Mar 2024

Taiwan

Law Over Borders Comparative Guide:

Fashion Law

Introduction

Taiwan has long excelled in the manufacturing of fashion goods such as apparel and clothing accessories. Over the years, Taiwan’s textile industry has grown into the leading global supplier of sustainable and functional textiles, accounting for approximately 70% of the global market for functional fabrics. However, despite Taiwan’s dominance in manufacturing, only a few Taiwanese fashion brands are able to achieve global recognition. Statistics from the international database Euromonitor International shows that even in Taiwan’s domestic market, leading foreign brands still maintain a significant market share. To encourage growth of Taiwan’s fashion brands, the Taiwanese government has implemented a number of supportive policies and incentives to promote art, culture, and domestic brand creation. As a result, Taiwan’s fashion industry has been growing steadily in recent years, both in terms of the number of businesses and revenue. With Taiwan’s increasing disposable income, the domestic consumer market holds enormous potential for the fashion industry, especially with the growing demand for sustainable fashion. As Taiwan’s fashion industry continues to grow, it is expected that Taiwanese fashion brands will also become more important in the coming years.

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1 . What are the main intellectual property rights available to protect fashion products?

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1.1. Summary of IPRs

The main intellectual property rights available to protect fashion products in Taiwan include copyright, trademarks, design patents, trade secrets, geographical indications, unfair competition laws, licensing agreements, and customs recordation to combat counterfeit products.

IPRDurationTime and modalities for grantPros and cons in the fashion sector
Trademarks10 years from the date of registration (renewable).

Average time to obtain a trademark from filing date: 8 - 12 months.

Grant fee required.

Pro: potentially indefinite life.

Cons: can be expensive to obtain broad coverage, search and registration can be time-consuming and complicated and it can be expensive to obtain and prove secondary meaning.

Copyright50 years after the death of the author.Protection begins upon the completion of a work.

Pro: easy to obtain.

Cons: doesn’t cover fashion design (such as silhouette, shape, and style) and it is difficult to establish separability.

Patents
  • Invention patent: 20 years (non-renewable).
  • Utility model patent: 10 years (non-renewable).
  • Design patent: 15 years (non-renewable).

Average time to obtain a patent:

  • Invention patent: 18-24 months.
  • Utility model patent: 4-6 months.
  • Design patent: 12-18 months.

Pro: strong protection.

Cons: lengthy and expensive, a complex process.

Trade secretsUnlimited. Trade secrets are protected as long as they remain confidential.Protection begins upon satisfying the requirements of secrecy, economic value and reasonable measures.

Pro: indefinite protection life as long as the data or information stays a secret. 

Con: carefully exercised to ensure the confidentiality of the secret.

Domain namesRegistered for 1-10 years (renewable).Registration is accomplished by making a purchase through an authorized registry. 

Pro: helps safeguard brand’s identity and reputation on the internet.

Cons: if registered by someone else, retrieval may depend on trademark or other previous legal rights and registering and maintaining multiple domain names can be expensive.

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1.2. Trademarks and non-traditional trademarks

Trademarks provide exclusive rights to use the mark in connection with specific goods or services, protecting brand names, logos, and distinctive symbols associated with fashion products. Typically, a trademark is a symbol presented in two dimensions, such as “text, graphics, symbols, or their combinations”, that identifies the origin of goods or services. In addition to the typical trademark protection, the current Trademark Act covers any sign that can be recognized as an indication of the source of goods or services. This protection includes, but is not limited to, trademarks consisting of words, designs, symbols, colors, three-dimensional shapes, motions, holograms, sounds, or any combination thereof.

The most used non-traditional trademarks are as follows.

Three-dimensional mark (shape marks). A three-dimensional trademark should be represented through images depicting the three-dimensional shape of the trademark. Dotted lines are commonly utilized in the images used to show the manner, position or context in which the mark is used on the relevant goods or services, as well as for the purpose of distinguishing the parts to be registered. An example of a shape mark is registration no. 01889563, relating to a handbag design by Kabushiki Kaisha Miyake Design Jimusho (Japan).

