Haworth & Lexon Law Newsletter (20)

Haworth & Lexon Law Newsletter
No.4, 2003 (Total:No.20)    May20th, 2003
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, Intellectual property rights, 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.


Judicial Interpretation over commercial-residential-estate disputes has significant influence to the real estate developers.
 Regulations on Confirmation and Protection of Well-known Trademark will become enforceable on June 1.
Latest Laws and Regulations
Notice on Tax Settlement for foreign investment corporation who has less than 25% foreign fund in its total capital.
The Supreme People's Court's reply on whether the state-assigned right of land use of the stated-owned insolvency corporation can be seen as the insolvency asset.
The Regulation on business-injury insurance will become enforceable on Jan 1,2004.

Judicial Interpretation over commercial residential estate dispute has significant influence to the estate developers.

The Interpretations over commercial residential estate dispute was promulgated in April, 28,2003 by the Supreme People's Court, and will become valid on June 1,2003. This Interpretation has drawn out specific rule on the settlement of commercial residential estate disputes, and emphasizes on the protection of the estate buyer, and thus deserves the keen concern of the estate developers.

As the rules of the real estate market of Shanghai are quite strict already, the articles in this interpretation have a lot in common with the present rules in Shanghai. Though in Shanghai there are few cases which strongly hurt the interests of the buyers such as breaching the principle of honesty and credit, untrue advertisement, quality problems, this Interpretation still has significant influence towards the real estate developer.

The problem, which deserves the keen concern of the developer mostly, is that punitive compensation will be enforceable on five circumstances. If buyers could not obtain the house because of sellers' vicious breach of contract or deceit in purchasing the commercial residential estate, the punitive compensation would be applicable. The buyers can get the compensation under the following 5 circumstances: when seller:
1) Set mortgage on the house after it be sold, and doesn't inform purchaser of that.
2) Re-sell the house again to a third person when the purchasing property has been already sold.
3) Conceal the fact that the seller doesn't obtain the presale license or provide false presale licenses when signing the contract.
4) Hide the mortgage fact of the house in sale.
5) Hold back the reality that the house being sold has been sold to someone else or would be pulled-down for public program and has get compensation already.

If the purchase contract be regarded as invalid or withdrawn or relieved in this five circumstances, a compensation of the purchase fee as well as a reimburse containing a return of the already paid purchase fee and the interest.

What worth notice is that the punitive compensation is only applicable when the buyer failed to obtain the house. And if the seller colludes with a third person viciously acting as the seller had already delivered the house to the third person, the buyer's request for confirmation of the invalidity of the purchase contract between the seller and the third person should be supported.

Secondly, the sale advertisement can be regarded as a part of the contract in some situation. For example, the material illustration of the house and related facility which includes in the range of commercial residential estate development programming, should be treated as offer. These explanations should be regarded as a part of the contract whether or not these explanations are contained in commercial residential estate purchase contract, and violation of them should be counted as breach of contract.

Thirdly, court would not affirm the invalidity of the contract easily during the trial of the commercial residential estate purchase disputation. For instance, if the seller sign pre-sale contract with the purchaser when the seller doesn't acquire the pre-sale license of commercial residential estate, the contract should be confirmed void unless the seller get the license before the litigation.

What's more, if the subscribing, or reservation contract has already contained the main content of the commercial residential estate purchase contract prescribed in the Article 16 of Regulation on commercial residential estate Sale, and the seller has also accept the money according the contract signed, the contract should be regarded as formal purchase contract. And the application for confirming of valid contract for the reason that the contract is without of registration according laws or regulations will not be support by the court. All these rules have a significant influence to developers.

Furthermore, this Interpretation has also made clear stipulation on the use of law on compensation and settlement for residence removal, shortage of premises dimension, commercial residential estate equality and etc.

Regulations on Confirmation and Protection of Well-known Trademark will become enforceable on June 1.

