of the original application.

2. During the re-examination stage: Any time before a re-examination decision on the original application is rendered, regardless of whether it is a decision of allowance or refusal.

Divisional applications are accorded the filing date and other priority rights claimed in the original application. Given the 30-day period indicated in the first circumstance, if the applicant is unable to submit the claims intended for the divisional application before the deadline, the applicant may file amendments to the claims any time before the first office action is issued.

Requests for a substantive examination of a divisional application must be filed either within 3 years from the filing date of the original application or within 30 days from the filing date of the divisional application, whichever is later. The divisional application will be published within 18 months of the filing date of the original application.

Further divisional applications may be filed within 30 days on receiving the notice of allowance for the preceding divisional application, and the foregoing rules apply to any further divisional applications.

Amendments Contemplated by the TIPO

The TIPO is contemplating introducing the following amendments:

1. Allowing applicants to file divisional applications following receipt of notice of allowance of the original application in the re-examination stage.

2. Extending the statutory time limit for filing of divisional applications from 1 month to 3 months.

The proposed changes would therefore benefit IP holders and patent applicants because the timeframe for filing divisional applications would be lengthened. This would also bring Taiwan’s rules further in line with international norms. As these changes move through the legislative process, we will be monitoring their implementation.

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

New employment rules to come into effect 1 March 2018

Amendments to Taiwan’s Labor Standards Act passed by the legislature on 10 January 2018, after much controversy, protest and debate. Generally speaking, these amendments roll back or relax changes which were made to the law at the end of 2016, and may be amended, or clarified, further. The effective date of these amendments is 1 March 2018.

Overtime & Annual Leave

1. The wage for overtime on flexible rest days will be calculated as actual time worked, rather than in four-hour blocks as before. This overtime should be factored into the maximum monthly overtime for each employee, detailed in the next item.

2. Overtime may be calculated over a three month period by employers, and may not exceed 54 hours in one month and 138 hours in three months. In order to implement such an overtime policy, the employer must obtain consent from the relevant labor union or, if there is no labor union, the approval of a labor-management conference. If the company has 30 or more employees, this change must be reported to the local labor authority.

3. If the employee chooses to convert their overtime hours into make-up leave and this is agreed to by the employer, the make-up leave must be equal to the hours of overtime worked. The deadline for make-up leave shall be negotiated by the employer and employees. Furthermore, any remaining make-up leave must be converted back into payment for overtime and given to the employees upon its expiration or upon termination or voluntary resignation.

4. The employer and the employee may agree to carry over unused annual leave to the next year. However, any remaining annual leave must be converted into wages and paid to the employee at the end of the second year or upon completion of the employment contract.

Shift work

5. The employer may shorten the rest time between shifts from eleven to eight hours for those industries or businesses designated by the Ministry of Labor (“MOL”). To implement this change, the employer must obtain consent from the relevant labor union or, if there is no labor union, the approval of a labor-management conference. If the company has 30 or more employees, this change must be reported to the local labor authority.

6. Employers from those businesses or industries that are designated by the MOL and which have obtained consent from the central Competent Authority, may change the placement of an employee’s mandatory rest day. This adjustment allows the employee to work a maximum of 12 consecutive days. To implement this change, the employer must obtain consent from the relevant labor union or, if there is no labor union, the approval of a labor-management conference. If the company has 30 or more employees, this change must be reported to the local labor authority.

Once the new rules come into force, it is likely that government authorities will issue clarifying interpretations on how they expect employers to implement the new rules. It is therefore suggested that employees and employers pay particular attention to these developments.

For more information on Taiwan employment matters, please contact Christine Chen at cchen@winklerpartners.com or on +886 (0) 2 2311 8307.

