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 Article 24(2) and Article 30(1), of the Statue for Control of Cosmetic Hygiene have been repealed with immediate effect.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.
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.
Taiwan’s Legislative Yuan passed a bill amending the Personal Information Protection Act (PIPA) on 15 December 2015. The bill was the first amendment to the PIPA since it took effect in 2012.
In 2012, the Executive Yuan declined to put Articles 6 and 54 of the PIPA into force on grounds of administrative impracticability. In response, the Legislature has now amended Articles 6 and 54. In addition, the Legislature added medical records to Article 6′s list of sensitive information that in general cannot be collected, processed, or used unless one of six enumerated exceptions applies. Consent of the data subject is now a permitted exception.
According to media reports, the Ministry of Justice has suggested that it will put the amendments to PIPA including Articles 6 and 54 into force in March of this year.
2 March update: The amendments will go into effect on 15 March 2016. Read our full feature on the PIPA changes here.
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.
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.
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
- 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
- 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)
- 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
- Lease agreement with qualifying incubator programs (for a list of qualifying incubators click here)
5. Won awards in recognized entrepreneurial or design competitions
- 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.
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.
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.
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.
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.