Haworth & Lexon Law Newsletter
No.8 2013(Total:No.135) Sep. 25, 2013
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.
Guidelines:
News Update
Partner of Haworth & Lexon attended the 2013 Annual Assembly of LAWROPE
Latest Laws and Regulations:
China (Shanghai) Pilot Free Trade Zone Was Formally Launched and Competent Authorities and Divisions Issued Supporting Opinions
Shanghai Municipal People’s Government Announced the Supporting Operating Rules within the Pilot Free Trade Zone
Decision on Revising the Detailed Implementing Rules for the Collective Assets Management Business of Securities Companies
Notice of the People’s Bank of China on RMB Settlement of Investment in Domestic Financial Institutions by Foreign Investors
The Announcement of the State Administration of Taxation on the Issue of Identification of Resident Identity in Relation to the Implementation of the Arrangement between the Mainland of China and Hong Kong Special Administrative Region Regarding the Avoidance of Double Taxation on Income and Prevention of Tax Evasion
Provisions of the Supreme People’s Court on Certain Issues Relating to the Application of the “Enterprise Bankruptcy Law of the People’s Republic of China” (II)
Reply of the Supreme People’s Court on the Calculation of the Limitation for Arbitration Application of Personnel Disputes
Interpretations of the Supreme People’s Court on Certain Issues concerning the Application of Law in the Trial of Criminal Cases of Fabricating and Deliberately Disseminating False Terrorist Information
Beijing High People’s Court Unveiled the Guidelines for Judging the Patent Infringement
Legal Practices:
Reinforce Trademark Protection: An Analysis of the Trademark Law (Revised 2013)
News Update
Partner of Haworth & Lexon attended the 2013 Annual Assembly of LAWROPE
Our Firm has become the member and sole representative in China of the integrated international legal network, LAWROPE (http://www.lawrope.com/), since June 2013 (http://www.lawrope.com/news-article.html?id=35). Our senior partners Sean Yuan, Bailey Xu, Marshal Chen and Gary Gao are the Firm’s LAWROPE representatives. LAWROPE was founded in 1991. With its over twenty years experience of working closely together, LAWROPE has 17 member law firms from 15 countries of Europe, the U.S., Latin America and China to provide large and medium-sized companies and individuals with efficient cross-boarding legal services, as well as accounting, tax, financial and real estate consulting, aiming to facilitate the clients’ requirements whatever the business across borders. After becoming a member of LAWROPE, our law firm will take advantage of the professional abilities of all our cooperative law firms to guide and protect our Chinese clients in the overseas investment and business transactions, and will assist more overseas clients in dealing with their legal affairs in China by virtue of the platform offered by LAWROPE.
The 2013 Annual Assembly of LAWROPE was held in Brussels, Belgium on October 5, 2013. One of our firm’s partners participated in the Assembly and introduced to member law firms of LAWROPE the latest investment laws and policies of China.
Latest Laws and Regulations
China (Shanghai) Pilot Free Trade Zone Was Formally Launched and Competent Authorities and Divisions Issued Supporting Opinions
On September 18, 2013, the State Council promulgated the Notice on Printing and Distributing the Overall Plan for the China (Shanghai) Pilot Free Trade Zone (Guo Fa [2013] No.38, hereinafter referred to as the Notice).
As specified by the Notice, the China (Shanghai) Pilot Free Trade Zone shall be established to explore management models such as national treatment prior to investment approval and management by negative list, deepen the reform of the administrative examination and approval system, speed up the transformation of government functions, and enhance the level of interim and ex post regulation in a comprehensive manner. The free trade zone shall cover the four special customs regulation zones, including the Shanghai Waigaoqiao Free Trade Zone, the Shanghai Waigaoqiao Bonded Logistics Park, the Yangshan Bonded Port and the Shanghai Pudong Airport Free Trade Zone.
The Overall Plan for the China (Shanghai) Pilot Free Trade Zone attached to the Notice has detailed the major tasks and measures of the free trade zone: speed up the transformation of government functions, and transfer the current governmental pre-examination to interim and ex post regulation; further liberalize the service sector, explore the management model by negative list, reform the outbound investment management model, promote transformation of trade development models, deepen the liberalization and innovation of the financial sector, etc.
The Notice preliminarily determines the fields and sectors of an open service industry, including financial service, shipping service, professional service, cultural service and social service.
Since September 29, 2013 when the free trade zone was launched, various departments and divisions of the Central Government, including China Banking Regulatory Commission, China Securities Regulatory Commission, China Insurance Regulatory Commission, State Administration for Industry and Commerce, Ministry of Culture, Ministry of Transport, have promulgated separate documents to support the management and operation of the relevant industries within the free trade zone.
