An Analysis on Chinese and Foreign Entrepreneurs’ Equity Disposal Options

(By Wang Qiurui) Selfishness is nature of human beings and difficult to get rid of, out of which a problem arises that employees and even high-level managerial staff of a company care much more about their own interest than the company’s rise and fall when dealing with managerial issues. Adam Smith raised a question related to such problem in his masterpiece the Wealth of Nations, known as ‘Smith’s Difficult Question’.

Many past and living Chinese and foreign entrepreneurs have turned to equity to find a way of thinking a solution to overcome such weakness of human beings. However, being governed by the current Company Law of P.R.China, settlement of a case in such a way would give rise to many legal issues. It should be more advisable for Chinese entrepreneurs to create and apply to their businesses a phantom equity system.

  1. Equity Incentive Programs Applied by Fortune 500 Companies

Some fortune 500 companies, especially those listed companies, usually have equity incentive systems and programs for eligible staff above certain position levels, especially high-level managerial staff, who are given an amount of equity (mostly in the form of stocks) and then become shareholders of the companies.

A company taking such action obviously aims to mobilize high-level managerial staff to work as the Read More...

Does Tudou.com Require Permission for the Use of YYeTs’ Unauthorized Subtitle Translation in China?

tudou(By You Yunting) YYeTs is one of fansub groups in China, which translated foreign films and television program and subtitled into a language other than that of the original by fans (not officially licensed translator). YYeTs have translated many foreign films and television programs and developed very fast in China.

Recently,  YYeTs claimed that, as Tudou.com used, without permission, YYeTs’ subtitle translation for the video of the Voice and deleted the names of translator, YYeTs tried to negotiate with Tudou.com but was blamed for illegal translation. That raised a question: without the permission of the right holder for the Voice, could YYeTs’ translation receive protection from the Copyright Law?

The video of the Voice, an American reality television singing competition broadcast on NBC, shall be legally regarded as an audio -visual recording. If Internet users used them to practice English, YYeTs’ translation certainly is a type of legitimate action. Nonetheless, if the translation were uploaded to the Read More...

Will Alibaba’s App Information Leakage Trigger Strict Supervision and Regulation on Mobile Games?

alibaba(By You Yunting) “疯狂来往” App, an in-game of China’s leading e-commerce Alibaba(NYSE: BABA)’s Messaging App Laiwang, was blamed for user’s private data leakage, according to the news. “疯狂来往” App (pronounced as “Feng Kuang Lai Wang”) was made to record players as one persons holds up a mobile device displaying words and others use gestures to provide clues to an answer, a little like guessing game. Considering that “疯狂来往”App is an interactive game among friends and acquaintances, many of the players were dressed rather casually when caught on the videos and some videos shows users in their underwear or naked while playing the game at home with family or friends. Worsen the videos also involved private information of teenagers under eighteen. Regardless of its sharing features into social networking websites such as Wechat and Qzone, some sharing videos were also automatically stored on Youku.com, a video website, which anyone can read online.

After exposure, the videos have since been deleted by Youku.com. However, the videos may be up to 35959 sharing in Youku.com without permission, which included a tremendous amount of private data Read More...

China Laws and Regulations Update in September 2014

1.The PRC State Administration of Foreign Exchange releases the Notice on the Pilot Reform of the Administrative Approach Regarding the Settlement of the Foreign Exchange Capitals of Foreign-Invested Enterprises in Certain Areas

On 4 August 2014, the PRC State Administration of Foreign Exchange released the Notice on the Pilot Reform of the Administrative Approach Regarding the Settlement of the Foreign Exchange Capitals of Foreign-Invested Enterprises in Certain Areas to launch the pilot reform of the settlement of the foreign exchange capitals of foreign invested enterprises on a discretionary basis in 16 areas throughout the P.R.China, including the Suzhou Industrial Park, on 4 August 2014, after such reform was first launched in the Shanghai Free Trade Zone.

In addition, according to the Notice, the uses of the foreign exchange capitals of foreign invested enterprises and the RMB capitals acquired through the settlement of such foreign exchange capitals are restricted, and the payment management, the management of settlement and use of the capitals in foreign accounts for direct investment and the post-supervision of the PRC State Administration of Foreign Exchange are standardized.

Website of the State Administration of Foreign Exchange:

Read More...

Judgment Abstract on NDRC’s Administrative Decision of Zhejiang Insurance Association in China

(By You Yunting) By reports, recently, National Development and Reform Commission (the “NDRC”) investigated the industry group the Zhejiang Insurance Association and its membership insurers, originated from that the Zhejiang Insurance Association in violation of the Anti-Monopoly Law organized its 23 membership insurers to agree on unified commissions from auto insurance premiums through meetings. The NDRC fined 22 of the insurers a total of RMB 110 million. Today, we will introduce the NDRC’s Punishment Decision on Zhejiang Insurance Association and make some comments.

