National Development Council announces plans to simplify incorporation

The National Development Council and other agencies recently announced three planned measures to simplify procedures for foreign investors wishing to establish business entities in Taiwan.

1. A university may allow a startup to register its business address at a university incubator

A business in Taiwan must register the actual premises from which the business is conducted as its address. Universities however have been reluctant to allow startups to register their business addresses at university incubators because universities are in general not permitted to allow for-profit businesses to use university property.

As a solution, the NDC, the Ministry of Education and the tax authorities have reached a consensus that allowing universities to permit startups  to register their businesses addresses at university-operated incubators serves policies to encourage academic-business cooperation. Consequently, a university incubator will be permitted to allow a student startup to register its business address at the incubator instead of having to make other arrangements such as leasing off-campus premises. It appears that student startups will include startups founded by non-degree students who take courses in entrepreneurship.

2. Foreign investors may appoint agents to open bank accounts and file for tax registration

Currently, a foreign investor must come to Taiwan to open corporate bank accounts and register for taxes in person.  In many cases,the foreign investor must make two trips to Taiwan during the process. The NDC now plans to allow foreign investors to appoint an agent (typically a lawyer or an accountant) to open corporate bank accounts and file for tax registration on behalf of the foreign investor.

3. Foreign investors may appoint an agent to use the online company registration system without use of a digital certificate

The Ministry of Economic Affairs has created a one-stop website that investors can use for routine company filings including name reservation, incorporation, and business registration. To use the website, users must currently create a cumbersome digital certificate using a Chinese interface. To simplify use of the website, the Ministry of Economic Affairs has agreed that foreign investors will be permitted to authorize an agent to make routine filings on their behalf without the foreign investor’s having to obtain a digital certificate.

According to the NDC’s press release, these measures will be adopted in one month.

While all of these measure are steps in the right direction, allowing agents to open bank accounts and file for tax registration  has the most potential to simplify the process of setting up a business in Taiwan for foreign investors.

WP closed for Typhoon Chanhom

Winkler Partners will be closed Friday, 10 July 2015 in accordance with the typhoon warning announced by the Taipei City Government. Please direct any urgent matters to info@winklerpartners.com, which will be checked regularly.

All government agencies in Taipei City, New Taipei City, Keelung City, Taoyuan City and Lienchiang County (Matsu) will be closed on this date; any deadlines that fall on this date will automatically be extended to the next normal working day, Monday, 13 July 2015.

Peter Dernbach quoted in Asia IP on 3D printing

Partner Peter Dernbach was recently interviewed about 3D printing and its implications for intellectual rights holders, as well as the current state of trademark legislation in Taiwan, by Asia IP. In the May and June edition of Asia IP, Peter says that many of the industry’s key players hail from Taiwan and that Taiwan’s Premier has recently said that a plan will be developed to provide further support at the governmental level. From an intellectual property point of view, Peter notes that, “It will be important for industry groups to educate customers about potential risks in using 3D printers to produce items that look like the original goods, but may not share all of the same properties“.

In a further section titled Trademark Survey 2015,  Peter notes that while Taiwan’s Trademark Act was last amended in 2012, some new administrative measures have recently been proposed. “The TIPO (Taiwan Intellectual Property Office) plans to make some administrative changes to further protect trademark owners’ rights. In March 2014, they announced that in order to protect rights, they would shorten the administrative remedial process by setting up a dedicated unit within the TIPO to handle objections, hear disputes and speed up the process from objection to ruling”.

Peter adds that the biggest challenge for trademark owners is the sale on counterfeits online. Meeting that challenge will require greater cooperation between Internet service providers, the IP police and parties which handle the financial transactions for those sites engaging in the sale and distribution of counterfeits. You can read the full article on 3D printing here.