On September 28, 2013, China Banking Regulatory Commission promulgated the Notice of the China Banking Regulatory Commission on Issues concerning Banking Regulation in the China (Shanghai) Pilot Free Trade Zone (Yin Jian Fa [2013] No.40), providing for the banking regulation within the free trade zone:
(1) Chinese-funded banks are supported to develop business within the free trade zone. Chinese-funded commercial banks of national scale, policy banks, Shanghai local banks are allowed to set up new branches or specialized business agencies within the free trade zone. Existing banking outlets within the free trade zone are allowed to be upgraded to the level of branches or sub-branches.
(2) Foreign-funded banks shall be supported to carry out business operations in the free trade zone. Qualified foreign-funded banks are allowed to set up subsidiary banks, branches, specialized business agencies and Sino-foreign equity joint venture banks within the free trade zone. Sub-branches of foreign-funded banks within the free trade zone are allowed to be upgraded to the level of branches.
(3) Support shall be extended to the establishment of non-banking financial companies within the free trade zone, and the development of cross-border investment and financing services shall be encouraged.
As specified by the Certain Policy Measures for Supporting and Promoting the China (Shanghai) Pilot Free Trade Zone in the Capital Market promulgated by China Securities Regulatory Commission on September 29, 2013: CSRC will approve the Shanghai Futures Exchange to prepare the establishment of the Shanghai International Energy Trading Centre Co., Ltd. within the free trade zone which shall be specifically in charge of promoting the establishment preparation of an international crude oil futures platform; CSRC shall support enterprises and individuals within the free trade zone that satisfy certain conditions to make two-way investment in domestic and overseas securities and futures markets in accordance with relevant provisions; the foreign parent companies of enterprises within the free trade zone may issue RMB-denominated bonds on the domestic market pursuant to relevant provisions.
China Insurance Regulatory Commission promulgated on September 29, 2013 the document of Supporting the Development of the China (Shanghai) Pilot Free Trade Zone, expressly supporting the establishment of foreign-invested specialized health insurance institutions within the free trade zone on a pilot basis; supporting insurance companies to establish branches within the free trade zone to carry out cross-border RMB reinsurance business; supporting insurance institutions in the free trade zone to make overseas investment on a pilot basis, and actively studying the possibilities to expand the scope, and raise the percentage of, overseas investment by insurance institutions in the free trade zone on a pilot basis.
On September 26, 2013, the State Administration for Industry and Commerce promulgated the Notice of the State Administration for Industry and Commerce on Printing and Distributing the “Certain Opinions of the State Administration for Industry and Commerce on Supporting the Development of the China (Shanghai) Pilot Free Trade Zone” (Gong Shang Wai Qi Zi [2013] No.147), enumerating as follows the major changes of the administrative and commercial work within the free trade zone:
(1) Reform the industrial and commercial registration system on a pilot basis, and a registration system for the subscription of registered capital shall be adopted on a pilot basis. Unless the actual payment of the registered capital of certain companies is otherwise prescribed by laws or administrative regulations, a registration system shall be applied to the subscription of the registered capital of all the other companies on a pilot basis.
(2) A registration system of “business licenses before permits” shall be adopted on a pilot basis. Except for the prior licensing matters for enterprise registration as prescribed by laws, administrative regulations or the decisions of the State Council, the registration system of “business licenses before permits” shall be adopted on a pilot basis within the free trade zone.
(3) An annual report disclosure system shall be adopted on a pilot basis. The enterprise annual inspection system shall be changed to an enterprise annual report disclosure system within the free trade zone.
(4) A project record-filing system shall be applied to foreign-invested advertising enterprises on a pilot basis.
(5) A “one-stop acceptance” mechanism shall be applied to the establishment of enterprises within the free trade zone.
The Notice of the Ministry of Culture on the Application of Cultural Market Administration Policies in the China (Shanghai) Pilot Free Trade Zone (Wen Shi Fa [2013] No.47) enumerates the major policy adjustments as follows of the cultural market management within the free trade zone:
(1) Foreign-invested performance brokerage agencies and entities operating performance venues are allowed to be established within the free trade zone to provide services in Shanghai Municipality.
(2) Foreign-invested entertainment venues are allowed to be established within the free trade zone.
(3) Foreign-invested enterprises are allowed to engage in the production and sales of gaming and recreational equipment within the free trade zone, and may sell gaming and recreational equipment whose contents have passed the review of competent cultural departments on the domestic market.
The Ministry of Transport and Shanghai Municipal People’s Government promulgated the Implementing Opinions on Carrying Out the Overall Plan for the China (Shanghai) Pilot Free Trade Zone to Accelerate the Construction of Shanghai International Shipping Centre (Jiao Shui Fa [2013] No.584), putting forward such opinions as follows in connection with the construction of Shanghai International Shipping Centre:
(1) Relax the restrictions on share ration of foreign investment in international shipping business, allow foreign investors to establish Sino-foreign joint ventures or Sino-foreign cooperative joint ventures to engage in international shipping business at an investment ratio over 49% within the free trade zone and permit foreign investors of the shipping registration subjects to break the 50% restriction on foreign capital contribution ratio.
