Brief Introduction to “European Union’s Recommendations for QTSPs Based on Standards”
Brief Introduction to “European Union’s Recommendations for QTSPs Based on Standards”
2022/06/24
I. Introduction
The Electronic Identification and Trust Services Regulation (eIDAS)[1] of the European Union was passed in 2014 and came into effect in July 2016. The eIDAS consists of six chapters and its core elements are covered in two parts: Chapter 2 Electronic Identification and Chapter 3 Trust Services. Chapter 3 provides the legal framework for trust services (TS) in relation to electronic transactions and encompasses electronic signatures, electronic seals, electronic time stamps, electronic registered delivery services and website authentication. Each trust service can be provided by trust service providers (TSP) or qualified trust service providers (QTSP). Qualification from the supervisory authority of each member state is required to become a QTSP and provide qualified trust services (QTS).
In March 2021, the European Union Agency for Cybersecurity (ENISA) published “Recommendations For QTSPs Based On Standards[2]” for those interested in becoming QTSPs.
II. Highlights
The eIDAS is technology neutral regarding trust service security requirements, without specifying any technology. In other words, TSP can achieve the level of security required by the eIDAS with different technologies. In fact, the European Union hopes to drive standardization with common grounds gradually formed with industry self-regulation in the legal framework and the trust framework under the eIDAS[3].
Since 2009, the European Union has been formulating the standardisation framework related to electronic signatures with the assistance from standardization bodies such as European Committee for Standardization (CEN) and European Telecommunications Standards Institute (ETSI). The vision is to establish a comprehensive standardization framework to resolve the problems of using electronic signatures across borders within the European Union. A series of standards on electronic signatures and relevant trust services have been put in place, to meet the international requirements and the eIDAS[4]. The ETSI/CEN standards of digital signatures related to QTSP are as follows[5]:
1. Provision of qualified certificates for electronic signatures (Article 28 of the eIDAS)
ETSI EN 319 411-2 (and in adherence to EN 319 401, EN 319 411-1, EN 319 412-2 and EN 319 412-5).
2. Provision of qualified certificates for electronic seals (Article 38 of the eIDAS)
ETSI EN 319 411-2 (and in adherence to EN 319 401, EN 319 411-1, EN 319 412-3 and EN 319 412-5).
3. Provision of qualified certificates for website authentication (Article 45 of the eIDAS)
ETSI EN 319 411-2 (and in adherence to EN 319 401, EN 319 411-1, EN 319 412-4 and EN 319 412-5).
4. Qualified electronic time stamping service (Article 42 of the eIDAS)
ETSI EN 319 421 (and in adherence to EN 319 401), EN 319 422.
5. Qualified validation service for qualified electronic signatures (Article 33 of the eIDAS)
ETSI TS 119 441 (and in adherence to EN 319 401), TS 119 442, EN 319 102-1, TS 119 102-2 and TS 119 172-4.
6. Qualified validation service for qualified electronic seals (Article 40 of the eIDAS)
ETSI TS 119 441 (and in adherence to EN 319 401), TS 119 442, EN 319 102-1, TS 119 102-2 and TS 119 172-4.
7. Qualified preservation service for qualified electronic signatures (Article 34 of the eIDAS)
ETSI EN 319 401, TS 119 511 and TS 119 512.
8. Qualified preservation service for qualified electronic seals; (Article 40 of the eIDAS)
ETSI EN 319 401, TS 119 511 and TS 119 512.
9. Qualified electronic registered delivery service (Article 44 of the eIDAS)
ETSI EN 319 401, EN 319 521, EN 319 522, EN 319 531 and EN 319 532.
III. Comment and Analysis
The ENISA recommendations demonstrate the European Union’s intention to encourage ICT service providers to become QTSPs by introducing relevant standards in electronic signatures formulated by the European Union standardization bodies. The purpose is to provide companies and users in the European Union with more secure and trustworthy services in relation to electronic signatures. This enhances the confidence of users and promotes the vibrant development of electronic transactions throughout the European Union.
Over recent years, Taiwanese companies have been proactively involved in digital transformation. The process toward digitalization often requires assistance from external ICT service providers. However, the unfamiliarity in ICT makes it difficult for companies to judge the professional expertise of providers. Perhaps companies can refer to the introduction above to understand whether a provider meets the requirements of the European Union standards. This serves as a basis for the selection of ICT service providers to ensure a certain level of competences. This will be beneficial to the digital transformation and entrance in the European Union market for companies.
[1] Regulation (EU) No 910/2014 of the European Parliament and of the Council of 23 July 2014 on electronic identification and trust services for electronic transactions in the internal market and repealing Directive 1999/93/EC, https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=uriserv%3AOJ.L_.2014.257.01.0073.01.ENG (last visited Jun. 24, 2022).
[2] European Union Agency for Cybersecurity [ENISA], Recommendations for Qualified Trust Service Providers based on Standards (2021), https://www.enisa.europa.eu/publications/reccomendations-for-qtsps-based-on-standards (last visited Jun. 24, 2022).
[3] id. at 8
[4] id. at 8-9.
[5] id. at 11-12
- Regulation (EU) No 910/2014 of the European Parliament and of the Council of 23 July 2014 on electronic identification and trust services for electronic transactions in the internal market and repealing Directive 1999/93/EC
- Recommendations for Qualified Trust Service Providers based on Standards (2021)
Hsieh, Ming-Chun
Associate Legal Researcher
In recent years, because of the uncertainty of the positing of virtual currency under law, the issues of transparency and security etc. arising out in connection therewith are emerging, and the incidents of money-laundering, terrorist attack and investor fraud involving therewith lead to concerns of various countries. Therefore, the new change in Japanese legislations relating to virtual currency exchange service providers falls mainly in the effect of amended contents of “Payment Services Act” and “Act on Prevention of Transfer of Criminal Proceeds”. The reasons for amendment to the legislations are such that virtual currency transaction involves the exchange with statutory currency, and is the outlet/ inlet of the existing financial system; therefore it is necessary to have the virtual currency exchange service providers be supervised[1]. Essential points involving the amendments are stated as follows: 1. Payment Services Act The keys to the amendment to Payment Services Act (hereinafter referred to as the “Act”) are the Act recognizes that virtual currency has the nature of property and inputs the registration system for the exchange service providers, and provides relevant supervisory regulations. (1) Definition of virtual currency As defined in items 1 and 2 of Paragraph 5 of Article 2 of the amended Payment Services Act, virtual currency can be divided into two kinds, but is limited to that which is recorded on an electronic device or any other object by electronic means, and excludes the domestic (Japanese) currency, foreign currency and currency-denominated assets[2]. ① It has 3 elements as follows: It can be used in relation to unspecified persons for the purpose of payment consideration for the purchase or leasing of goods or the receipt of provision of services. It can be purchased from and sold to unspecified persons. Its property value can be transferred by means of an electronic data processing system. ② Its property value can be mutually exchanged with other virtual currency and can be transferred by means of an electronic data processing system. In addition, some authors[3] consider that virtual currency is equivalent to the use of blockchain technology. However, according to the definition after the amendment to laws in Japan, the definition of virtual currency is based the judgment of the above elements rather than the use of blockchain technology. (2) Input of registration system for virtual currency exchange service providers Pursuant to Paragraph 7 of Article 2 of the Payment Services Act, “Exchange Service” is defined as the operation of exchange, agency or management activities. No person may engage in the virtual currency exchange service unless the person is registered[4] with the competent authority (Article 63-2 of the Act). A person who has conducted the virtual currency exchange service without obtaining the registration is subject to imprisonment for not more than three years or a fine of not more than three million yen or both based on Subparagraphs 2, 5 of Article 107 of the Act. (3) Mechanism of users protection: The purpose of the amendment is to take countermeasures for the risks generated from virtual currency exchange, such as pecuniary loss caused by insufficient information, the loss incurred in the custody of users’ property, and disclosure of personal information of users）[5]. Discussions are divided into 4 points. ① Information security management A virtual currency exchange service provider must take necessary measures for information security management (Article 63-8 of the Act) ② Measures for users protection A virtual currency exchange service provider must take relevant protective measures for users, including the provision of explanation for misunderstood transaction and information about contents of transaction (Article 63-10 of the Act) ③ Separate management of property A virtual currency exchange service provider must manage its own property separately from the money or virtual currency of the users, and must retain a certified public accountant or an audit corporation to periodically conduct the external financial audit (Article 63-11 of the Act) ④ Designated Dispute Resolution Organization Referring to financial ADR system, the complaint or dispute matter of users shall be concluded by the Designated Dispute Resolution Organization (Article 63-12 of the Act) (4) Supervision over virtual currency exchange service providers: As regulated by Articles 63-13 ~ 63-20 of the new Payment Services Act, essential contents of supervisory requirements for virtual currency exchange service providers are stated below: ①The obligation to prepare and maintain books and documents ②Annual financial reports ③The authority of the Prime Minister to inspect relevant business ④The Prime Minister orders a virtual exchange service provider to conduct business improvement. ⑤The Prime Minister may revoke the registration of a virtual currency exchange service provider who has obtained the registration through illegal or wrongful means. (5) Penalty for violation of obligations The existing penalties under articles 107~109 and articles 112~117 of the Payment Services Act also apply to virtual currency exchange service providers. The causes of violation of obligations and corresponding penalties are summarized as follows: ① Any person who has not obtained registration or has obtained registration through wrongful means or by use of other’s name is subject to imprisonment for not more than three years or a fine of not more than three million yen, or both (Article 107 of the Act) ② An exchange service provider who has violated the separate management of property or has violated the disposition of suspension of operation is subject to imprisonment for not more than