Is It Invalid to Establish Joint Ventures between Foreign Companies and Chinese Citizens in China?

(By You Yunting) Today we would like to introduce a typical case concerning the situation where a Chinese citizen tries to form a joint venture with a foreign individual. Pursuant to Chinese laws and regulations, foreign companies, enterprises, other commercial organizations and individuals (the “foreign investors”) can only form joint ventures with Chinese companies, enterprises and other commercial organizations, rather than with Chinese citizens. For these reasons, the court determined that the contract agreed upon by the Chinese citizens and foreign investors was invalid and each party should undertake the expenses and costs of establishment individually.


Court Decision Made Compensation to a Foreign Buyer against Products Infringement of the Manufacturer in China

hero pens

(By Luo Yanjie) In our today’s post, when a foreign company ordered a number of Hero pens from a Chinese company, the Chinese company used the fake products to replace the authentic ones and then the fake products were found to be confiscated and punished by the Customs. Finally, the foreign company brought the Chinese company into the court and won the lawsuit, claiming that the Chinese company disobeyed the contract.

Hero pens are famous and have received well reputation for its good quality in the industry of pens in China.


An Unregistered Trademark can be Licensed to Another Party for a Fee


Abstract: An unregistered trademark may lawfully be licensed to another person. If any third party had registered the trademark, the licensor’s actions will constitute a breach of license contract. Except where the licensor has committed obvious fraud, the validity and effectiveness of such a license contract upon unregistered trademarks cannot be denied.

(By Luo Yanjie) Generally, a trademark in a trademark license should be registered before it is licensed to any other party. However, in today’s post, we will discuss a particular case there the trademark licensed was unregistered at the time the license was concluded. After being heard by two courts and the Supreme Court, such a trademark license contract was ruled to be valid. The following is our analysis.


What Information Could Be Considered as Trade Secret in Tech Product Transaction in China?


(By Albert Chen) The tech product transaction involves the information of technology and business. Among such information, to judge which part could be considered as trademark secret, it shall be based upon Article 10 of the Anti Unfair Competition Law, which regulates that to determine the trade secret, the court shall evaluate “whether it is known to the public”, “benefiting”, “practicability” and “confidentiality”.

Case Summary

In 1998, Shanghai Zhenxing Aluminum Co., Ltd. (the “Zhengxing Company”) developed a manufacturing technology, which the company used to produce articles. This technology created by Zhenxing set the standard for the production of the article. Shanghai Huikai Aluminum Co., Ltd. (the “Huikai Company”) was founded on September 10th 2003, and afterwards carried out the business in the same product manufacturing as Zhenxing. As investigated, among the 70 clients of Huikai, 68 once transacted with Zhenxing. For these clients, most products they purchased from Huikaiu were almost the same as those they bought from Zhenxing. Furthermore, Qin and Pan, who are now working in Huikai, are former employees of Zhenxing. During their employment with Zhenxing, the company signed confidential article in the labor contract and also an independent confidential agreement.


A Dispute and Settlement involving Technology Investments

Comments on a Shareholder’s Qualification Case Arising out of Technology Investments

(Steven Wang) Recently, the author has represented parties in a shareholder’s lawsuit, with the dispute centering on IPR investment. The court has already heard the case. The property value involved in the lawsuit totaled as high as RMB 300 million Yuan, and the laws applied in its hearing involved IPR law, contract law, and corporate law. The focus of the dispute referred to the patent, exclusive technology, contribution, revocation of shareholder qualification and the application of law when a number of conflicts arise among these different areas of the law.  These conflicts have caused a lot of discussion regarding these legal conflicts, and several conclusions have been reached regarding issues presented in the case.


What do the First Valuation Adjustment Mechanism (VAM) Lawsuits in China Tell Us?

Analysis on the HF Fund’s lawsuits against Gansu Shiheng and Hong Kong Dia

(By Bai Lituan & Zhang Qianlin) In December 2012, HF Fund Management Co., Ltd. (the “HFF”) filed a lawsuit against Gansu Shiheng Nonferrous Metals Co., Ltd (the “GSNM”), and after being heard by the Supreme People’s Court, the Court stated that the valuation adjustment Mechanism (VAM) would be considered partially valid. This particular case has been seen ups and downs, and now that it has finally been heard, we would like to share our opinions on it within a framework of legal analysis, and hope that it will help clarify any issues presented in the case and thus help to reduce the risks investors typically face.


Why China Withdrew its Reservation to Article 11 of the UN CISG

(By Luo Yanjie) Recently, the Chinese government sent an official notice to the General Secretary of the UN to withdraw its statement made to the United Nations Convention on Contracts for the International Sales of Goods (the “Convention”) that “China would not be bound by Article 11 and the relevant regulations of Article 11.” (As provided in Article 11 of the Convention, “A contract of sale need not be concluded in or evidenced by writing and is not subject to any other requirement as to form. It may be proved by any means, including witnesses.”) Presently, the withdrawal has already come into effect. Therefore, the articles in the Convention and the Contract Law of China have become more integrated. Today, we are going to share with our readers our opinions on this issue.


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

(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.


Is It Illegal to Unlock or Jailbreak iPhone and iPad in China?

By You Yunting

A friend asked me a question: why by the latest USA legislature, to unlock iPhone shall be against the law, while it is permitted by law to do so for iPad? This question is complicated on essence, and it actually involves two restrictions designed by Apple on its devices.

On the initial launch of iPhone, the exclusive operating partner of Apple for its new device in USA was AT&T, and therefore it built the capability into the phone so as to ensure only the AT&T would be service network. Later on, as detained a slow internet speed, such a SIM lock was soon been unlocked, and from then on other operator could serve the users with iPhone.


Analysis on Common Legal Risk of Chinese Company’s Ads

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.


Who Shall Pay for E-commerce’s Wrong Pricing?

By Luo Yanjie

With the rising of E-commerce in the retail industry, the protection on the consumers’ interests thereby emerges has been ever attended to. This article will discuss the problem of “wrong price”. Let’s take a look at the following example:

In August of last year, we saw a panic shopping (note: the link is in Chinese) on the books labeled RMB 50 which shall be RMB 1800 in origin in the book promotion on (NYSE: Dang), Soon after, however, refused to deliver the books arguing the “wrong price” and thereafter cancelled orders. That triggered the right protection by thousands of consumers, and lawsuits filed in succession. Yet the court rejected part of the claims, and held that the contract has ever been concluded on the order cancellation, and therefore the website shall not be responsible for it. Now we would like to share the opinions with readers as follows:


Full Text of Judicial Interpretation on Anti-Monopoly Law of China Supreme Court

The Supreme People’s Court issued Regulation on Several Issues Concerning the Application of Law in the Trial of Civil Cases arising from Monopolistic Conducts yesterday and the new judicial interpretation of Anti-Monopoly Law will take effect on 1st June, 2012. We have translated the Chinese version into English as follows:

Regulation on Several Issues Concerning the Application of Law in the Trial of Civil Cases arising from Monopolistic Conducts

To ensure the proper judgment of civil disputes arising from the monopoly, prevent monopolistic conducts, protecting and promoting fair competition in the market, safeguarding the interests of consumers and social public interests, this regulation is enacted according to the relevant regulations such as the Anti-monopoly Law of the People’s Republic of China, the General Principle of the Civil Law of the People’s Republic of China, the Law of the People’s Republic of China on Tort Liability, the Contract Law of the People’s Republic of China and the Civil Procedural Law of the Peoples Republic of China.