Regulations on Confirmation and Protection of Well-known Trademark (hereinafter described as Regulations) have already been promulgated, and will become enforceable on June 1. The Tentative Regulation on Confirmation and Administration of Famous Trademark (hereinafter described as Tentative Regulation) will be abrogated at the same time. There are several aspects that need us to pay attention to:
I. Defined the well-known trademark as " the trademark, which has a nationwide and high reputation towards the related public", and also made clear the meaning of the related public.

II. On the basis of Article 14 of Trademark Law, the Regulations have listed the evidence that could verify the famous degree of the trademark.

III. Cancel the 5 years restrain in the Tentative Regulation on famous trademark owner's right of repeal for the same or similar trademark in non-comparable commodity, and this has reinforced the protection of well-known trademark.

IV. Made clear stipulation that: Any Party deeming that his trademark be used in the other corporation's name registration, what may deceive or cause misapprehension of the public, could ask the governing administration for repeal of the corporation name, and the governing administration should settle the problem under Regulation on Corporation Name Registration.

Tentative Regulations has similar stipulations, but only those owners of "Well-known Trademark" could give rise to this repeal. Actually, there are many instances in which the trademark has already had the qualifications of well-known trademark while still not get approbation, and in this situation the trademark could not get protection according to Tentative Regulation, and these situation will be more and more after the passive confirmation of famous trademark been brought in to effect.

V. According to Tentative Regulations, Trademark Bureau is the sole Administration governing famous trademark confirmation, while Interpretations on the Settlement of Civil Disputes on Domain Name and Interpretations on the Settlement of Trademark Disputes both stipulate that well-known trademark can be confirmed in the judicial way. This conflict has been solved in this Regulation.

Even before the enforcement of the above Interpretation , there was judicial precedent in which the court ruled the well-known trademark in judicial practice, especially the trademark infringement and unlawful competition case, for example, NIPSEA(Nippon Paint Southeast Asia) International Group Vs. Libang, Wuhan. In this case our firm acted as the representative of NIPSEA International Group, and through our application, the serious of trademark "Nippon" owned by our client has been successfully confirmed as well-known trademark by the Intermediate People's Court of Wuhan and Higher People's Court of Hubei Province. (Please click the following international site if you want know more about the case http://www.hllawyers.com/law-cn-news.htm )

Latest Laws and Regulations

On Apr,18th, 2003, the General Administration of Taxation promulgated the Circular of Taxation Settlement about Foreign Investment Corporation who has a less that 25% foreign fund in its total registered capital, and this Circular has a clear stipulation to regard these foreign enterprises as domestic corporations in taxation rate and registration, and these foreign enterprises will no longer enjoy taxation privilege except those especially ruled by the State Council.

The Supreme Court has promulgated on Apr,18th, 2003 the Reply on whether the state-assigned right of land use of the stated-owned insolvency corporation can be seen as the insolvency asset and this Reply will become enforceable on the same day.

According to this Reply, the state-assigned right of land use can not been regarded as insolvency property , and will be taken back by related government when the enterprise falls into insolvency. And the enterprise also has no right in the settlement of the estate, thus the mortgage set on the estate should be approved by the government or the administrations of estate, otherwise the mortgage will be regard as invalid. The mortgagor can only get the remain fee after the remise fee of the estate usufruct be paid. The estate usufruct owned by state enterprise who is on the state insolvency program scheme will be deal with according to the rule of State Council.

Regulations on Business-injury Insurance was made public on Apr, 27,2003 by the State Council, and will become enforceable on Jan, 1,2003. The following situations will be regard as business injury according to the Regulation,
1) Get injured by working cause during working hours in working place,
2) Get injured when dealing with the job related work in working place before and after the working hour,
3) Accidental hurt by violence while fulfill one's work during working hours in working places,
4) Occupational disease,
5) Disappeared by working accident or harm during working evection,
6) Hurt by automobiles on the way to work,
7) Other situations stipulated by Law, or administrative legislations.
The following situations will be regard the same as business-injury:

Suddenly death or death after 48 hours salvage during working hours in working place; get injured while in defense of State and public interest; the old wound caused by war or public reasons re-outbreak if the guy had been injured in army and had already get the disability certificate of Revolution Soldier.