LEGAL UPDATES - TAK Associes and Ecovis International

Intellectual Property Office announced the partial amendment of Chapter III: Substantive Examination of Design Patents of The Examination Guidelines for Patents (“the Guideline”), effective on November 1st, 2020.

The purpose of this revision is to relax the restriction on regulation. In this revision, the limit stating that computer generated icon (CGI) and graphical user interface (GUI) design patent applications must be applied to physical objects, is removed accordingly.

The revision on the Guideline also let software businesses to obtain design patent protection more easily and more comprehensively by relaxing the requirements for disclosure of a design patent application.

Bureau of Labor Insurance announced that from January 1st, the premium rate for labor ordinary insurance shall increase up to 11.5% (including 1% for employment insurance) and the premium rate for Labor Insurance of occupational accident shall apply too.

The employer shall be aware of this adjustment on premium insurance and shall also take the adjustment of minimum wage to $ 24,000 TWD into consideration. Both shall be applied as from January 1st.

On October 9th, the Ministry of Economic Affairs has issued the draft Amendment for Business Mergers and Acquisitions Act. The purpose is to protect shareholders’ rights and to loosen the restriction on merger and acquisition. The main draft revisions are as following:

1. Disclosing material personal interest of directors and majority shareholders is an obligation
A shareholder holding more than 10% shares of the company and who is also the director of the merged company shall disclose the material content of his personal interests related to the merger and acquisition. He shall also explain the reason for approval or objection while issuing a shareholders’ meeting notice.

2. Relaxing the restriction on short-form merger
If the total merged price paid by the company does not exceed 20% of the net worth, this is subject to the approval of an extraordinary meeting by the board of directors.

3. Providing better tax benefits 
The actual acquisition cost can be amortized within specified years, while intangible assets acquired are wider. Moreover, shareholders of the merged company may choose to delay their tax on dividend for 5 years.

The electricity policy of Taiwan Government is to promote photovoltaic and wind turbine. The goal for Taiwan is to generate 20 percent of its electricity through renewable energy by 2025.  The capacity of photovoltaic is expected to reach 20 gigawatts (GW), as to wind turbine is more than 5.7 GW.

According to the statistics from Ministry of Economic Affairs, the total of invested amount for offshore wind power is up to 60.7 billion. Also, Taiwan Power Company is working on improvement of electric grid to

Ministry of Energy is also setting up a new department for photovoltaic, to arrange, plan, review the projects as from this September.

Draft of the amendment on Act for the Recruitment and Employment of Foreign Professionals (“the Act”) has been released by the National Development Council on September 14th, 2020. The purpose of this draft amendment is to simplify the procedure of application for work permit and residence and to incite foreign professionals to stay in Taiwan.

The major draft amendment includes:
- Extension on term of taxation benefit: a foreign specialized professional will benefit from the tax preference at the first application, covering from 3 to 5 years.
- Relaxation on application conditions for permanent residence: according to the draft amendment, foreign professionals are eligible to apply for permanent residence, as long as they stay in Taiwan for 5 consecutive years, and foreign specialized professionals for 3 consecutive years; as long as they stay in Taiwan 183 days per year on average.

Other amendment on other fields like requirement of profession, dependent residence conditions, and health insurance matter are discussed.

National Development Council will collect opinions to write further amendment in the near future.

According to Article 157 of Company Act, the private company (“the Company”) in Taiwan is capable to issue special shares under certain criteria, that shall be prescribed in the article of incorporation (“AoI”) of the Company.

One of the criteria indicates that the Company can have multiple voting right or veto power over specific matters. However, it is not specifically prescribed in the conditions of voting right in the article. To clarify this criteria, the Ministry of Economic Affairs further announced an interpretation on August 13th 2020.

The latter stipulates that if the Company intends to have special shares with multiple voting rights over specific matters or to exclude special shares from exercising multiple rights over specific matter, this shall be to the discretion of company’s shareholders, as long as it is prescribed in AoI of the Company, in compliance with the law.

In July 2020, the Ministry of Labor (MOL) announced that local labor authorities shall follow revised guidelines to exam reporting of furlough from business entity and make a clear report line to its supervised authority.  The labor authority shall focus on the following matters:

1.  Furlough shall be effective under the consent between business entity and the employee.
2. Furlough shall be reported to labor authorities actively, and if there is a change of prescribed furlough, business entities shall report to labor authorities from time to time.
3.  Furlough shall be constructed on the basis of furlough agreement provided by the MOL.
4.  If labor authorities receive any complaint regarding furlough issue, the authorities will initiate examination procedure and other actions.

Business entities shall therefore be more cautious on procedural issues and, substantive matters (wage calculation, working hours, etc.) when implementing furlough policies for employees.

On January 15, 2020, was announced the Business Disputes Procedure Act (the Act) to be effective by July 1st, 2021.  The enforcement of this Act will change the procedure, the measurement and other related regulations involving a business dispute.