two years or a fine of not more than three million yen, or both (Article 108 of the Act). ③ Any person who has failed to prepare or has falsely prepared books, reports, attachment and documents or has refused to answer the questions or has refused to accept or has hindered the business inspection is subject to imprisonment for not more than one years or a fine of not more than three million yen, or both (Article 109 of the Act) ④ A person who fails to take necessary measure for improving its operation is subject to a fine of not more than one million yen. 2. Act on Prevention of Transfer of Criminal Proceeds In order to prevent from money-laundering, the legitimacy of fund sources must be assured. The amended “Act on Prevention of Transfer of Criminal Proceeds” (hereinafter referred to as the “Act”) incorporates the virtual currency exchange service providers as “specified business operators” and imposes them with the following main obligations: (1) The obligation to confirm user identification (Article 4 of the Act) (2) The obligation to confirm and preserve transaction records (Articles 6 & 7 of the Act) (3) The obligation to report suspicious transactions (Article 11 of the Act) The above are major contents of the amendments to legislations in relation to virtual currency exchange service providers in Japan. The purposes of the amendment are to promote the innovation of virtual currency operators and the balanced development with consumer protection. Therefore, they are included in the Payment Services Act and are subject to similar supervision as with electronic bill and Funds Transfer Service[6]. The reorganization of virtual currency system in Japan has stepped forward. However, the application of actual operation needs continual follow-up and observation, so as to be used as reference for the relevant law system of our country. [1]Financial System Council, The Working Group on Payments and Transaction Banking of the Financial System Council, P27. [2]Currency-Denominated Assets, Assets denominated in currency refers to the “Currency-Denominated Assets” in Japanese and defined in the Payment Services Act: as used in this Act means assets which are denominated in the Japanese currency or a foreign currency, or for which performance of obligations, refund, or anything equivalent thereto (hereinafter referred to as "performance of obligations, etc." in this paragraph) is supposed to be made in the Japanese currency or a foreign currency. In this case, assets for which performance of obligations, etc. is supposed to be made by means of Currency-Denominated Assets are deemed to be Currency-Denominated Assets. [3] ＜Improvement System of Virtual Currency＞, Daiwa Institute of Research, see website:, http://www.dir.co.jp/research/report/law-research/financial/20160520_010904.pdf#search=%27%E4%BB%AE%E6%83%B3%E9%80%9A%E8%B2%A8+%E8%B3%87%E9%87%91%E6%B1%BA%E6%B8%88%E3%81%AB%E9%96%A2%E3%81%99%E3%82%8B%E6%B3%95%E5%BE%8B+%E3%83%96%E3%83%AD%E3%83%83%E3%82%AF%E3%83%81%E3%82%A7%E3%83%BC%E3%83%B3%27 (Ｌast browse date: 12/07/2017) [4]Article 63-2 of the Payment Service Act provides the registration with the Prime Minister; however, in practical operation, the operators shall apply for registration with the local financial bureau. [5]Financial System Council, The Working Group on Payments and Transaction Banking of the Financial System Council, P29. [6]In the Payment Services Act of Japan, it is specified that the remittance business engaged by a non-banking provider was officially named as “Funds Transfer Service”, in which business contents aim at the third payment works. Financial Research Development Funds Management Committee, “Study of the industrial development and management between international non-financial institution payment services”, written by Kuo Chen-Chung and Hsu Shih-Chin, pp60~61(2015).
Product Liability of Living Lab ProductsI. Forward Only about 18% of the products or services continue to create good sales and have long product life cycles after entering the stream of commerce. This might denote that mass investing in the R&D does not necessary guarantee to develop popular goods and services. In order to overcome this obstacle, many experts and scholars from different research areas propose different R&D mechanisms to solve this problem. The so called “open innovation” is one of the most dynamic R&D mechanisms in recent years, which is created to compensate the weakness of “closed innovation”. By introducing the concept of “open innovation”, Living Lab invites real users join the projects of un-launched products and services for every possible R&D process to obtain the real interaction wherefrom, to fulfill the goal of “user centric” innovation. However, if users or any third party is injured or damaged from the trial products or services, to what extent Living Labs is liable for is one important question to further future innovation environment. This article will first gives a brief introduction and the development of living labs in Taiwan, follow by applying national laws and analysising obstacles to the liability issue caused by defective Living Lab products. Then, the article will continue to refer to foreign legislation and Living Lab practice, and conclude by suggestions and recommendations to the Living Labs practice in Taiwan. II. Brief Introduction of Living Labs A. Composition of Living Labs The concept of Living Labs was developed by Professor William J. Mitchell from the MIT Media Lab and School of Architecture. Professor Mitchell proposed applying the user-centric research method by using Living Lab as a R&D platform and bring together stockholders (co-creators), including public sectors, companies, universities and research fellows, and the most important, the end-users communities, both professional or non-professionals from various backgrounds, to join the R&D process. B. Operation Mode of Living Labs Living Lab invites end users to join the real world testing either in a digital, physical or virtual environment. Un-launched products or services are provided for testing and users are required to give feedbacks either experience, opinions, suggestions or even ideas to the products or services in return. Living Lab then collets and utilizes the feedbacks and observe the behavior patterns for product or service modification and improvement, future R&D plans and market analysis. C. Benefits of Living Labs Lirving Lab could effectively converse different backgrounds and levels of empirical environment, enhance the efficiency in R&D and bring about different benefits to the stakeholders. By participating in the R&D process, users could give feedbacks to Living Labs to further up the un-launched products and services (on the marketplace) to fit consumers’ needs. For industry, Living Lab provides platforms to get together stakeholders, speed up the integration of stakeholders of different size or from different fields and promote the R&D efficiency. For universities and research institutes, the public-private-people (user)-partnership (PPPP), could further more flexible services or R&D ecosystem and not only to have user-centric innovation, but also user-driven innovation.1 D. Development of Living Labs Living Labs has been energetically developed in Europe. Through the integration of project resources, individual Living Lab forms into Living Labs networks and actively engaging in cross-border or cross-project co-operation. 2 The concept of Living Labs has been introduced into Taiwan, there are several Living Labs in Taiwan so far, for example, Living Labs Taiwan from Institute for Information Industry (III), 3Touch Center (Center for Technology of Ubiquitous Computing and Humanity) from National Cheng Kung University, 4 Insight (Center of Innovation and Synergy for Intelligent Home and Living Technology) from National Taiwan University, 5 and Eco City from National Chiao Tung University. 6 The Living Labs aim to bring about the user-centric and user-driven model and bring new elements to R&D innovation. III. Liability of Losses, Damages, or Injuries Caused by Living Lab Products In order to encourage more end users join the Living Labs experiment, Living Labs usually provide the un-launched products or services as gifts or lend it for free. However, if products or services caused injury, economic loss or property damages to the users or third party during the experiment, to what extent should the Living Lab be liable for. A. Legal Status Upon on discussing of legal liability of Living Labs, the first prong to review is the legal status of Living Labs under the legal system in Taiwan. Although it is called “Lab”, but it is not necessarily to be a lab with “physical facility”, it could also be “virtual Labs”, for example, HP and Firebox are both launch for virtual Living Labs online to invite users join their open innovation projects. The concept of open innovation within the Living Labs environment, where Living Labs play as a role of a cook pot which gather personnel, equipment, and technology from parties from different working fields, integrate resources and creativeness to catalyze innovative ideas for new products and services. Normally, each Living Lab can be viewed as an independent "legal entity". In other words, it can exercise rights ad bear responsibility/liabilities under the law, and therefore, to response to needs for R&D, increase efficiency and contribute matters of legal compliance. B. User’s Legal Claims Against Living Labs 1. Contractual Liability Living Labs often use “user agreements” as legal documents to regulate the legal relationship between Living Labs and users. If there is any injury, damages or losses occurred during the experiment, users can sue Living Labs for breach of contract and sue for liability, warranty or violation of justice of contract. If the product is defective, such as manufacture defect, design defect or lack of proper warning, the injured user can sue Living Labs based on warranty. However under the provisions of Article 411 of the Civil Code, 7 if the product is offered for trial free for charge, if the gift is defective and caused injury, damages or losses to the users, Living Lab is not liable for breach of warranty. Unless the Living Lab intentionally conceal the defects and not information the user, or represent to the user that the product is guaranteed flawlessness and free from defects. Under this situation, Living Lab will be liable for damages caused by the defect. In the situation that when Living Lab only lend the products for trial, with the provisions of Article 466 of the Civil Code, 8 only when Living Lab intentionally conceal the defect, then is liable for the injuries and damages resulting there from. However, the purpose of the Living Labs experiment is to implement the open innovation, through the operation of the mechanism, by inviting potential users to join the experiment and require them to give feedbacks, ideas and recommendations for future product improvement. In addition to that, in most of the situations, it is difficult for Living Labs to foresee the existence of potential risks of their products or intentionally conceal the defects or guarantee the products are without defects; therefore it will be even harder for the injured users to bear the burden to proof the above situations. It is worth to address that, Living Labs and users shall enjoy contract autonomy as long as the provisions and terms of contract are not violating laws, public order and good morals, but not without any restriction. When parties have right of freedom of contract, at the mean time, their contract shall not exceed the boundaries of contractual justice. Especially, the burden and allocation of risks needs to be measured and assessed by the status and interests of the parties on rational bases. Because one of the special characteristics of Living Lab is open to general users to participate the experiment voluntarily, Living Lab usually adapts fill-in standard form contracts for convenience. But for the protection of the users, Living Lab shall pay more attention to the provisions and terms of contract which must not violate Article 247-1 of the Civil Code, 9 for example, provisions of contract shall not waive, decrease or increase liabilities of the parties, waive or limit any party to exercise his/her rights, or significant detriment one another’s’ interests, otherwise that part of the provision shall be void. 2. Tortious Liability When damages are caused by defective Living Lab products, users may be able to sue Living Labs and based his/her causes of action on Consumer Protection Law Article 7 business operator’s liability, 10 The Civil Code Article 191-1 manufacturer’s liability 11 and as well as The Civil Code Article 184 (1) tortious liability. 