Pattern marks (monogram marks).A pattern trademark can be represented through the pattern’s structure and sequence. Moreover, the trademark may be represented using dotted lines to illustrate the pattern, its position, or its content as applied to the relevant goods or services. Trademark description should be clearly written, particularly regarding how the pattern trademark is used on a specific section of the goods, indicating its actual usage. Examples include DAMIER AZUR (registration no. 01392144), which is a check pattern design by Louis Vuitton Malletier (France) and the pattern of interlocking initial G with connecting lines used by Guccio Gucci S.p.A. (registration no. 01169995).

Color marks. A color trademark is a single color or combination of colors that is applied, in whole or in part, to the goods, to the packaging or to the place of business where services are provided. If a color itself can adequately identify the origin of goods or services, not in combination with a word, figure or symbol, it may be registered as a color trademark. An example is the particular shade of blue box with white satin ribbon, as registered by Tiffany & Co. (registration no. 01448056).

Position marks.A position mark indicates that a specific position of the mark is an important feature of the given goods and services. It is common practice to claim a combination of position marks along with color trademarks or three-dimensional trademarks, for position marks further enhance trademark identifiability. Registration no. 01788440 owned by Cowell Fashion Co., Ltd. (South Korea) is an example where the positioning of the brand label is an important identifying feature. 

Unregistered marks.Unregistered trademarks do not receive the same level of protection as registered trademarks under Taiwan’s laws, and proving infringement of unregistered trademark rights can be challenging. However, if a mark has become well-known through extensive and continuous use, it may be protected under the Trademark Act and Fair Trade Act, even if it is not formally registered. The main purpose of this protection is to prevent others from exploiting the reputation of a well-known mark. Meanwhile, unregistered marks may be protected under trade secret laws if their non-public use is vital to the business and provides a competitive advantage or unfair competition laws if the unregistered mark is involved in deceptive or unfair practices.

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1.3. Design as an alternative or addition to TM registration

In Taiwan, designs can be protected through registration under the Patent Act. A design patent can be granted for the overall shape, a part thereof, patterns, color usage, or any combination of these elements suitable for industrial application and possessing an aesthetic quality. Novelty is a prerequisite for obtaining a design patent. In the fashion industry, the appearance of fashion items, such as fabric weaves, garment shapes or details, handbags and jewelry, are often registered as design patents. A design patent, once granted, remains valid for 15 years from the application date and is not renewable. For example, the iconic snake necklace from Bulgari’s Serpenti Collection (publication no. D162041) and the fabric with classic pattern of Givenchy (publication no. D176557).

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1.4. Copyright as an alternative or addition to TM registration

In the fashion industry, copyright protection extends to elements such as patterns, design sketches, effect drawings, structure charts, and the overall appearance of a product. Typically, these elements are safeguarded as artistic or graphic works. Works created by foreign entities that are first published outside Taiwan’s territory might be protected under copyright law if they are recognized as copyrighted according to the bilateral and international conventions to which Taiwan is a party, under reciprocal conditions. Taiwan does not belong to the Berne Convention for the Protection of Literary and Artistic Works, the Paris Convention for the Protection of Industrial Property, or the World Intellectual Property Organization Convention (WIPO) however, as a member of the WTO and a signatory to the WTO Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS), Taiwan has agreed to recognize the copyrights of nationals of all WTO member states. Nevertheless, industrial products and style are not subject to the protection of the Copyright Act and the similarity of “style” between two designs will not be considered as copyright infringement (Criminal Judgment of the Tainan District Court [108] Zhi-Yi-Zi No. 9 (Taiwan)).

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1.5. Any other pertinent IP rights

A Geographical Indication (GI) can be registered as a certification mark to gain protection under the Trademark Act. A certification mark is a symbol that serves to certify specific qualities, accuracy, materials, ways of manufacturing, places of origin, or other attributes of goods or services belonging to another entity. It is used by the owner of the certification mark to distinguish the certified goods or services from those that are not certified. For example, a mark certifying a product as “100% wool”.

An applicant seeking to register a certification mark must be a legal entity, group, or government agency with the capability to certify the attributes of another entity’s goods or services. The use of a certification mark implies that the holder of the certification mark permits the entity to display the certification mark on items or documents associated with the certified goods or services (Articles 80-83 of the Trademark Act).

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2 . Beyond intellectual property: what contractual arrangements are useful in manufacturing, distributing and advertising fashion products?

