(By Yu Zhiyuan) Directors’ liability in China is an attractive matter to foreigners who act or intend to act as directors in China. Today, we would like to introduce directors’ liability in China to the below questions.
1. What are the key areas of liability that directors in China need to be aware of?
Directors shall abide by laws, administrative regulations and articles of association of the company and shall have the fiduciary and diligent duties to the company.
Directors may not abuse their authorities by accepting bribes or generating other illegal income, and may not convert company property.
(1) may not misappropriate company funds;
(2) may not deposit company assets into an account in his own name or in any other individual’s name;
(3) may not loan company funds to other people or give company assets as security for the debt of any other individual without the approval of the shareholders meeting, general meeting of shareholders or the board of directors in violation of the articles of association;
(4) may not execute any contract or engage in any transaction with the company in violation of the articles of association or without the approval of the shareholders meeting or the general meeting of shareholders;
(5) may not use the favorable conditions and conveniences to seek the business opportunities that shall belong to the Read More...
1 The State Council Issues Policy, Emphasizing Combating Fake Goods Sales and Copyright Infringements on Internet
On 7th November, 2015, the General Office of the State Council issued the Opinions on Intensifying the Regulation of intellectual property Infringement and Counterfeiting in the Internet Domain (the “Opinions”) with the aim to strengthen regulation of infringement and counterfeiting behaviors in the internet domain and promote sound growth of the e-commerce industry. The Opinions pointed out main activities the government authorities will fight against, including online sale of counterfeited and inferior products and internet copyright infringement.
(For more details, please consult with your lawyer.)
Sourced from the official website of the Government of the P.R.C.: http://www.gov.cn/zhengce/content/2015-11/07/content_10276.htm
2 China Securities Regulatory Commission Issue Drafts of New Editions of Supervision Regulations for Public Comment
On 6th November, 2015, China Securities Regulatory Commission (“CSRC”) issued notice requesting public comment on the Administrative Measures for Initial Public Offerings and Listing (Consultation Read More...
1 The Central Government Pushes to Introduce Negative List System for Market Access across the Country
On 19th October 2015, the State Council issued the Opinions on Implementing Negative List System for Market Access (“Opinions”), pushing to introduce the system nationwide. As set forth by the Opinions, pilot negative list system for market access will be launched in certain selected districts from 1st December 2015 to 31st December 2017, and a nationally uniform negative list system for market access and corresponding policies are expected to be implemented as of 2018, under which except for those listed on the negative list, all kinds of entities have equitable access to markets and businesses under applicable laws.
(For more details, please consult with your lawyer.)
Sourced from the official website of the Government of the P.R.C.:
2 The State Food and Drug Administration Issues New Regulations on Food Industry Licensing
On 30th September 2015, the Read More...
(By Yu Zhiyuan) I recently represented a client who was finally the winning party to a typical franchise dispute case, from which we can learn most legal risks possibly facing franchisors and franchisees during their performance of franchise business as well as operational standards and risk control measures for businesses in the brand chain industry.
- Case Facts
In this case, the franchiser, owner of a well-known early childhood education brand, entered into a franchise agreement with each franchisee to perform franchise activities as a chain store dealing in the franchiser’s brand. As mutually agreed, in addition to one-off franchise fees and deposits, each franchisee should pay royalty fees in advance before each royalty year begins, and if there is any overdue payment of royalty fees, penalties.
Later as disputes arose from the franchiser’s failure to provide continuous guiding support under the franchise agreement, a number of franchisees refused to pay royalty fees. Then the franchiser filed a lawsuit, for which the franchisees appointed me to represent them together.
- Lawyer’s opinions
The facts of this case seem simple, but indicate a lot of useful information. First up, the Read More...
- The State Council Issues Policies on the Promotion of Imports and Exports On 22nd July 2015, the General Office of the State Council of the P.R.C. issued the Policies on the Promotion of Imports and Exports.
(For more details, please refer to your lawyer.)
Sourced from the official website of the National Government of the P.R.C.: http://www.gov.cn/zhengce/content/2015-07/24/content_10031.htm
- The Supreme People’s Court Issues New Judicial Interpretation, Conditionally Recognizing the Validity of Private Lending Between Enterprises
On 6th August 2015, the Supreme People’s Court issued the judicial interpretation on Private Lending, which will take into effect on 1st September 2015.
The new judicial interpretation specifies the conditions of the effectiveness of private lending agreements and notably validates private lending between private enterprises which meets the requirements thereof.
(For more details, please refer to your lawyer.)
