Category Archives: Litigation

Does Wind’s Sale of Tonghuashun’s Stock Constitute Insider Trading?

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Previously, we posted “Tonghuashun VS. Wind and the Judgment Standards for Software Copyright Infringement in China” to introduce the copyright dispute between Wind and Tonghuashun. According to a recent report, two lawyers based in Beijing filed a complaint to the China Security Regulatory Commission (“CSRC”) accusing Wind and its affiliated company of insider trading, which has made the dispute more complicated.

As shown by the currently available information, from the second quarter of 2011 to the third quarter of 2012, Wind’s affiliated company was a shareholder of Tonghuashun. When the rumor emerged that Wind would sue Tonghuashun, Tonghuashun’s shares experienced several major trades. As indicated in the report issued in the third quarter of 2012, Wind sold all the Tonghuashun shares it had held. Wind explained this situation by stating that its investment in Tonghuanshun was to use its rights as a shareholder to persuade Tonghuashun to cease infringement. Today’s post will provide analysis on this issue.

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Legal Analysis on the Preemption Dispute between Fosun and SOHO China

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(by Bai Lituan) After six months of tense negotiation without any satisfactory result over a dispute of the 8-1 Pearl Project land plot on the Bund, Fosun (00656.HK) and SOHO China (00410.HK) finally chose to take the case to court in Shanghai. The first hearing of the case was in late November 2012. Before then, Fosun insisted that the share transaction between SOHO China and Shanghai Zendai Group damaged its right of preemption.

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Guideline for Foreigners to Apply Work Permit in China

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(By Albert Chen) According to the statistics issued by the Ministry of Human Resources and Social Security (the “MOHRSS”) in 2012, the employment license released to foreign workers in China has totaled 200, 000. In fact the administration approval with respect to foreigner employment in China is not limited to this license. Considering we have been consulted for many times what approval is legally demanded for the employment of foreigners, today we gonna introduce you the specific procedure. And in general, the approval could include: 1) work permit of foreign employers; 2) work visa; 3) employment permit; 4) physical examination; 5) residence permit.

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Should Employer Give Notice to Trade Union before Terminate Employment in China?

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 (By Albert Chen) The dispute over employment termination is quite common in labor conflicts, and whether the employer shall send a notice to the trade union before the termination is commonly seen in such disputes. What then, are the regulations regarding this aspect in China?

I. What is the function of trade union in China?

The role of the trade union is specified in Article 2 of Trade Union Law of PRC (the “Trade Union Law”):

“Trade unions are mass organizations formed by the working classes of their own free will.

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Jurisdiction of the Criminal Investigation by Police in the Taobao Malicious Reviewer Case

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(You Yunting) In the widely-covered corporate espionage dispute between Sany Heavy Industry (“Sany”) and Zoomlion Heavy Industry Science & Technology Development Co., (“Zoomlion”), Sany has criticized the Hanshou Public Security Bureau (“Police”) in Changde City, Hunan Province, stating that it did not have jurisdiction to investigate the case and that its investigation was in violation of the law. The Hanshou Police, however, replied there is no problem with it handling this investigation. As of now, there has been no final decision in the case, but the jurisdiction issue it has raised has captured the public attention. Coincidently, the author also believes that there are Police jurisdictional issues in the recent Tabao malicious review extortion case.

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What Legal Risk May Come to Companies Enrolled in the Non Bank Loan in China?

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(By Albert Chen) The capital shortage is inevitable during the company operation, and many operators could be head aching with the financing. Due to the strict demands and procedures for the credit approval in the banks, the company may suffer from the refusal of loan application or delay in lending. At that time, the non-bank loan could play another main role in the company financing. Then what risks may come to foreign invested companies as they enrolled in the non-bank loan when running business in China? Please check today’s post for the answer.

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Solutions to Labor Dispute on the Employment of Foreigners in China

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By Albert Chen

A subscriber of our website raised a question to us: what to do when countered a labor dispute for foreigners in China, who shall also be protected by local laws? To this question, you may find your answer in today’s post.

I. Are Chinese laws and regulations applying to labor disputes of foreigners?

The main existing laws regulating the employment of foreigners in China is RULES FOR THE ADMINISTRATION OF EMPLOYMENT OF FOREIGNERS IN CHINA (Rules) issued by police, labor and other two departments. According to Article 26 of the Rules:

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How to Respond Employees’ Compensation Claim for Office Relocation in China？

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By You Yunting

A subscriber of our website asked that what the company shall reply when the employee hand in his/her resignation for the inconvenience occurred from relocation of the office and as for the employee’s claim of compensation.

We reply as follows: Obviously, it could come to the employee’s consideration that the relocation of the office is the statutory situation of “A major change in the objective circumstances relied upon at the time of conclusion of the employment contract renders it unperformable”, and it is also resulted by the employer, and for this reason, they would claim an extra one month salary and compensation.

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Could Apple Use Objection to Jurisdiction to Prolong the Litigation Period?

