Haworth & Lexon Law Newsletter (7)

Haworth & Lexon Law Newsletter

No.3, 2002 (Total:No.7)    Mar. 20th, 2002

Edited by Haworth & Lexon

Haworth & Lexon Law Newsletter ” is issued every month, mainly introducing the legal change in the fields of Corporate, Securities, Foreign investment, E-commerce, International trade etc. with necessary comment. All the comments do not mean the legal opinion of our firm and the firm does not have any legal liability for such comment. Should you have any interest in any topics or any questions please feel free to contact the firm. You will be expected to have satisfactory response from the professional attorney of our firm.


?/SPAN>        The Regulations on Guiding the Direction of Foreign Investment & The List for Guidance on Foreign Investment in Industries will take effect on April 1

?/SPAN>        How to register copyright, licensing contract and transferring contract of computer software

?/SPAN>        Latest Laws and Regulations

     State Development Planning Commission issued Opinions concerning promotion and guidance of private investment

     The Provisional Regulations on the Establishment of Foreign-Invested Printing Enterprises” came into effect on Feb 29 2002

     Protection of Olympic Symbols Regulation” will take effect on April 1,2002

     The Supreme Court of PRC issued Regulation Concerning Jurisdiction of Civil, Commercial Case with overseas factor

  Further Opening to the World, Attracting Foreign Capital, Merging into Global Economy

Regarded as a large-scale amending on direction of foreign investment after China’s entry into WTO, The Regulations on Guiding the Direction of Foreign Investment” promulgated by State Council on Feb.11th, 2002, and amended “The List for Guidance on Foreign Investment in Industries” jointly issued by State Development Planning Commission (SDPC), State Economic and Trade Commission and Ministry of Foreign Trade and Economic Cooperation (MOFTEC) will take effect on April 1,2002.

According to the regulations, The List for Guidance on Foreign Investment in Industries and The List for Foreign Investment in Preferential Industries in Middle and West region are the basis of the approval of foreign-funded projects and enterprises and policies applied to them.  The details of categories for encouraged, restricted and prohibited industries have been further amended and clarified. The regulations also interpreted some terms in the list; The terms appeared in the guidance list, such as equity joint venture”, contractual joint venture”, “Chinese party shall hold dominant position”, Chinese party shall hold relative dominant position” have been interpreted as well.  Besides, the way of sorting restricted industry into “restricted category (A)” and restricted category (B) has been cancelled, and accordingly the approval procedures have been amended.

The List for Guidance on Foreign Investment in Industries” in many details, demonstrates China’s policy of further opening up to the world, attracting more foreign capital and merging into global economy:

1.       Further open up to the world: In the list, the number of items in the encouraged category has been increased from originally 180 to over 260 now, while the number of the items in the restrictive catalogue has been reduced to 75 now from originally 112.

2.       Less limitation for share ration held by foreign investors. 

3.       To comply with WTO commitment on region, quantity, scope of business, requirements of share ratio and time schedule, service trades such as banking, insurance, commercial, foreign trade, tourism, telecommunication, transportation, accountant, auditing and legal service have been further opened.

According to statistics, in 2001, global transnational investment has been fallen to US$800 billion compared with US$1.3 trillion in 2000. The capital of contractual American direct investment in China has been reduced by 8% and perspective of EU investment in china is not optimistic. The above is one cause for China’s amending foreign investment regulations in order to better attract foreign investment.  In spite of the amendments, China’s policies and regulations of foreign investment still have long way to go. For example, China still lacks necessary policies and regulations for foreign merger and acquisition; There are still remnants of planned economy, such as all the project plans, contracts, charters of foreign-funded projects, no matter restricted, encouraged or prohibited must be examined and approved.

  How to Register copyright, licensing contract and transfer contract of computer software

To implement Computer Software Protection Regulations, State Copyright Bureau issued Computer software copyright registration procedures” on Feb.20, 2002 , which applies to software copyright registration, software copyright exclusive licensing contract registration, software copyright transfer contract registration. The new regulations include 6 sections and 35 articles, specifying registry applicant, registry authorities, procedures for application, approval, notification and cancellation are specified.

Applicants and registry authorities:

According to the regulation, applicant of software copyright should be the right-holder or natural person, legal person or other organization who obtained copyright through inheritance or transferring. Registry applicants of software copyright contract should be parties of software copyright exclusive contract or software copyright transfer contract. If any of applicants is foreigner or person with no citizenship in any country, the regulation is also applied. State copyright Bureau designated that the Center for China’s Copyright Protection is the registry authorities.

The applicant and application authority:

Software of application for registration should be developed independently or material improvement in functional aspect based on the approval of original right-holder. With regard to co-works, all right-holder may select one right-holder as representative to conduct registration with consent. If such consent can’t be reached, any right-holder may apply for registration with the prerequisite that no harm is done to any other right-holders, but names of other right-holders should be indicated.