12 Yet, in order to provide motivations and incentives for users to join the open innovation, Living Labs usually gratuitous lending or gifting products or services to the users, at least in this stage, Living Labs are not conform with the definition of “business operators” 13 in the Consumer Protection Law, in designing, producing, manufacturing, importing or distributing goods, or providing services design, manufacturing, inputs, distribution of goods or the provision of services for business enterprise operators. Nor the Living Labs users are under the same definition of “consumer” 14 protected under the definition of the Consumer Protection Law, as those who enter into transactions, use goods or accept services for the purpose of consumption. Therefore, the relationship between Living Labs and the users are not “consumer relationship” 15 for sale of goods or provision of services, for which the Consumer Protection Law might not be applicable to offer protection to the users. Reviewing from the legislative history, Article 191-1 of the Civil Code was amended after the Consumer Protection Law. The reason for amendment was to maintain the completeness of the torts liability in the Civil Code and in supplement to the inadequacy of the Consumer Protection Law. 16 In referred from the above, the definition of “goods” is synonymous with the definition in the Consumer Protection Law. In order to apply the provisions, parties must be in the “consumer relationship” as regulated in Article 2 (3) of the Consumer Protection Law. As mentioned above, usually, Living Labs provide the products free of use or as gifts, it is really difficult to say there is “consumer relationship” between the parties. The first clause of Article 184 of the Civil Code states, “A person who, intentionally or negligently, has wrongfully damaged the rights of another is bound to compensate him for any injury arising there from. The same rule shall be applied when the injury is done intentionally in a manner against the rules of morals.” Hence, in this situation the burden of proof will lay on the users to prove that Living Labs is either with negligent or intent to damage the users by the defective products. Living Labs adapt open innovation to encourage users to participate into the every possible R&D process and obtain feedbacks or recommendations in return. Therefore, most of the time, Living Labs do not have “intent” to cause damages to the users, but whether Living Labs are with “negligence” will often be difficult to prove by the users. C. Third Party’s Legal Claim Against Living Labs 1. Contractual Liability In the case when a third party, who is not associated with the Living Labs experiment, sustains injury or damage from the defective Living Labs products, he or she might not be able to sue under the terms of contract because there is no contractual relationship exists between the parties. The possible cause of action for the third party might be able to sue Living Labs based on torts liability for damages. 2. Tortious Liability Although Article 7 of the Consumer Protection Law does provide cause of action for the third party to sue against the business operator for defective products, the third party must base his or her claim on the “consumer relationship” between the Living Labs or users. However, as mention as above, the relationship between Living Labs and the users are not under the “consumer relationship” as prescribed in the Consumer Protection Law, thus third party cannot sue Living Labs for damages in accordance with the Consumer Protection Law. As to the application process of provisions prescribed in Article 191-1 and 184 (1) of the Civil Code, the result is as the same as above. IV. Foreign Legislation and Practice A. American Jurisprudence 2d In the Comment of the 63A Am. Jur. 2d Products Liability §1142 states, “[s]trict liability covers not only products which have been sold, but also products that have been designed to be sold, have been produced to be sold, or are offered to be sold or marketed”. Furthermore, introduction into the stream of commerce does not require a transfer of possession; strict liability rests on “foreseeability”, and not on esoteric concepts relating to transfer or delivery of possession. Furthermore, the Comment extends the scope of application of strict liability to the “Transaction Other than Sales”. Strict liability also applies to the distribution products in a commercial transaction other than a sale, one provides the product to another either for use or consumption or as a preliminary step leading to ultimate use or consumption. For products made available for demonstration, testing or trial regulated in 63A Am. Jur. 2d Products Liability §1147, where a product-caused injury has taken place while the product is being tested or used for trial purposes by the prospective buyer, prior to the completion of a sales transaction, the person or entity who placed the product into the stream of commerce by providing it to the prospective buyer may be strictly liable. Strict liability also applies to those who manufacture and supply products to consumers on an investigational basis, even though the "supplying" does not technically amount to a sale. In the Observation of §1147 states that “[a] manufacturer who enters the marketing cycle by way of a demonstration, lease, free sample, or sale is in the best position to know and correct defects in its product, and as between the manufacturer and its prospective consumers, should bear the risk of injury to those prospective consumers when any such defects enter the market uncorrected. In sum, if one sustained injury, damages or economic losses by Living Labs products, he or she may sue Living Labs for product strict liability prescribes in §1142 & §1147. B. Living Labs Practice in Foreign Countries Referring to provisions of “Standard Contract” used between Living Labs and the users in other countries, most of the time, Living Labs might disclaim damages to property, but cannot disclaim legal protection or injury compensation. At the mean time, most of the Living Labs also adapt public safety insurance and product liability insurance to protect themselves and the users. V. Conclusion and Recommendation In conclude, the legal norms in Taiwan seems not be able to offer proper protection to Living Labs and the users. This article suggests that in order to form the ecosystem for the open innovation model of Living Labs, Living Labs shall provide proper protection to the users in order to balance the interests between Living Labs and users and catalyze the motive for the users to join the experiment. In referring to the “Guidelines for Good Clinical Practice for Trials on Pharmaceutical Products” 17 from the Department of Health, besides the proper duty, the main purpose of the guideline is to ensure the safety of the human participants. In the provisions prescribe in Article 22 of the “Good Clinical Guidelines”, the clinical trial agreement or related document shall provide participants with proper compensation or treatment when damage occurs. The “Model Clinical Trail Agreement” also provides provisions of damage compensation and insurance in the template which state the application to the assumption of risks and consumer protection. However, because the pharmaceutical clinical trial is with higher risk, the competent authorities, Department of Health, particularly get involved within the regulations and mechanisms of clinical trials to protect the human participants. In sum, whether the similar mechanism can be applied directly between the Living Labs and users needs for further consideration. Finally, for the continuous operating environment, it is necessary for Living Labs to adapt related laws and measures for the open innovation operating model. It is suggested that Living Labs shall enter contracts in the terms with proper risk allocation in accordance to contract justice and possibly with public safety or product insurance to share their liabilities. 1.EUROPEAN COMMISSION INFORMATION SOCIETY AND MEDIA, Living Labs for User-Driven Open Innovation:An Overview of the Living Labs Methodology, Activities and Achievements, European Commission(2009),at7,availableat http://ec.europa.eu/information_society/activities/livinglabs/docs/brochure_jan09_en.pdf (last accessed on Dec. 31, 2012). 2. Id., at 11-12 & 14. 3.Living Lab Taiwan, http://www.livinglabs.com.tw/index.html (Last accessed Dec. 26, 2012). 4. Touch Center from National Cheng Kung University, http://touch.ncku.edu.tw/touch/?q=node/52 (Last accessed Dec. 26, 2012). 5.Insight from National Taiwan University, http://insight.ntu.edu.tw/zh-tw/node/662 (Last accessed Dec. 26, 2012). 6.Eco City from National Chiao Tung University, http://www.ecocity.org.tw (Last accessed Dec. 26, 2012). 7.Civil Code Article 411, “The donor is not liable for a defect in the thing or right given. But, if he has intentionally concealed the defect or expressly guaranteed that the thing was free from such defect, he is bound to compensate the donee for any injury arising therefrom.” 8.Civil Code Article 466, “If the lender intentionally conceals a defect in the thing lent, he is responsible to the borrower for any injury resulting therefrom.” 9.Civil Code Article 247-1, “If a contract has been constituted according to the provisions which were prepared by one of the parties for contracts of the same kind, the agreements which include the following agreements and are obviously unfair under that circumstance are void. (1) To release or to reduce the responsibility of the party who prepared the entries of the contract. (2) To increase the responsibility of the other party. (3) To make the other party waive his right or to restrict the exercise of his right. (4) Other matters gravely disadvantageous to the other party. 10.Consumer Protection Law Article 7, “ business operators engaging in the design, production or manufacture of goods or in the provisions of services shall ensure that goods and services provided by them meet and comply with the contemporary technical and professional standards of the reasonably expected safety prior to the sold goods launched into the market, or at the time of rendering services. Where goods or services may endanger the lives, bodies, health or properties of consumers, a warning and the methods for emergency handling of such danger shall be labeled at a conspicuous place. Business operators violating the two foregoing two paragraphs and thus causing injury to consumers or third parties shall be jointly and severally liable therefore, provided that if business operators can prove that they are not guilty of negligence, the court may reduce their liability for damages.” 