The Chinese Automotive Industry is a Hotbed for Systematic Vertical Monopoly


Abstract: Current regulations, created by ministries and commissions such as the National Development and Reform Commission (“NDRC”), formulate that automobile distribution should follow the hierarchy from sole distributor to brand distributors. This is to prevent in-fighting within the individual brand, however, the results is a legal hotbed for monopoly practices to eliminate or restrict competition.

(By You Yunting) According to Media’s reports, China Automobile Dealers Association (the “CADA”) recently confirmed that the CADA is actively cooperating with the NDRC’s anti-monopoly investigation. But a senior executive of CADA explained that the investigation is aimed at whether automobile manufacturing enterprises fixed the minimum sale prices to distributors, not about the issue of high profit of imported automobiles into China. Setting a high price for import automobiles is a business decision, and does not constitute as a monopoly conduct.


A Trademark Infringement Dispute Caused by Recycled Budweiser Bottles

(By You Yunting)To save costs, Chinese beer manufacturers have been using recycled bottle to refill beer, and while most large-scale beer manufacturers will engrave their trademarks into their glass bottles, as well as recycle their own bottles. However, for small-scale beer manufacturers, such practices are impractical, and when small beer manufacturers use other larger manufacturer’s bottles with their trademarks, all the ingredients for trademark infringement are present. In today’s post, we will introduce to you two cases heard by two different courts concerning the same issue. 


China’s Latest Laws and Regulations in April 2013

I. The Supreme People’s Court and Local People’s Courts Successively Released White Books on Judicial Protection of Intellectual Property in 2012 and Model Cases.

On April 22, before World Intellectual Property Day, the Supreme People’s Court released the White Book on Judicial Protection of Intellectual Property By Chinese Courts in 2012 (the ”White Book”) and Model Cases embodying new Issues related to intellectual property protection.

Afterwards, the local people’s courts successively released local white books on local intellectual property protection and local model cases. On April 25, the Shanghai High People’s Court held a press conference and released the White Book of the Shanghai People’s Court on Intellectual Property Adjudication in 2012 and Ten Key Cases.


China’s Latest Laws and Regulations in March 2013

I. The Ministry of Commerce Issued Opinions Concerning the 2013 Guide on Attracting Foreign Investment Jobs 

On March 19, 2013, the Ministry of Commerce issued Opinions Concerning the 2013 Guide on Attracting Foreign Investment Work (“Opinions”), which emphasizes attracting foreign investment in the high value-added manufacturing industry, enhancing openness of the service industry to the outside world, and strengthening the important role of foreign investment in the introduction of technology and knowhow. The Opinions also promote advancement of foreign investment in eastern areas and bringing change to central western areas, as well as further improving the investment environment to protect the legal rights and interests of foreign invested enterprises and improving protection of intellectual property rights. The Ministry of Commerce concurrently released a report on the situation of foreign investment attraction in 2012.


Is It Illegal for Running Kindle Store with A License Borrowed from Business Cooperation?


(By You Yunting) On the morning of 13th December, to most one’s inexpectation, launched itsChinese Kindle Store. As indicated in the web page, it is run by, a licensed online publisher. That hints Kindle reader would come to China soon. And on the eager of Chinese users,a media report on 14th December (Note: the link is in Chinese) claimed Kindle Store has been halted by the General Administration of Press and Publication (the “GAPP”) for its violation against the law.
“Mr. Wang Qiang, the chief of digital publication section of the Science & Digital Publication Department of GAPP said in his interview that Amazon’s Kindle Store is violating the law for its license borrowed from business cooperation”. Also, it is mentioned in the report that GAPP has inquired and investigated and, but yet no result is available now. It is obvious that to Amazon’s plan, it would like to settle the license obstacle by using others’ license. In today’s post, we would like to discuss legal issues concerning licenses on electronic book business.
I. What license is necessary for e-book business?
The qualification of e-book business is mainly regulated in department rules of GAPP. Possibly due to a faster development in science and outdated regulations, the rules are actually could not been seen as an official legislature. It is called Opinions on Developing E-book Industry by GAPP. (Note: the link is in Chinese) By its Article 14, the e-book business of Amazon involves the edition, publish and sales of the e-publication, and thereby shall correspondently apply for three licenses.
Before the e-book, the online game industry is also facing the license problem to publishing the user terminal. At then, two ways are mainly adopted by game companies for the acquisition of business license: 1) the game companies with online publish license could directly submit the game to the GAPP for approval in his own name; 2) those companies with no such qualification, they would present the games to the electronic audio and video publishing house and afterwards to gain the e-publication license. But unlike the publish of online game, for which hundreds of games could be run by a single company and they are possible to gain the license through the publishing house, the release of the e-book may involves millions of works, once they are published through publishing house, all their gains may be inadequate for the payment to the publishing house.
II. Why Amazon did not apply for the license directly?
Could Amazon directly apply for the license for online publication? The answer is no. The shareholder of is Amazon USA, which makes it a foreign invested company. And by the Guideline of Foreign Invested Industry issued by the Ministry of Commerce, the field of video & audio production as well as the electronic publication and making is prohibited for foreign investment. For this reason, could no apply for the license solely by itself or in its name.
III. What problems for the cooperation between Amazon and
According to the page of Amazon’s e-book:
“The e-book store of Kindle is supported by, Xinchuwangzheng (jing) No.045”. The is a licensed corporate, and obviously by Amazon’s plan,it would like to settle the problem of license through the cooperation with a licensed company. But to my personal opinion, the current operation model is defected. To my experience, the domain name, server room, software for reading and payment for book purchase of Kindle e-book store are all supported by, and it has no connection with, so where could see the support from Therefore, it is not groundless in law that the official from the GAPP said Amazon’s operation under others’ license is violating the law.
Before closing, just half month ago, Xiaomi Inc., a private high tech company, released its set top box–Xiaomi Box, which was also halted by the administration. For that, the author has also written two articles to criticize the authority. For this time, the international giant Amazon couters with the same problem in the publish field. However, either Xiaomi or Kindle Store leads the development direction of science and advanced culture. Their experience in the government’s administration could also explain their “advance”, and the outdate of Chinese authority. And by te existing system in China, no judicial relief is available to Chinese companies when in such situation, and they could not file an administrative lawsuit. The main risk for it is the administration supervision could kill the update and upgrade of high-tech products, which would eventually make our science development legging behind the global trend.


