When Could “Fair Use” Other’s Works in China?

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By Albert Chen

Techdirt recently reported the US court has adopted scanning within the scope of fair use, and by China Copyright Law, the library could also make a special copy or digitalize its collection, as well as the communication. Today, we would introduce the statutory license in Chinese legislature.

As known to us, the using of others work demands the right owner’s consent and the payment of the royalty (unless no payment as approved by the right owner). But as aiming to promote the cultural development, the emphasis on the exclusive right protection could only damage the spread-out of the culture and information. Thus, in addition to the protection, we also see Copyright Law regulates the “fair use” of the works, under which the using by a third party shall not be approved by the right owner or to pay the royalty.

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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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How to Decide Infringement When Conflict between Trademark and Trade Name in China?

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By Luo Yanjie

As two different concepts in law, trademark plays the role as to distinguish the origin of the product or services, and the trade name is the literal expression to indicate different companies. But in the daily operation, we may see the confusion between these two concepts, and the trade name may also be used as kind of mark in business. Naturally, we see many companies choose to register their name as the trademark. Despite the similar function of them, the trademark and trade name are verified by different administrations (the mark is subject to the administration of trademark office, and the trade name is ruled by local administration of industry and commerce), but that also triggers the conflict between two objects. In today’s post, we would like to analyze the conflict occurred when trade name registered prior to the trademark by different subjects.

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Why China Is Not Among Top 20 Countries of Pirated Music Download?

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By You Yunting

Musicmetric, a website in USA, published the top 20 countries of pirated music download, yet to most ones’ astonishment, China is not found on the tally, who is commonly accused of granting least protection on IPR. Then what contributes to the surprising result? In today’s post, you could find our answer to it.

I. Most online music services are using the copyrighted ones

Unlike chargeable music download in iTunes or through P2P in USA, most users in China tend to get their free music by search engine, or download or listen to them by music software. The most popular music service now in China is from Baidu (NASDAQ: BIDU) and Tencent (SEHK: 700), whose music library is mostly licensed by the main recorders around the world.

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How to Pay the Non-compete Compensation in China?

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By Luo Yanjie

Restriction of business strife is the restriction clauses agreed in labor contract, IPR contract or confidential agreement between the employer and the employee with confidentiality obligation, which restricts the latter being engaged in the units manufacturing similar products, operating the similar business or competing with the original employer, neither shall the bond employee manufacture the products or operate the business competing with the employer.

Considering the professional division of social labor, the restriction on the future engagement of the employee in the familiar industry will of no question badly damage their interests. Therefore, we see the provision in the Labor Contract Law that the original employer shall pay employee the compensation for the non-compete during the agreed period. Yet what shall be more attentive to the employer is the payment of the compensation shall follow the legal regulation, otherwise the agreement on the non-compete shall be invalid. In this essay, you will see our opinions on it:

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Chinese Latest Laws and Regulations of September 2012, I

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I. The General Office of the State Council Issued Several Opinions on Promoting Steady Growth of Foreign Trade.

The General Office of the State Council issued the Several Opinions on Promotion of Steady Growth of Foreign Trade of the General of Office of the State Council (the “Several Opinions”) on 18, September, 2012, which provide 16 opinions to promote steady growth of foreign trade in 2012, including doing well with export tax refund and financial service, developing trade facilitation, improving trade environment, optimizing the trade structure and other areas. And the policies of export tax refund and export credit insurance are the hot issues attracting the attentions. The experts said the following detail implementation measures and provisions would be promulgated soon for the implementation of the Several Opinions.

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Analysis on Application of Red Flag Rule in China

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By Luo Yanjie

Recently, Shanghai No.2 Intermediate People’s Court issued “Investigation Report about Infringement of Right of Information Network Dissemination in the Area” which introduces the application of “red flag” principle in China. Today we would like to share the topic with readers as follows:

I. The basic concept of “red flag” principle

“Red flag” principle is an exception of “safe harbor” principle. It means if the fact of infringement obviously like a “red flag” flying, network service providers cannot pretend not to see, or to shirk responsibility as not knowing. In this premise, even if the right people have issued a notice, the court should also identify the Internet service provider is aware of third party’s infringement and shall bear tort liability.

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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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Encyclopedia vs Apple: Why AppStore Could Not Ship into Safe Harbor?

By You Yunting

As reported by media, Beijing No.2 Intermediate People’s Court made the first instance decision for infringement claims made by Encyclopedia of China Publishing House (Encyclopedia) agains Apple’s AppStore. With the decision, Apple shall compensate Encyclopedia RMB 520, 000 yuan and immediately cease the infringement. In current, no intention to appeal has been expressed by Apple.

Case: Encyclopedia discovered Apple’s user could purchase and download apps of its copyrighted works, which could be read in iPhone and iPad. With the anger of the infringement, Encyclopedia filed a lawsuit against Apple, who counter-stroke that the actuall operator of AppStore is a company registered in Luxembourg, not Apple. And Apple provided no services in the process of software uploading, and therefore Apple shall be with no engagement in the dispute.

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Han Han Vs Baidu: Safe Harbor Principle in China

By Albert Chen

Han Han, Baidu, Baidu Wenku, apology, Safe Harbor Principle, information storage space, ISP, Internet Service Provider, prior examination, delete infringing contents, delete classification, quick channel, DNA comparison technology, prevent and stop the infringement, Baidu claim, more rigorous due diligence duty, bona fide and no misfeasance,

By news reports, Beijing Haidian People’s Court judged the copyright infringements filed by Han Han and other Chinese writers against Baidu (NASDAQ: BIDU) Wenku, an online document sharing port, in recent. Among all the 14 lawsuits, 7 are supported the claims of compensation as $ 400 for each work involved, yet refuse the claims of shut-down the port and apology. As to the rest 7 lawsuits, Baidu gain an overwhelming victory.

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Risk and Its Prevention for Dormant Investment in China

By Luo Yanjie

Recently, Shanghai Huangpu People’s Court issued white paper about cases involved Non-State-Invested Units. The white paper disclosed that the dormant investment is ubiquitous in Non-State-Invested Units during the process of their establishment, and that not only makes investors’ rights and interests unguaranteed, but also cause a serious threat to the commercial good-faith. As introduced, some actual investor would not like to establish the company in their own names considering various factors, but registered the company in others’ name. It results lots of disputes. Now we would like to discuss the risk of “dormant investment” and introduce how to reduce the risk as follows:

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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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