Category Archives: Operation

How to Protect Your Works When AI Lowers the Barrier to Film Creation to Zero

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(By You Yunting) The recent AI-generated Chinese short drama Huo Qubing has gone viral. Reportedly, the computing production cost was a mere 3,000RMB, yet it racked up massive views. A friend asked me: “Can I charge for this video since it’s entirely generated by AI?” My response: “Certainly, it can be offered for a fee. However, under the Copyright Law, works generated entirely by AI are generally ineligible for copyright protection. If someone else uses this video to charge fees, you may have no legal recourse to stop them.” Therefore, to secure enforceable rights, creators must proactively embed protectable intellectual property (IP) or personality rights into their video as an “IP moat”.

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Does Sharing a ChatGPT Conversation Link Mean Waiving Your Privacy?

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Does Sharing a ChatGPT Conversation Link Mean Waiving Your Privacy?

(By Wang Ting) In late July 2025, the “Share” feature of OpenAI’s ChatGPT triggered a global privacy controversy. Conversation links generated by users were indexed by search engines such as Google, leading to the large-scale exposure of sensitive information, including medical records and trade secrets. Although ChatGPT promptly removed the option that allowed shared conversations to be publicly searchable, debate has continued over whether clicking “Share” should be deemed a voluntary waiver of privacy.

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Should Global Steam in China Be Scrutinized Too Since Valve Loot Boxes Was Sued as Gambling in the U.S.?

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(By You Yunting) In February 2026, the New York State Attorney General sued the well-known game developer Valve Corporation (“Valve”) for illegally promoting gambling through in-game “Loot Box” feature in its video games. In fact, several months before the filing, Valve—likely anticipating regulatory pressure—actively lowered the drop rates for certain rare items in Counter-Strike 2, triggering a flash crash in the global virtual item market and causing heavy losses for speculators. The lawsuit far across the Pacific Ocean has also struck a nerve with China’s gaming community since a large number of Chinese players remain active on Global Steam in China which is on the edge of regulation. Because of the gambling allegations surrounding Valve’s own games, this gray zone now faces unprecedented regulatory risks. We will analyze these legal issues under both U.S. and Chinese legal frameworks.

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How Will NVIDIA’s Purchase of Pirated Content to Train AI Be Characterized Under Chinese Law?

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(By You Yunting) Recently, a lawsuit filed by U.S. copyright holders against NVIDIA for allegedly using pirated materials to train AI models has attracted significant public attention. According to the complaint, in order to quickly obtain more than 500 terabytes of data, NVIDIA proactively contacted the pirate website Anna’s Archive and paid hundreds of thousands of U.S. dollars to download a large volume of pirated content, including copyrighted books and articles.

Anna’s Archive is one of “shadow libraries” known for their decentralized and anonymous nature, most of which typically provide access to literature in a way that infringes upon its copyright. If the plaintiffs’ allegations are true, it will be a serious blemish on the reputation of NVIDIA, the world’s most valuable company, to have paid a pirate website for content and then been sued by copyright holders. However, the unauthorized use of training data can be considered the “original sin” of nearly all general AI companies. In both China and the United States—the two global leaders in AI technology, numerous lawsuits concerning AI training data have already emerged. We will discuss whether, under Chinese law, NVIDIA’s alleged conduct will be considered breach of law.

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Advantages and Disadvantages of Incentive Shares Held Directly and Indirectly

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(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.

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Has Luckin Inc. Violated Chinese Criminal Law?

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(By Zhao Sen)There is a widespread concern about the news that Luckin Coffee, a famous Chinese company listed on the US stock market underwent an over 80% slump in share price because of the allegation of financial information falsification. According to documents provided by Luckin Coffee to SEC, Tencent Securities reported, CEO of Luckin Coffee and some of employees who reported to him did improper activities, including false deals since the second quarter of 2019. According to the US Securities Law 1934 and the Sarbanes-Oxley Act, in addition to a large sum of fines, a person who has committed securities related fraud may face an imprisonment of up to 25 years. Is falsification by Luckin Coffee a crime in Chinese law? This is a good question.

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New Changes in Export Control Rules of China

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（By Wang Haichuan）The new Export Control Law of China (the “Draft”) was published for public comments on December 28, 2019. This is the first law on export control in China. Export control means measures taken to prohibit or restrict the export of certain items such as nuclear, biological products or weapons in order to fulfill international obligations such as non-proliferation obligation, national security and development interests, etc. Currently, there are administrative regulations of export control on chemicals, general nuclear items, nuclear items used for multi-purpose, missiles, military products, biological products (the “Current Regulations”). Compared with the Current Regulations, the Draft makes no change in the current regulatory mechanism and allocation of responsibility and duties, appropriately improves the system and measures and fills blanks in laws. This article will focus on the changes in export control and their possible impact on companies doing business in China.

