Content

WP awarded B Corporation certification

Winkler Partners, a full service law firm based in Taipei, Taiwan, has become the first legal service provider in Asia to become a Certified B Corporation. According to B Lab, a non-profit that awards B Corporation certification, Winkler Partners is the 17th company in Taiwan to be certified. Worldwide, only 36 legal service providers have received certification, out of a total of 1932 companies since B Lab began awarding certification in 2007.

B Corp stands for Benefit Corporation, a type of for-profit corporate entity that places an equal importance on sustainability, working for the shared benefit of workers, stakeholders, wider society and the environment, as it does on profit making. B Corps adhere to greater accountability and transparency rules than traditional companies. Currently, 30 states in the United States, Italy and the UK (known as Community Interest Companies) allow for Benefit Corporation entities to be formed. B Lab provides certification for businesses in other jurisdictions whose corporate laws do not yet provide for registration as a Benefit Corporation.

The B Corp assessment survey covers sections on Environment, Workers, Customers, Community, Governance, and based on the answers, an Overall score is given. These scores make up our B Impact Report, which can be viewed here. Winkler Partners obtained an Overall score of 98, with 80 being the minimum score needed to receive certification.

Winkler Partners scored high for Environment, which takes into account our commitment to reducing energy usage and increasing energy savings, our extensive recycling program and measurement of our carbon footprint, the use of environmentally friendly products throughout our office, rainwater capture and our roof garden. We also scored above the B Corp median score for Workers, where our salary, benefits, diversity and work environment were evaluated; and Community, where our membership of 1% for the Planet, support for Wild at Heart Legal Defense Association and other organizations, as well as pro-bono work for Forward Taiwan were taken into consideration. Going forward, B Corp certification will allow us to effectively evaluate the ongoing contributions we make to these communities and enable us to identify areas in which we can improve.

You can read more about our commitment to our colleagues, clients and community on our B Corp profile page here. You can find out more about B Lab and the B Corp movement here. For more information on Winkler Partners’ B Corp certification, please contact James Hill at jhill@winklerpartners.com or +886 (0) 2 2311 2345 extension 535.

Data protection enforcement decisions by Taiwan’s Financial Supervisory Commission

Taiwan has had data protection laws since the mid-1990s, but a new era in data protection began in October of 2012 when the Personal Information Protection Act of 2010 (the “PIPA”) took force.

Enforcement of the PIPA is dispersed. Instead of having a single data protection authority (DPA), central government regulators share responsibility for enforcing the PIPA along with local governments. In addition, the Ministry of Justice plays an important coordinating role and interprets the PIPA.

The only regulator that publishes its data protection enforcement decisions is the Financial Supervisory Commission (“FSC”). The FSC is Taiwan’s super-regulator for financial industries. In this role, it oversees securities and futures firms, banks, and insurers. FSC data protection enforcement decisions are thus an important source for understanding enforcement of the PIPA by Taiwan’s executive branch.

Enforcement Cases by the Numbers

The FSC has published 16 enforcement decisions since the PIPA took force in 2012. The number of enforcement decisions in each year has varied. For example, while seven decisions were issued in 2016, no decisions were issued in 2015. Between 2012 and 2014, the FSC issued an average of two or three FSC enforcement decisions each year.

The seven 2016 enforcement decisions included five enforcement decisions against insurance companies by the FSC Insurance Bureau and two decisions against banks by the FSC Banking Bureau. As of this writing (March 2017), the FSC has already issued two enforcement decisions. Both of the 2017 decisions have been against insurers.

Of the various FSC sub-agencies, the Insurance Bureau has been the most active in its PIPA enforcement. Eleven of the 16 FSC enforcement decisions since 2012 have been insurance cases while just five decisions have been banking cases. Thus two trends can be identified. The first is increasing overall enforcement activity by the FSC since 2016. The second is that the FSC is especially concerned about the collection, processing, and use of personal information by the insurance industry.

We anticipate that these trends will continue and expect to see an increasing number of PIPA enforcement cases issued by the FSC with a focus on the insurance industry.

Types of Enforcement Decisions

FSC Enforcement decisions since 2012 can be categorized into four types: data breach cases, failure to obtain consent cases, inadequate security cases, and cases involving failure to notify.