11.Civil Code Article 191-1, “The manufacturer is liable for the injury to another arising from the common use or consumption of his merchandise, unless there is no defectiveness in the production, manufacture, process, or design of the merchandise, or the injury is not caused by the defectiveness, or the manufacturer has exercised reasonable care to prevent the injury. The manufacturer mentioned in the preceding paragraph is the person who produces, manufactures, or processes the merchandise. Those, who attach the merchandise with the service mark, or other characters, signs to the extent enough to show it was produced, manufactured, or processed by them, shall be deemed to be the manufacturer. If the production, manufacture, process, or design of the merchandise is inconsistent with the contents of its manual or advertisement, it is deemed to be defective. The importer shall be as liable for the injury as the manufacturer.” 12.Civil Code Article 184 (1), “A person who, intentionally or negligently, has wrongfully damaged the rights of another is bound to compensate him for any injury arising there from. The same rule shall be applied when the injury is done intentionally in a manner against the rules of morals.” Consumer Protection Law Article 2 (2), “business operators" means those who are engaged in the business of designing, producing, manufacturing, importing or distributing goods, or providing services. Consumer Protection Law Article 2 (1), “consumers" means those who enter into transactions, use goods or accept services for the purpose of consumption. Consumer Protection Law Article 2 (3), “consumer relationship” means the legal relationship arising between consumers and business operators for sale of goods or provision of services. 16.王澤鑑，侵權行為法第二冊：特殊侵權行為，第313-314頁 (出版日期2006年7月) 17.DEPARTMENT OF HEALTH, Guidelines for Good Clinical Practice for Trials on Pharmaceutical Products, http://www.6law.idv.tw/6law/law3/%E8%97%A5%E5%93%81%E5%84%AA%E8%89%AF%E8%87%A8%E5%BA%8A%E8%A9%A6%E9%A9%97%E6%BA%96%E5%89%87.htm (last visited Dec. 31, 2012)
Legal Considerations of E-commerce of Taiwan: Development and the Status QuoI. Preamble 1. Current Situation of E-Commerce Along with rapid developments of the information and the Internet, what follows in suit is inevitably the electronicalization in general industries. Nowadays, countries around the world accelerate exploitation of information technologies and management methods to enhance their capability of competition. Developments in digitalization have brought traditional business concerns to face rigorous challenge as regards both the nature of the business and the context of same, as well, in more recent years incidents such as Internet data exposition and on-line fraud have happened over and over again. Contentions of on-line transaction have also increased a great deal while some illegal websites proclaimed themselves to be legal ones. All these situations point to the importance of building up legislation on e-commerce and cyber environment. No less important is the buildup of more reliable environments friendly to electronic trades as to which the government should take into account the needs voiced from both suppliers and buyers in an effort to put into effects relevant implementations conducive to benignant developments of e-commerce. In the meantime, the entire B2C e-commerce market is going through unprecedented fusion, ongoing merging and cross application is seen in varied on-line transactions including TV shopping, Internet shopping, mobile shopping, e-mail shopping and so on, growing more tense than ever are integration in the context of http://bilingualdb.rdec.gov.tw/BilingWeb/bl_showworddetails.asplogistics,cash flow, exchange of information, and transactions, in addition, interchange of platforms and horizontal consolidation of varied equipments are indication enough that looking into the future, what looms ahead is a service-oriented, attention-intensive era of economy; by taking into good account consumers' actual needs, convenience and economies, these supplemented with customized service delivery, the intending party can realize phenomenal profits well beyond estimation; considering that the B2C business world is continually renovating its latest technology or application (the Skype, for example) better yet management model is required to strike profits (such as diggings of killer APs, Killer access Devices, Killer channels, Killer business models and their applications), and therein lies the orientation for efforts to be spent in so far as the future of the B2C e-commerce is concerned. By the outcome of the B2C Business Strategy Conference closing as of both 2004 and 2005,the current B2C e-commerce of Taiwan is fighting hard to cross the gap of lag in family Internet shopping rates (13% in 2003, grown up to 19.6% by 2005), if relevant technology matures and breaks various obstacles against B2C e-commerce, it is safe to say that by 2007 will come the mainstream epoch for Internet shopping vogue, and that is good enough for what one could envision for the B2C e-commerce. Reliable survey conducted for relevant projects indicates that the on-line shopping market over the year 2005 is estimated at approx. NT$51,073,000,000, reflecting a growth of 47% over the correspondent field of NT$34,720,000,000 realized in 2004, hopefully the growth may hit around 43% by the year 2006, estimation: NT$73,146,000,000; in the year 2005 the overall retail market realized a revenue of approx. NT$3,090,297,000,000 of which roughly 1.65% was due to contribution from on-line retail sales, estimation shows that by the year 2009 the on-line shopping market will expand to around NT$154,475,000,000. All of the survey digits clearly show that there is still much to expect of our domestic electronically subordinated markets, for which a growth potential always exists. 2. Implementation strategies and policy directions Over the nearly twenty years in the past the US has been strategically employed varied technologies associated with e-commerce at large, for the promotion of e-commerce and that has fetched a hit over Japanese business industry that was long-timed noted for their high quality struck at relatively low-profile cost image, and at the same time switched the fading stage of the US economy up to the rosy side. What makes e-commerce so much a marvel? Well, the secret is in fact simple enough, for in the wake of contemporary atmosphere for competition centering on internationalization and globalization, the only recipe for success and survival for any business is simply the triplicate: “Speed”, “Flexibility” and “Creativity”; e-commerce not only timely satisfied these needs, it plays a key role in this respect all at once, such that any responsive and responsible business executive would but have to admit that “Without getting electronic, you can expect no more orders”. In awe of this wake trend going for entrepreneurial electronic synonymous with e-commerce, our government has been keeping a keen eye on the position of modern e-commerce around the world. In addition, it has charged relevant departmental agencies to attend to the development and planning of domestic e-commerce to begin with the Ministry of Economic Affairs firstly accomplished Electronic Commerce Model System recommended for Business-to-Business (B2B) in the Informative Segment, the indicial system for electronic industry for our country is thereby established, and this by and by has extended to other kinds of industry; in the meantime, efforts have been shed to expel lots of bottlenecks facing the electronic of all and sundry industries as regards the environmental nods and the institutional node. Years of governmental efforts in this concern have seen results in the context of our domestic industries vying one another in the startup of getting involved in electronic operation. It is safe and fair to say that up to this date the e-commerce development in this country, already soundly founded, and is still growing avidly and rapidly. Because of the application of information has already become a sharp tool for advanced countries in upgrading their competitive margin in global markets, the premise being as such, countries have one by one promulgated their national information expertise development projects with a view to get going infrastructures information and communication constructions on a national scale. Here in this country relevant constructions have begun as early as back in the year 1994, the Executive Yuan has ratified the “National Information/Communication Infrastructure Implementation Plan” in the year 1997; in June 1999 the “Industrial Automation Plan” ratified previously was upgraded to a combined “Industrial Automation and Electronicalization Plan” for the purpose of promoting industrial competition margin. By the year 2001 our government, in view of societal need for general information as well as technical renovation that comes as a result of advances in information/communication technology, and through collective consultation and resource consolidation, founded a National Information and Communication Initiative Team (NICI Team) whose mission is to implement NICI Projects, while the priory founded Industrial Automation and Electronicalization Plan continued to function in the name of the “Industrial Electronic” Work Group under said NICI Project, in addition, a consensus has been reached that the implementation of information/communication know-how be regarded as playing a key role in the promotion of overall national competitive competency. II. Legislative Demands for the Development of e-Commerce in Taiwan 1. Trend of international legislation Under the ongoing trend of globalization and internationalization, transnational communication and transaction blooms fervently, a universal expectation shared by nations around the world is that concrete and clear-cut legislations be adopted to rule out obstacles to developments of electronic transactions due to inadequacy of statutory provisions or proscriptions. Whatever the contents of legislation from one state to another, the primary object is unexceptionally to promote developments of electronic transactions by the institutional introduction and intervention in all respects concerned. Phrased otherwise, the key role played by laws governing electronic transactions lies in presentation as enabling or supplemental laws to serve as legal basis with respect to issues where conventional institution fails to see or proves inept; whereas issues or legal interactions facing common transactions equivalent to traditional trades will still abide by conventional statutes, still, the ongoing trend respecting the same electronic trades on international communities calls not for the creation of new laws, but in installing legislation on issues not being covered in currently enforced statutes. Other countries facing issues relating to electronic transactions will not reason with reference exclusively to traditional civil or commercial codes by ignoring electronic trade codes or vice versa, instead they will rely upon both traditional codes and relatively regulations related to electronicalization, at the same time. 2. Legislation of e-commerce: Necessity and Orientation for Deliberation Speaking of legal concerns possibly facing application of electronic trades, with legal effects to the extent acknowledged according to laws governing transactions executed by “Electronic Signatures ACT” with respect to electronic documents being excepted, party autonomy and the principle of freedom to contract will prevail, still, contractual contentions otherwise occurring