Update
Implementing Regulations for ISP Safe Harbor Amendments Announced
The Taiwan Intellectual Property Office (TIPO) announced the Regulations Governing Implementation of Limitations on the Liability of Internet Service Providers on September 7, 2009. The regulations address amendments to the Copyright Act establishing safe harbor provisions for Internet Service Providers (ISPs) that came into force earlier in 2009. The regulations have been based on the outcome of discussions with interested parties during the drafting of the amendments to the Copyright Act and public hearings this past summer. Interested parties had until September 17 to submit comments on the regulations. Absent significant opposition, the TIPO anticipates that the regulations will come into force in November 2009.
Notifications and Counter-notifications
Article 3 of the Regulations sets out the requirements for notifications sent to ISPs by rights holders under the Copyright Act. Notification may be made in writing sent by mail or fax or via electronic signature document sent by e-mail. The rights holder or its authorized representative must sign or chop the notification. ISPs may provide alternate means of receiving notification from rights holders. The notification must include:
i. Identity of the rights holder’s name along with their address, phone number, fax number, or e-mail;
ii. Identity of the infringed copyright;
iii. Request to the ISP to remove or deny user access to the infringing content;
iv. Adequate information and access routing information on the infringing content;
v. A statement that the rights holder has a good faith belief that the content cited is unauthorized or violates the Copyright Act; and
vi. A statement that the rights holder will assume liability if third parties incur damages as a result of false notification.
If multiple infringements will be alleged then these may be cited in a single notification.
Article 4 requires that an ISP notify a rights holder of any required amendments to a notification within five working days of the day following receipt of the notification. And a rights holder then has five working days to submit an amended notification. A notification shall be void if the rights holder fails to comply within the five-day period. Notification that does not meet the requirements and that has not been amended within the prescribed time to comply with the requirements shall not constitute evidence that an ISP has knowledge or awareness of the alleged infringement. That is to say, improper notice shall be deemed no notice.
The Copyright Act provides users of information storage service providers with a mechanism to challenge an infringement notification. Users of other types of ISP do not enjoy this right. A user of an information storage service provider who believes he or she has been wrongly accused of infringement by a rights holder may submit counter-notification to the information storage service provider requesting restoration of the alleged infringing content. Article 5 of the regulations provides that a counter-notification must be signed or chopped by the user (or representative) and include:
i. Identity of the user and contact information;
ii. Request to restore deleted content or access to the same;
iii. Adequate information on the content;
iv. A statement that the user has a good faith belief that he or she has legal authorization to use the content in question and that the deletion or denial of access to content is result of a false claim by the rights holder;
v. Consent to the information storage service provider to forward the counter-notification to rights holder; and
vi. A statement that the user will assume liability if third parties incur damages as a result of false counter-notification.
A representative making counter-notification must at same time state that he/she is doing so on behalf of the user.
Article 6 requires that an ISP notify a user of any required amendments to the counter-notification within five working days of the day following receipt of the notification. And a user then has five working days to submit the amended counter-notification. A counter-notification shall be void if the rights holder fails to comply within the five-day period and an ISP will not be required to restore access to the content.
Three-Strikes Rule
The Copyright Act provides that an ISP must to avail itself of the safe harbor protections inform its users that their service shall be terminated in whole or in part in the event that a user has been involved with three incidents of infringement. The Copyright Act does not, however, expressly require that the ISP terminate service. And the regulations do not address the "three-strikes" provision of the amendments at all though its absence from the regulations had been expected as users of connection ISP had not been provided with a means within the Copyright Act to challenge a notification. The amendments to the Copyright Act and the regulations appear to have been carefully thought through to appease those parties lobbying for the inclusion of a "three-strikes" mechanism while ensuring that the ISP and individual users of connection services have a degree of protection.
Observations on the 'Safe Harbor' Regime
There has, first, been no actual obligation imposed by the Copyright Act or the regulations on an ISP to terminate service, throttle, or restrict a user’s connection after the occurrence of "three-strikes". And where, for example, a user of a connection ISP has not been provided with any means within the notification system to challenge a notification then making it in fact a contractual issue between the ISP and user limits the likelihood of the law being challenged.