1. Data Breaches

Data breaches are the most common reason for enforcement decisions. In general, these cases have involved negligent disclosures of customer personal information. In some cases, the disclosures were caused by poorly designed or maintained internal control and internal audit mechanisms while in other cases there were procedural errors in the course of business. Examples of data breaches cases are briefly discussed below in reverse chronological order by the date of the enforcement decision.

10 January 2017: Nan Shan Life Insurance Co., Ltd. improperly mailed policyholder personal information to third parties in the course of mailing notices to policyholders. The FSC found that the personal information disclosures were caused by execution errors in Nan Shan’s computer system. This enforcement decision is notable because the FSC also found that the breach was material and penalized Nan Shan for failing to immediately report the breach. This is the only enforcement decision to date in Taiwan that addresses late reporting.

11 April 2016: A customer requested information about salary transfers to the customer’s account at Cathay United Bank. In its response to the customer’s request, Cathay United Bank’s Da’an Branch disclosed the personal information of another customer to the requesting customer.

22 August 2013: CTBC Bank committed an error in its internet banking operations that enabled any internet user to enter, browse, and obtain customer information stored in the bank’s internal index pages.

2. Failure to obtain consent

Enforcement decisions have also been made against financial enterprises who have violated the PIPA by providing personal information of customers for use by third parties without first obtaining the customers’ consent. This type of case is illustrated by the following enforcement decisions.

29 June 2016: Mega International Commercial Bank, without having obtained the consent of its customers, provided basic customer personal information to its affiliate Chung Kuo Insurance Company Limited to conduct telemarketing.

4 October 2013: A Nan Shan Life Insurance solicitor, without obtaining written permission from the policyholders, gave personal information of customers to a third party whom the solicitor had engaged to answer policyholders’ questions about a policy.

10 July 2013: A Chang Hwa Commercial Bank, Ltd. employee made a query to the Joint Credit Information Center about a customer’s credit information without having obtained the customer’s written consent.

3. Inadequate Security

Cases of this type include the following:

16 November 2016: PCA Life Assurance Co., Ltd. inadequately implemented its 2015 personal information inventory operations, resulting in failure to delete personal information before the expiration of the relevant retention period.

11 November 2016: Mercuries Life Insurance Co., Ltd. was penalized for having inadequate overall personal data protection measures and a lack of effective internal control mechanisms in conducting its information operations.

8 September 2016: A Fubon Life Insurance Co., Ltd. customer complaint handler failed to adopt appropriate security measures and failed to use encryption when sending photocopies of policyholder call-in card applications to personal email addresses.

4. Failure to notify

14 February 2017: Mercuries Life Insurance Co., Ltd. was penalized for failing to expressly inform data subjects of statutorily required matters when it collected personal information of customers through its official website on a web page it provided for customer email queries about insurance.

Penalties

Under the PIPA, regulators are empowered to order private sector actors to remedy a violation of the PIPA. Failure to remedy the violation by a prescribed deadline will result in an administrative fine ranging from NT$20,000 (c. US$650) to NT$500,000 (c. US$16,300). However the FSC also has the power to fine financial businesses when they violate rules governing internal controls, and these fines are considerably higher than the fines that may be imposed under the PIPA. A notable feature of the FSC enforcement decisions is that when the FSC determines that a financial institution has violated the PIPA, it usually also finds that the same facts simultaneously constitute a violation of internal controls. As a result, the fines imposed in most FSC enforcement decisions are generally the higher fines for violation of internal controls.

In less serious cases, the administrative fine for a violation of internal controls in a data protection case is NT$600,000 (c. US$19,570). However higher fines are imposed in more serious cases. For example the FSC imposed a fine of NT$1.2 million (c. US$39,100) in the 2016 PCA Life Assurance case where PCA Life Assurance failed to delete personal information by the expiration of the retention period. Relatively high fines were also imposed in two cases involving external leaks of personal information: NT$3 million (c. US$97,830) in a 2014 case in which an ex-employee of Cathay United Bank had downloaded personal information of customers onto a private external storage device, and NT$4 million (c. US$130,400) in the 2013 CTBC Bank data breach case.

Typically, these fines for violations of internal controls are also accompanied with an order to remedy the PIPA violation by a prescribed deadline. In the majority of cases, a deadline of one month was set to remedy the PIPA violation. In a minority of more serious cases, a deadline ranging from seven to ten days was set.