It refers to cases involving operations of at least NT$ 100 million for listed company. These business cases shall be settled in a prompt manner. Special Business court is used to tackle with these issues under the Act. Whenever the dispute arises in connection with those cases, the dispute shall be settled in Special Business Court and shall follow the procedure of the Act.

It is mandatory to assign lawyers to tackle with business cases. Mediation procedure is also mandatory to undergo with expertise of related fields, and has to last up to 60 days. Only if no agreement is reached, the parties would enter litigation procedure.

Also, this procedure adapts technological measurements, such as, filing brief and submitting evidence through internet; the hearing can also be handled via video conference. This may reduce time of transmission of the documents, transportation and thus can speed up the whole hearing procedure.

Other new approaches, such as inquiring system, professional witness, secret protective order, are integrated into the Act. Related regulations, assignment of lawyers, calculation on remuneration of lawyers, procedure on brief transmission, etc., are under drafting to finalize the enforcement of the Act.

On August 1st, 2020, National Immigration Agency of the Ministry of the Interior (MOI), announced a new policy on entering Taiwan in this difficult time of COVID-19.

1.  People are subject to a 14-day quarantine after entering Taiwan:
Holders of Taiwanese nationality, and foreigners holding legal alien resident certificate (ARC) or alien permanent resident certificate (APRC) shall be subject to a 14-day quarantine.

2.  People shall submit the a negative test for COVID-19 three days before boarding, and are subject to a 14-day quarantine:
Applicable to non-holders of ARC or APRC.

3.  People from Hong-Kong and Macau shall submit a negative test for COVID-19 three days before boarding, and are subject to a 14-day quarantine after entering Taiwan, if:
 (1) They are holding a special permit for business’ purpose, humanity reasons; or
 (2) They are students holding legal entry permit issued by Ministry of Education.

 4. People from Mainland China
 (1) People subject to a 14-day quarantine after entering Taiwan:
A. Applicable to a Taiwanese spouse or a Chinese kid less than two-years-old who has a Taiwanese parent who holds a legal residential certificate.
B. Applicable to people who are graduating students approved by the Ministry of Education.
 (2) People shall submit the negative test for COVID-19 three days before boarding, and are subject   to a 14-day quarantine after entering Taiwan.
Applicable to people accompanying a kid to enter Taiwan who hold legal entry permit due to family reunion.

The number of trademark applications has been skyrocketing for the past years in Taiwan with a record of 86,794 applications in 2019. The Intellectual Property Office (“the IPO”) was thus mandated to speed up the application procedure to meet the needs of applicants, and to ensure robust protection against infringement.

The trademark examination procedure suffers from being under-staffed, which encouraged the IPO to introduce an accelerated examination program. This fast track mechanism will shorten the examination term for trademark application from 5 to 4 months.

This program will begin on May 1st with online applications. Graphic trademarks (i.e. any sign with distinctiveness: words, devices, symbols, colors, ...) shall be subject to this application, while trademarks in three-dimensional shapes, motions, holograms, sounds or certification marks, collective membership marks, and collective trademarks are excluded from this program.

Name of graphic trademarks must be consistent with the reference provided by the IPO and the application fee can be paid online.

The Minister of Labor (“MOL”) announced the amendment to the Regulations for Establishing Measures of Prevention, Correction, Complaint and Punishment of Sexual Harassment at Workplace to protect employees or candidates’ rights when suffering from sexual harassment at work.

According to the current Regulations, any employer with over 30 employees is required to set up measures of prevention, correction, complaint and punishment of sexual harassment. These measures shall be then posted in the workplace and be acknowledged by all employees.

In case of sexual harrasment, the employee or candidate will have two channels of protection, either through the internal complain channel, or through external complain with local authority if the perpetrator is the employer. The employer is obligated to add this amendment to its current measures.

The amendment of the Regulations concerns more than 30,000 employers and will be enforced starting November 1st.  Any failure to abide by this amendment will result in fines ranging from 20,000 to 300,000 NTD.

The government issued the Special Act of COVID-19 Prevention and Financial Reliefs and Related Regulations to counter the effects of COVID-19.

One of them, issued late March by the Ministry of Health and Welfare, allows citizens under quarantine to apply for subsidies of 1,000 NTD per day. The subsidy can however be perceived only if the applicant complies with the quarantine instructions given by the National Health Command Center.

The Ministry of Health also calls for subsidy applicants to act in good faith by, for instance, refraining from making unnecessary trips to Level 3 countries, as prescribed in the travel notice. Failure to comply with this rule will result in the exclusion from the subsidy program.

According to current Patent Act in Taiwan, applicants can file their patent application online, although the process can be time-consuming and the required documents too heavy to upload.

Consequently, the Ministry of Economic Affairs intends to facilitate the electronic filing mechanism under the Regulations Governing the Implementation of Filing Patent Applications and Services by Electronic Means.