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The Effect of GDPR on Chinese Businesses

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(By Lisa Li)The EU General Data Protection Regulation (“GDPR”) affects a broad range of people outside the EU. Certain Chinese businesses are very likely to be bound by GDPR. This article briefly discusses how GDPR affects Chinese businesses and what Chinese businesses should do to comply with GDPR.

1.The Application of GDPR to Chinese Businesses

This is a matter of applicability. GDPR applies to the following people.

(a) People established in the EU who control or process data and process personal data while doing business regardless of where these data are processed.

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Key Points on Early Dissolution and Liquidation of WFOEs

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(By Lisa Li)In accordance with the PRC Company Law (hereinafter referred to as the “Company Law”), the Regulations of PRC on Administration of Company Registration (hereinafter referred to as “Company Registration Administration Regulations”) as well as the Law of PRC on Foreign Invested Enterprises (hereinafter referred to as “Foreign Invested Enterprises Law”) etc and based on the author’s prior experience in handling cases of early dissolution and liquidation of companies, we summarized key points and practical experience regarding the early dissolution and liquidation process of wholly foreign invested companies, including foreign invested enterprises owned by one sole foreign investor and those jointly owned by foreign investors (hereinafter collectively referred to as the “WFOE”) prior to expiration of the registered operation term.

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A Brief Overview on the Foreigner’s Work Permit in China

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(By Lisa Li) As of April 2017, the Circular on Fully Implementing the Work Permit System for Foreigners to Work in China jointly issued by the State Administration of Foreign Expert Affairs, the Ministry of Human Resources and Social Security, the Ministry of Foreign Affairs and the Ministry of Public Security (the “Circular”) has been implemented in China to integrate previous foreigner’s employment permit and foreign expert work permit as the foreigner’s work permit, aiming to simplify the foreigner’s work permit application procedures and to facilitate the introduction of foreign talents. In accordance with the relevant laws, regulations and policies regarding the foreigner’s work permit and from our recent experience, we summarized the following main points and some best practices regarding the foreigner’s work permit in order to provide a brief overview on the foreigner’s work permit system in China.

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Does MOC’s Prohibition on Item Sweepstakes Decrease the Profits for Game Companies in China?

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(By You Yunting) Recently, the Ministry of Culture has issued the Notice of Ministry of Culture on Regulating Online Game Operation and Strengthening Interim and Ex Post Supervision (Referred to as “Notice”), which will be put into effect as of May, 2017. The Notice contains lots of specific policies, including the restrictive policy on providing virtual props and value-added services of an online game by sweepstakes (Referred to as “Item Sweepstakes”), which are the significant sources of profits for game companies. In this article, we’ll discuss whether this policy would affect the incomes of these game companies or not.

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How to Determine Joint Liabilities of shareholder for IPR Infringement in China?

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(By Wang Ting and You Yunting)The limited liability of the shareholders means that the liability of the shareholder to the company are limited to its capital contribution, and the independent personality of corporation means that the Company shall fulfill its external liabilities by all of its properties. Therefore, the shareholders usually do not take personal responsibility in IPR infringement cases even when the long-term business of the company is infringement of the intellectual property rights (“IPR”) in most cases. However, today we will introduce a recent case, in which the shareholders were determined to take such joint liabilities for the IPR infringements.

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In What Ways Can Startups Obtain Competitive Advantages from Intellectual Property?

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(By You Yunting) Large number of business opportunities have arisen from the rapid development of wireless and mobile technologies. As a result, new startups appear one after another, scrambling for these opportunities. However, the faster a market grows, the fiercer competition it involves. The process of Entrepreneurship is a race with other outstanding entrepreneurs, in which they use reasonable efforts to gain competitive advantages and win their rivals. If properly used, intellectual property rights can be very helpful in creating advantages. Here, let’s talk about what advantages can startups create by using intellectual property.

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What Should Startup Entrepreneurs Know to Negotiate with Outside Investors and Handle Equity issues?

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(By You Yunting) The other day I had a conversation with a lawyer of a foreign law firm. That lawyer, who specializes in handling legal affairs of VIE financing on behalf of the investment side, told me that many startups would sign investment agreements proposed by investors directly without any argument. To be honest, I can hardly understand nor agree with this kind of practice. I think investors may actually feel ambivalence in face of such situation, too. On one hand, they can get more control over the invested business as well as other extra benefits. With probably unfair terms being included in an investment agreement, investors may be happy to have a favorable position in the relationships with startups. On the other hand, the investors are expecting to gain lucrative profits, so they may doubt whether the startups will be able to win fierce competitions of the market as they behaved so obediently when making investment agreements. This article talks about common points of financing negotiation between startups and investors as well as startups’ internal equity allocation issues.

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Directors’ Liability in China

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(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.

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