Restrictions eased on foreign professionals living and working in Taiwan

The Draft Act for the Recruitment and Employment of Foreign Professionals passed smoothly through Taiwan’s legislative branch this past October and will come into force on 8 February 2018. This new law is part of an overarching effort by the Taiwanese government to attract and maintain foreign talent in targeted sectors in the face of fierce international competition and an aging society. Unlike the Labor Standards Act and Employment Services Act, the two statutory laws that govern employment for both Taiwanese and foreign nationals, the Act for the Recruitment and Employment of Foreign Professionals is sponsored by the National Development Council. It offers a number of benefits to foreign white collar workers not previously enjoyed, including tax incentives, easing of restrictions on residency for both the professional and their family members, and the ability for those with permanent residency to be included in the pension system under the Labor Pension Act.

The act designates three kinds of foreign employees: foreign professionals, special foreign professionals, and senior foreign professionals, each with their own set of benefits. It also aims to resolve some longstanding issues faced by such workers in the past. Below, we summarize a few of these issues and discuss the solutions proposed in the bill.

1. The waiting period for spouses and children of foreign professionals to be approved for National Health Insurance coverage

Currently, dependents of foreign professionals are made to wait six months before Taiwan’s state-sponsored health insurance takes effect. For those with minor illnesses or injuries, this is not a serious problem as the cost of treatment without insurance is still relatively low. However, more severe cases or things like childbirth and surgery require coverage by the NHI to be affordable for most families. Article 14 of the new law removes this restriction, allowing dependents of the foreign professional to gain coverage as soon as they have obtained documentary proof of residency.

2. The requirement that a foreign professional must reside in the state for 183 days out of the year to maintain permanent residency

This requirement, as provided for in Article 33 Paragraph 1 Subparagraph 4 of the Immigration Act, was overly restrictive on foreigners with permanent residency, some of whom needed to take business or personal trips abroad for indefinite periods of time. Article 18 of the new law changes the minimum to five years of residing in Taiwan to avoid revocation of permanent residency.

3. The three year limit on work permits and ARCs

Whereas work permits, under Article 52, Paragraph 1 of the Employment Services Act, are presently limited to a term of three years, and Alien Residency Certificates are subject to the same term limit, as prescribed in Article 22 Paragraph 3 of the Immigration Act, the new bill extends this to five years for the category of foreign special professionals. The intention of this article is to allow foreign special professionals with indefinite or long-term work contracts to reside in Taiwan without worrying about overstaying their ARC. This also covers joining families of foreign special professionals, who may apply for identical periods of residency.

Overall, the Act for the Recruitment and Employment of Foreign Professionals will provide some incentives for foreigners currently living and working in Taiwan to continue their residency here and for those considering Taiwan as a potential destination for employment.

For more information on Taiwan employment matters, please contact Christine Chen at cchen@winklerpartners.com or on +886 (0) 2 2311 8307.

Do trademark rights owners have recourse against similarly transliterated names?

Chinese, like many languages, has established commonly-followed conventions for transliterating names in foreign languages. Names of famous people, brands and companies however often find themselves the target of infringement, as we have explored before. A recent case before Taiwan’s IP Court highlighted issues surrounding the transliteration of foreign language words into Chinese characters, and the rights afforded trademark owners in defending their marks against similarly-named brands or companies.

Article 70, paragraph 2 of Taiwan’s Trademark Act provides that “without the consent of the trademark rights holder, any of the following circumstances will be deemed infringement of trademark rights: knowing that a trademark is a well-known registered trademark of another person, and using words [or characters] from that well-known trademark as one’s company name, business name, group name, domain name, or other indication of business entity, causing a likelihood of confusion or misidentification among relevant consumers or a likelihood of diluting the distinctiveness or reputation of that trademark.” Is “using words [or characters] from that well-known trademark” only limited to words [or characters] identical to the well-known registered trademark? In the “FRANKLIN” case, the IP Court’s first and second instance judgments suggest that the answer to this question is no.

Background

Franklin Templeton Securities Investment Consulting (SinoAm) Inc., a group company of Franklin Templeton Investments, one of the biggest global asset management companies, has provided mutual fund services in Taiwan since 1990. Franklin Templeton Distributors, Inc. filed for trademark registration of the mark “Fu Lan Ke Lin (“FRANKLIN” in Chinese characters, 富蘭克林)” with the Taiwan Intellectual Property Office (TIPO) in 1998, and obtained registration in 2000. Franklin Templeton Distributors, Inc. then licensed this trademark to Franklin Templeton Securities Investment Consulting (SinoAm) Inc., which the company used to represent its mutual fund services.