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2.1. Manufacturing fashion products

License agreements 

A license agreement is a legally binding contract in which a licensor grants permission to another party (the licensee) to use the licensor’s infrastructure and resources to manufacture products. Common license agreements typically pertain to the use of intellectual property rights (IPRs) and include clauses such as identification and ownership of the licensed IPRs, license scope (exclusive and non-exclusive), duration and termination, confidentiality, breach of contract, provisions concerning quality control, royalties reporting duty, licensor’s audit right, sublicensing, and provisions concerning improvements.

Non-disclosure Agreements (NDAs)

An NDA is often signed before the parties disclose confidential information to each other and primarily serves to prohibit one party from wrongfully using or disclosing specific information relating to the other party. The agreement should require the receiving party to handle this information with a certain degree of care, often defined as at least the same level of care they would use for their own confidential information.

To safeguard confidential information, both parties must define what falls under NDAs’ scope and specify that confidential information can only be used for a particular purpose. While not directly related to confidentiality, it can be wise to state in the NDA that all information is disclosed “As Is” and without warranties. By adding such a statement, although it might not prevent legitimate claims for fraud or concealment, it may provide some protection against unwarranted claims. Furthermore, NDAs should include a clause for equitable relief, stating that in the event of a breach, monetary damages would be insufficient, and both parties agree that injunctive relief is appropriate. 

Subcontract agreements with suppliers/in-house manufacturing

A contractor has the option to subcontract the contract to other suppliers. The term “subcontracting” refers to an arrangement that does not constitute an assignment but allows another supplier to perform a portion of the contract on behalf of the contractor.

Additionally, clauses related to specifications, quality, quantity of ordered products, packaging, delivery, inspection and acceptance procedures, price and payment terms, representations, and warranties, with particular attention to the legal and technical capabilities of the manufacturer, term and termination, governing law, and dispute resolution, are of vital importance. In cases where manufacturing is carried out in-house, it is crucial to establish internal policies and rules to ensure proper protection of IPRs.

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2.2. Distributing fashion products

Agency agreement 

Unlike some jurisdictions, Taiwan does not have legal provisions exclusively dedicated to fashion-related agreements. These agreements are subject to the general contractual provisions outlined in the Civil Code. In an agency agreement, the principal delegates various business activities, such as marketing and sales, to an agent who acts on behalf of the principal. The agent operates in the best interests of the principal, and typically, the principal has all legal and financial responsibilities derived from the agent’s activities. The agent’s compensation can take various forms, including a certain percentage of the revenue generated, a fixed fee, or other agreed-upon arrangements.

Selective distribution online in high-end fashion and trademark protection

Selective distribution is a distribution system where the supplier undertakes to sell the contract goods or services, either directly or indirectly, only to distributors selected on the basis of specified criteria, and where these distributors do not sell such goods or services to unauthorized distributors within the territory reserved by the supplier to operate that system. In Taiwan, enterprises are generally not allowed to set restrictions on the resale prices of goods or services to their trading partners. However, there may be exceptions for those with valid reasons. This rule also extends to services provided by enterprises (Article 19 of the Fair Trade Act).

Co-branding and co-marketing 

Co-branding entails the joint use of brands in sales and promotional activities, while co-marketing involves brand owners working together to share marketing opportunities to promote their individual brands. Both arrangements enable brand owners to reach a broader audience and harness the influence of their respective brands. It is essential to exercise due diligence when considering potential co-branding partners. Key clauses in a co-branding and co-marketing agreement encompass several important aspects, such as the scope, implementation, and duration of the collaboration, profit distribution methods, measures for brand protection, exit or termination procedures, handling of damages, and the specification of governing law and dispute resolution mechanisms.

Franchising and alternative sales model agreements 

In Taiwan, franchising operates in the absence of an independent legal framework. The relationships between franchisors and franchisees are primarily governed by the terms of franchise agreements while the validity and enforcement of these agreements fall under the purview of the Fair Trade Act of 2010 and the franchising guidelines issued by the Fair Trade Commission (FTC).