Applicants will have non-electronic alternatives to file their application if file sizes are beyond a predetermined size, or if the information system encounters a breakdown.

Besides, the filing date shall differ depending on the filling medium. In general, the date on which the authority receives the file will be the filing date. However, if it is delivered by post-office, the postmark date will be the filing date

The public and many industries are greatly affected by the COVID-19 coronavirus outbreak. As a result, the Taiwanese Government issued a Special Act of COVID-19 Prevention and Financial Reliefs on February 25th. The purpose of this Act is to support the public in preventing the disease and, when needed, recovering from it. The Act also provides financial relief to industries most impacted by the virus, whether financially or operationally. 

Regarding people in quarantine, professionals unable to work because they take care of family members in quarantine are entitled to a quarantine leave.  They may apply for a government-granted subsidy up to 1,000 NTD per day . Companies granting paid quarantine leave to their employees are entitled to tax reduction.

As regards industries, companies producing protective equipment or raw materials requisitioned by the government can apply for subsidy or compensation granted in the Act.

Additional measures will soon be taken by the Ministry of Labor, such as subsidy programs for employees with unpaid-leave and companies with operational difficulties.

On March 11th, the Ministry of Health and Welfare promulgated a draft amendment to the Regulations Governing of Criteria for the Label, Promotion and Advertisement of Foods and Food Products Identified as False, Exaggerated, Misleading or Having Medical Efficacy.

Under the amendment, food products labeled as “healthy” are prohibited unless they have been certified by the Health Food Control Act authorities. Such certification aims to avoid misleading labels and consumer confusion on products' health benefits.

This amendment will only be enforced starting January 1st, 2022, yet at this date, transgressing manufacturers will risk fines ranging from 40,000 NTD to 4,000,000 NTD. The authorities are also entitled to recall and correct the label within a prescribed time period.

According to current Patent Act in Taiwan, applicants can file their patent application online, although the process can be time-consuming and the required documents too heavy to upload.

Consequently, the Ministry of Economic Affairs intends to facilitate the electronic filing mechanism under the Regulations Governing the Implementation of Filing Patent Applications and Services by Electronic Means.

Applicants will have non-electronic alternatives to file their application if file sizes are beyond a predetermined size, or if the information system encounters a breakdown.

Besides, the filing date shall differ depending on the filling medium. In general, the date on which the authority receives the file will be the filing date. However, if it is delivered by post-office, the postmark date will be the filing date.

The President and the Administration Yuan published on January 15th the Intellectual Property Court and Commercial Court Organization Act and the Commercial Matter Proceeding Act. These new measures aim to promote economic development in Taiwan, and facilitate proceedings to reach fairer decisions in commercial disputes. It is the first time that major cases of commercial disputes will be handled by a professional court, namely the Commercial Court, rather than a common one.

According to the Commercial Matter Proceeding Act, major commercial cases will be referred to the Commercial Court, which will apply special proceedings to cases ranging from disputes of over 100 million NTD between a director and his company to insider trading, financial statement fraud or other criminal liabilities regulated by the Securities Transaction Act of over 100 million NTD. The court will also have authority over disputes in shareholders' or board of directors’ meeting.

Negotiation by mediation is required before judicial proceedings, and attorneys are to be present before the court. During the hearings, the parties may appoint expert witnesses to submit professional opinions and may propose inquiries to the other party. If any trade secrets are involved in the court files, the party may apply for a Secret Protective Order.

In January, the Ministry of Economic Affairs (MOEA) announced draft amendments to the Trademark Act, following a thorough consultation with experts, scholars, as well as two consultation conferences and one public hearing..

In this draft, 14 articles are amended and 2 articles have been added.

Majors changes include: authorising attorneys at law or CPAs only, or anyone meeting the regulated qualifications, to be agent to practice trademark matters (1); introducing express examination for trademark application to accelerate the registration (2); removing the previous condition of refusing application for registration infringement trademark, to simplify the procedure. Instead, trademark could be examined to challenge its validity upon this ground and the interested party can be free from the 5-years statute of limitation prescribed in the current Trademark Act (3).

Taiwan Intellectual Property Office announced draft amendments to the Copyright Act of Taiwan on January 30th to clarify the definitions of the intangible use of copyright, such as public broadcast, public performance and public transmission, as a response to the widespread use of streaming media, e-books and IPTV.

According to the current Act, the copyright shall be assigned in its whole to either the author or its employer. The assignment of the copyright ownership will be more flexible, allowing the parties to agree to allocate the copyright partly, or to assign to a third party.

The exclusion of copyright infringement will also be more specific. To clarify Article 65's authorisation of "fair use" of copyright, new amendment lists circumstances where copyrights are not infringed under Article 44 to Article 63, such as use of works for the purpose of teaching, education, public policy announcement, news report and research. 

Damages for infringement may be calculated based on the applicable royalty fees under the new amendment, which will be a relief to the copyright owner, currently burdened to prove the actual damage amount incurred by the infringement.