in the course of transaction will be subjected to relevant civil or commercial codes all the same, and that having nothing to do with pertinent electronicalization legislations. Considering the practical aspects, competency of legal intervention in the course of concluding of contracts involving electronic transactions deserves deliberation in the context of practical needs. Apart from relevant issues seen in a contract, matters such as competency of law respecting trades of digitalized merchandises, respecting protection of consumers in respect of which the law is already there, and respecting privacy protection, are all of vital interest to parties in executing any electronic transactions. Other issues which warrant close inspections considering a piece of electronic trade include; legislation with respect to cash flow, to material flow and practices, to whatever affects the proper rights of parties to a trade, to attempts to use the Internet as a criminal means, to situations where violation of safety of trade or order of trade arises; to issues relevant to competency of proof considering electronic documents, electronic signatures in the event of dispute out of a piece of electronic trade; and eventually, responsibilities on the part of ISP who forms a part of a piece of electronic trade, as well as electronic jump mail (spam), because all of them could undermine the development of electronic transactions. III. Taiwan Legislation on Electronic Commerce: the Status Quo and the Outlook in the Future The arrival of digital era has broken down the fence by which the world for ages has been defended, the e-commerce is taking up the place of traditional marketing scheme and outlets in giant strides, and has virtually become the focus of economy in the current era, Still, new fangled trade modes emerging from day to day in step with electronic modern business operators are impinging upon existent legal systems here in this country and that without any letup, such that the traditional philosophy of legislation is compelled to reorient itself to meet the impending challenge of our times. The most important of interest to a wholesome development of e-commerce lies in the creation of a benignant legislation structure. However, it is a pity that the creation of electronic commercial codes is a very complicated institutionalized project, considering that apart from electronic documents and electronic signature, the electronic transaction by and large will involve legislation specific to civil, criminal and otherwise legal fields, encompassing key issues including: contractual relationship, electronic taxation, electronic cash flow, network jurisdiction and protection extended to consumers. Given the foregoing disclosure, it is rightly with a view to attend to smooth developments of electronic trades, to secure a wholesome transaction environment, and to safeguard the proper interests of network users, that the importance of a wholesome legislation structure is set off all the more obviously. Seeing that the crucial key to nationwide practicing of so-called electronic transaction or trade and to the meaningful functioning of an electronic government lies indispensably in the creation of a safe and reliable network environment, so that information in the process of internet transmission is ensured against falsification, fabrication or theft, will allow for identifying of the identity of both parties to the transaction, and henceforth, preclusion of denying by either party of the transaction afterwards, that therein lies the key to the universality of an electronic government and of the implementation of electronic transaction, as a matter of fact here in Taiwan the “Electronic Signature Act” was ratified in 2001, and the same put into practice in April, the year next to 2001, This code accords electronic documents and e-signatures which fulfill prescribed requirements the same legal effects as would be granted to traditional paper documents or signatures, and specifies certifying agents based on low-profile control means. Next in both 2003 and 2004 respectively, the competent authorities have put into effect subordinating statutes including: “The Enforcement Rules of Electronic Signature Act”, “Regulations on Required Information for Certification Practice Statements” and “Regulations Governing Permission of Foreign Certification Service Providers”, with a view to comprehensive coverage of codes specifying control of electronic signatures, to the safeguarding of environments for credible electronic signatures, and all these meant for access with international counterparts. The Electronic Signature Act specifies essentially “electronic documents” which carry information specified as electronic transactions (the specification includes what is known as electronic government), and “electronic signatures” produced by parties thereto and as appearing thereon. Electronic transaction is based on computerized network and electronic technology bear advantages over traditional commences in terms of convenience, effectiveness, scope of coverage, low-profile trade costs, among other considerations, for all these reasons will better meet the information age that is ours today and the challenge for globalization of trade and economy everywhere, that is why they develop so fast and find wider and wider application from day to day. Legislation of electronic transaction is not meant to establish a rule of regulations that will totally replace correspondent laws erected earlier in years bygone, it starts out in the beginning to address unique legal complications that arose because of substantial change having taken place as regards means and manner of transaction. The newly arisen legal problems originated from the unique feature of electronic transaction itself, what comes in suit is the global, universal, international, technical and inter-territorial nature of codifications governing electronic commences, Currently legislation of e-commerce around the world is classifiable into those which relates to promotion or macroscopically policy of electronic transactions, synoptic codification of electronic transactions, codification of electronic signatures, codification of environments friendly to electronic commences. (Comprising: protection of consumers, protection of privacy) After reviewing different specifications of electronic transactions from international sources, one is convinced that differentiation in legislation of electronic trades from one state to another is much more a result of policy election than that of pure legislates. Notwithstanding that over the last decade legislation of electronic commerce that is seen globally ran fast, every state tries hard to bring up a full set of codes on electronic commerce/transaction in the shortest possible period so as to effect timely control of electronic transactions which themselves are renovating with no less fast a speed, however, it is a pity that electronic commerce goes deep into a number of specific fields, crossing legal, scientific and technical realms, and its application extends deep into varied day-to-day layer, such that the scope of legislation of electronic commerce/transaction has run afar to limits beyond imagination, forcing international organizations and economic entities to issue model codes and directives for their member states to adopt as norms for comparable legislations. Nevertheless, after being cut into effect for several years, problems emerged one after another with electronic commerce/transaction codes, including electronic signatures act; the situation is the same in countries all over the world, in Hong Kong, where Electronic Transactions Ordinance as amended have been promulgated in 2004, in Singapore, where triplicate-phased public inquiry in written form have been proffered successively in 2003 and 2005, whereby public suggestions are solicited as references to subsequent revisions; whereas on the other hand, the United Nations have erected protocols addressed to issues arising in the course of concluding of international electronic contracts to complement the “UNCITRAL Model Law on Electronic Commerce of 1996” and the “UNCITRAL Model Law on Electronic Signatures of 2000”. A common guideline for legislation at Legislature Agency is: “Adequate Regulation, Leaving Leverage, Conducing to Development”, in order to provide suitable legislation frame as soon as possible, a Legislature Agency would but offer sketchy outline to allow for space appropriate for future development of the newly emerging e-commerce world. So there is little wonder that Taiwan's electronic signature relevant rules have been cited as the most succinctly structured electronic signature code anywhere on the globe, as such, its contents are restricted but to controls of electronic signatures, failing largely to deal with the highly mutable electronically transacted business activities and trades. Four years have elapsed since the implementation of the electronic signature code, in view of the ever-changing environments of e-commerce, statutes currently in force have proved inadequate or behind time, if only present status and future demands of e-commerce are to be taken into account in step with emerging trends in global legislation as well as newly arisen commercial modes, it is truly time to review and amend current codes. To build a wholesome environment for the e-commerce industry, local competent authorities have already effected general review of current electronic signature rules by taking into account: how the current regulations have been working, international developmental trends, the latest development of relevant technology, and put forth recommendations on amendments of current codes after reviewing ongoing trends of legislation seen in Singapore, Hong Kong and the United Nations. Their amendments to their existent codes included, underway are our amending of scope of application of current codes so that a good match is possible with practical reality, such that the code is renamed to read as “Electronic Signature and Transaction Act”, the keynote being to enlarge scope of application of both electronic documents and electronic signatures, inclusion of regulations relevant to electronic trades and strengthening of currently existent authentication agencies in terms of their management capabilities, Also, to lay firm practice of electronic signature and transaction norms, amendments where necessary of relevant by-laws are being prosecuted at the same time, in this connection drafts in progress includes: “Amendments of The Enforcement Rules of Electronic Signature Act (Draft)”, “The Regulations for the Examination of Eligibility of Executive Agencies Exempt from the Application of Electronic Signature Act (Draft)”, “The Regulations on Certification Authority Agency (Draft)”, and “The Regulations of Guidance to Electronic Signatures and Transactions (Draft)”. So in short competent governmental agencies by now have begun to earnestly review current laws, drafting amendments thereto or considering legislation of new laws, whilst comprehensive planning addressed to future trends of our electronic transaction codes is also on the agenda. Without touching the prime framework of the Electronic Signatures Act that is currently in force, we are working on amendments of that code, for the reason that such is a way that incurs the least possible costs, so to say, all issues which electronic trades will or might face are titleogether included in the codification process, this serving to rule out overlapping of statutory provisions, what is made possible all at once is elucidation as to any amendment or draft incurred on the basis of current