Sourced from the official website of the Supreme People’s Court: http://www.court.gov.cn/fabu-xiangqing-15146.html
- The People’s Bank of China and the Other Nine Authorities Jointly Issue Policies on Boosting the Internet Finance Industry
On 18th July 2015, the People’s Bank of China, the Ministry of Industry and Information Technology, the Ministry of Public Security, the Ministry of Finance, the State Administration for Industry and Commerce, the Legislative Affairs Office, the China Banking Regulatory Commission, the China Securities Regulatory Commission, the China Insurance Regulatory Commission and the State Internet Information Office jointly issued the Policies on Boosting the Internet Finance Industry (“Policies”).
Such Policies provide a range of instructions on supporting and encouraging internet finance activities and specify duties of administration and control over major internet finance activities such as payment over the internet, network lending, equity crowd-funding, sale of funds via the internet, internet insurance, internet trust, doing and closing transactions through the internet.
Sourced from the official website of the National Government of the P.R.C.: http://www.gov.cn/xinwen/2015-07/18/content_2899360.htm
- The Supreme People’s Court Issues the Decision on the Dispute of Arbitration Jurisdiction between China International Economic and Read More...
(By Dr. Wenbao Qiao) For foreign companies doing business in China, dispute and litigation may sometimes be inevitable. Once a dispute cannot be resolved out of court, there is a long and rocky road to the final success, with several important points to be considered for planning and handling of litigation in China:
Documents and Evidence
The first step of each procedure is to collect and prepare all necessary documents and evidence. According to Chinese law, documents and evidence from another country (such as excerpts from the commercial register or powers of attorney) have to be first notarized in their country of origin and then certified by the Chinese Embassy or Consulate in the respective country. Only notarized and certified documents and evidence will be accepted by Chinese courts. While preparing the documents and evidence, attention should be paid to the timeline required for the notarization and certification. There are several important statutory deadlines shown below. Failure to meet these deadlines can lead to the loss of a case. Notarization and certification in Germany usually takes two to three weeks, which in turn may play a critical role for the time schedule of trial preparation.
One practical suggestion for the preparation of power of attorney is to issue it as so called “special power of attorney”. Such special powers include, for Read More...
(By You Yunting) Mr. Wang Feng (in the Left Picture), the husband of the well-known international film star, Ms. Zhang Ziyi, is a famous singer in China, whose image has immense commercial value. Amateur singer Ding (in the Right Picture) became famous because of imitating Wang Feng in an imitation talented show. Except the similar appearance, he dressed up himself as Wang Feng did, sang the songs created by Wang Feng and even claimed to have his face changed in order to achieve a more vivid effect. As is reported that Wang Feng filed a lawsuit for infringing his rights of name and portrait against Ding who was suspected of profit-making publicity by using the name and photos of Wang Feng in Weibo. Wang Feng claimed to stop the infringement immediately and pay compensation for the infringement incurred.
Viewed from the brief introduction, it is hard to Read More...
(By You Yunting) Recently, Uber Shanghai carries out a marketing activity called Call for one hundred million by one button of Uber cooperated with 1qiaobao, an App owned by PINGAN INSURANCE GRP. According to the Uber’s official Weibo, users can use the Uber App to call the securicar provided by both Uber and 1qianbao, and anyone who is the winner of the caller can obtain all the financing earnings of one hundred million yuan, which is about ten thousand yuan. I think this activity has huge legal risks, therefore hereunder are the risks and its reason.
What’re the legal risks of Uber’s promotion?
The Anti-Unfair Competition Law requires that business operator shall not engage in sales with prizes in the form of lucky draws where the amount for the highest prize exceeds RMB 5,000, which means ten-thousand- yuan-prize of this activity has the risk of breaching the law. Although Uber will not charge the consumers during this activity, providing service is also applied to the article 13 of Read More...
(By You Yunting) I was once asked by a journalist what the foundation of intellectual property courts and the ratification of the Opinions on Quicker Development of the Globally Influential Scientific and Technological Innovation Center matter to small and medium-sized startups, and replied the outcome of those two events were the same, both of which ultimately aimed to enhance the awareness of intellectual property throughout our society and guide small and medium-sized enterprises to establish a competition barrier and a management philosopher on how to avoid infringing others’ intellectual property rights. As governmental authorities define and set official instructions and policies, each startup should take full use of its intellectual property during daily operation, trying to become positioned to succeed, just like a well-known Chinese aphorism says that even the pig can fly when the typhoon comes. Combined with my experiences, this article mainly deals with the issue of how small and medium-sized startups seek intellectual property protection both internally and externally.
- How to file intellectual property application with external departments?
Intellectual property is essentially intangible assets. Specific actions should be taken to ensure your businesses have all rights to such intangible assets, in connection with filing patent and trademark Read More...