Headstart Taiwan: Required documents to hire foreign employees

Taiwan’s Workforce Development Agency has released a list of documents it will accept from employers to show they qualify under the new Headstart Taiwan program to hire foreign employees without being subject to minimum experience or capital/revenue requirements. To qualify, companies that are registered less than five years must meet one of the following criteria and provide documentation in order to qualify:

1. Received NT$2 million or more in venture capital
Required documents:

  • Venture Capital Enterprise (Update) Registration Form  (or evidence of lawful incorporation) or,
  • Statement of Shareholders’ Capital Contributions in Cash, issued by the competent authority for company registration within 2 months of application date (XX Venture Capital Inc. should appear in the Shareholder Roster) or,
  • Foreign investment approval from the competent authority or its agent (the approved lines of business should include venture capital investments)

2. Registered on the Go Incubation Board for Startup and Acceleration Firms (GISA) with the Taipei Exchange
Required documents:

  • Approval to list on the Go Incubation Board for Startup and Acceleration Firms (GISA), issued by the Taipei Exchange

3. Granted an invention patent in Taiwan, or had a patent assigned or licensed to exploit by a Taiwanese invention patent holder that is registered with the Taiwan Intellectual Property Office (TIPO)
Required documents:

  • Taiwan Invention Patent Certificate or,
  • Approval letter to record invention patent assignment or license issued by the Taiwan Intellectual Property Office, Ministry of Economic Affairs

4. Joined an incubator
Required documents:

  • Lease agreement with qualifying incubator programs (for a list of qualifying incubators click here)

5. Won awards in recognized entrepreneurial or design competitions
Required documents:

  • Certificate from qualifying entrepreneurial or design competitions (for a list of qualifying competitions click here)

In addition to meeting one of the above criteria, all qualified Headstart Taiwan employers must also provide either a Company Registration Certificate or a Business Registration Transcript when applying for employee work permits.

Employees and managers are treated differently for work permit purposes. An ordinary foreign-invested business can obtain a single work permit for a foreign national manager if the business has at least NT$500,000 in capital at registration and NT$3 million in revenue after its first year of operation. These capital/revenue requirements are lower than those for foreign employees (NT$5 million/NT$10 million). Taiwan’s National Development Council has announced that Taiwan will grant up to 2,000 entrepreneur visas starting in July 2015. While the requirements for obtaining and extending an entrepreneur visa have not been announced, the program is intended to allow startups to have multiple foreign managers or executives in addition to foreign national employees.

1st quarter trends in IP released

Taiwan’s Intellectual Property Office (TIPO) has released IP registration figures and trends for the first quarter of 2015.

A total of 17,221 new patent applications were made, an increase over the first quarter of 2014 of 11.88%. There were a total of 3,967 invention patent applications originating in Taiwan and 6,558 originating abroad, a decrease of 12% year on year. The top foreign patent applicants were Intel (173 applications), Toshiba (158) and Tokyo Electron Taiwan (120). The TIPO also notes that while overall applications by Hon Hai Precision Industry Co. (the single largest patent applicant in the country) have decreased, Hon Hai’s applications for Internet of Things and cloud technologies have increased.

In addition, the TIPO received 17,379 trademark applications, and while applications originating in Taiwan decreased by 3.23%, foreign applications increased by 6.62% over the same period last year. The largest number of foreign applications came from the United States (888), China (847) and Japan (801). Applications from China increased 50.71% over the same period last year, a trend the TIPO notes has continued for the last four quarters.

The full report is available on the TIPO’s website in Chinese here.

Taiwan to begin issuing entrepreneur visas from July

According to reports in the Chinese language media, National Development Council (NDC) Minister Woody Duh has announced that Taiwan will begin issuing entrepreneurial visas to foreign nationals from July, in a bid to attract talent, strengthen Taiwan’s startup ecosystem and create jobs.

2,000 visas a year will be available to foreign nationals (including nationals of Hong Kong and Macau), which come with one year of residence. Extensions of a further two years are available to those entrepreneurs who can provide evidence of operating a bona fide business, such as registering a business or generating revenue. Entrepreneurs who lawfully reside in Taiwan for five years are then eligible for permanent residency.

The report notes that other countries such as Chile, South Korea, Canada, Singapore and the UK have issued similar plans. The NDC has been charged with developing Taiwan’s startup ecosystem under the Headstart Taiwan project, with the aim to assist entrepreneurs through deregulation, attracting investment and developing startup clusters, most notably Taiwan Startup Stadium. For more on the Headstart Taiwan project please visit the NDC’s website.

Taiwan and the right to be forgotten

A case of first impression involving the right to be forgotten recently came before the Taipei District Court. Despite an inconclusive District Court decision, Taiwan’s history of adopting European data protection standards and shifting public opinion in Taiwan suggest that the right to be forgotten could be created in the future.

