China Laws and Regulations Update in July 2023

1. Provisional Rules on Generative AI Services

Promulgated by Cyberspace Administration of China, National Development and Reform

Commission of the People’s Republic of China, etc.

Promulgation date: 13 July 2023

Implementation date: 15 August 2023

Document number: CAC, NDRC, MOE, MOST, MOIIT, MOPS, NRTA Order No.15

Six government departments, including Cyberspace Administration of China recently co-issued the Temporary Rules on Generative AI Services (“Rules”) which will be brought into action from August 15th.


China Laws and Regulations Update in June 2023

1. Obstacle Free Environment Law

Promulgated by National People’s Congress

Promulgation date: 29 June 2023

Implementation date: 1 September 2023

Document number: Chinese President Order No.6

The Obstacle Free Environment Law consists of eight chapters and 72 articles, dealing with facility construction, information exchange, social services, etc. under major obstacle free environment policies in a comprehensive and organized way. This law explicitly states that obstacle-free environment is mainly for disabled and old people. The policies, standards, requirements under this law are mainly intended to meet the needs and expectations of disabled and old people, reflect its special characteristics, deal with real issues and make specific provisions more suitable and effective. It also stresses that obstacle-free environment is basic, generally accessible and beneficial to all, stating that people but disabled and old ones who need no obstacle can use the obstacle-free environment to make the obstacle environment benefit all in our society. (Source: NPC website)


China Laws and Regulations Update in May 2023

1. Interpretation of Several Issues Concerning Law Application in Criminal Cases Arising from Adolescent Rape or Obscenity

Promulgated by Supreme People’s Court, Supreme People’s Procuratorate, Ministry of Public Security and Ministry of Justice

Promulgation date: 25 May 2023

Implementation date: 1 June 2023

Document number: SAMR Order 72

The Interpretation consists of sixteen articles in six parts.

First, circumstances where child rapists should be sentenced to heavier penalties. In Article 1 of the Interpretation, there are six circumstances where “heavier penalties at a higher level” should be given to child rapists in criminal law, including rape by violence, force, etc., or in a house or dormitory. It also sets out that adults who committed adolescent rape or obscenity and pleaded guilt should be sentenced to lenient penalties with severity.


Are Pig Breeding Businesses under Non-poaching Pact Really Reckless to Face the Risk of Ten Billion Penalties for Monopolies?

(By You Yunting) According to a media report[1], Muyuan Group, a big pig breeding business announced a non-poaching pact among Muyuan, Wens, Twins, Chai Tai and other big businesses, advocating no poaching, less competition and sound development in the industry, stating any violation will result in retaliation. I couldn’t help feeling surprised for the pact probably violating the Anti-monopoly Law and resulting in a penalty of hundreds of million to tens of billion RMB.

Non-poaching pact

In order to reduce internal competitions and develop in sound environments, we advocate:


China Laws and Regulations Update in April 2023

1. Internet Advertisement Regulations

Promulgated by State Administration for Market Regulation

Promulgation date: 20 March 2023

Implementation date: 1 May 2023

Document number: SAMR Order 72

The Rules further clarifies responsibilities of advertisement owners, internet advertisement managers and publishers and internet information service providers; actively addresses social concerns, includes provisions relating to pop-up ads, splash ads and ads published by smart device; further specifies advertisement regulatory rules in key areas, including “advertorials”, internet advertisements containing links, cost-per-click, algorithm recommended or live stream advertisements and ads indirectly published subject to approval; adds provisions relating to jurisdictions over advertising sponsors. It establishes a system that supports regulation and law administration in internet advertising and energizes the orderly growth of the internet advertising industry. (Source: SAMR website)


What Problems Does “AI Sun Yanzi” Have in Intellectual Property and Law?

(By You Yunting) Various AI generated songs by “AI Sun Yanzi” hit the screen the other day. Related intellectual property issues became hot topics on media. I would like to discuss legal issues relating to songs generated from real person’s voice extracted by AI engines.

In brief, based on intellectual property law, it is not very likely that songs generated by AI trained with real person’s voice and used for non-commercial purpose infringe other person’s rights, but before they are made available online, licenses for copyright, backing music and elements used in videos should be obtained. In Civil Code, however, songs generated by AI trained with real person’s voice must be subject to the person’s authorization or otherwise, could infringe personal rights. Let’s look at the “AI Sun Yanzi” case.