Friendly Group was established in Shanghai in 2002. The group filed for and obtained trademark registration for the “Fu Lan De Lin” (“FRIENDLY” in Chinese characters, 富蘭林) mark in Taiwan, which contains three characters identical to the “Fu Lan Ke Lin (“FRANKLIN” in Chinese characters, 富蘭林)” mark, in 2003. The services designated for this mark include “commercial or industrial management assistance, marketing research and consulting, corporate consultancy, education, publication”. Yet the service it actually provided in 2013, security investment consulting, was not designated for this mark.

In 2013, Friendly Group established two companies in Taiwan, which used “Fu Lan De Lin” as the distinctive portion of their names (i.e. Fu Lan De Lin Securities Co., Ltd. and Fu Lan De Lin Investment Co., Ltd.). In addition, Friendly Group used “Fu Lan De Lin” as a trademark to promote its “security investment consulting” services. FRANKLIN/TEMPLETON DISTRIBUTORS, INC. discovered this and commissioned its attorney to send a cease and desist letter to these two companies demanding that they discontinue use of “Fu Lan De Lin” as their company name and trademark.

These two companies responded that “Fu Lan De Lin” is the Chinese transliteration of their company group’s English name, “FRIENDLY”, while “Fu Lan Ke Lin (“FRANKLIN” in Chinese characters)” is the transliteration of the family name of Benjamin Franklin, one of Founding Fathers of the United States. These two terms are obviously different. Furthermore, Friendly Group never claimed that it was in any way related to Franklin Templeton. Therefore, consumers would not confuse “Fu Lan De Lin” with “Fu Lan Ke Lin”. As a result, the companies refused to comply with the cease and desist request from Franklin Templeton Distributors, Inc.

Civil Suit

In 2015, Franklin Templeton Distributors, Inc. initiated a civil suit with the IP Court against the two “Fu Lan De Lin” companies, asserting that their adoption of “Fu Lan De Lin” as company name and trademark constituted intention to mislead consumers and free-ride on its goodwill. Accordingly, it claimed that these two companies infringed upon its trademark rights and requested that the IP Court order them to cease use of the “Fu Lan De Lin” trademark.

Generally speaking, a trademark right owner in Taiwan is entitled to prevent others from using a similar trademark which is likely to mislead consumers, but does not have the right to prevent others from using an identical or similar term as “a company name, business name, group name, domain name, or other indication of business entity.” However, in case that a trademark becomes “well-known” via extensive marketing and promotion, it is granted greater protection under Taiwan’s Trademark Act in order to prevent others from using it in the above-mentioned manner. Furthermore, a holder of a well-known trademark also has the right to prevent others from using a similar mark for dissimilar products or services.

As Franklin Templeton Distributors, Inc. owns the prior registered trademark “Fu Lan Ke Lin”, it is entitled to claim that “Fu Lan De Lin” is a similar trademark which is likely to cause consumer confusion and therefore infringe upon its trademark rights. It is also able to claim that “Fu Lan Ke Lin” has already become a well-known mark in the “security investment” field due to its long-term extensive marketing. As a result, it is entitled to request the two “Fu Lan De Lin” companies to cease using “Fu Lan De Lin” as the distinctive portion of their company names.

Article 68, paragraph 3 of Taiwan’s Trademark Act provides that “using a trademark which is similar to the registered trademark and used in relation to goods or services identical with or similar to those for which the registered one is designated, causing a likelihood of confusion among relevant consumers” constitutes infringement of the trademark owner’s trademark rights. Hence, if the Court recognizes that “Fu Lan Ke Lin” and “Fu Lan De Lin” are similar trademarks that may cause a likelihood of consumer confusion, Franklin Templeton Distributors, Inc. is entitled to prevent the use of the “Fu Lan De Lin” mark.