Introduction to the Case:

Respondent: Zhejiang Insurance Association

Reference:  发改办价监处罚[2013]7号

Since 2009, Zhejiang Insurance Association organized all insurers in Zhejiang Province to revise the Zhejiang Province Motor Vehicle Insurance Discipline and its implementing rules through meetings and revisions through meetings and revisions, to agree on and carry out on an agreement of fixing commercially motor insurance fees

Based on the aforesaid analysis on illegal facts, the NDRC held that the respondent is in violation Read More...

Judgment Abstract on NDRC’s Administrative Anti-Monopoly Decision of PICC Zhejiang Branch’s Impunity in China

NDRC(By You Yunting) By reports, recently, National Development and Reform Commission (the “NDRC”) investigated the industry group the Zhejiang Insurance Association and its membership insurers, originated from that the Zhejiang Insurance Association in violation of the Anti-Monopoly Law organized its 23 membership insurers to agree on unified commissions from auto insurance premiums through meetings. The NDRC fined 22 of the insurers a total of RMB 110 million, with PICC Property and Casualty Company Limited Zhejiang Branch, an insurer, escaping punishment because of informing the authorities and providing key evidence. In today’s post, we will introduce the decision on PICC Property and Casualty Company Limited Zhejiang Branch escaping punishment and make comments.

Introduction to the Case:

Party: PICC Property and Casualty Company Limited Zhejiang Branch (the “PICC Zhejiang Branch”)

Reference:发改办价监免[2013]4号

Since 2009, under the organization of the Zhejiang Insurance Association, PICC Read More...

Analysis on New Provision of Agent’s Trademark Rush-Registration in China Trademark Law

(By Luo Yanjie) According to the latest news report, more than 14 millions of trademark applications in China have already been filed by June 2014. It indicates that Chinese economy develops very fast and also that brands across China and even all over the world, big or small, are attempting to the protection of trademark registration in China. However, there is no doubt that some trademarks were registered with bad faith at the beginning, i.e., pirate trademark rush-registrations. Among those trademark rush-registrations, some of rush-registrars are connected to the original holders, thus leading to prevention from agent’s trademark rush-registration as regulated in Article 15 of the Trademark Law (2001 version). Furthermore, in the newly applicable Trademark Law from May 2014, legislature departments made implementation on the Article 15. In today’s post, we will discuss the modification and its application.

1.   Modification of Article 15 in the 2013 Trademark Law

The 2001 version of Trademark Law stipulates that, in the event that an agent or representative seeks Read More...

Could Qunar.com be Entitled to Cancel Competitor’s domain name of Quna.com?

去哪儿(By Luo Yanjie) Generally, enterprises are always using the application of trademarks to protect their brands, but because of the strict trademark review and long review periods, sometimes enterprises could not obtain the approval of trademark registration. Even so, with regard to their famous goods, enterprises could rely on the Anti-Unfair Competition Law to protect their rights and interests. In today’s post, we will introduce and share a typical case with readers.

Introduction to the Case:

Appellant (Plaintiff at first instance): Beijing Qunar.com Information Technology Co. Ltd (the “Qunar”)

Respondent (defendant at first instance): Guangzhou Quna Information Technology Co. Ltd (the “Quna Company”)

Court of first instance: Guangzhou Intermediate People’s Court No.: (2011)穗中法民三初字第217号

Read More...

Is It Legal for Foreign Company to Transfer User Data out of China?

(By Wang Ting) Recently, China State broadcast CCTV, imposed Apple Inc. that its iPhone’s ability to track and time-stamp user’s frequent locations without user’s permission infringed user’s privacy. Even though the news impacts turned out to be small in western countries, large amounts of Medias in China reported the news (Note: the link is in Chinese). Within the quicker development of internet and mobile internet, personal data and information has become increasingly frequent cross region and even breaking national boundaries, thus making the transfer of personal data more smoothly. In today’s post, at the beginning of Apple’s device’s location tracking abilities, we will introduce regulations and legal risks concerning how enterprises transfer user data from China to third countries.

  1. Notes of collecting and using user’s personal data

At present, protection of user’s personal data are scattered among different laws and regulations in China. There are major applicable laws, for example, the Decision of the Standing Committee of the National People’s Congress on Strengthening Information Protection on Networks and the Law on the Protection of Consumer Rights and Interests. The Decision Read More...

Introduction to Protection of New Varieties of Plants in China

(By You Yunting)Introduction to the Case:

Appellant (Defendant at first instance): Jiangsu Xunong Seeds Science and Technology Co., Ltd (the “Xunong”)

Respondent (Plaintiff at first instance): Tianjin Tianlong Seeds Science and Technology Co., Ltd (the “Tianlong”)

Court of first instance: Nanjing City Intermediate People’s Court  No.: (2009)宁民三初字第63号

Court of second instance: Jiangsu Province Higher People’s Court  No.: (2011)苏知民终字第0194号

On November 10, 2000, a new three-crossbreed hybrid japonica rice named “9优418”, jointly cultivated by the Liaoning Rice Research Institute (the “LRRI”) and the Xuzhou Academy of Agricultural Sciences (the “AAS”), was approved by the National Crop Variety Approval Committee of China (the “NAVAC”).