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By Albert Chen

The most watched copyright battle between Chinese Writer Alliance (the “Alliance”) and Apple was heard in Beijing No.2 Intermediate People’s Court on the 11th of this month. You may have read our previous essay on the private hearing of the case, and in fact, Apple has also filed an objection to the jurisdiction in the case. Nonetheless, the application was refused by the intermediate court and upheld by the high court after appeal. The lawsuit has been delayed by procedure for nearly half a year, as favored by Apple. Today, we are going to introduce the regulation on the objection to civil jurisdiction in China.

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Has Apple Lost Opportunity of In-Camera Hearing on Its Case?

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By Albert Chen

The most watched dispute between Baidu (NASDAQ: BIDU) and Chinese Writers Alliance (the “Alliance”) is heard on 11th of October in Beijing No.2 Intermediate People’s Court. That lawsuit is filed following the battle against Baidu by the Alliance. Before the hearing on 11th, Apple applied to the court for the hearing in camera with the claim that the case is with trade secret related. After the consideration by the court, such an application was refused by the judge, yet it still decided the procedure may switch into be in private when one the interrogation involves the business secret. In today’s post, you may see our analysis on the “lawsuit in camera” in China.

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Analysis on Common Legal Risk of Chinese Company’s Ads

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By You Yunting

The competition in Chinese market is so fierce that the company would strive to make their ads be more outstanding, yet that could also bring them the risks of administrative punishment. In today’s essay, you will see our analysis on the common risk for corporate propaganda.

I. No fulfilling to the promise in propaganda

The most typical case shall be the ads from Beijing Hyundai (note: the link is in Chinese), the joint venture of Hyundai in China. As claimed in the its ads, the chief of the company promised not to reduce the sales price of its vehicle in the coming 2 years, which soon be overthrown by its price adjustment within 120 days after that with the pressure from market competition. On that, we saw the consumer filing a group lawsuit against its break-in of promise. Despite as investigated by the company that, the words of the chief is not quit the same as claimed in the media report, and Hyundai was therefore judged of no liability, the Korean brand faced a devaluing of social reputation in China. In our opinions, the losses of intangible asset of the car maker are much more than the claimed compensation. And that shall mainly lie with the over promise by the company.

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What Financial Support and Tax Preferential Policies can be enjoyed for Patent Application?

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Nowadays, the State and local governments have issued serious financial support and tax preferential policies to encourage innovation of patents.

I. Financial Support Policies

Firstly, from the perspective of the State, the Chinese applicants applying to the State Intellectual Property Office (SIPO) for patents can enjoy the policy of reduction or postponement of the payment of the patent fee. The relevant expenses include the application fee (excluding printing expense and surcharge), substantive examination fee of the invention and 3 years’ annual fees from the year when the patent right is granted. On the other hand, for the Chinese applicants applying for patents overseas, they can obtain the financial support to the extent of certain amount, which includes the official fee of application for foreign patent, retrieval expense paid to patent retrieval organization, service expenses paid to the agency and so forth.

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Guiding Case by China Supreme Court: JV’s Minority Shareholders May Undertake All Company’s Debt

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By You Yunting

By judicial practices in China, in case the Sino-foreign invested company, which however is operated under the management of Chinese shareholder, is trapped in the insolvency, the foreign investors could be judged to take all the debt of the company, not subject to the total amount of its investment, when Chinese partner chooses to disappear or refuse to clear the debt. And in recent, as per the latest 3rd guiding cases by China Supreme People’s Court, by a decision indicated in it, the non controlling shareholder shall be liable to the joint liability to the non-settled debt of the company, that obviously aggravates the burden of the company shareholder. Then, what is the fair way to avoid such risks? We put forward our answer to it in today’s post.

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The Validity of Foreign Investor’s Share Holding In the Name of Chinese Dormant Citizens

By Luo Yanjie

As reported, 24quan.com, a Chinese daily-deal website, is undergoing a contentious conflict (note: the link is in Chinese) between its operation team and investors. Berjaya Corporation Bhd (Berjaya), the biggest investor of the website and registered in Malaysia, accused the operation team of withholding  RMB 2 million yuan with no authorization, yet the team responded by saying that the investor was unilaterally deducing the share held by the team from 40% to 3%. Currently, the website and the company is under the control of the team, who has dismissed the staffs appointed by the investor, and in retaliation, the investor announce that their funding cease.

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Proview Was Charged by Its Lawyer for Fee Payment Failure

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By You Yunting

According to a news report (note: the link is in Chinese), the iPad battle in China has ended in reconciliation with Apple’s payment of 60 million dollars to Proview by the agreement. However it seems that Proview will soon be trapped in another dispute afterwards and related to the battle, its agents of Grandall Law Firm (the “Grandall”) filed a lawsuit to the local court on the 23rd of July, demanding the professional fee of 2.4 million dollars.

As introduced by the attorneys from Grandall, their entrustment by Shenzhen Proview was on a contingent fee, by which it could gain 4% of the total conciliation expenses or the compensation (namely 2.4 million dollars by the final settlement agreement). Also all the litigation fee or expenditures paid for custom record in the trademark battle was firstly paid by Grandall. However, after the end of the dispute, Proview refused to cash the fees into Grandall’s account as agreed and has even collected the money paid by Apple at the end of June.

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