(2) Permit foreign investors to establish solely-funded enterprises to engage in international shipping management business.
(3) Other opinions or policies related to the development of shipping business within the free trade zone.
Meanwhile, Shanghai Customs promulgated the Announcement on Establishing Customs Business Window for China (Shanghai) Pilot Free Trade Zone (Shanghai Customs Announcement [2013] No.3), specifying that Shanghai Customs have decided to set up the customs business window in the comprehensive service hall of China (Shanghai) Pilot Free Trade Zone to facilitate enterprises that handle industrial and commercial registration at Yangshan Bonded Port, Shanghai Waigaoqiao Free Trade Zone, Shanghai Waigaoqiao Bonded Logistics Park and Shanghai Pudong Airport Free Trade Zone.
Scope of business acceptance at the customs business window:
(1) Registration, renewal and modification of the customs declaring entities, registration, renewal, modification, revocation, etc. of the declarers;
(2) Consultation and application of relevant customs innovative pilot projects in China (Shanghai) Pilot Free Trade Zone;
(3) Other customs business consultation.
Shanghai Municipal People’s Government Announced the Supporting Operating Rules within the Pilot Free Trade Zone
On September 26, 2013, the Standing Committee of the Shanghai Municipal People’s Congress deliberated and passed the Decision on Temporarily Adjusting the Application of Relevant Local Regulations of Shanghai Municipality in the China (Shanghai) Pilot Free Trade Zone (SCSMPC Announcement No.3, hereinafter referred to as the Decision), the Regulations of Shanghai Municipality on the Examination and Approval of Foreign-invested Enterprises shall cease to be applicable to foreign investments within the China (Shanghai) Pilot Free Trade Zone other than those subject to special market entry management measures prescribed by the State. Where relevant provisions of laws and administrative regulations are adjusted in the China (Shanghai) Pilot Free Trade Zone, pertinent local regulations of Shanghai Municipality shall be adjusted accordingly. Provisions of other relevant local regulations of Shanghai Municipality shall be adjusted in the event of any discrepancy with the Overall Plan for the China (Shanghai) Pilot Free Trade Zone. The foregoing adjustments to relevant local regulations shall be effective on a trial basis for three years.
On that basis, Shanghai Municipal People’s Government promulgated the Measures on the Administration of the China (Shanghai) Pilot Free Trade Zone and the Announcement of Shanghai Municipal People’s Government on Promulgating the Special Administrative Measures (Negative List) on Foreign Investment Access to the China (Shanghai) Pilot Free Trade Zone (2013) (hereinafter referred to as the Announcement), Administrative Measures for the Record-Filing of Foreign-invested Enterprises in the China (Shanghai) Pilot Free Trade Zone, Administrative Measures for the Record-filing of Foreign Investment Projects in the China (Shanghai) Pilot Free Trade Zone and other relevant supporting rules of operation.
Measures on the Administration of the China (Shanghai) Pilot Free Trade Zone
On September 26, 2013, Shanghai Municipal People’s Government promulgated the Measures on the Administration of the China (Shanghai) Pilot Free Trade Zone (Shanghai Municipal People’s Government Order No.7, hereinafter referred to as the Administrative Measures), stipulating that the Management Committee of the China (Shanghai) Pilot Free Trade Zone (hereinafter referred to as the “Management Committee”) shall be set up in Shanghai Municipality. The Management Committee, as a local office of the municipal people’s government, shall specifically perform the reform tasks relating to the free trade zone, and conduct overall management and coordination of relevant administrative matters in the free trade zone.
The duties and responsibilities of the Management Committee mainly include: to take charge of the administration in terms of investment, trade, financial services, planning and land, construction, greenery and city appearance, environmental protection, labor and personnel, food and drug regulation, intellectual property rights (“IPR”), culture, public health, statistics work, etc. within the free trade zone; to direct the administrative operations carried out within the free trade zone by administrations for industry and commerce, quality supervision and inspection departments, tax authorities, public security organs and other departments; and to coordinate the administrative operations carried out within the free trade zone by customs, inspection and quarantine authorities, maritime administrations, finance departments and other departments; to undertake work related to security review and anti-monopoly review, to name just a few. The Management Committee shall be uniformly responsible for relevant administrative matters previously managed by the Shanghai Waigaoqiao Free Trade Zone Management Committee, the Yangshan Bonded Port Management Committee and the Shanghai Integrated Bonded Free Trade Zone Management Committee.