(By Luo Yanjie) Recently, Guangzhou Intermediate People’s Court ordered New Balance Trading (China) Co., Ltd, an affiliate of US-based Sports footwear manufacturer New Balance, to compensate a Chinese shoes owner, Zhou Yuelun, with a rarely high amount of RMB 98 million for infringing his Chinese “新百伦” trademark, a Chinese transliteration from English word New Balance, in the first instance. Such high amount of compensation is unusual in China intellectual property infringement. It is for this reason that this case attracted extensive attention. Upon the public records, from the legal view, we will briefly introduce and analyze this case in today’s post.
Introduction to the Case:
Plaintiff: Zhou Yuelun
1st Defendant: Guangzhou Sheng Shi Chang Yun Trading Co., Ltd (the “SSCY”)
2nd Defendant: New Balance Trading (China) Co., Ltd (the “NEW BALANCE”)
Court of first instance: Guangzhou Intermediate People’s Court
Plaintiff Zhou Yuelun claimed that he holds the Chinese character Read More...
- The National Development and Reform Commission and the Ministry of Commerce Publish the Catalogue of Industries for Foreign Investment (2015 Revised Edition)
On the 10th March 2015, the National Development and Reform Commission and the Ministry of Commerce of the PRC published the Catalogue of Industries for Guiding Foreign Investment (2015 Revised Edition) (“Catalogue”) under the approval by the State Council of the PRC. The Catalogue will become effective on the 10th of April 2015.
The Catalogue totally contains 432 items, from which 48 items of the 471 items totally contained in the 2011 Edition, have been eliminated. Among those eliminated items, 41 ones are under the restricted class, 5 under the priority class and 2 under the prohibited class. In addition, the number of items “limited to joint investment and cooperation” in the Catalogue is 15, decreased from 43 in the 2011 Edition and the number of items applicable only to “Chinese controlled businesses” in the Catalogue is 35, decreased from 44 in the 2011 Edition.
Items under the priority class newly added to the Catalogue mainly include modern agriculture, high tech, advanced manufacturing, energy conservation, renewable energy and modern service industries.
Sourced from the official website of the National Development and Reform Commission of the PRC: Read More...
(By You Yunting) As we have already posted Judgment Abstract on NDRC’s Administrative Decision of Qualcomm Incorporated (Part 1) on April 17 2015, today we would like to introduce more.
III What’re the legitimate basis and the final decision?
Pursuant to Article 47 and Article 49 of the Anti-Monopoly Law, the NDRC made the following decisiosn against Qualcomm’s abuse of dominant market position in the SEPs markets and the baseband chip markets:
- Order Qualcomm a halt to illegal activities upon abuse of dominant market position as follows:
a Qualcomm shall provide patent lists to its licensees in China and not charge licensees for expired patents.
b Qualcomm shall not request its licensees in China to grant back their patents for reverse license to Qualcomm for free.
c Qualcomm shouldn’t insist on charging a high rate of licensing fee to calculate based on the net wholesale prices.
d Qualcomm shall offer licenses to its wireless communication related SEPs without bundling with other non-SEPs.
e Regarding the sale of baseband chips, Qualcomm shall not be allowed to Read More...
(By You Yunting) As from October 2013, the National Development and Reform Commission (the “NDRC”) starts the anti-monopoly probe into the world’s biggest cellphone chip maker, Qualcomm (NASDAQ: QCOM) , and makes in-depth investigations and discussion with tens of cellphone manufacturers and baseband chip manufacturers at home and abroad. Recently, the NDRC determined that Qualcomm holds a dominant position in the markets of standard essential patents (“SEPs”) licensing in relation to CDMA, WCDMA and LTE wireless communication and the baseband chip market, and that Qualcomm be fined 6.088 billion yuan in the violation of the Anti-Monopoly Law. Today we will introduce the punishment decision and make comments.
Introduction to the Case:
Respondent: Qualcomm Incorporated
Reference: 发改办价监处罚 1号
I. Why does Qualcomm hold a dominant position?
1. Qualcomm holds a dominant position in the markets of SEPs licensing
The NDRC found that under the following facts and reasons, Qualcomm holds a dominant position:
a Qualcomm occupies 100% shares in the market of SEPs licensing, without any competition. Pursuant to Item 1, Read More...
(By Luo Yanjie) Article 15 of both the 2014 version and the 2001 version of the Trademark Law stipulated that an agent shall not rush-register trademarks of the principal or the represented. In practice, Article 15 is always used to prevent from rush-registration. The following judgment will introduce a typical rush-registration case with new ideas for reference.
Introduction to the Case:
Re-appellant (plaintiff at first instance, appellant at second instance): LEHMANBROWN LIMITED (the “HK Company”)
Re-respondent (defendant at first instance, respondent at second instance): Tradeamrk Review and Adjudication Board (the “TRAB”)
Court of first instance: Beijing No.1 Intermediate People’s Court
Court of second instance: Beijing Higher People’s Court No.: (2012)高行终字第686号
Court of Retrial: Supreme People’s Read More...