codes, backed with policy directive or de facto needs, and that effort conducive to collateral correlation with international reality. Issues as to which and what topics should be included in the scope of protocol for amendment of the Electronic Signature Act, including, for example, exemption eligibility and periodical review, as to those that would warrant enactment of dependent codes by competent authority authorized pursuant to said protocol, those which should be left to competent authorities in charge of other object enterprises to exercise their options as to erection of new laws or more preferably, amendment of current laws, ISP relevant provisions, for example, would have to be jointly deliberated and coordinated by and among experts representing respectively the government, the industry concerned, the academic circle, and the researching elites, that being a necessary requisite procedure to the setup of a milestone marking the structuring of an irreproachable electronic transaction mechanism here in this country. Up to the present day, trailing tight behind the development of electronic trade industry this country is equipped with substantially adequate codes, in the foreseeable future, current laws will still be reviewed with reference to the many unique features of the electronic trade industry to make amendments where justifiable, so as to make our codes more perfect. The orientation for future efforts can roughly be summed up in 7 points outlined below: 1. Guideline of Legal Mechanism to Resolve Electronic Transaction/Commerce Issues The legislation theme considering the electronicalized dominant reality today in our country is set on the keynote of the electronic signature codes,in so far as a legal action is committed by reason of electronic operation, to the extent that what is provided in currently enforced law is thus involved, then any jurisprudent discussion in that context will honor as principal the freedom to contract as provided in civil codes, and regard as exceptional legally required act, this being the premise, in the process of law enactments, principles that must be met include: Firstly, the market oriented principle, it seems that the leading position ought to be taken by private enterprises where the matter relates to development of e-commerce, that business need not be a constrained industry; Secondly, refraining from imposing any restraint on the e-commerce transaction, what a government must do is to participate an seldom as possible, and to refrain from meddling to the extent appropriate, it follows then that it should avoid imposing additional or unnecessary restriction upon commercial activities prosecuted via world wide web or electronic trades, considered as such are; troublesome procedures or formalities, tax duties additionally levied or additional fees; Thirdly, the sole reason for governmental intervention would be; to reinforce and back up a predictable, a most simple, easy, and contextually consistent environment in which to legally bind electronic commercial activities; Fourthly, understanding the unique features that characterize electronic commerce, effect earnest review and amendment where justified, of that part of current laws or ordinances susceptible of obstructing development of electronic trades, or titleernatively effect new order or scheme, regulation to adapt to possible development of electronic trades; Lastly, implementation of electronic trade activities are globally motivated, the establishment of a globally unified unique code to govern electronic trade activities to put aside traditional legal systems varying from one country to the next, will boost up confidence on the part of those engaged in electronic trade activities. 2. Legislation be concerned with International Paralleling As having been stated hereinabove, a guideline for legislation is: adequate regulation, leaving leverage, conducing to development. Since after having been put into practice for years, multiple problems emerged one by one, is almost a rule for many nations where legislation of electronic commerce/transaction or electronic signature codes was introduced, and that evidenced by the publication of the amended Electronic Transactions Ordinance, 2004, Hong Kong; open invitation to the public for suggestions, 2003 and 2005, Singapore, for reference for amendments; the UN Protocol drafted to deal with interrelated problems arising out of the processes of concluding of international electronically related contracts. A common keynote in the institutionalizing of electronic transaction codes among international communities is that in addition to the legal status invested upon electronic documents, electronic signatures, provisions are made to protect fair trade principle, fair competition, consumer’s proper interests, intellectual proprieties and privacy, paralleled with means and measures to encourage supervision, effective mediation and discourage criminal undertakings, while the governmental policy tends to assume a non-restrictive, market-oriented tune, to keep to the minimum any governmental intervention, and unwarranted constraints, the same is, just as it should be the guideline for the instituting of electronic transaction codes here in this country so as to keep abreast with international realities, and that conducive to making out the utmost of advantages possible out of electronic transaction activities on the worldwide stage. 3. Deliberation of the Electronicalized Dominance Legalization be in Parallel with Newly Emerged Applications and Development of Transaction Modes Due to the technology involved in striking a deal executed electronically, one piece of electronic trade on the point of conclusion is not as simple as traditional modes of transaction by virtue of the preclusion of both time and space restrictions, so to speak, application of electronic mode of transaction may very well result in situations beyond restriction through traditional legal constraints or theoretic reasoning. Such trade modes, by reason of its unique transaction feature, gave way to contention as to incompatibility with traditional statutory constraints, this is briefly a common dilemma facing all the nations around the world, and they all betake themselves in the working for whatever is possible to regulate and control electronic transactions through legislative means and innovations. Not to mention the complexity of legal intervention in case of transnational transactions prosecuted electronically, again, by reason of the unique feature characterizing electronic transaction, so a basic tune for the working toward the formulation of electronic trade legislation is the buildup of consensus so as to being domestic effort in alignment with international reality. 4. Studies on the Topics of Digitalized Merchandise Any trade of digitalized goods, without regard to whether such is taken as a commodity pursuant to civil codes, would hardly quality for being categorized as sort of authorization or anonymous contract, they would more appropriately be ascribed as like purchase vs. sale and be detitle with accordingly. Given that on-line delivery or downloading, albeit differing from the transfer delivery that is specified in civil codes, still, want of material delivery would not necessarily mean want of legally deemed transfer or delivery. That intangible network transmission would grant the purchaser de facto control of the object in question, then ascertaining of the point of time of transfer of risk, may very well be prosecuted in accordance with provisions in the civil code. As regards assumption of responsibility for flaw, trade of commercial software against on-line payment may reasonably be regarded as categorized debt against which buyer is entitled to delivery of flawless commodity; as to reinstatement of obligations upon dissolution of contract, the point lies not with returning of the object as received, but with returning of the right to use the software concerned, In the event of virus being entrained with the purchase which is an object in question, damage incurred to the buyer is usually in the form of damaged hardware or falsification, deletion of files, that of loss of inherent interests, as to such forms of damage or loss buyer may exercise multiple means of indemnifications, still, the legal status of filed date and principle to quantify such loss in view of indemnification will have to be defined commensurate with evolution of both theory and practice. Overall, as far as transactions of software against on-line payment are concerned, civil law as is still adequate without much ado. As to the question whether digitalized commodities qualify for postal trades where Consumer Protection Law applies, to balance the proper interests claimable to both consumers and the entrepreneur, and to rule out consumer's abuse of rights where ethics is at risk, it is fit and proper to restrict or rule out the transaction of certain commodities under specified categories, For one thing, considering the risks of digital date or digitalized commodities containing digitalized information, in respect of which copying or reproduction is as easy an pie, as to which it is not easy to ascertain whether the consumer has indeed returned the utility right, there is reason to doubt the suitability of granting unilaterally the consumer the right of rejection. Still, in so far as the digitalized commodity remains unopened, or that it is supplied with copying or reproduction procedures, product initiation means, then the risk of copying or reproduction is ruled out and in this instance Consumer Protection Law should apply notwithstanding. 5. Topics Relating to Consumer Protection and Privacy Protection The latest amendment to Consumer Protection Law with respect to electronic trades by including postal purchase on the Internet under Article 2 Section 10, and by the addition of Article 19-1 to allow for the application of the Hesitation Period respecting postal purchase trades, means more comprehensive protection for on-line consumers all right, still, due to the riddling complexity of the operation of electronic commerce at least a portion of the contents of transaction hardly fit the latest provisions in Consumer Protection Law, such that conflict seems to have emerged between protection for the consumers and reasonable risks borne by the entrepreneur. It is therefore suggested that the competent authorities consult the “Distance Marketing of Consumer Financial Services Directive (Directive 97/7/EC)” issued by the European Union with regard to the exclusion of contractual obligations, and conduct a comprehensive review of contents possible for inclusion in a piece of electronic transaction so as to delete commodities or services inappropriate for stipulation under Article 19 and article 19-1 by amendments to existent legislation, both administration and legislature ought to reinforce efforts in relevant protection mechanism to meet the challenging the Internet Age of our times paralleled with efforts to go in line with ongoing trends for consumer's protection on the international scenario. Next, responding to the point of key interest to consumers regarding protection of personal date entangled in B2C electronic transactions, the Ministry of Justice has publicized the protocol of amendments to Personal Date Act, whereby the scope of coverage extend to overall latitudes without discrimination, incorporating the obligation to serve notice respecting the collection and use of data, restriction on the collection of children's data and of sensitive data, group litigation, and increase of indemnity amounts. Upon legislative ratification of amendments to Personal Data Protection Act in the future, operators of electronic trades will have to face certain restrictions collecting data on websites in addition to being charged with duty of notice, so that without securing consent from the person whose data is being solicited for collection, the operator may not engage in inappropriate use, let alone selling of personal data in question, it is anticipated that our existent on-line marketing mode would hence go through substantial change. To prevent operators of electronic transactions in this country from frustrations adapting to the forthcoming statutory amendments, it is suggested that the competent authorities upon legislation of said amendments prepare models of policy for protection of personal privacy confronting operation of electronic transactions. 