Announcement of Shanghai Municipal People’s Government on Promulgating the Special Administrative Measures (Negative List) on Foreign Investment Access to the China (Shanghai) Pilot Free Trade Zone (2013)
Subsequently, Shanghai Municipal People’s Government promulgated the Announcement on Unveiling the Special Administrative Measures (Negative List) on Foreign Investment Access to the China (Shanghai) Pilot Free Trade Zone (2013) (Hu Fu Fa [2013] No.75, hereinafter referred to as the No.75 Document), specifying the measures of access not consistent with the national treatment for the external investment projects and establishment of foreign investment enterprises within the free trade zone. The Negative List was compiled in accordance with the National Industries Classification and Code (2011 Version) and included 18 industries and sectors. The Negative List is not applicable to S public administration, social security and social organization and 2 industries of T international organization.
For fields outside the Negative List, the ratification system is changed to the record-filing system for the foreign investment projects (excluding those domestic investment projects as prescribed by the State Council to remain subject to the ratification system); examination and approval of the contract articles of foreign investment enterprises is changed to record-filing management. Except for the special management measures for the specified foreign investment access, foreign investment is forbidden (restricted) for the industries prohibited (restricted) by the State or the treaties or protocols to which China is a contracting party or a participant, for the projects that endanger the State security and social stability and foreign investors are forbidden to participate in any business activities that impair the public interests.
Administrative Measures for the Record-Filing of Foreign-invested Enterprises in the China (Shanghai) Pilot Free Trade Zone
As specified by the Administrative Measures for the Record-Filing of Foreign-invested Enterprises in the China (Shanghai) Pilot Free Trade Zone (Hu Fu Fa [2013] No.73), the Management Committee of the China (Shanghai) Pilot Free Trade Zone (hereinafter referred to as the “Record-filing Agency”) shall be responsible for the record-filing management of foreign-invested enterprises within its scope of authority. An investor that establishes a foreign-invested enterprise within the free trade zone shall, after obtaining the pre-approval of the enterprise name, log onto the one-stop foreign investment acceptance platform of the free trade zone (hereinafter referred to as the “Acceptance Platform”) to fill out and submit relevant information online, and make commitments on the information required for record-filing.
After an investor (or a foreign-invested enterprise) has completed online application, the Record-filing Agency shall process the record-filing within one working day, and send the Record-filing Certificate of Foreign-Invested Enterprises/Enterprises Invested by Hong Kong, Macao and Taiwan Investors in the China (Shanghai) Pilot Free Trade Zone (hereinafter referred to as the “Record-filing Certificate”) to the investor (or foreign-invested enterprise) and relevant departments online.
Administrative Measures for the Record-filing of Foreign Investment Projects in the China (Shanghai) Pilot Free Trade Zone
As specified by the Administrative Measures for the Record-filing of Foreign Investment Projects in the China (Shanghai) Pilot Free Trade Zone (Hu Fu Fa [2013] No.71), projects subject to record-filing management within the free trade zone shall include Sino-foreign equity joint ventures, Sino-foreign cooperative joint ventures, wholly foreign-owned enterprises, foreign-invested partnerships, merger and acquisition of domestic enterprises by foreign investors, increase of capital by foreign-invested enterprises and other various types of foreign investment projects other than those subject to special market entry management measures for foreign investment in the free trade zone (i.e. those included on the negative list), but shall exclude domestic investment projects for which verification and approval shall be retained as prescribed by the State Council.
The Record-filing Agency shall, within ten working days upon receipt of the application materials, issue to the relevant Applicant the record-filing opinions on foreign investment projects of the free trade zone (hereinafter referred to as the “Record-filing Opinions”). The Record-filing Agency shall process the record-filing of foreign investment projects that are not in violation of laws and regulations, are in line with State industry policies, and fall under the scope of foreign investment projects subject to record-filing management in the free trade zone. The Record-filing Agency shall state the reasons in the Record-filing Opinions if the record-filing applications for certain projects are not approved.
Where record-filing is approved for a foreign investment project, the Applicant concerned may, by virtue of the Record-filing Opinions, go through examination and approval procedures in terms of planning, land use, environmental impact assessment, construction, etc., submit fund application reports to relevant departments if it intends to apply for government subsidies, sub-loans, interest discounts and other preferential policies, and go through relevant procedures with the State or municipal development and reform commission if it intends to apply for tax exemption and reduction for import equipment or other preferential policies.