The “Disposal Directions (Guidelines) on the Business Practices of Franchisors” is aimed at ensuring fair competition within the franchising business and preventing franchisors from concealing vital information during the recruitment of franchisees. The aforementioned information includes startup costs, operating expenses, restrictions and authorization of intellectual property, contents and methods of operational assistance and training, plans for setting up other franchisees in the same area of operation, restrictions applied to the franchise relationship during the contract period and alteration and termination of the contract.

Any violation of the Guidelines by a franchisor involving concealment or delayed disclosure of significant information is considered a breach of Article 24 of the Fair Trade Act if it is deemed unfair to the prospective franchisee and detrimental to the trade practices within franchising operations. Such infringements may lead to corrective measures ordered by the FTC, administrative penalties (up to TWD 25,000,000), or claims for compensation of damages (up to three times the proven amount in cases of intentional infringement).

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2.3. Advertising fashion products

Employing fashion models 

According to the Taiwan Labor Standards Act (LSA), a worker is defined as a person who is hired by an employer to work for wages (Article 2 of the LSA). All employee–employer relationships are mandatorily regulated by the LSA. However, individuals working as models in the fashion industry may not necessarily fall under the category of traditional labor. Within the modeling industry, the contractual relationship between a model and their agent typically involves the use of a standard contract prepared by the agent, subject to regulation by the Civil Code.

Social media, influencers and brand ambassadors/celebrities 

Influencers. Direct engagement of a well-known personality can elicit greater trust and appreciation among consumers and is a highly effective tool for advertisers’ online promotion. Here are some main issues for advertisers using influencers:

  • Disclosure — where the brand incentivizes an influencer through payment or payment in-kind, endorsements must disclose that they are promotional posts. For example, using a label such as ‘#ad’. (Fair Trade Commission’s Disposal Directions (Guidelines) on Online Advertisements).
  • Claims by influencers — ensure the influencer does not make claims or omissions that breach regulations.
  • Presentation of content by influencers — care should be taken to ensure that the content presented by the influencer is not misleading. For example, using beauty filters in promotions of beauty products is likely to cause controversy (see Fair Trade Commission Disposal Directions (Policy Statements) on the Use of Endorsements and Testimonials in Advertising).
  • Record keeping — maintain up-to-date records of all commercial relationships with influencers and talents to avoid accidental compliance issues or breaches of any exclusivity arrangements.
  • Monitoring — closely monitor consumer response to influencer content to promptly identify unintended consequences. This includes maintaining streamlined communication with the influencer to ensure that any private or direct messages they receive about the content (whether positive or negative) can be quickly relayed to the brand.
  • Contracting with influencers — include damage limitation in the provisions as well as key commercial issues such as duration of the endorsement partnership, payment, deliverables and the timeline for their delivery, exclusivity, compliance with brand policies (if applicable), termination provisions and ownership of the IPRs in the content.

Brand Ambassadors. A brand ambassador contract between a fashion brand and its ambassador outlines specific requirements for the ambassador role that should be fulfilled over a set period of time. Such contract typically clarifies language and tone guidelines that should be used for sponsored content, what the ambassador should avoid when representing the brand, legal responsibilities and disclosures to ensure compliance with governmental agencies, and other standard terms, such as payment, number of sponsored posts, cancellation process, etc.

Advertising standards, relevant authorities and advertising practice 

With the aim of protecting consumers from unfair practices by sellers and advertisers, Article 21 of the Fair Trade Act bans false or misleading representations. In particular, it requires advertising agencies to be jointly and severally liable for advertisements they create or design which they should have known were false or misleading. The same liability applies to the publishing or broadcast media companies that run such advertisements. The Fair Trade Act applies to practices in all industries and advertising media, including internet advertising. 

In May 2007, the FTC announced the amendment of “Fair Trade Commission Policy Statements on Use of Endorsements and Testimonials in Advertising”. It declares that the endorser is jointly liable with the product manufacturer under Article 21 of the Fair Trade Act, in terms of Article 14 of the Administrative Law, if it can be evidenced that the endorser and the firm collaborated in deceptive advertising. This policy was first implemented in the case of the celebrity Wen Cui Pin, who was found to collaborate with the punished producing firms and to intentionally make false claims about the body slimming clothes.