6. Topics Relating to Cash Flow titlehough respecting electronic transactions, safe payment scheme has already been established for the market; further to that, the Banking Bureau of the Financial Supervisory Commission, Executive Yuan, has published aimed at web banking operations “Pattern Contracts for Personal Computerized Banking Services and Web Banking Service” and stipulated “Criterion for Banking Institution's Operation and Safety Control of Electronic Banking Services”, to ascertain safeguarding of web payments; as regards petty payments amendment has been made to Banking Law by the introduction of Article 42-1, whereby cash buildup cards derive their legality basis, along with Procedures governing Bank's issue of cash buildup cards implemented such that such cards are available for on-line transactions, these are much in the promotion phase, yet distant to universal application. In practice, it is common and popular for credit cards to be used in on-line transactions, still, such form of payment could strike a potential risk for the card owners, to effectively protect card owners' safety at consumption and proper interests, it is suggested that the competent authorities promptly institute “Pattern Contract Terms Respecting Web Transactions Using Credit Cards” to meet inadequacies of stipulation on credit card operation over on-line transactions. Concurrent with the increased frequency of cash flow via the internet, there may develop more of payment tools in the foreseeable future, and more funds may come and go via the Net, however, the existent legislation respecting electronic transfer of funds currently is far from adequate, it is appealed that the competent authorities institute relevant legislation in time to help build a sound and wholesome environment for out net financial industry as well. 7. Tax Related Topics Internationally there has not reached, to this day, unified consensus respecting complicated net taxing policy, since that taxation with respect to on-line transactions is not as simplistic as would suffice the notion that “as long as there is income, there is duty”, it involves by and large concerns such as development of the Internet industry, fairness of taxation and even national competition, so in so far as net taxation is concerned, the concern should extend to deliberation of complementally measures apart from just reviewing if existent taxation laws are adequate for exploitation and in the negative case, if ad hoc stipulation is required
A Brief Introduction to Taiwan’s Legislations to Promote Industrial Innovations of the Digital EconomyA Brief Introduction to Taiwan’s Legislations to Promote Industrial Innovations of the Digital Economy 2023/05/15 I. Background To encourage the development of digital industries in communications, information, cybersecurity, networking and communication, to centralize digital governance and digital infrastructure development and to assist in digital transformation of public and private sectors in Taiwan, the Ministry of Digital Affairs (“the MODA”) was created on August 27, 2022 to spearhead the national digital development policy, communications and digital resources; the development of digital technology use cases and the environment for innovations and talents; policies and regulations governing digital economy industries, national cybersecurity, the government’s digital services, open data and data governance, digital infrastructure, international exchange and cooperation and competence standards for the government’s professional personnel in IT and informational security. The Administration for Digital Industries (ADI) and the Administration for Cyber Security (ACS) have been established as the MODA’s subordinate agencies, to address challenges on all fronts in the digital wave. As the central competent authority on the industrial development of the digital economy, the MODA may subsidize, incentify or support innovative activities of digital economy industries in accordance with Paragraph 1, Article 9 of the Statute for Industrial Innovation and determine relevant matters in accordance with Paragraph 2 of the same article. Hence, the MODA promulgated the Subsidy, Reward and Assistance Regulations for Promoting Industry Innovation (“the Regulations”) on December 23, 2022, to encourage innovation and R&D on software, services, integration and application in telecommunications, information, cybersecurity, networking, and communication. The purpose is to enhance the industry environment and to boost the industry competitiveness. These Regulations serve as the MODA’s flagship efforts in promotion of industrial innovations and highlights Taiwan’s emphasis on digital economy industries. Below is a summary of the Regulations. II. Scope As stated in the overview described in Article 2, the Regulations aim to assist in the development of software products, digital services and infrastructure, system integration and vertical use cases in telecommunications, information, cybersecurity, networking and communication, so as to encourage innovations in digital economy industries such as ecommerce, digital contents, new types of digital services, communications and network deployment, to improve the industry environment and enhance the industry competitiveness. In sum, the “digital economy industries” mentioned in the Regulations refer to software, digital services or digital infrastructure sectors in telecommunications, information, cybersecurity, networking and communication. III. Policy measures According to Paragraph 1, Article 3 of the Regulations, the MODA or its subordinate agencies may provide subsidies, rewards and assistance to the activities in digital economy industries such as promotion of innovation or R&D, supply of technologies and support in upgrade. This may involve the encouragement of creation of innovation of R&D centers by companies; assistance to establishment of innovation or R&D institutions; fostering of cooperation among industries, academia and research organizations; promotion of corporate engagement in talent development at schools and development of human resources in industries; support to innovations by local industries; advocacy of corporate use of big data and the government’s open data; enhancement of communications network resilience and network infrastructure prevalence and other relevant matters. Moreover, the Regulations provide details of the policy measures for subsidies, rewards and support as follows: 1. Subsidies The relevant details are provided from Article 4 to Article 17 of the Regulations. (1) Eligibility According to Paragraph 1, Article 4 of the Regulations, subsidy recipients in principle shall be engaged in activities of digital economy industries, shall be either a sole proprietorship, partnership, limited partnership, or corporation registered in accordance with domestic laws or a natural person who is national of the R.O.C., a natural person from Hong Kong or Macau or a foreign national with permanent residency and has never been listed as a refusal account by any bank. Flexibility can be granted in accordance with Paragraph 2 of the same article. If required for the development of digital economy industries, the MODA or its subordinate agencies may establish separate eligibility criteria for subsidy recipients. However, such eligibility criteria only take effect via public announcement and publication on the Executive Yuan Gazette. Finally, according to Article 13 of the Regulations, no subsidy application may be submitted in event of violation of laws related to environmental protection, labor safety and health or food safety and hygiene during the most recent three years, as determined to be serious by central competent authority. (2) Subsidy limits According to Article 5 of the Regulations, different programs come with different ceilings measured in percentage. In principle, the subsidized amount shall not exceed 50% of the program budget if it is for promotion of industry innovation or R&D or encouragement of corporate use of big data and the government’s open data to develop and innovate commercial applications or service models. However, this does not apply to specific policy considerations or subsidy schemes above the budget and approved by the MODA or its subordinate agencies. For example, the subsidized amount shall not exceed 50% of the course fees for corporate engagement in talent development on campus or enhancement of talent resources for industries. However, this limit does not apply to subsidies to indigenous people, persons with disabilities, low-income households, or the special circumstances approved by the MODA or its subordinate agencies. Support schemes such as assistance to industrial technology and upgrade; encouragement of creation of innovation of R&D centers by companies; assistance to establishment of innovation or R&D institutions; fostering of cooperation among industries, academia and research organizations; support to innovations by local industries; enhancement of communications network resilience and network infrastructure prevalence and other projects shall be announced by the MODA or its subordinate agencies and published on the Executive Yuan Gazette. (3) Subsidy programs According to Articles 6 of the Regulations, there are no specific restrictions on subsidy categories, with two exceptions: (1) promotion of industry innovation or R&D – Subsidies are limited to six categories, i.e., innovation or R&D personnel expenses for approved projects; costs for consumables and raw materials; access and maintenance expenses for innovative or R&D equipment; introduction of intangible assets; commissioning and verification fees of research; and travel expenses. (2) advocacy of corporate use of big data and the government’s open data to develop and innovate commercial applications or service models or enhancement of communications network resilience and network infrastructure prevalence - Subsidies are limited to three categories, i.e., fees for commissioned services; training & education fees; and promotional campaign expenses. (4) Application submission According to Article 7 of the Regulations, an applicant should submit the application form, the project plan and relevant data to the MODA or its subordinate agencies. If the contents of the project plan or documents fail to meet requirements, the MODA or its subordinate agencies may request missing materials before a deadline of up to one month. The MODA or its subordinate agencies may not accept applications without missing materials supplied before deadlines. (5) Acceptance and review According to Article 8 of the Regulations, the MODA or its subordinate agencies shall convene review meetings to review applications, changes and irregularities in the execution of subsidy programs. Applicants may be asked to provide explanations or Personnel may be sent to conduct on-site inspections. If necessary, relevant authorities