Administrative Measures for the Record-filing of the Investment in and Establishment of Enterprises Overseas by Enterprises within the China (Shanghai) Pilot Free Trade Zone
As specified by the Administrative Measures for the Record-filing of the Investment in and Establishment of Enterprises Overseas by Enterprises within the China (Shanghai) Pilot Free Trade Zone (Hu Fu Fa [2013] No.74), the Management Committee of the China (Shanghai) Pilot Free Trade Zone (hereinafter referred to as the “Record-filing Agency”) shall be responsible for the record-filing management of the overseas investment made by Enterprises within its scope of authority for the activities of an Enterprise, through new establishment, merger and acquisition, etc., establishing a non-financial enterprise overseas or acquiring the ownership, controlling power right of operation and management and other rights and interests of an existing non-financial enterprise overseas. The Record-filing Agency shall apply record-filing management to overseas investment.
The Measures for the Administration of Overseas Investment shall still apply to overseas investment involving countries (regions) with no diplomatic relation with China, overseas investment in specific countries (regions), overseas investment involving the interests of multiple countries (regions), establishment of offshore special purpose companies, overseas investment in energy and minerals, overseas investment whereby investors need to be attracted domestically, etc.
The Record-filing Agency shall complete the record-filing, and prepare and issue the Certificate of Overseas Investment of Enterprises (hereinafter referred to as the “Certificate”) within five working days after an Enterprise has submitted all the materials required by Article 5 herein, and after the materials are confirmed to be in the required form.
Administrative Measures for the Record-Filing of Overseas Investment Projects of the China (Shanghai) Pilot Free Trade Zone
As specified by the Administrative Measures for the Record-Filing of Overseas Investment Projects of the China (Shanghai) Pilot Free Trade Zone, the Management Committee of the China (Shanghai) Pilot Free Trade Zone (hereinafter referred to as the “Record-filing Agency”) shall apply record-filing management to the general overseas investment projects executed within the jurisdiction and authority of Shanghai Municipality by local enterprises registered in the China (Shanghai) Pilot Free Trade Zone.
The following projects, regardless of their investment amount, shall be preliminarily examined by the municipal development and reform commission which shall then report the said projects to the National Development and Reform Commission (NDRC) for verification and approval, or shall be subject to the examination opinions issued by NDRC which shall then report the said projects to the State Council for verification and approval: investment projects in countries with no diplomatic relation with China or subject to international sanctions, countries and regions in wars or riots, or other sensitive countries and regions identified by NDRC; and overseas investment projects involving basic telecommunications operations, cross-border development and utilization of water resources, large-scale land development, main power transmission lines, power grids and news media, or other sensitive industries identified by NDRC.
The Record-filing Agency shall, within five working days upon receipt of the application materials, issue to the relevant Applicant the record-filing opinions on overseas investment projects of the free trade zone (hereinafter referred to as the “Record-filing Opinions”).
Notice of the People’s Bank of China on RMB Settlement of Investment in Domestic Financial Institutions by Foreign Investors
On September 23, 2013, the People’s Bank of China promulgated the Notice on RMB Settlement of Investment in Domestic Financial Institutions by Foreign Investors.
According to the Notice, foreign investors that invest in domestic financial institutions upon approval by the finance regulatory authority of the State Council and in accordance with relevant laws may use RMB for investment activities that specifically include the establishment of new financial institutions, the capital increase, M&A, share purchase, equity transfer, profit distribution, liquidation, capital reduction, shareholding reduction or early recovery of investment relating to existing financial institutions, etc.
As specified by the Notice, a domestic settlement bank shall, when processing RMB investment in a domestic financial institution by a foreign investor, open RMB bank settlement accounts for the foreign investor and the domestic financial institution. Specifically, except for the outbound remittance of the RMB funds obtained by the foreign investor from profit distribution, liquidation, capital reduction, shareholding reduction or early recovery of investment, the domestic settlement bank shall open special accounts for all the other business to deposit relevant capital in accordance with the principle of using special accounts only for designated purposes.
Where a foreign investor is required to go through examination and approval before capital verification in accordance with relevant administrative measures of the finance regulatory authority of the State Council when remitting offshore RMB investment funds to the Mainland, the foreign investor shall submit the approval documents issued by relevant regulatory departments and other pertinent materials to its domestic settlement bank for handling capital verification. Where the foreign investor is required to conduct capital verification before examination and approval, it may first request the domestic settlement bank to conduct capital verification by producing the duplicates of the application materials submitted to regulatory departments, and subsequently submit the approval or record-filing documents to the settlement bank upon receipt; if later the foreign investor fails to obtain approval, the funds remitted into the Mainland shall be repatriated via the original route.
Where a foreign investor remits its RMB profits out of the Mainland, its domestic settlement bank may directly process the outbound remittance after reviewing relevant profit disposal resolutions of the foreign-invested financial institution concerned, tax payment certificates and other relevant materials. Where a foreign investor remits out of the Mainland the RMB funds obtained from capital reduction, share transfer, liquidation, early recovery of investment, etc., its domestic settlement bank shall handle the outbound remittance of RMB funds for the foreign investor after reviewing the approval or record-filing documents issued by the finance regulatory authority of the State Council and tax payment certificates.
