Taiwan Ministry of Economic Affairs amends Regulations Governing the Approval of Investment or Technical Cooperation in Mainland China

　In order to prevent potential outflow of technologies as a result of Taiwanese proprietary technologies or IP rights transfer to Chinese nationals, the Ministry of Economic Affairs promulgated an amendment to Article 5 of the “Regulations Governing the Approval of Investment or Technical Cooperation in Mainland China” on December 30, 2020, which specifies that selling or licensing of specific technologies will be considered “technical cooperation” and must be approved in advance.  This is to avoid any possible prejudice to Taiwan’s industrial development.  Key points of the amendment are summarized as follows.  

1.  Scope of technical cooperation is extended.  

All future transfer and license of Taiwanese proprietary technologies or IP rights to Chinese entities or Chinese nationals will be included into the scope of technical cooperation that is subject to prior approval of the competent authority.   

2.  Both direct and indirect technical cooperation are subject to prior approval.  

By reference of the comments sought and gathered during the public comment period, the amendment provides that both direct and indirect transfer or licensing are now subject to regulatory approval, so as to avoid a scenario that Taiwanese nationals transfer or license their proprietary technologies or IP rights indirectly to Chinese entities through any third-area company to skirt relevant regulations.  

3.  The scope of regulatory approval and control is widened and defined.  

During the public comment period, “integrated circuit layout” sector was targeted for regulatory control by the Ministry of Economic Affairs.  However, after consideration of the ever-changing development of IP rights and “integrated circuit layouts” having been covered by “specialist technology”, the Executive Yuan examined and decided on this issue that technical cooperation in China involving “proprietary technologies, patent rights, trademark rights, or economic rights” are now subject to regulatory approval and control.  

　Moreover, in view of the facts that technical cooperation in China is, in practice, subject to prior approval and the review procedure thereof is different from that of investment in China, the Ministry of Economic Affairs also promulgated an amendment to Article 4 of the “Regulations Governing the Examination of Investment or Technical Cooperation in Mainland China” by adding in paragraph 2 of Article 4 a separate review procedure specifically for Taiwanese nationals’ applications for technical cooperation in China.  (Released 2020.12.30) 

/CCS