A rights holder has no right to know what action an ISP has taken against a connection service user and additional laws and regulations prevent the disclosure of such information absent a court order. There would be little current incentive for an ISP frequently trying to upsell consumers to more expensive and faster connections to actually enforce the "three-strikes" rule as a notification only contains an allegation of infringement–and given some of the cases reported in other jurisdictions and the use of automated notification systems that troll for infringement based on key words rather than actual content, an ISP would be correct to be wary. An ISP could face liability but this would require that a rights holder litigate first against a connection user. Which would in turn require sufficient evidence to support a court order to disclose the identity of the user.
The amendments also impose civil liability on any party who files a false notification of infringement. The regulations further require that a notification include both a statement by the rights holder that it has a good faith belief that the content cited is unauthorized or violates the Copyright Act and that the rights holder will assume liability if third parties incur damages as a result of fraudulent notification. Where, for example, a user of a connection ISP has received a false notification then the only redress to avoid "the strike" would be to bring legal action against the rights holder, and that user would have statements by the rights holder contained in the notification on which to base the action. The prospect of civil liability should serve to somewhat check the over-enthusiastic use of automated infringement notification systems sometimes seen in other jurisdictions as a rights holder should have sufficient and actual evidence of infringement at the time that the notification had been issued.
A version of this article appears in the Computer Law and Security Review. For more information about this topic, please contact K. Mark Brown or Marcus Clinch.
Tags: copyright , IP , Marcus Clinch , Mark Brown
Feature
Getting the Deal Through - Trademarks 2010 Published
Getting the Deal Through recently published its most recent edition of Trademarks,* a volume in its series of annual reports designed to help general counsel, government agencies and businesses stay informed about increasingly complex trademark laws. Partner Peter J. Dernbach contributed to the Taiwan chapter, which includes information on Taiwan's year-old IP Court and the Taiwan Intellectual Property Office's proposed amendments to the Trademark Act.
For more information on trademark issues in Taiwan, please contact Peter Dernbach at +886.2.2311.2345 ext. 222.
*Reproduced with permission from Law Business Research. This article was first published in Getting the Deal Through - Trademarks 2010 (published in October 2009; contributing editors Joseph F Nicholson and Stuart J Sinder, Kenyon & Kenyon LLP). For further information please visit www.GettingTheDealThrough.com.
Tags: IP , Peter Dernbach , trademark
Update
CLA Tackles Abusive Penalty Clauses in Labor Contracts
The Taiwanese media reported earlier this month that the Council of Labor Affairs (CLA) was drafting amendments to the Labor Standards Act to prevent abuse of penalty clauses in labor contracts. The CLA says it has received many complaints of attempts to enforce unfair, abusive penalty clauses to which employees have agreed in order to find employment during the current economic downturn.
It should be noted that penalty clauses for breach of contract can and are enforced under Taiwanese law. Labor contracts are no exception. The CLA distinguishes between penalty clauses and what it terms "punitive penalty clauses", which are essentially liquidated damages. Punitive penalty clauses are most common in the aviation industry and are widely used in employment contracts with pilots. An example of a punitive penalty would be if an employer and employee agreed to fixed damages for early resignation at 30 months salary.
According to the CLA, penalty clauses first became common in Taiwan's technology industry. Typically, the employee agrees that if he or she resigns before having completed two to three years of employment, he or she will pay the employer a penalty equivalent to two or three months of salary. The penalty clause for early resignation is often accompanied by a non-compete clause where the employee agrees to pay the employer a penalty if he or she accepts employment with a competitor after resignation from the original employer within a certain period of time. The employee usually agrees to wait for six months or up to two years before accepting employment at a competitor.
During the recent recession, both ordinary penalty clauses and punitive penalty clauses have spread to other industries. The CLA is now proposing to prohibit all punitive penalty clauses. Nonetheless, the CLA argues that ordinary penalty clauses should still be enforceable on the public policy grounds that if an employer intensively trains an employee such that the employee's job skills are improved during the course of employment, the employee should repay the employer through service or in money. To protect employees, the CLA wants to create an exception to the enforceability of ordinary penalty clauses where acts of the employer caused the employee to terminate the employment relation. Under this exception, even an ordinary penalty clause will be void if the employer has violated the terms of the employment contract, labor laws, or failed to pay wages and the employee terminates the employment.