Shi v. Google International LLC (Taiwan)

The facts of Shi v. Google International LLC (Taiwan) were similar to Google Spain SL, Google Inc. v Agencia Española de Protección de Datos, Mario Costeja González, the Spanish case decided by the Court of Justice of the European Union in 2014. In Costeja, the Court of Justice held that Google Inc. was a data controller and that a search operator had a duty to remove links that are “inadequate, irrelevant or no longer irrelevant, or excessive in relation to the purposes of the processing at issue carried out by the operator of the search engine, not kept up to date, or that they are kept for longer than is necessary unless they are required to be kept for historical, statistical, or scientific purposes…”

Mr. Shi was an owner of a Taiwanese baseball team that was accused of throwing games a number of years ago. Mr. Shi was indicted on fraud charges but ultimately found not guilty. Nonetheless, information about his alleged involvement in throwing baseball games still appears in Google search results.

In 2014 Mr. Shi brought legal proceedings against Google International LLC, Taiwan Branch (“Google Taiwan“) asking that Google Taiwan be ordered to remove its links leading to information about Mr. Shi’s alleged involvement in the scandal. In January of this year, the Taipei District Court issued a judgment against Mr. Shi. 103 Su Zi No. 2976.

In its opinion, the District Court did not reach the issue of whether a right to be forgotten should be recognized in Taiwan. The District Court was unwilling to infer from the fact that Google’s search engine may be used in Taiwan that its searches and organization of information take place in Taiwan. Nor was it willing to infer that Google Taiwan had control of the Google search engine. It found that Google Search is operated by Google Inc. and that Google Taiwan was a branch of Google International LLC, another entity in the Google group. As a result, Mr. Shi had no standing to bring his claim against Google Taiwan. This ruling contrasts sharply with Costeja where it was held  that Google Inc. was subject to the European data protection law because despite not having a formal legal presence in Spain, its activities there in combination with its Spanish affiliate amounted to an establishment in Spain.

While Mr. Shi is said to be appealing, the case highlights once again the great importance the Taiwanese courts place on the distinctions between different legal entities even in the same group of companies and the reluctance of the lower courts to squarely address new legal theories such as the right to be forgotten.

Taiwan Looks to Europe

The predecessor of Taiwan’s current Personal Information Protection Act (the “PIPA“) was the 1995 Computer Processed Personal Data Protection Act. This statute was based largely on the 1980 OECD Guidelines on the Protection of Privacy and Transborder Flows of Personal Data and the Council of Europe’s 1981 Convention for the Protection of Individuals with Regard to Automatic Processing of Personal Data.

Even before the PIPA took effect in 2012, a delegation from the Ministry of Justice traveled to Europe to study the draft General Data Protection Regulation (GDPR). At the time, officials from the Ministry of Justice also stated that the Ministry was following the development of the right to be forgotten in Europe with a view toward including it in the next set of amendments to the Personal Information Protection Act. While these amendments have not yet appeared, the Ministry of Justice has also formally requested the Ministry of Foreign Affairs to monitor the progress of data protection legislation in Europe.

Debate on Internet Regulation in Taiwan

Finally, heightened public concerns over internet abuse and the growing perception in some quarters that Taiwan’s freewheeling internet culture needs to be better regulated have lead to renewed calls for a right to be forgotten in the first half of this year. To be sure, suggestions that greater control be exercised over the kinds of speech and information available on the Internet in Taiwan are vigorously opposed by many influential voices. Still, there is noticeably little opposition to the concept of a right to be forgotten to date.

In sum, Taiwan’s courts have thus far declined to recognize a right to be forgotten by sidestepping the issue. Nonetheless, Taiwan’s tendency to follow European developments in data protection and growing concerns about the social cost of an unregulated internet make it foreseeable a version of the right to be forgotten will be proposed by the academic experts who advise the Ministry of Justice on data protection. It is equally foreseeable that any such proposal will engender a public debate similar to the one in Hong Kong on whether the right to be forgotten is in fact a device to protect the wealthy and powerful from what they deem to be excessive public scrutiny.

Issuing gaming points in Taiwan

The key legal requirement to issuing online gaming points in Taiwan is that the gaming point issuer must adopt one of several regulator-approved measures to ensure that users can receive refunds for unused points. For example, the regulator has approved a bank guarantee that user points will be refunded.

Failure to obtain a bank guarantee or to adopt another approved method may result in an order from the regulator to take down the online game.