Procedures and documents of application:

If registration of software copyright is applied for, the following documents should be submitted to the Center for China’s Copyright Protection:

 Application form in accordance with the requirements

 Identification documents of software

 Related confirming documents

To protect the interests of right-holder, the procedures allows applicant to exceptionally submit identification documents in the way that is provided in the procedures. Applicant may apply to seal source programs, files or samples, which no one should unseal except applicant or judicial authority.

If parties of software copyright exclusive contract or software copyright transfer contract apply for registration, they should submit following documents:

 Contractual registration form

 Copy of contract

 Identification of applicants

Approval, notification, cancellation:

The Center for China’s Copyright Protection should, within 60 days from the receipt of application for registration, complete approval. If the application is in compliance with the procedures, the software copyright should be registered and been made to public. The registry certificate should be conferred accordingly. The public is allowed to read the registry and other relevant documents

State copyright Bureau may cancel copyright registration, based on final judgment or administrative punishment by administrative department of copyright. The Center for China’s Copyright Protection may cancel registration in light of the application of applicants.

Although computer software protection regulations” states that software copyright registration is not the premise of protection, due to the attributes of computer software copyright, software copyright registration can better confirm the ownership of copyright, contribute to protect interests of software right-holder and related person. So State copyright Bureau encourages software copyright registration and puts emphasis on registered software.


Latest Law and Regulations

State Development Planning Commission issued Opinions concerning promotion and guidance of private investment on Feb.1, 2002. The opinion states that whatever fields foreign capital is encouraged or allowed to invested in, private investment is encouraged or allowed, respectively. And the same preferential policies are applied to foreign investment as well as private investment. The private investment is encouraged and guided to engage in commercial construction of infrastructure and pubic project in the form of whole ownership, cooperation, joint investment, participation and franchising etc. Venture capital is stably developed to provide capital support to high-tech project of private investors. Technical element is allowed to invest as invisible assets. The opinion support private investors cooperate with foreign investors, encourage competent private investors to invest overseas, allow private investment project to apply for loans from foreign government or international financial institution.

State Press and Publication Administration and Ministry of Foreign Trade and Economic cooperation issued The Provisional Regulations on the Establishment of Foreign-Invested Printing Enterprises on Jan.29, 2002. The provision states that Sino-foreign equity or contractual joint venture are permitted in the business of printing publications, trade dress printing and other printing matters and that wholly foreign-owned enterprises are permitted in the business of trade dress printing .In a joint venture enterprise engaged in the printing publications or other printed matters, the Chinese party must have controlling interest or hold a dominant position. The minimum registered capital of foreign-funded printing enterprises engaged in printing publications or trade dress printing is no less than 10 million RMB. The minimum registered capital of foreign-funded printing enterprises engaged in other printing business should be no less than 5 million RMB. Application for establishment of foreign-funded printing enterprises shall be submitted to the relevant provincial level press and publication administrative departments for preliminary examination and to the State Press and Publication Administration (SPPA) for final examination and approval. After obtaining SPPA approval, applicants shall apply to the relevant foreign trade and economic cooperation administrative departments for approval. The provisions provide that foreign-funded printing enterprises should not set up subsidiary.

State Council promulgated Protection of Olympic Symbols Regulations, which shall take   effect on April 1, 2002.  According to the regulation, the right holders of Olympic Symbols enjoy the exclusive right.  No one can use Olympic symbols for apparent or potential commercial purposes without the authorization.  Olympic Symbols can be only used under the condition that an authorized use contract is signed.  Olympic Symbols should be used within the territory area, period limited by the authorized use contract.  The right holders of the Olympic symbols should file the authorized use contract in State Councils’ administration department for industry and commerce.  The total amount of compensation of Olympic Symbols infringement is decided by the right holders’ loss or the infringer’s interest gained by infringing acts, including the reasonable expenses paid for stopping infringement.  In case it is hard to settle the right holders’ loss or the infringer’s interest, the authorized use fee shall be taken into reference.

The Supreme Court of PRC issued Regulation Concerning Jurisdiction of Civil, Commercial Case with overseas factor which came into effect on Mar.1, 2002. The regulation will cover such cases as foreign contracts and tort disputes; letter of credit disputes; appeals for withdrawal, admission and enforcement of international arbitral settlement; examination of cases concerning the effectiveness of concerned arbitral articles; and appeals for admission and enforcement of settlement made by foreign courts. The regulation will not cover border trade disputes between China and foreign countries, or foreign real estate issues and property rights issues. The regulations states that generally the first trial of the above-said cases will be the responsibility of the intermediate or above courts except the courts of the economic and technological development zones approved by the State Council.