The CLA will now need to draft its proposed legislation and hold public hearings before submitting its draft to the Executive Yuan for approval, after which the Legislature will take up the bill.
For legal guidance on employment law in Taiwan, please contact Christine Chen.
Tags: Christine Chen , employment , labor
Feature
Taiwan Chapter of The Mergers & Acquisitions Review Published
Partner Steven J. Hanley has contributed to the Taiwan chapter of the Mergers & Acquisitions Review, published annually by Law Business Research, Ltd. The chapter can be downloaded here.
Tags: commercial , investment , Steve Hanley
Feature
Winkler Partners Contributes to Taiwan Chapter of Enforcement of Money Judgments
Winkler Partners associates Marcus Clinch and Liu Yen-ling recently contributed to the Taiwan chapter of the latest edition of Juris Publishing's Enforcement of Money Judgments. The chapter provides a comprehensive and current overview of enforcing a foreign money judgment in Taiwan.
For more information about this topic, please contact Marcus Clinch at 886-2311-2345 ext. 511, or Liu Yen-ling at ext. 543.
Tags: Liu Yen-ling , Marcus Clinch
Update
ISP 'Safe Harbor' Loopholes Panned
Criticism has been leveled at the “Internet Service Provider Liability Limitation” amendments to Taiwan’s Copyright Act that came into effect in May 2009. The amendments resemble the ISP liability limitation regime set out in the 1998 US Digital Millennium Copyright Act (DMCA) Title II and provide for a notice-takedown-counter notice mechanism as well as a controversial “three strikes” rule whereby alleged offenders face termination of services in whole or in part.
The amendments have been justified as necessary to reduce online copyright infringement in Taiwan while setting limitations on the liability of an ISP for acts of infringement committed by users. To avail themselves of the “safe harbor” protections from civil and criminal liability, ISPs must remove or disable allegedly infringing material upon notification from a rights holder. ISPs, however, need not make a substantive determination as to whether the activity cited in a notification constitutes infringement.
Although the amendments to the Act include mechanisms to discourage the sending of false notifications, concerns remain that an ISP may be compelled to remove material or terminate user access on the basis of an allegation of infringement. Individual users of connection services do not even have the option of providing a counter-notification in the event that the ISP warns the user that a notice has been received. Receipt of three notices should lead to the termination of a user’s access to the internet by the ISP in whole or in part. An individual user’s only real recourse would be to take legal action against party issuing the notice(s).
Tags: copyright , IP , Marcus Clinch , Mark Brown
Update
Anti-Spam Bill Rebuffed
Taiwan’s Legislative Yuan recently rejected a long-awaited anti-spam bill that had been drafted by the National Communications Commission (NCC) and approved by the Executive Yuan. The bill, entitled Regulations Governing Electronic Commercial Mail, called for restrictions on senders of commercial e-mail, requirements on ISPs to initiate measures to prevent unsolicited commercial e-mail, and civil remedies for victims of spam. The bill allowed recipients of spam to file civil suits against senders. Damages of between NT$500 and NT$2,000 (US$15 – US$62) could be sought per spam e-mail. The bill also prohibited the use of alphabetical spam and required senders of commercial e-mail to provide recipients cost-free opt-in and opt-out mechanisms.
Critics of the bill raised concerns that advertisers and ISPs would be unfairly targeted in civil actions rather than the original authors of the spam. The NCC, the competent authority under the regulations, contends, however, that advertisers and ISPs have a degree of responsibility in preventing spam and therefore should potentially bear some liability.
Concerns had also been raised that the courts could be flooded with civil claims by individuals seeking monetary damages. It had been suggested, in response to this concern, that the regulations should include administrative remedies that empowered and obligated the NCC to investigate complaints. The NCC, however, opposes extending the scope of its powers and responsibilities to this degree citing the need to protect personal information and the successes in curbing spam of the civil remedy approach under the US CAN-Spam Act.
It has been estimated that Taiwan residents received over 110 billion spam emails in 2008, or 29 spam emails per person daily on average.
The Legislative Yuan has requested that the NCC address the concerns that it has raised and submit a revised version of the bill in the future.
A version of this article appears in the Computer Law and Security Review. For more information about this topic, please contact K. Mark Brown or Marcus Clinch.