On the other hand, the Television Broadcast Advertising Examination Standards enacted under the Radio and Television Act set out further rules, defining the scope of the examination of advertisements, the requirement that broadcasters or advertising agencies must apply for permission to broadcast any advertisement, and a subsequent ban on content containing vulgar language or causing harm to the public; while the Standards for Advertising Production and Broadcast of Satellite, Radio and Television (“Production Standards”) stipulate detailed provisions on permissible content of broadcast advertising. 

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3 . What regulations govern online marketing and how are the rules enforced?

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3.1. Consumer protection regulations

According to the Consumer Protection Act, a consumer is any person who is acting for the purposes of consumption to make transactions in exchange for goods or services in relation to a commercial practice, and a consumer relationship is the legal relationship that exists between a consumer and a trader for the sale of goods or the provision of a service. Some of the most relevant consumer protection rules applicable to the fashion industry in Taiwan include: product safety and quality, warranty and return policies, and clear and transparent consumer contracts.

For fashion businesses operating online stores, the FTC requires advertisers to provide clear and accurate product descriptions, pricing, and terms and conditions. Fashion businesses must also comply with the Personal Data Protection Act, which regulates the collection, processing and use of personal data and requires businesses to protect the privacy of their customers.

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3.2. Physical store and online store layout

In Taiwan, there are no specific rules or regulations designed to protect the layout of physical and online stores. However, the layout of an online store and a physical store may be protectable under intellectual property laws, such as the Copyright Act, Trademark Act, and Patent Act. The layout of a physical store can be protected as interior design or architecture works under the Copyright Act, three-dimensional trademarks under the Trademark Act, and design patents under the Patent Act. For example, the physical store layout from the Apple Store (publication no. D182008).

Meanwhile, in addition to being protected as pictorial and graphical works under the Copyright Act, the layout of an online store may also be protectable as graphical user interface (GUI) under the Patent Act.

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4 . What are the most relevant unfair competition rules for fashion businesses and how do the courts interpret and enforce these rules?

Unfair competition rules for fashion businesses are primarily governed by the Fair Trade Act. The Fair Trade Act aims to maintain fair and free competition, protect consumers and prevent and rectify monopolistic and unfair trade practices. Relevant provisions in the Fair Trade Act include deceptive advertising, trademark infringement, and unfair trade practices:

  • Deceptive advertising (Fair Trade Act, Article 21) — fashion businesses are prohibited from engaging in deceptive advertising practices, which may include false claims about products, misleading price information, or inaccurate product descriptions. 
  • Trademark infringement (Fair Trade Act, Article 22) — unauthorized use of another company’s trademark or a confusingly similar mark is considered infringement of an existing mark, which further leads to unfair competition. 
  • Unfair trade practices (Fair Trade Act, Article 25) — the Fair Trade Act provides a framework for addressing various unfair trade practices, including any deceptive or obviously unfair conduct that is likely to have an effect on the order of trading.
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5 . Is there any regulation specifically addressing sustainability or ESG (Environmental, Social and Governance) in the fashion industry?

Taiwan does not have a statute specifically addressing requirements of sustainability or ESG in the fashion industry. However, the Financial Supervisory Commission has announced corresponding plans urging certain businesses to disclose their corporate social responsibility (CSR) initiatives and activities in their sustainability reports. According to Sustainable Development Action Plans, if a fashion business is a public company and meets the legal requirements (i.e. its financial report for the last fiscal year shows that its capital stock is not less than TWD 2 billion), it must prepare, submit and publish a sustainability report annually.

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6 . Customs monitoring: do any special import and export rules apply to fashion products?

Generally, there is no specific law targeting import and export of fashion products. However, there are laws and regulations that apply to specific ‘goods’ that might be used in the production of fashion products. For example, Taiwan’s Wildlife Conservation Act stipulates that no import or export of live wildlife or protected wildlife products is allowed without prior approval from the authority, and that the importer must submit a number of documents for approval by the authority when importing exotic wild animals that are not endemic to Taiwan for the first time. These rules form the legal basis where pertinent government agencies can set up further regulations and procedures for the importation of furs and hides used in the fashion industry.