Furthermore, Article 70, paragraph 2 of Taiwan’s Trademark Act provides that “knowing that a trademark is a well-known registered trademark of another person, and using words [or characters] from that well-known trademark as one’s company name, business name, group name, domain name, or other indication of business entity, causing a likelihood of confusion or misidentification among relevant consumers or a likelihood of diluting the distinctiveness or reputation of that trademark” should be deemed infringement of the trademark owner’s trademark right. It is apparent that the wording “using words [or characters] from that well-known trademark as one’s company name, business name, group name, domain name, or other indication of business entity” in Article 70, paragraph 2 is different from that of “using a trademark which is similar to the registered trademark” in Article 68, paragraph 3 of the same Act. The above comparison suggests that the legislators would like to distinguish the circumstances described in these two sections, and limit the coverage of Article 70, paragraph 2 to “using a company name or other business identity indication identical to a well-known trademark.” Since the defendants in the “FRANKLIN” case use “Fu Lan De Lin” as the distinctive portion of their company names, which is not identical to the plaintiff’s trademark “Fu Lan Ke Lin” (the characters “De” and “Ke” are different, and ), it is disputable that the use of “Fu Lan De Lin” infringes upon the trademark right of “Fu Lan Ke Lin” as granted under Article 70, paragraph 2.

In accordance with the “Line-by-Line Interpretation of the Trademark Act” published by the TIPO, “using words [or characters] from a well-known trademark provided under Article 70, paragraph 2 of Taiwan’s Trademark Act should be construed as using a term “completely identical to” the “words [or characters]” contained in that well-known trademark which easily attracts consumers’ attention and can be used to distinguish it from others’ goods or services. Considering that (a) “identical or similar to a third party’s well-known trademark ” is used in Article 70, paragraph 1 of Taiwan’s Trademark Act (whose wording is different from that used in Article 70, paragraph 2), and (b) Article 70 of the same Act is a legal fiction provision that defines the acts that are deemed infringement; therefore, the interpretation of “using words [or characters] from a well-known trademark, provided under Article 70, paragraph 2, should not be arbitrarily broadened to refer to using a term “similar to” the “words [or characters]” contained in that well-known trademark. Having said that, if a similar term’s principal impression for identification is deemed substantially the same as the “words [or characters]” used in the well-known trademark according to social general concept or a similar term is used as the distinctive portion of its business identity, such use should still be construed as “using words [or characters] from a well-known trademark. Hence, pursuant to the TIPO’s interpretation, “using words [or characters] from a well-known trademark” provided under Article 70, paragraph 2 should be limited to using a term “completely identical to” the “words [or characters]” contained in that well-known trademark in principle. The exceptions to this are: (i) a similar term’s principal impression for identification is substantially the same as the “words [or characters]” used in the well-known trademark, and (ii) a similar term is used as the distinctive portion of its business identity.

In the “FRANKLIN” case, the plaintiff’s trademark “Fu Lan Ke Lin” is certainly not identical with the term “Fu Lan De Lin” used by defendants. As a consequence, the question should be whether the principal impression created by “Fu Lan De Lin” is substantially the same as that by “Fu Lan Ke Lin”.

The IP Court judgment for the first instance held that although there exists a difference between the “De” character of “Fu Lan De Lin” and the “Ke” character of “Fu Lan Ke Lin”, (i) “De” and “Ke” rhyme, and (ii) the other three words “Fu”, “Lan”, and “Lin” are identical. “Fu Lan De Lin” and “Fu Lan Ke Lin” should be deemed different translations of the same term “FRANKLIN”, and the major identification concept of “Fu Lan De Lin” and “Fu Lan Ke Lin” is substantially the same. As such, the IP Court for the first instance concluded that the use of “Fu Lan De Lin” in the defendants’ company names should be deemed as using “words [or characters] from the well-known ‘Fu Lan Ke Lin’ trademark”.