Tags: consumer protection , Marcus Clinch , Mark Brown , telecom
Feature
Do Expatriates Need to Join the National Health Insurance Program?
The promulgation of the National Health Insurance Act in 1994 changed Taiwan from a country where most of the population did not have insured health care to one where most of the population enjoys a health care system that ranks among the best in the world. The program provides both dental and medical coverage, and its premium ratio is 6:3:1, paid by employers, employees, and the government, respectively.
Some expatriates assigned to work in Taiwan question whether they need to pay into Taiwan's national health insurance system. For example, the expatriate and his or her family already have private health insurance through their employer, or their assignment is on a short-term basis. They might have a preferred practitioner in one of Taiwan's neighboring countries and only plan on using Taiwan's health system in the case of an emergency.
According to the National Health Insurance Act, all foreign nationals with work authorization, an employment-based alien residence certificate, and employment contract with a Taiwanese company are required to join Taiwan's health insurance system from the day they start work. The penalties for employees for not participating in the system range from NTD 3,000-15,000 (approx. USD94-470). Employers who fail to insure employees and their dependents may be subject to a penalty of double any premiums due, as well as potentially have to refund any of the employer’s share of the premiums the employee had to pay by his or herself.
In some cases, an entity outside of Taiwan will send a foreign employee to the island in order to fulfill a construction, sales or technical contract. This expatriate, who has an employment contract with, and is receiving a payroll from an entity outside of Taiwan, will be required to join the health insurance program within four months after receiving their alien residence certificate and work permit. Since the foreigner's payroll comes from outside of Taiwan, he or she must apply for health insurance at a national health insurance office as well as pay the NTD 659 (USD 20) a month premiums. The government can in fact verify whether income is from a Taiwanese company by checking with the local tax administration.
It should be noted that expatriates who have private health insurance are still allowed to keep and use their policy if they join the national health insurance program. Many larger companies in Taiwan provide employees with additional health insurance via private insurance companies as an additional worker benefit.
For legal guidance on employment law in Taiwan, please contact Christine Chen.
Tags: Christine Chen , employment , labor
Update
Taiwan Enacts ISP 'Safe Harbor' Amendments to Copyright Act
Taiwan has enacted long-debated copyright legislation establishing safe harbor provisions that Internet Service Providers (ISPs) may avail themselves of for copyright infringement by users. The “Internet Service Provider Liability Limitation” amendments to the Copyright Act, promulgated in May 2009, have been based largely upon the ISP liability limitation regime set out in the 1998 U.S. Digital Millennium Copyright Act (DMCA) Title II.
According to the International Intellectual Property Alliance, losses to the copyright industry from online piracy in Taiwan exceed US$230 million annually.1 Copyright industry groups have lobbied the government vigorously in recent years seeking greater ISP accountability for online infringement and effective, non-judicial means to combat infringement of copyrighted works online. The amendments reflect an attempt to reconcile the assumed losses by copyright holders from online infringement with the need to limit liability exposure for ISPs while protecting the rights of digital users.
Four types of ISPs have been identified and the scope of their services defined:
a. Connection service providers: those who provide services, by wire or wireless means, of transmitting, routing, or receiving, information through a system or network controlled or operated by the service provider, or of the intermediate and transient storage of information in the course of such transmitting, routing or receiving;
b. Caching service providers: those who, after information has been transmitted at the request of a user, provide services of intermediate and temporary storage of the information through a system or network controlled or operated by the service provider, for the purposes of providing accelerated access to the information by users who subsequently request transmission of the information;
c. Information storage service providers: those who provide information storage services at the request of a user through a system or network controlled or operated by the service provider; and
d. Search service providers: those who provide users with services, including an index, reference, or hyperlink, to search or hyperlink to online information.2
All ISPs must comply with the following general requirements to be eligible for the safe harbor from the infringement of copyright by their users:
a. adopt copyright protection measures and inform users of such measures;
b. adopt and inform users of a “three-strikes” policy whereby the services of repeatoffenders would be terminated in whole or in part;
c. make public the information about contact windows for receiving notices provided under this regime; and
d. implement technical measures to identify or protect copyrighted works that are provided by rights holders and have been approved by the competent authority. ISPs are not required to monitor content.