To date, the FSC has imposed stand-alone PIPA fines in just three cases: the 2016 Mega International Commercial Bank decision, the 2013 Nan Shan Life Insurance decision, and the 2013 Chang Hwa Commercial Bank decision. The administrative fines imposed by these decisions were respectively: NT$50,000 (c.US$1,630), NT$20,000 (c. US$650), and NT$50,000 (c. US$1,630). All three of these cases fall in the category of providing a customer’s personal information for use by a third party without having obtained consent.

Conclusions

Taiwan’s Financial Supervisory Commission is actively enforcing violations of the PIPA with remedy orders and fines. While fines remain low by international standards, Taiwan’s media covers violations of data protection law extensively. As a result, members of the public and consumers are increasingly aware of their rights under the PIPA and are already highly sensitive to disclosures of personal information. This will put pressure on other regulators to follow the FSC’s lead and publish enforcement decisions. Ultimately Taiwan is likely to follow regional and international trends and replace dispersed enforcement with centralized enforcement by a unitary data protection authority.

For more information on data protection and privacy matters in Taiwan, please contact Chen Hui-ling at hchen@winklerpartners.com.

Frequently asked questions on merger control in Taiwan

We receive regular inquiries from foreign clients as to whether a particular transaction requires making a merger control filing in Taiwan. The following is the first installment of a multi-part series in which we explore commonly asked questions related to merger control in Taiwan. This first installment covers basic questions related to the scope and coverage of Taiwan’s merger control regulations.

1. Does Taiwan have merger control regulations?

Yes. Taiwan’s Fair Trade Act (the “FTA”) includes merger control provisions. The FTA empowers Taiwan’s Fair Trade Commission (the “FTC”) to prohibit transactions it determines would have a net-negative market impact, after weighing the transaction’s anti-competitive or other adverse effects on the Taiwan market against any countervailing economic benefits.

2. Does Taiwan have pre-merger reporting requirements?

Yes. The FTA requires pre-merger notification if a regulated transaction meets certain market impact thresholds.

3. Do global transactions require filing in Taiwan?

Yes, provided that the transaction: (i) falls within one or more of the categories of regulated transactions and (ii) meets certain market impact thresholds, as set forth in the FTA.

4. What types of transactions are covered by the FTA?

The FTA applies to typical merger and acquisition transactions such as statutory mergers and share or asset purchases. Share and asset purchases for less than the entirety of a target business may be deemed regulated transactions under the FTA.  With respect to share purchases, any transaction resulting in the acquirer holding one-third or more of the voting shares of the target would be covered by the FTA.  Likewise, an asset purchase of a principal or major portion of the assets of a target would fall within the scope of the FTA. The FTA’s regulatory purview also extends to other business combinations including joint ventures and various other arrangements whereby one entity has de facto or contractual control over the operations of another.

5. What are the relevant market impact thresholds?

The FTA requires filing if any one of the following conditions exists with respect to a regulated transaction:

  • upon consummation of the proposed transaction, the combined entity would control one-third of the relevant market in Taiwan;
  • prior to the consummation of the proposed transaction, one of the participants in the transaction controls one-fourth of the relevant market in Taiwan;
  • during the immediately preceding fiscal year, (A) one of the transaction participants had sales revenue in Taiwan exceeding NT$15 billion (~US$465.5 million) and (B) the other participant had sales revenue in Taiwan exceeding NT$2 billion (~US$62.1 million)[1]; or
  • during the immediately preceding fiscal year, (A) one of the transaction participants had global sales revenue exceeding NT$40 billion (~US$1.32 billion) and (B) two participants each had sales revenue in Taiwan exceeding NT$2 billion (~US$62.1 million).

6. Are there any exemptions to the FTA filing requirements?

Yes. Common restructuring transactions are exempted from the FTA filing requirements.  Such transactions include:

  • the merger of (i) a parent enterprise (the “Parent”) with (ii) another enterprise, 50% or more of the voting interests of which is held either directly by the Parent or indirectly by a wholly-owned direct subsidiary of the Parent;

  • the merger of enterprises 50% or more of the voting interests of which are held directly or indirectly (not illustrated below) by the same Parent;

  • a transfer by a Parent of (i) all or a principal part of its business or assets or (ii) all or any part of its business that could be operated separately, to another newly established enterprise wholly-owned by the Parent; and the redemption of shares from certain shareholders by an enterprise (pursuant to certain provisions in the Company Law or the Securities and Exchange Law) resulting in any remaining shareholder(s) holding more than one-third of the outstanding shares of the enterprise.