The Announcement of the State Administration of Taxation on the Issue of Identification of Resident Identity in Relation to the Implementation of the Arrangement between the Mainland of China and Hong Kong Special Administrative Region Regarding the Avoidance of Double Taxation on Income and Prevention of Tax Evasion
On September 13, 2013, the State Administration of Taxation promulgated the Announcement on the Issue of Identification of Resident Identity in Relation to the Implementation of the Arrangement between the Mainland of China and Hong Kong Special Administrative Region Regarding the Avoidance of Double Taxation on Income and Prevention of Tax Evasion (SAT Announcement [2013] No.53, hereinafter referred to as the No.53 Announcement) on the identification of resident identity and other issues in relation to the application by Hong Kong residents to enjoy the treatment specified in the Arrangement as follows:
The No.53 Announcement specifies the procedure in relation to the identification of Hong Kong identity: where the applicant is a legal person, the agency may identify its resident identity in accordance with its company registration certificate (copy) or the certified copy of its business registration certificate issued by the relevant Hong Kong authority; where the applicant is an individual, the agency may identify his/her resident identity by his/her Hong Kong ID card, his/her Mainland Travel Permit for Hong Kong Resident, and his/her tax payment receipt in Hong Kong in the previous tax year. Next, the No.53 Announcement has specified the types of applicants who need to provide resident identification evidence; the competent HK taxation agency may require the applicant to provide his/her identity certificate.
Meanwhile, the No.53 Announcement further provides for the procedure for the competent HK taxation agency to produce a resident identity certificate and the identification of a HK resident identity certificate.
Provisions of the Supreme People’s Court on Certain Issues Relating to the Application of the “Enterprise Bankruptcy Law of the People’s Republic of China” (II)
In September 9, 2013, the Supreme People’s Court promulgated the Provisions of the Supreme People’s Court on Certain Issues Relating to the Application of the “Enterprise Bankruptcy Law of the People’s Republic of China” (II) (Fa Shi [2013] No.22, hereinafter referred to as the Interpretations II), which further interpret several issues regarding the application of the Bankruptcy Law, on the basis of the Provisions of the Supreme People’s Court on Certain Issues Relating to the Application of the “Enterprise Bankruptcy Law of the People’s Republic of China” (I).
The Interpretations II provide for the basis for determining the debtor’s property In addition to all the monetary funds and physical goods owned by a debtor, the people’s court shall identify any creditor’s rights, equities, intellectual property rights, usufructuary rights, other property and property rights which are legally owned by the debtor, the estimated value of which may be assessed in monetary terms and which are transferrable pursuant to law as the property of the debtor.
Moreover, the Interpretations II enumerate the scope of the debtor’s property, including other person’s property occupied or used by a debtor based on warehousing, safekeeping, contract of hire, sales by proxy, loan, deposit or leasehold contract or other legal relationship; any property for which a debtor has not yet obtained its ownership in a title retention transaction; any property of which ownership is proprietary to the State and which shall never be transferred, etc.
Regarding exercise of the right of rescission, the Interpretations II stipulate that, where the people’s court revokes the debtor’s property upon the administrator’s request and transact such property at an apparently unreasonable price, the seller and buyer shall refund in accordance with the law the property or price obtained from either party. Where the debtor’s prepaid debt in the previous year application becomes overdue prior to the acceptance of the bankruptcy and the administrator requests to revoke such prepayment act, the people’s court will not render any support in such regard, excluding the circumstance where such prepayment act occurs within six (6) months prior to the acceptance of the bankruptcy application while the debtor is found to be in the situation prescribed in Article 2.1 of the Enterprise Bankruptcy Law. After the bankruptcy application is accepted, if the administrator fails to request the revocation of the debtor’s transfer of its property for free, transaction at an apparently unreasonable price or waiver of the creditor’s right in accordance with Article 31 of the Enterprise Bankruptcy Law, and hence the creditor files a lawsuit in accordance with Article 74 of the Contract Law, requesting revocation of the debtor’s aforesaid acts and incorporation of the recovered property into the debtor’s property, the people’s court shall accept.
Meanwhile, the Interpretations II have elaborated and specified the ways to handle other relevant matters involved in the PRC Bankruptcy Law.