Until recently, this requirement applied only to online gaming software. The Taiwan Industrial Development Bureau defined online gaming software in a nonbinding 2006 guidance as “software that allows a player to play a game concurrently with multiple other persons over the internet through a server maintained by the gaming operator.” A typical example of online gaming software is World of Warcraft.

However, the Industrial Development Bureau is now inclined to consider all gaming software published via application (app) platforms as online gaming software even if the software does not allow players to play concurrently.  Consequently, foreign game publishers whose payment structure requires the issue of gaming points need to ensure that an approved method for securing refunds is in place regardless of whether they publish traditional multiplayer online games or the newer single-player games popular on mobile app platforms.

Taiwan’s Labor Ministry relaxes rules for foreign professionals working at startups

On 7 January 2015, the Ministry of Labor (MOL) amended rules for foreign professionals working in Taiwan. Among the latest amendments, foreign professionals that have a bachelor’s degree or higher are no longer required to have work experience to work at qualifying startups. Qualifying startups are those that meet one of the following criteria outlined as part of the National Development Council’s HeadStart Taiwan project:

  • Have received NT$2 million or more in venture capital,
  • Have registered on the Go Incubation Board for Startup and Acceleration Firms (GISA) with the GreTai Securities Market (as of March 2015 known as Taipei Exchange),
  • Have been granted an invention patent in Taiwan, or have had a patent assigned or licensed to exploit by a Taiwanese invention patent holder, the assignment or license of which is registered with the Taiwan Intellectual Property Office (TIPO),
  • Incubators already part of the international startup cluster in Taipei approved by the Executive Yuan or directly operated by or cooperating with the Ministry of Economic Affairs and which have been rated as Quality Incubators by the Ministry in the last three years or,
  • Have won awards in recognized entrepreneurial or design competitions.

HeadStart Taiwan’s main objectives are to create an environment that supports the growth of Taiwan’s startup ecosystem through deregulation, attracting capital, and cluster building. For more information, please refer to the NDC’s website here.

Registering your .taipei domain and protecting your brand online

In August, Taipei City Government reached an agreement with ICANN to release the .taipei domain and make it available to businesses and individuals. Spearheaded by Taipei’s Department of Information Technology (DOIT), the .taipei project follows a trend set by other world cities such as New York, London and Berlin, which, in recent years, have launched their own city-level domains. According to the organizers, the new domains are a good way to market goods and services to the local community; attach a geographic location to brand identity; highlight a business’ location in relation to competitors; and provide a boost to search engine optimization (SEO).

From December 1, holders of global trademarks registered with the Trademark Clearinghouse (TMCH) will be given priority to register their new .taipei domains, following that in January 2015 Taipei-based companies and organizations will be able to register their .taipei addresses. General registrations won’t be permitted until March 31st.

Registrations will be processed in four waves:

Sunrise Period: December 1-31: Owners of trademarks registered with TMCH
Taipei Enterprise Sunrise Period
: January 21-February 19: Entities registered in Taipei City or New Taipei City only
Landrush Period
: February 24-March 26: First come, first served
Open Registration: March 31 onwards

*For detailed period policies please click the respective link

Domains registered in the Sunrise Period will cost a total of NT$4800 (approximately US$155) for three years. Taipei Enterprise fees will be NT$1920 for three years, while registrations made in the Open Registration Period will cost NT$800 for one year, according to information provided by Net Chinese (in Chinese), the domain registrar handling the .taipei project. Trademark holders wishing to register during the Sunrise Period can only register domains that exactly match the trademark listed with TMCH. During the Taipei Enterprise period, both full and partial matches are permitted.

The priority given to trademark holders allows for the protection of these marks online, and prevents domain squatting, a practice that can seriously damage a brand’s online identity and reputation, and can cause confusion amongst consumers. WP’s Daniel Chen, who has worked on many domain dispute cases for our international clients says, “We advise our clients, and indeed all trademark holders, to register their respective domains early to avoid the often lengthy and costly process of obtaining a suspension and/or transfer of domains registered by squatters”.

Additionally, Partner Peter Dernbach is active in the ICANN community as a member of the IP Constituency, currently serving as a member of the PDP Working Group on Translation/Transliteration of Contact Information. Peter also serves as a Panelist for WIPO’s Arbitration and Mediation Center, and has helped resolve numerous domain name disputes under the Uniform Domain Name Dispute Resolution Policy (UDRP).

Businesses interested in registering a .taipei address should visit the .taipei project website for more information, or contact Net Chinese.