In the coming months, we expect to publish additional installments of this FAQ.  Future installments will cover questions related to the definition of “relevant market” as well as filing procedures and content.  For more information on mergers and acquisitions in Taiwan, please contact Gregory A. Buxton at gbuxton@winklerpartners.com.


[1] Note that different sales revenue thresholds apply to financial holding companies.

Diez consejos en cuanto a relaciones laborales en Taiwán

This is a Spanish translation of our English article “Ten tips for Taiwan employment contracts”, which you can find here.
Esta es la traducción al español de nuestro artículo en inglés “Ten tips for Taiwan employment contracts”, el cuál se encuentra disponible aquí.

El ámbito laboral se ha convertido en un tema de suma importancia en Taiwán dado que el número de demandas laborales iniciadas por empleados ha incrementado significativamente en años recientes. En este artículo presentamos una lista de diez consejos a tener en cuenta toda vez que un empleador se encuentre negociando o elaborando un contrato de trabajo en Taiwán. Pese a no proporcionar una lista exhaustiva, este artículo contiene información vital para los contratos de trabajo a ser implementados en Taiwán para evitar los problemas que vemos de forma regular en nuestra práctica laboral.

1. Uso de un contrato de trabajo escrito

Taiwán no tiene leyes o regulaciones que específicamente regulen los contratos de trabajo y por tanto, los empleadores gozan de cierta flexibilidad con respecto al formato de sus contratos de trabajo. Pese a que no existe una ley explícita que requiera contratos laborales escritos, para asegurar claridad y evitar potenciales disputas con los empleados en el futuro, es recomendable que los empleadores usen contratos laborales escritos en Taiwán.

2. Uso de un manual del empleado / reglas de trabajo

Empleadores que contraten 30 o más empleados deben tener un manual del empleado o reglas de trabajo. Aunque no se llegue al límite de 30 empleados, muchas empresas eligen tener de forma separada, un manual del empleado o reglas de trabajo que también formen parte del contrato laboral. Tener un documento separado (pero vinculante) que detalle elementos de la relación laboral como los derechos de propiedad intelectual, disciplina y convenios restrictivos, otorga a los empleadores mayor seguridad respecto a los derechos y obligaciones mutuas emergentes del contrato de trabajo.

3. Establecer claramente el término del contrato

Los contratos laborales en Taiwán son de término indefinido a menos que se especifique un término fijo. Los empleados empiezan a gozar de todos los derechos laborales otorgados bajo ley en cuanto comienza la relación laboral. Mientras que los periodos de prueba pueden existir en los contratos laborales, éstos son de uso limitado en Taiwán. Esto se debe a que la terminación de la relación laboral en Taiwán no puede ser a mera voluntad del empleador, sino que dicha terminación debe cumplir siempre con los requisitos especificados bajo la Ley de Normas Laborales (“LSA” por sus siglas en inglés).

4. Protección a la propiedad intelectual

Entre las buenas prácticas en contratos laborales está la clara definición de los derechos de propiedad y creación en relación a toda propiedad intelectual ya existente y futura que se encuentre dentro del alcance de las funciones del empleado. La protección puede ser reforzada haciendo referencia en el contrato laboral al manual del empleado o cualquier otro acuerdo escrito que detalle con especificidad los derechos de propiedad intelectual relevantes.

5. Definir claros convenios restrictivos

De forma similar a los derechos de propiedad intelectual, describir claramente los derechos y obligaciones de los empleados durante y después de terminada la relación laboral con respecto a secretos comerciales, información confidencial, y restricciones a la competencia y solicitación, es un aspecto crucial en cualquier contrato de trabajo en Taiwán. El alcance de los convenios restrictivos con respecto a la no competencia y solicitación deben ser razonables. Por ejemplo, el término de duración de la prohibición a la competencia no puede ser más de dos años, el empleador debe tener un interés legítimo a proteger, las funciones laborales y la posición del empleado que se retira deben ser suficientes para otorgarle acceso al interés legítimo que el empleador pretende proteger, y el empleado debe recibir compensación razonable por cualquier pérdida ocasionada por aceptar el convenio de prohibición a la competencia. Si la cláusula no se ajusta a los principios antes mencionados, es muy probable que las cortes de Taiwán no la consideren válida y ejecutable.