Reply of the Supreme People’s Court on the Calculation of the Limitation for Arbitration Application of Personnel Disputes
On September 12, 2013, the Supreme People’s Court promulgated the Reply to the Request for Instructions on the Calculation of the Limitation for Arbitration of Personnel Disputes of Public Institutions (Chuan Gao Fa [2012] No. 430), replying to Sichuan Province High People’s Court as follows with regard to the calculation of the limitation for arbitration of personnel disputes of public institutions:
Pursuant to Paragraph 1 of Article 27 and Article 52 of the Law of the People’s Republic of China on Labor-dispute Mediation and Arbitration, where a party concerned applies for arbitration within one year from the date on which he/she knows or should know that his/her rights have been infringed upon, the relevant people’s court shall recognize the arbitration application if it is accepted by the relevant arbitration institution.
? Interpretations of the Supreme People’s Court on Certain Issues concerning the Application of Law in the Trial of Criminal Cases of Fabricating and Deliberately Disseminating False Terrorist Information
On September 29, 2013, the Supreme People’s Court promulgated the Interpretations on Certain Issues concerning the Application of Law in the Trial of Criminal Cases of Fabricating and Deliberately Disseminating False Terrorist Information (Fa Shi [2013] No.24, hereinafter referred to as the Interpretations).
The Interpretations have identified the crime of fabricating false terrorist information and the crime of knowingly and deliberately disseminating terrorist information fabricated by others. Whoever fabricates terrorist information, and disseminates or connives at the dissemination of fabricated terrorist information, thus seriously disrupting social order, shall be deemed as having committed the crime of fabricating false terrorist information in accordance with one of the crimes under Article 291 of the Criminal Law. Whoever knowingly and deliberately disseminates terrorist information fabricated by others, thus seriously disrupting social order, shall be deemed as having committed the crime of deliberately disseminating false terrorist information in accordance with one of the crimes under Article 291 of the Criminal Law.
The Interpretations further enumerate the acts that shall be deemed as reaching the threshold of “seriously disrupting social order” prescribed by one of the crimes under Article 291 of the Criminal Law, including causing disorder in airports, railway stations, ports, shopping malls, theatres, sports venues and other places with high population density, or causing emergency evacuation measures to be taken; affecting the normal operation of aircrafts, trains, vessels and other large passenger transportation tools; causing interruptions of the work, production, operations, teaching, research and other activities of State organs, schools, hospitals, factories and mining enterprises, and other entities, etc.
Meanwhile, the Interpretations have enumerated the circumstances subject to “heavier punishment” and the acts of “cause serious consequences” as stipulated in Article 291 of the Criminal Law.
Beijing High People’s Court Unveiled the Guidelines for Judging the Patent Infringement
Recently Beijing High People’s Court formulated and promulgated the Guidelines for Judging the Patent Infringement, unveiling all-around and operable provisions for determining the scope of patent protection, infringement judgment, patent infringement demurrer and so on.
The Guidelines have summarized some experiences and practices of courts in Beijing hearing patent-related cases and deleted some contents of the previous Opinions on Issues Concerning Patent Infringement Judgment that are no longer applicable to current judicial practices in accordance with the Patent Law and the relevant judicial interpretations of the Supreme People’s Court.
The Guidelines mainly provide for the judgement of the equivalent features and for the first time specify the “three basics” of equivalent features, i.e. basically the same means, functions, connotations of effects and methods of judgment, and rectify the previous simple and extensive method of judging the equivalent features; make an overall and complete provision on the rules for judging infringements of functional attributes, specify the concept of functional attributes and exclude some circumstances that may not be identified as of functional attributes under the fundamental provisions of judicial interpretations; make categorized regulations on the timing for interpretations of claims and specify the authorities of judges to interpret claims under different circumstances; incorporate “indirect infringements” into “joint infringements” and thus clarified the connotations of the two concepts; standardize the different identifications and practices, etc. of judicial practices.
Legal Practices
Reinforce Trademark Protection.An Analysis of the Trademark Law (Revised 2013)
Media report tells that, up to the first half of 2013, valid registered trademarks in China have totalled 6,808,000, ranking first in the world and making China a real Trademark Giant. Nevertheless, our country’s protection of trademarks is not satisfactory, as reflected in such circumstances as “free ride”. Trademark infringements not only impair the lawful rights and interests of trademark owners but also lead to frequent appearance of fake brands which the consumers can hardly anticipate or avoid.
As is known to all, the cost of a trademark infringement is low but the cost in safeguarding the rights and interests is high, which is a prominent problem in the facet of trademark protection in China and also the root cause of repetitious trademark infringements. To this end, the Trademark Law as revised starts with introducing the punitive compensation system, increasing the statutory compensation amount and reducing the trademark owner’s burden of proof in order to intensify its protection of the trademark rights. The Trademark Law as revised this time shall be passed on August 30, 2013 and will take effect on May 1, 2014.
Add methods of compensation calculation and increase the statutory compensation amount.
