Taiwan: Taiwan IP Court's Jurisdiction Over Abroad E-Commerce Sites

In a recent decision, the Taiwan IP Court rendered a new perspective on the test of determining whether a Taiwan court has jurisdiction over a foreign defendant whose products are sold to Taiwan via its website. Hsu v. Village Vanguard, 107 Min-Zhu-Kang 1 (IP Court 2018). This second-instance decision held that, to determine whether personal jurisdiction over a foreign defendant resides with a Taiwan court, the court should follow the general theory of jurisdiction in international law, taking into consideration all relevant factors including whether the foreign defendant can reasonably anticipate that Taiwan is one of its major markets or fields of activity.

Before Hsu

While Taiwan is a civil law country, no direct guidance is provided by any statutory law on how a court should decide whether it has jurisdiction over a dispute having a foreign element. This is an area where legislators intentionally remained silent and let the case law to prevail. Before Hsu, the dominant test courts had been adopting was the so-called "analogy theory." Under this theory, if any of the rules concerning national jurisdiction as provided in the Code of Civil Procedures, when being applied in an analogous way to the dispute (namely, with the dispute's foreign elements being put aside), can afford jurisdiction to a Taiwan court, then the court can take jurisdiction over that dispute, unless the court considers itself as an inappropriate forum to that dispute (or, in legal argot, forum non conveniens).

The rules for determining national jurisdictions in the Code of Civil Procedures can make a long list of legal Latin terms. These concisely-worded rules, many of them able to trace their lineage all the way back to the Roman law, sometimes have to be much stretched, or truncated, before being aptly applied or dis-applied to an abroad online IP dispute. The most problematic of all is the rule that says a court has jurisdiction if it is located within the place of a tort, including the place where the consequences of the tort occurs.

Consider the case of Hsu, where the alleged counterfeits (made in China) put on sale at a Japanese toy company's website indeed entered Taiwan's market due to Taiwan consumers' online purchases, and hence infringed the plaintiff's copyrights in Taiwan. At first glance, these facts could make Taiwan a place of the tortious result, per a literal reading of the rule. However, if the analogy approach is hence to be applied unconditionally, then the Japanese company, or any foreign company under like circumstances, will be subject to the IP Court's jurisdiction, however flimsy or incidental the Taiwan consumers' purchases may be. Evidently, to reach a meaningful decision, the court needs to add some limitation to the rule of the place of the tort; but the question is the rule itself is too concise to provide any textual support for inclusion of any substantial limitation.

Holdings in Hsu

The IP Court's decision in Hsu is groundbreaking as it held that the analogy approach should be abandoned. Instead, to determine whether the court can take jurisdiction over a dispute having a foreign element, the judges should follow the general theory of jurisdiction in international law. In other words, all relevant factors of a case shall be considered and weighed against each other under a case-by-case basis, with the place of tortious result being just one factor. Other factors to be considered include, to name a few, the defendant's residence, the place where the tort is committed, the place where the defendant's obligation if any should have been performed, the place where the defendant's property is located, and, last but not least, the defendant's reasonable anticipation that Taiwan is one of its major markets or fields of activity. The question of forum non conveniens, on the other hand, shall also be reviewed in light of this approach, and the factors to be considered include the convenience of investigation of evidence, effectiveness of the enforcement of judgment, and the substantive justice, among others.

What is highlighted in Hsu is the foreign defendant's reasonable anticipation (or forseeability), a factor which actually has no presence in any rules for national jurisdiction in the Code of Civil Procedures. According to Hsu, this factor shall be accorded additional (if not critical) weight when the defendant resides or the infringement is committed outside Taiwan. In an online infringement dispute, a defendant's foreseeability can be established by, for example, the facts that the defendant's website is operated in a country to which Taiwan has cultural and language affinity, and that citizens and netizens of the two countries have convenient and voluminous tourism and information exchange.

By cutting the Gordian knot, the IP Court bypassed the question of whether any rule of the Code of Civil Procedures should apply analogously so as to afford jurisdiction over an alleged online infringement the main activities of which seem to have nothing to do with Taiwan. As to the razor used by the court to solve this conundrum succinctly, it is exactly the defendant's foreseeability. As the evidence shows, although the whole-Japanese website posts an announcement saying it cannot process abroad purchase orders, a careful reading of the website reveals the opposite may be true. In some of the web-pages, viewers may find there are banners printed in Chinese, reading: "Foreign customers! please click here to purchase these goods through our agent." These banners not only explained how the alleged counterfeits were purchased from Taiwan but also justified the court's jurisdiction over this case, as the IP Court indicated:

It is worthy to note the IP Court's decision was issued after taking reference of a handful of amicus curiae filed in response to the court's call to the local IP community. It is generally believed that after Hsu, the IP Court will become more willing and better equipped to take jurisdiction over abroad e-commerce websites, especially those which have Chinese web-pages and whose operators are nationals of a country that may recognize and enforce a Taiwan court's judgment.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.