6. Cumplir con leyes relacionadas a la transferencia / despido de empleados

Todo empleado despedido a raíz de un proceso de restructuración o cambio de propietarios de la empresa tiene derecho a indemnización y preaviso bajo la ley. La LSA especifica las circunstancias en las que un empleado puede ser despedido legalmente en Taiwán con preaviso e indemnización, como en el caso de transferencia de propiedad o suspensión de actividades de la empresa. Existen muy pocas circunstancias en las que un empleador puede despedir a un empleado sin preaviso o indemnización. Ejemplos de estas limitadas circunstancias son el grave incumplimiento del contrato laboral o la divulgación de secretos comerciales de la empresa por parte del empleado.

7. Elegir el idioma correcto

Las cortes de Taiwán reconocen los contratos de trabajo redactados en chino o inglés. En el caso de existir un contrato laboral en ambos idiomas, es recomendable especificar en el contrato, cual versión rige en caso de un conflicto entre ambas versiones. Es bueno tomar en cuenta, que muchas veces las cortes en Taiwán deciden que la versión que rige es la del idioma chino.

8. Definir jurisdicción y mecanismos de resolución de disputas

La vía de mediación es disponible a los empleados ya que cada gobierno local en Taiwán tiene una oficina que ofrece mediación y apoyo legal sin costo a empleados que tengan disputas con sus empleadores. Las cortes de Taiwán tienen divisiones especializadas en manejar casos relaciones a temas laborales. Es común que los contratos laborales, particularmente aquellos que implican a entidades o empleados extranjeros, contengan una cláusula que indica que la ley aplicable en caso de disputa es la de la República de China (Taiwán) y que las partes deben  usar sus mejores esfuerzos para llegar a un acuerdo mutuo mediante consultación o mediación antes de iniciar un litigio.

9. Especificar beneficios requeridos por ley

Las leyes de Taiwán establecen que los empleadores que tengan una entidad legal constituida en Taiwán deben aportar al Seguro Nacional de Salud y al Seguro Laboral de cada empleado. Estos y otros beneficios, los cuales deben ser pagados por el empleador, no pueden ser alterados por parte del empleador de forma desfavorable en el contrato laboral.

10. Evitar cambios a las condiciones laborales

Existen restricciones impuestas a empleadores que pretendan cambiar las condiciones laborales del empleado (como el lugar de trabajo) en un contrato de trabajo. Por ejemplo, muchas empresas transnacionales desean poder decidir el lugar de trabajo de sus empleados arbitrariamente; sin embargo, nuevas modificaciones a la LSA establecen que los empleadores que pretendan hacerlo deben cumplir con algunos principios generales o sino estarían incumpliendo el contrato laboral y la LSA. Los principios generales incluyen: (a) el cambio debe ser por las necesidades de la empresa y por un propósito justificable; (b) no pueden hacerse cambios desfavorables en cuanto a salario u otras condiciones de trabajo; (c) los cambios deben ser adecuados a las habilidades especificas del empleado; (d) los empleadores deben proporcionar asistencia a los empleados si el lugar de trabajo es inconveniente; y (e) los empleadores también deben poner en consideración los intereses de los familiares del empleado.

Tomando en cuenta los diez consejos arriba mencionados al redactar sus contratos de trabajo puede ayudar a evitar potenciales disputas laborales de forma preventiva. Para más información sobre temas laborales en Taiwán, favor contáctese con Christine Chen cchen@winklerpartners.com o +886 (0) 223112345 externo 307.

Personal information concerns when conducting due diligence

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

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

Purpose

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

Qualifying Conditions

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

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

Contract or contract-like relationship

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

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

Consent

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

Personal information

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

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

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


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

Regulations amended to strengthen border control measures protecting trademarks

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

Below are some key points of the amendment:

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Summer 2017 internship

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

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

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

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

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

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

Grand Justices rule pre-approval for cosmetics advertising unconstitutional

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

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

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

Amendments to Labor Standards Act passed

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

Changes to annual leave

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

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

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

Elimination of national holidays

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

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

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

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

Overtime on flexible rest days

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

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

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

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

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

Two strategies for speeding up patent applications

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

Electronic Priority Document Exchange (“PDX”)

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

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

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

The Patent Prosecution Highway (“PPH”)

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

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

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

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

 

Archives