In trademark infringement litigations, the trademark right holder generally will require the infringer to compensate for its losses. According to the original Trademark Law, there are three patterns for calculation of compensation: (1) the amount of the benefits gained by the infringer; (2) the losses suffered by the trademark right holder during the existence of the infringement; (3) if it is difficult to determine the amount of the benefits gained by the infringer or the losses suffered by the trademark right holder, the people’s court shall, depending on the circumstance of the infringement, render a judgment awarding compensation not more than RMB500,000. The Trademark Law as revised has adjusted the calculation of the compensation, mainly as follows:
1. Add another method for compensation calculation so that the trademark owner can have more options.
The Trademark Law as revised stipulates that, in addition to the aforesaid three methods, the amount of compensation for infringement may be reasonably determined by the trademark owner by reference to the multiples of the trademark royalties; in other words, if the infringed trademark has been licensed to a third party, the trademark owner may compensate the third party by reference to the multiples of the royalties of such trademark.
2. Increase the statutory compensation amount
The author’s experiences tell that, in cases of trademark infringements, it is rather difficult to prove a trademark owner’s losses or the infringer’s profit-making amount, so in the majority of such cases it is the court that, at its sole discretion, determines the amounts of compensation payable by the infringer to the trademark owner for the latter’s losses, ranking from tens of thousands to hundreds of thousands in real practices. With the rising price of commodities and developing economy, the aforesaid compensation amounts obviously are not sufficient to act as a warning signal, so the Trademark Law as revised has increased the current “not more than RMB500,000” to “not more than RMB 3,000,000”.
Introduce the punitive compensation system
The current trademark infringement compensation system in China follows the principle of “filling gaps”, i.e. it is the infringer who shall compensate the trademark owner but such compensation is only intended to cover the losses suffered by the trademark owner. The Trademark Law as revised introduces the punitive compensation system, providing that, where an infringer maliciously infringes upon another party’s exclusive right to use a trademark and falls under grave circumstances, the amount of compensation may be determined as not less than one time but not more than three times the amount determined according to the foregoing methods. The amount of compensation shall cover the reasonable expenses incurred by the right holder for stopping the infringement. That is to say, if the trademark infringement is malicious, the trademark owner may claim compensation of a larger amount. So, there is no provision to be found in order to determine the standard for “malicious” and the court, at its sole discretion, may determine the same on the basis of actual conditions. Personally speaking, for example, if an infringer’s infringement act is curbed but later such infringer commits another infringement or commits infringement despite knowledge of the recognition of the relevant trademark, such circumstances can be deemed as patterns of “malicious” manifestation. The introduction of the punitive compensation is not only an innovation in the field of trademark law but also a systematic innovation within the entire intellectual property protection of China.
Reduce the right holder’s burden of proof
As mentioned above, in judicial practices of trademark infringement cases, it is rather difficult for a trademark owner to collect the relevant evidence to demonstrate that an infringer has made profits from its infringement. Therefore, even if the infringement is serious, the final amount of compensation due to the trademark owner will not be very high. To relieve the trademark owner’s difficulty in proving the infringement’s illegal gains which leads to low amount of compensation, Article 63 of the Trademark Law as revised stipulates that, where the right holder has duly discharged its obligation of burden of proof, but the account books and materials related to the infringing acts are mainly controlled by the infringer, the relevant people’s court may, for the purpose of determining the amount of compensation, order the infringer to submit account books and materials related to the infringing acts. Where the infringer fails to provide such account books and materials or provides false account books and materials, the people’s court may render a judgment on the amount of compensation by reference to the claims of the right holder and the evidence furnished thereby. This provision attributes the burden of proof for the compensation amount to the infringer, whereby relieving the trademark owner’s burden of proof and reducing to some extent the difficulty of the trademark owner in protecting its own rights.
Reinforce administrative penalties
When increasing the trademark infringement compensation amount, the Trademark Law as revised has also intensified the administrative penalties on trademark infringements. Article 60 of the Trademark Law as revised stipulates that, when addressing the dispute, the administration for industry and commerce shall order the relevant party to immediately cease the infringing acts if it is of the opinion that infringement has been established, and shall confiscate and destroy the infringing goods and instruments mainly used for manufacturing the infringing goods and forging the registered trademark. Where the party has gained RMB 50,000 or more of illegal business revenue, a fine of up to five times the illegal business revenue may be imposed thereon; or where the party has no illegal business revenue or has gained less than RMB 50,000 of illegal business revenue, a fine of up to RMB 250,000 may be imposed thereon. Thus it can be seen that, intensifying crackdown on trademark infringements by administrative means also reflects the intensifying protection of trademarks.
In addition to the aforesaid revisions, the Trademark Law as revised has specified indirect infringement acts, acts of using others’ trademarks as enterprise names, etc. in order to curb trademark infringements from different perspectives.
(The author’s contact information: kevincheng@hllawyers.com)