or institutions may be commissioned assist in financial reviews. Additionally, according to Article 9 of the Regulations, the period from document readiness by an applicant to notification of the completed review to the applicant may not exceed three months. This may be extended by one month if necessary. Finally, according to Article 17 of the Regulations, subsidized projects, subsidy recipients, approval dates, subsidized amounts (including cumulative amounts) and relevant information shall be announced on the websites of the MODA or its subordinate agencies each quarterly unless the disclosure should be restricted or is not provided according to Article 18 of the Freedom of Government Information Law. (6) Contract signing Once reviewed and approved, the applicant must sign the subsidy contract with the MODA or its subordinate agencies within the time period specified by Article 10 of the Regulations. Unless extension has been agreed by the MODA or its subordinate agencies, the approval of the application loses validity if a contract is not signed before the deadline. (7) Matters of adherence by subsidy recipients Once the subsidy contract has been signed, an applicant becomes a subsidy recipient under the Regulations and must abide by relevant terms and conditions. First, the recipient shall establish a separate account for subsidy funds and maintain a separate account book, according to Article 11 of the Regulations. All of the interest generated from the subsidy account and any balance remaining after the project completion shall be fully returned to the national treasury via the MODA or its subordinate agencies. Meanwhile, to examine whether there are any duplications of application, the use of subsidy funds and the effectiveness of project implementation, the MODA or its subordinate agencies may dispatch personnel or commission a fair and just organization to inspect the relevant documents, account books and status of project execution. The subsidy recipient shall not refuse such an examination, is obligated to respond and shall submit work reports and details about the use of funds by following the agreed-upon schedule. In event of breach, the disbursement of subsequent funds may be suspended, under the terms and conditions of the subsidy contract. Second, according to Article 12 of the Regulations, if a recipient fails to execute the subsidized project as planned or the project experiences a significant delay in progress, or there is an overly large gap between the project results and the business plan, or the project fails to pass the review, inspection or acceptance by the MODA or its subordinate agencies and no improvement has been made before the specified deadline, or there is a breach of the Regulations Governing Procurements for Scientific and Technological Research and Development if the subsidized amount exceeds 50% of the recipient’s procurement and it meets the threshold for public announcements under the Government Procurement Act, the MODA or its subordinate agencies may suspend the next disbursement in accordance with the terms and conditions of the subsidy contract, claw back the disbursed subsidy and even stop any subsidy to the recipient for one to five years, depending on the severity of the circumstances. Third, according to Article 14 of the Regulations, the MODA or its subordinate agencies must conduct a comprehensive assessment of effectiveness of subsidized projects and the recipient shall cooperate by providing data required for the assessment. Fourth, according to Article 16 of the Regulations and unless otherwise specified by laws, if the subsidized amount exceeds 50% of the total budget for a technology project, the ownership and utilization of R&D results shall comply with the Government Scientific and Technological Research and Development Results Ownership and Utilization Regulation. In event of breach by the recipient violates, the MODA or its subordinate agencies may terminate the subsidy contract and shall refuse to accept any subsidy application from the recipient for five years from the date of completion of the innovation or R&D. If the reason is attributable to the recipient, the subsidy contract shall be canceled and the subsidies shall be refunded. (8) Subsidy applications According to Article 17 of the Regulations, a subsidy applicant shall declare to the MODA or its subordinate agencies the following: 1) No significant default in the execution of any government-sponsored science and technology projects during the past five years. 2) No suspension currently in force as a result of disciplinary actions in relation to execution of a government-sponsored science and technology project. 3) No tax incentives, rewards or subsidies for the same matter under other laws granted to the same subsidized project. 4) No taxes owed during the past three years. However, individuals who apply for the subsidy under Subparagraph 5 or 6, Paragraph 1, Article 3 are exempted. 5) No violation of laws related to environmental protection, labor safety and health or food safety and hygiene or the People with Disabilities Rights Protection Act during the most recent three years, as determined to be serious by central competent authority. However, this does not apply to circumstances that occurred prior to the enforcement of the Statute. If the applicant refuses to declare the above, the MODA or its subordinate agencies may not accept the application. If any false statement is identified, the application may be rejected, or the subsidy may be withdrawn, the contract may be canceled and the disbursed funds shall be returned. 2. Rewards According to Paragraph 1 of Article 18 of the Regulations, the MODA or its subordinate agencies will announce reward programs for digital economy industries with details on recipients, eligibility criteria, evaluation standards, application procedures, approving agencies and other related matters. Moreover, reward applications are not accepted according to Paragraph 2 of Article 18 and the provisions of Article 13 and Article 15 shall apply mutatis mutandis. Article 17 regarding announcement of government information on subsidy applications shall also apply to reward applications. 3. Assistance Relevant rules are primarily prescribed from Article 19 to Article 21 of the Regulations. (1) Eligibility According to Paragraph 1 of Article 19 of the Regulations, the rules prescribed in Subparagraph 1, Paragraph 1 of Article 4 also apply to the eligibility criteria for assistance to digital economy industries. In other words, assistance recipients in principle shall engage in activities of digital economy industries, either a sole proprietorship, partnership, limited partnership, or corporation registered in accordance with domestic laws or a natural person who is national of the R.O.C., a natural person from Hong Kong or Macau or a foreign national with permanent residency and has never been listed as a refusal account by any bank. Flexibility can be granted outside the aforesaid limitations and in accordance with Paragraph 2 of Article 19. If required for the development of digital economy industries, the MODA or its subordinate agencies may establish separate eligibility criteria for assistance recipients via public announcement and publication on the Executive Yuan Gazette. (2) Oversight of commissioned organizations According to Article 20 of the Regulations, the MODA or its subordinate agencies may evaluate and assess the effectiveness of the assistance services provided by the commissioned organization(s) for recipients as an important basis for reviewing assistance projects. (3) Establishment of a single contact window The assistance unit may establish a single contact window to provide assistance and counseling services, according to Article 21 of the Regulations. 4. General provisions In addition to specific rules, the general provisions prescribed from Article 22 to Article 25 shall apply to subsidies, rewards or assistance provided by the MODA and its subordinate agencies. First, all the funds required for policy measures shall come from the budgets allocated by the MODA or its subordinate agencies, according to Article 25 of the Regulations. Second, the MODA or its subordinate agencies may commission a legal person or a group to handle the application acceptance, review, approval, inspection, subsidy disbursement and claw-back, rewards, assistance and other relevant matters, according to Article 22 of the Regulations. Furthermore, according to Article 23 of the Regulations, the incoming and outgoing of funds for subsidy, reward and assistance projects are managed as follows: 1) The same project applying for subsidies with two or more organizations should list the details of all expenses and the breakdowns and amounts of subsidies, rewards and assistance under application with each government agency. The subsidy, reward and assistance program shall be canceled and the disbursed funds shall be returned in event of concealment or false statements. 2) If the review by each government agency on the use of funds identifies poor results, utilization not consistent with the subsidy purposes, or inflated or dishonest numbers, the subsidy, reward or assistance recipient shall return the disbursed funds. Meanwhile, no subsidy shall be granted to the subsidy, reward or assistance recipient in question for one to five years, depending on the severity of circumstances. 3) If procurement is involved in the subsidy, reward or assistance budget, the subsidy, reward or assistance recipient shall adhere to the Government Procurement Act. 4) When reporting on expenses, the subsidy, reward or assistance recipient shall enumerate in detail the utilization of expenditures and the total amount of spendings. The same project subsidized by two or more organizations shall list the actual sum of subsidies, rewards and assistance. Finally, according to Article 24 of the Regulations, the approval, disbursement and reimbursement of subsidies, rewards and assistance are processed as follows: 1) Disbursement based on project progress: The number of instalments, the method, the amount (percentage) are specified in the contract by the MODA or its subordinate agencies, depending on the project and the timetable. 2) Reimbursement shall be based on the Management Guidelines for the Disposal of Government Expenditure Vouchers, the Matters of Attention Regarding Budget (Donation) Implementations by Central Government Agencies for Private Groups and Individuals and relevant contractual provisions. IV. Conclusions To accelerate the innovation and development of digital economy industries in Taiwan, the MODA has promogulated the Subsidy, Reward and Assistance Regulations for Promoting Industry Innovation in accordance with Paragraph 1, Article 9 of the Statute for Industrial Innovation. It is hoped that the subsidies, rewards and assistance provided by the MODA helps to enhance the competitiveness of digital economy industries and the effectiveness of the digital economy development in addition to the Statute. The Regulations set out detailed rules on policy measures e.g., subsidies, rewards, and assistance. Key matters such as eligible recipients, application procedures, review mechanisms, responsibilities and obligations are clearly defined but certain flexibility is reserved by exceptions. A contract-centric approach provides manoeuvrability in practice specific to project circumstances. It is hoped that the MODA and its subordinate agencies can utilize these Regulations once in force, to enhance the business environment of the digital economy industries and continue to drive industry innovations.
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