Additional requirements to qualify for safe harbor have been imposed on ISPs by type according to the nature of services provided:
a. Connection service providers: transmission of information must be initiated by or at the request of a user and carried out through and automated process without selection or modification of the transmitted material by the connection service provider.
b. Caching service providers: cached information must not be modified, and caching service providers must adhere to rules regarding the “refreshing” of cached information through an automated technical process. Caching service providers must also remove or disable access to allegedly infringing content in an expeditious manner upon notification by the rights holder of alleged infringement.
c. Information storage service providers: must have no knowledge of, nor directly receive financial benefit from, infringing activity by a user and should respond expeditiously to remove or disable access to allegedly infringing content upon notification by a copyright holder.
d. Search service providers: must have no knowledge of nor directly receive financial benefit from infringing activity by a user and should respond expeditiously to remove or disable access to allegedly infringing content upon notification by a copyright holder.
A notice/take down mechanism has been established for caching, information storage, and search service providers. Receipt of proper notification requires that the ISP remove or disable access to the allegedly infringing material in order to obtain “safe harbor” protection. A rights holder may provide notification of infringement to a connection service provider. The connection service provider may communicate that notification to the user to demonstrate its compliance with the aforementioned general requirements. ISPs need not make a substantive determination as to whether the activity cited in a notification from a rights holder constitutes infringement. The ISP must simply be satisfied upon a formal examination of the content of the notification of its validity and sufficiency. It should also be noted that failure by caching, information storage, and search service providers to remove allegedly infringing content upon notification does not necessarily make the ISP liable for infringement. A rights holder would still need to establish the general elements for tort liability - willful misconduct or negligence on the part of the ISP - and to do so to the satisfaction of a court.
The amendments provide users of information storage service providers with a mechanism to challenge the infringement notification. The safe harbor provisions require that information storage service providers inform an allegedly infringing user of its take down measures pursuant to a rights holder’s notice of alleged infringement. A user who believes he or she has been wrongly accused of infringement by a rights holder may submit counter-notification to the information storage service provider requesting restoration of the alleged infringing content. Upon receipt of a counter-notification, the information storage service provider must forward the notice to the copyright holder.
An information storage service provider will not be obligated to restore a user’s content if the copyright holder submits proof to the provider within ten days of receiving the counter-notification that civil or criminal action has been initiated. If the copyright holder fails to provide such proof then the information storage service provider must restore the content within 14 business days of forwarding the counter-notification to the rights holder.
ISPs must inform users that their service shall be terminated in whole or in part in the event that a user receives three notifications of infringement from copyright holders in order to qualify for safe harbor. A degree of protection, however, has also been set out to prevent the abuse of the notification system. The amendments impose civil liability on any party who intentionally or negligently files a false notification of infringement or a false counter-notification. This would check the over enthusiastic use of automated infringement notification systems sometimes seen in other jurisdictions. A rights holder should have sufficient and actual evidence of infringement at the time that the notification had been issued. It should also be noted that parties could also avail themselves of other protections and rights set out in the Criminal Code, Civil Code, other Acts in the event of actions taken as a result of false notifications. The amendments, however, afford ISPs protection.
ISP complying with requirements under the amendments to qualify for safe harbor or who act in good faith upon becoming aware of suspected infringement will not be liable to users for any actions taken.
The Taiwan Intellectual Property Office plans to hold further public hearings later in the year on the proposed regulations accompanying the amendments.
1IIPA 2009 Special 301 Report on Copyright Protection and Enforcement
2Taiwan Intellectual Property Office translation of draft partial amendments to the Copyright Act
For more information about this topic, please contact K. Mark Brown or Erik Chen.
Tags: copyright , Erik Chen , IP
Update
FCMs Permitted to List on Taiwan Stock Exchange
The Financial Supervisory Commission has released new regulations that will permit Taiwanese Futures Commission Merchants (FCMs) to list on the Taiwan Stock Exchange.
The regulations released yesterday require that an FCM have been listed on Taiwan's OTC market for at least one year and have a net value of NT$2 billion (c. US$60 million).
Other requirements include minimum capital adequacy requirement (a ratio to customer bonds) and the absence of disciplinary action by the regulator or major, uncorrected violations of the FCM's internal controls.
For more information on listing requirements in Taiwan, please contact Shan Lee at +8860-2-2311-2345 ext. 333.