Advantages and Disadvantages of Incentive Shares Held Directly and Indirectly

(By Bai Lituan) Over recent years increasingly more businesses have used incentive shares to retain key employees. They may hold shares in the subject company directly (hereinafter referred to as “holding shares directly”) or indirectly through a limited partnership i.e., a platform for employees to hold shares (hereinafter referred to as “holding shares indirectly”). What are the advantages and disadvantages of holding shares directly or indirectly? This article deals with this issue in the areas of business control and tax burden.


China Laws and Regulations Update in March 2023

1. Amendments to Legislative Law of the People’s Republic of China

Promulgated by National People’s Congress

Promulgation date: 14 March 2023

Implementation date: 15 March 2023

Document number: NPC’s decision to amend the Legislative Law

According to the decision, the main content of the amendment is 1. improvement of legislative guidelines and principles, 2. administration of the Constitution and its supervision and clarification of Constitution compliance review requirements for the work on legislative and recordation review; 3. improvement of the mechanism for connecting and unifying legislative and reform decisions and the decision making rules for grant of powers; 4. implementation and demonstration of the whole-process people’s democracy philosophy; 5. scientific, democratic and legal legislation requirements; 6. the legal status of supervision laws and improvement of entities responsible for formulating rules of departments under the State Council; 7. improvement of legislative powers of a city divided into districts and clarification of rules and the work mechanism on coordination in local law making between districts; 8. improvement of recordation review rules; and 9. improvement of the work on legal advocacy. (Source: NPC website)


Why Zheng Yuanjie Finds it Difficult to Seek Protection of Intellectual Property Rights?

(By You Yunting) Zheng Yuanjie, a famous fairy tale writer announced on his personal social account that he would no longer seek trademark protection or publish any written work. By his own account, he had sought trademark protection for 673 infringed trademarks unsuccessfully. After reading part of the content of his Weibo, I feel he may have some misunderstanding of intellectual property protection principles. Actually, he was given a lot of legal protection, but intellectual property protection is different considering its privity. What he is angry about may be unnecessary.


China Laws and Regulations Update in February 2023

1. Instructions on Several Issues Connected with Enforcement Supervision Application Cases

Promulgated by Supreme People’s Court

Promulgation date: 31 January 2023

Document number: FF[2023]4

The Instructions regulates and gives guidance for common issues connected with enforcement supervision application cases. It regulates the filing and processing of these cases and gives guidance and includes requirements for appropriate ways in which parties involved can apply for enforcement supervision to the enforcement court and the court at the next level, eliminates ambiguities in existing enforcement rules by explicitly stating that in cases that should be resolved by arbitration or suing for substantive issues, parties involved and interested persons should follow the procedures of seeking remedies for substantive issues and work to enforce law and protect legal rights of parties involved more efficiently by regulating multiple and repeated enforcement supervision applications. It also sets out the period of application for enforcement supervision, explicitly stating that if the applicant refuses to accept the enforcement reexamination decision or applies to the court for enforcement supervision after expiration of the period for filing an opposition to or a request for reexamining the enforcement, the applicant should do so within the prescribed period of time. (Source: SPC website)


Are AI Generated Works Copyrightable? I and ChatGPT Give Different Answers

(By You Yunting) With much attention drawn to ChatGPT, people are interested in discussing whether AI generated works are copyrightable. When I am asked this kind of question, my answer is basically no. However, when I asked ChatGPT, the most well-known AI program, it answered yes. Open AI, ChatGPT developer claimed that it was entitled to benefits from these works. I would like to discuss this issue with you.

Ask Is AI generated content copyrightable?
ChatGPT Answer Yes, it is. In copyright law, original works created by individuals and organizations, including natural people and machines are copyrightable. All kinds of AI generated content that is protectable under copyright law, including words, pictures, audio recordings, videos and other forms of content are protected by copyright law.
Ask Can I get a share of profits from sale of AI (or chatgpt) generated works that are protected by copyright law?
ChatGPT Answer Sale or use of a copyright law protected AI generated work (such as a ChatGPT generated text) for other commercial purpose should be subject to license or authorization granted by the copyright owner, i.e. original author or licensor. Sale or use of the content of ChatGPT developed by a company or an individual with its copyright owned by the developer for other commercial purpose should be subject to license or authorization granted by the company or individual. In this case, ChatGPT developer or owner could get a share of the profits in an proportion agreed by the parties or explicitly set out in the authorization or license agreement.