In Taiwan, customs monitoring plays an important role in the front line protection of intellectual property rights. The following is an overview of the mechanism consisting of customs monitoring procedure, database operation and seizure procedure:

  • Application procedure for customs monitoring. In order to initiate customs monitoring in Taiwan, the rightsholder, i.e. the entity that holds the intellectual property rights, must register its rights with Taiwan Customs. After registration, the rightsholder can then apply to Taiwan Customs, requesting surveillance concerning import and export of certain types of products by specifying details of goods and an estimated time schedule for surveillance. Once approved, the aforementioned information will be stored in the Taiwan Customs database, which enables customs officers to identify and take action against potentially infringing products.
  • Seizure procedure. Upon detection of a suspected infringing consignment, customs officers will examine the consignment, which may involve checking documentation, inspecting the physical goods, or verifying intellectual property rights with the rightsholder. The rightsholder will be notified should the above circumstances occur. If the rightsholder’s allegations of infringement and requests for seizure are confirmed, customs officers will seize the infringing goods, which may be detained later. After seizure, the rightsholder may choose to initiate legal proceedings and the goods may be destroyed or otherwise disposed of in accordance with court orders.
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7 . Frequently Asked Questions (FAQs)

How to enforce copyright in Taiwan?

In Taiwan, the court is the authority that determines whether an alleged design is eligible for copyright protection. Under the Copyright Act, copyright protection is granted to original intellectual creations in various fields. This list is not exhaustive, but rather a flexible guideline. However, in the fashion industry, only patterns, design sketches, effect drawings and structure diagrams are typically protected as artistic or graphic works. The overall look of a product or the silhouette of a dress is often considered to be a matter of style or idea, which may not be eligible for copyright protection. Nonetheless, whether a design is copyrightable or not depends on the interpretation of the judge on a case-by-case basis. The best advice for a designer is to maintain detailed records or documentation of the design to demonstrate the originality of their creation.

What kind of use constitutes infringement?

The Copyright Act allows certain kinds of use known as “fair use” (Articles 44-65). There are four factors to consider in determining what constitutes fair use in cases not expressly covered by the fair use provisions (Article 65(2) of the Copyright Act):

  1. The purposes and nature of the use, including whether it is of a commercial nature or for non-profit educational purposes.
  2. The nature of the copyrighted work.
  3. The amount and significance of the portion used in relation to the entire work.
  4. The impact of the use on the current and potential market value of the work.

For instance, if a teacher plays a video related to the course content for non-profit educational purposes, using a small portion of the original work that does not create a “market substitution” effect, he or she may cite it without authorization as educational material in the classroom under Article 52 of the Copyright Act.

What are the legal risks when it comes to background music of a fashion show?

If a fashion house uses music created by another entity, the fashion house must obtain permission for each right behind the music, including:

  • to the notes and lyrics; 
  • to the recording of the song; 
  • to public performance, and 
  • to record. 

To make music a real challenge, all rights are often not owned by the same entity. As music is an integral part of many fashion shows, understanding the legal ramifications of using music during and after a runway show is imperative. If a fashion show is operating on a budget, using royalty-free music would be a viable option. 

EXPERT ANALYSIS

Chapters

Australia

Derek Baigent
Ellen Baker
Jennifer Wyndham-Wheeler
Shannon Fati

Belgium

Christine De Keersmaeker
Katrijn Huon

Brazil

Flavia M. Murad-Schaal
Isadora Schumacher Jeong

Finland

Hilma-Karoliina Rozell

France

Floriane Codevelle
Karina Dimidjian-Lecomte

Germany

Ariane Hettenkofer
Gina Maria Ziaja

Greece

Alexandra Varla
Maria G. Sinanidou

Hong Kong

Hank Leung
Harry Wong

India

Radha Khera
Ashwin Julka

Ireland

Patricia McGovern

Italy

Alice Fratti
Beatrice Cazzanelli
Carlo Colaci
Francesca Ferrero

Mexico

Erik Pérez Caballero
Luis Pavel García Costinica

Nigeria

Annie Oti

Singapore

Lorraine Tay
Cheryl Lim

Spain

David Fuentes Lahoz
José Miguel Lissén Arbeloa

Thailand

Chanya Veawab
Michelle Ray-Jones

United Kingdom

Gary Assim

United States

Megan Bannigan

Vietnam

Chi Lan Dang
Diep Thi Bich Le
Hien Thi Thu Vu
Tu Ngoc Trinh

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