The IP Court’s second-instance judgment took basically the same position as that of the first-instance judgment. However, it further recognized the similarity between “Fu Lan De Lin” and “Fu Lan Ke Lin” in terms of appearance, sound, and concept. It held that (i) the appearance of “Fu Lan De Lin” and that of “Fu Lan Ke Lin” are highly similar, to the extent that they are substantially the same, (ii) the sound of “Fu Lan De Lin” and that of “Fu Lan Ke Lin” are similar, to the extent that it is hard to distinguish the difference between them, and (iii), in terms of concept, both “Fu Lan De Lin” and “Fu Lan Ke Lin” give consumers the impression that they are translated from the same term: “FRANKLIN”. Hence, the second-instance judgment also concluded that the use of “Fu Lan De Lin” in the defendants’ company names should be deemed as using “words [or characters] from the well-known ‘Fu Lan Ke Lin’ trademark.”

Conclusion

The IP Court’s first and second instance judgements in the “FRANKLIN” case indicate the Court’s holding that “using words [or characters] from a well-known trademark” provided under Article 70, paragraph 2 of Taiwan’s Trademark Act should not be limited to using a term “completely identical to” the “words [or characters]” contained in that well-known trademark. The following situations may be deemed as “using words [or characters] from a well-known trademark”: (i) the parties’ marks and names (a party uses the words [or characters] from a well-known mark in its name) are just different translations of a single term, and are substantially the same regarding identification; or (ii)(a) the appearances of the parties’ marks and names are highly similar, and even substantially the same, (b) it is hard to perceive the difference between the parties’ marks and names, and (c) the parties’ marks and names are translations of a single term. It appears that the criteria used by the Court are similar to those used by the TIPO in the “Line-by-Line Interpretation of the Trademark Act” as described above (namely, in case that a similar term’s principal impression for identification is substantially the same as the “words [or characters]” used in the well-known trademark, such use should be deemed as “using words [or characters] from a well-known trademark”).

Given the IP Court’s holding in the “FRANKLIN” case, it may be concluded that a “well-known trademark” owner is not only able to prevent others from using a term “identical to its mark” as the “company name, business name, group name, domain name, or other indication of business entity,” but also able to prevent others from using a non-identical term which is highly similar to the extent that it is “substantially the same” as a well-known mark.

Whether “Fu Lan De Lin” and “Fu Lan Ke Lin” should be deemed substantially the same, we are of the opinion that as Benjamin Franklin is a very famous historical figure from the United States, and his name has been consistently translated as “Fu Lan Ke Lin” in Chinese, the number of Taiwanese people who would mistake “Fu Lan De Lin” as the translation of “Franklin” are likely not many!

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

WP recommended by the Legal 500

Six of Winkler Partners’ practice areas have been recommended by The Legal 500 as part of their research into legal service providers in the Asia Pacific region for 2018. For the first time, our employment practice was ranked in the first tier with Partner Christine Chen also listed as a Leading Individual. The Legal 500 notes that we helped clients navigate recent changes to the Labor Standards Act and that employment disputes are a particular strength.

Our insurance practice, led by partner Chen Hui-ling was ranked in the top tier for the sixth consecutive year, and was noted for our strength in D&O insurance. The Legal 500 says that Hui-ling “has extensive insurance litigation and arbitral expertise”. Michael Fahey is also mentioned for his support of cross-border matters.

In intellectual property, practice head partner Peter Dernbach was listed as a Leading Individual. The Legal 500 mentions that we have “notable expertise acting for international brands in enforcement and prosecution matters” and singles out our work on behalf of the Scotch Whisky Association. Partners Gary Kuo and Christine Chen are recommended for IP litigation.

The Legal 500 notes that our TMT practice has a niche in over-the-top (OTT) content and Internet of Things, citing our work with several multinational clients in connection with their services in Taiwan.

Finally our dispute resolution and corporate/M&A work were also recommended. The Legal 500 notes that we represent international clients across an array of commercial litigation matters, including the enforcement of foreign judgments and that our corporate practice, led by Gregory Buxton, “has extensive experience handling trans-Pacific and cross-Strait, inbound and outbound transactions”.

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

 

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