First, my argument is that no person should be granted copyright in or paid a license fee for AI generated works because they are not copyrightable in nature. Users can claim their rights under the Anti-Unfair Competition Law in case of AI generated work infringement.


Should Shareholders Be Responsible for Illegal Registered Capital Decrease without Notice to Creditors?

(By Bai Lituan) Registered capital is important part of a company’s assets and a guarantee on civil liabilities owed to people outside the company. Inappropriate registered capital reduction will directly affect a company’s ability to pay its debts and pose a threat to creditors’ interests. Therefore, the creditor notification process is a legal arrangement for maintaining a balance between legal person’s and personal interests and one of the prerequisites for exempting a shareholder reducing their capital contribution from liabilities to the extent of the registered capital decrease.


How to Look at “Hideki Yukawa” (Physicist and Nobel Prize Winner) Trademarks on Toilet Covers from Chinese Law Perspective? Comments on Legality of “Hideki Yukawa” Trademarks

(By Chen Danfeng)

On dang dang, JD and other platforms there are descriptions of the book “The Traveller” published by Shanghai Translation Publishing House and its author professor Hideki Yukawa, famous physicist and the first Japanese winner of the Nobel prize.

Translatation of the information of the Original Cover:

About the Author

Hideki Yukawa (1907-1981)

He is famous Japanese physicist who was born in 1907 and studied physics at the science school of Kyoto Imperial University (now named Kyoto University). He was awarded PHD of Science by Osaka Imperial University (now named Osaka University) in 1938, started to work as professor of Kyoto Imperial University in 1939 and was given the award of the Japan Academy in the following year. He served concurrently as professor of Tokyo Imperial University (now named Tokyo University) and was awarded the Order of Culture in the following year. He went to the US as guest professor of Princeton Institute for Advanced Study in 1948 and became guest professor and professor of Columbia University in July, 1949. He was awarded the Nobel Physics Prize for creation of the meson theory and became the first Japanese winner of the Nobel prize. He died of illness in Kyoto in 1981.


China Laws and Regulations Update in January 2023

1. Instructions on Improving Legal Protection of Intellectual Property Rights Relating to Traditional Chinese Medicines

Promulgated by Supreme People’s Court

Promulgation date: 22 December 2022

Document number: FF[2022]34

The Instructions consists of three parts and sixteen articles which are specific provisions relating to the role of judicial authorities in legal protection of intellectual property rights in traditional Chinese medicines and improvement of the ability to administer law to give legal protection of traditional Chinese medicine patents, business marks, trade and state secrets, copyrights and related rights, raw materials of traditional Chinese medicines, various products made from traditional Chinese medicines, etc. and more vigorously maintain the fair competition order on the traditional Chinese medicine market, protect legal interests of traditional Chinese medicine innovators and fight infringement of intellectual property rights in traditional Chinese medicines. The Instructions focuses on main areas and key issues relating to traditional Chinese medicines and is a guide for legal professionals to deal with cases arising from intellectual property rights in traditional Chinese medicines. To improve the protection of traditional Chinese medicine patents, the Instructions suggests following the development law of traditional Chinese medicines, understanding characteristics of traditional Chinese medicine innovation and improving rules on legal protection of patents in traditional Chinese medicine areas. (Source: SPC website)


Legal Applications of “Clean Hands Rule” to Shareholder Brought Actions

(By Bai Lituan)

What is “clean hands rule”?

The “clean hands rule” that came from the UK equity law deprives a person acting in an improper way of the right to seek remedies for their acts. A person acting in a way that violates the principles of “justice, conscientiousness, fairness, etc.” in equity law cannot seek remedies in a court under an equity law jurisdiction. The clean hands rule is generally accepted in international business arbitration and reflected by provisions of the Chinese Civil Code. For example, Article 591 provides that if a party violates the contract, the other party should take appropriate action to prevent loss increase or otherwise could not claim for the loss increase. Based on this provision, if a party does nothing to prevent the increase in damages caused by the other party breaching the contract, the non-breaching party will have no right to win the action for the loss increase with its hands not clean. In addition, articles 680 and 1125 of Civil Code implicitly follow the clean hands rule which for example is applied in Chinese cases of buying false products deliberately where the buyer will not be awarded a refund for and damages of three times the price of false products they bought because their hands are not clean and their acts are not protectable by law.