MOC: Data of IP Infringement Law Enforcement of this 1st Quarter in China

By You Yunting

The Ministry of Commerce (MOC) reported on 12th the latest progress of the combat against the IPR infringement and knockoff production in 2012 in China. And today’s post is mainly about part of the data released on the conference.

By the preliminary statistics, during this January to April, the commerce law enforcement departments nationwide have investigated and punished those involved in 78,773 cases of intellectual property rights (IPR) infringement and counterfeits, with the money involved of 1, 810 million yuan, 44,371 settled , 1, 016 transferred to the judicial organ and 4,065 dens for counterfeit manufacture are smashed. Also during the period, the public security department investigated 7, 140 cases of infringement and counterfeits, with 9, 305 suspects were arrested and 161. 1 million yuan is involved. During January to April, the procuratorate approved the arrestment in 1, 743 infringement or counterfeits cases and on 3, 289 individuals, and prosecuted 2, 516 cases and 4, 870 individuals. And also in the same period, 2, 586 criminal cases relating to the IPR infringement and counterfeits are filed in the courts throughout the nation, 2, 021 were settled and 3, 170 individuals are covered by the effective sentences.


New Chinese Laws & Regulations of May, 2012 (2)

IV. The Ministry of Commerce ( the “MOC”) Issued the Provisions on Procedures for Commerce Administrative Penalty (the “Provisions”)

On 12th May, 2012, MOC issued the Provisions to regulate the detail procedures of administrative penalty implemented by commerce administration, particularly the hearing procedure. According to the Provisions, in the case a citizen is to be fined no more than RMB 50 or other organizations to be fined no more than RMB 1000, and there are conclusive facts of violation and legal basis, the enforcement officials can apply the summary procedure to make the decision of administration penalty on site. However, in the case a citizen is to be fined no less than RMB 5000 or a legal person or other organizations to be fined no less than RMB50, 000, and in the event that administrative penalty involves suspense, cancellation and revocation of license or qualification certificates, the party concerned shall be notified his right to apply for hearing and details when a Prior Notice on Commerce Administrative Penalty is issued to the him.


New Chinese Laws & Regulations of May, 2012 (1)

I.The Ministry of Commerce’s Approval of Google’s Acquisition of Motorola Mobility subject to Limitations

The Ministry of Commerce (the “MOC”) announced 2012 No. 5 Announcement on 19th May, 2012. Accordingly, it decides to approve Google’s acquisition of Motorola Mobility with limitations. The Announcement states that MOC has received Google’s declaration of concentration of business operator for Google’s acquisition of Motorola Mobility on 30th September, 2011. After MOC’s review and examination, it thought the declaration documents and materials are insufficient, and asked Google to supplement more. On 21st November, 2011, MOC confirmed the supplementary documents and materials are satisfied with requirements, and accepted such declaration to initiate preliminary review and examination. Through preliminary review and examination, MOC thought such concentration declared is likely to eliminate and restrict the competition effect on China’s market of mobile intelligent terminal operation system, as a result, the term of review and examination has been extended twice. On 15th May, 2012, Google submitted the final undertakings on resolution of competition issue. Ultimately, according to the Announcement, Google shall acquire Motorola Mobility subject to four obligations, including licensing Android platform on free and open basis, treating all original devices manufactures in non-discriminatory manner, obeying Motorola Mobility’s FRAND obligation on patent, and entrusting independent supervisors to supervise Google’s fulfillment of the obligations above.


New Chinese Laws & Regulations of April, 2012 (1)

I.                 The Supreme People’s Court Continuously Issued  “Ten Major Cases” and “ Fifty Typical Cases” of 2011 Chinese Courts’ Intellectual Property Right Judicial Protection (the “2011 Ten Major Cases and Fifty Typical Cases”), 2011 Intellectual Property Right Judicial Protection Status of Chinese Courts (White Paper) ( the “2011 White Paper”) and 2011 Supreme People’s Court’s Annual Report of Intellectual Property Right Cases (the “2011 Annual Report”).


MCC Released the New Foreign Investment Industry Guide Catalog of 2012 Version

The Ministry of Commerce of China (the “MCC”) has recently revised the Foreign Investment Industry Guidance Catalog (the “Catalog”) recently, which will come into effect on 30th, January, 2012.

The Catalog is the important industry policy on guiding the foreign investment, and before this modification, it has been modified forth in 1997, 2001, 2002, 2004 and 2007 since the promulgation in 1995. And this post is the conclusion on the newly revised Catalog by Bridge IP Law Commentary.