The “9优418” comes from the female parent “9201A” and the male parent “C418”. The LRRI applied for the right of a new variety of plant with the Ministry of Agriculture on December 30, 2003 and received the approval on May 1, 2007. On the same day, the LRRI authorized Tianlong to the exclusive right of using the C418.

Read More...

China Laws and Regulations Update in August 2014

  1. The Shanghai Municipal People’s Government Releases the 2014 Revised Version of ‘Negative List’ Applicable in the Shanghai Free Trade Zone

On 1 July 2014, the Shanghai Municipal People’s Government released the 2014 Revised Version of ‘Negative List’ applicable in the Shanghai Free Trade Zone, containing 139 special administrative measurements, while the previous version contained 190 ones, representing a change of 26.8% contents of the Negative List.

The Revised Version of ‘Negative List’ eliminated fourteen (14) material clauses to expand business scopes, fourteen (14) material clauses to lift dual restrictions on both domestic and foreign investments and twenty three (23) clauses to readjust categories. The eliminated clauses, including those restricting foreign investment in mail orders and online sales of ordinary commodities, allowing wholly owned foreign businesses to deal in railroad transport, etc., relate to manufacturing, real estate, infrastructure, commercial trade, shipping, social service sectors, etc.

Website of the Municipal Government of Shanghai:

http://www.shanghai.gov.cn/shanghai/node2314/node2319/node12344/u26ai39501.html

  1. The Ministry of Commerce Publishes the Notice on Improving the Read More...

Could Jewelry Design be Protected by the China’s Copyright Law?

胜利之v俏灵蛇(By Luo Yanjie) It is common in China that a jewelry of the same design would be manufactured and sold by different jewelry shops in the industry of China’s jewelry. With regard to the initial source of the jewelry design, a lot jewelry companies and even consumers are not concerned whoever firstly designs the jewelry. In reality, a well-designed jewelry that took designers a great intelligence shall be protected by the Copyright Law. In today’s post, we will introduce a case where a jewelry design is succeed to be protected by the Copyright Law, sharing with readers.

Introduction to the Case:

Plaintiff: Shenzhen Tongtaifu Jewelry Co., ltd (the Read More...

Introduction to Ownership of the Performer’s Right in China

(By Luo Yanjie) As China recently ratified the Beijing Treaty on Audiovisual Performances, in today’s post, we will introduce the system and cases of the performers’ rights in the Copyright Law. As for who holds the performer’s right, different judgments will be found through three cases. Who holds the performer’s right? The performer, the company/organizationthat hires the performer, or the performing company/organization? These different judgments can become an obstacle for the further development of China’s performing arts.

Firstly, regulations relating to the performer’s right shall be introduced. Item 6, Article 5 of the Implementing Regulations of the Copyright Law stipulates that, performer refers to an actor, performing organization or any other person who performs literary and artistic works. Since Item 6, Article 5 made a simplified stipulation, there are quite different judgments in China’s local courts.

1st Case: The performer’s right belongs to the performing organization.

Appellant (defendant at first instance): China Record Corporation (the Read More...

Why Did NCA Officials Attend Sohu.com’s Press Conference against Toutiao.com?

(By You Yunting) Recently, Sohu vs Toutiao has attracted attention from the media. Sohu sued Toutiao for copyright infringement and unfair competition, whilst Toutiao filed lawsuits against Sohu for defamation. It is quite normal for two enterprises in competition to take legal proceedings against each other. However, what really surprised us was, in their dispute, that governmental officials attended Sohu’s press conference, in favor of Sohu. In today’s post, we will discuss the reason for theimproper governmental interference. Comments and suggestions are most welcome.

  1. The process of governmental attending Sohu’s press conference

On June 24, Sohu held a press conference to announce that Sohu would sue Toutiao for copyright infringement and unfair competition. In Sohu’s press release, it said that some National Copyright Administration (the “NCA”) leaders attended the press conference. Moreover, a NCA official publicly expressed that it is absolutely impossible to carry something that belongs to other people without permission back home or direct trading, thus being the baseline of the Copyright Law and the red line between the Copyright Law and new technology application.(Note: the link is in Read More...

China Laws and Regulations Update in July 2014

  1. The Legislative Affairs Office of the State Council Releases the newly revised Copyright Law of the People’s Republic of China (under Review) and Solicits Public Opinions for It

On 6 June 2014, the Legislative Affairs Office of the State Council released the newly revised Copyright Law of the People’s Republic of China (under Review) and solicited public opinions for it. The deadline for opinion solicitation will be 5 July 2014.

What is most significantly revised according to the draft copyright law under review includes provisions on objects, contents, ownership and the validity period of rights within the scope of copyright. Also, it has stipulated more penalties that will be imposed on those who infringe others’ copyrights and has set forth means of enforcement by administrative authorities concerned, who have powers of seizure and confiscation, which was first stipulated by laws.

(Website of the Legislative Affairs Office of the State Council:

http://www.chinalaw.gov.cn/article/cazjgg/201406/20140600396188.shtml)

  1. The State Administration for Industry and Commerce of the People’s Republic of China Solicits Public Opinions for Regulations (Used for Opinion Solicitation) on Prohibiting Read More...