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China Culture 0 Comment June 25, 2010, 8:58 am

The Supreme People's Court's Interpretation on How Law’s Applied for Patent Infringement Trials

-Provisions on component infringement and method infringement.

Article 12 provides that where a product infringes upon an invention or utility model patent by incorporating a component or part in the development of another product, this constitutes "use" of the patented product under prevailing Patent Law. Thus the product user may be exempted from damages, because "use" does not constitute design patent infringement. Where a product infringing upon a design patent is used as a component or part in another product, this constitutes a "sale" of the patented product. Because a design patent protects only the appearance of a product, the incorporation of an infringing product component will not be considered as a "sale" of the design patent product if it provides only technical functions, as opposed to visual effects of the said product.

Article 13 defines "product directly obtained by a patented method" as the product obtained immediately after utilizing the patented method. The Court further explains that subsequent processing of the initial product to obtain a follow-up product is considered to be "use" of the product obtained directly from the patented method.

-Defenses which the accused infringer may attempt to apply

Article 62 allows for a prior art defense in a patent disputes. Additionally, Article 14 specifies the application rules of the prior art defense. To establish a prior art defense, the People's Court will examine whether the alleged infringers technical features fall within the patent claim, rather than all technical features of the allegedly infringing product. Technical features that are identical to the prior art, or the difference there between is minimal; the alleged infringer may be exempted from infringement liability based on prior use of the art. Additionally, a prior art defense may not be applied if the accused technical solution has a different subject matter from that of the prior art.

The People’s Court also provided application rules for a "prior use defense," which aims to mitigate the unjustness of the "First-to-File" system. In order to encourage the filing of patent applications, the Court limits the prior use defense:

- to techniques illegally obtained cannot assert prior use defense;

-to circumstances in which a company "has made necessary preparations for manufacture and use”;

-when the "original production scope" is limited to "the production scale prior to the filing date or the production scale is achievable through full use of the existing production line or preparations"; and

-when the prior user cannot independently assign or license the technique or design concerned.

-Determination of damages

Article 16, mandates that damages should be awarded based on a calculation of the profit gained through the infringement. Additionally, damages will be limited to the proportion of the profits made due to the infringed patent, meaning profits generated through activities, such as marketing, will not be included in the damage calculation. If the alleged infringement is from a component found in a final product, damages will be awarded according to the value of the component and how it contributed to the profit of the final product.

-Determination of "New Product"

In patent suits involving a "new product,” the burden of proof will shift. Article 17 stipulates that a final product is not “new” if the product or the manufacturing process of the product is already known to the public, either domestically or abroad, prior to the patent filling date. For pharmaceutical companies, disclosure of the structural formula of a product, not including specific physical and chemical properties or manufacturing process, will not disqualify the product as a "new product."

-Action for Declaratory Judgment of Non-infringement

Declaratory judgments for non-infringement have become a common tool for infringers. In order to avoid this type of injustice Article 18 limits the situations in which an action for a declaratory judgment may be raised. Article 18 provides that when a patent holder warns an allegedly infringing party to cease-and-desist, the alleged infringers or other interested parties, such as licensees or distributors, may respond in writing in order to push the patent holding party to initiate legal proceedings. If the patent holder does not withdraw his cease-and-desist, or proceed with legal action within one month of receiving a response, or within two months after the dispatch of the response, the warned parties or other parties of interest may move for a declaratory judgment of non-infringement. This process only pertains to actions in the People's Courts, and does not apply to other forms of relief, such as administrative investigation and seizure.

Article 19 is a provision meant for switchover from the Old and the New Patent Law. If an alleged offense took place before October 1, 2009, the People's Court will use the Old Patent Law; if it occurred after October 1, 2009, the People's Court will use the New Patent Law. As for damages, even those infringements before October 1, 2009 the Court will apply the New Patent Law.

Summation

The Interpretation is a summary of the judicial practice of the trial of patent infringement cases in the past decade in China. The Supreme People's Court identified the commonly accepted rules in patent infringement trials in the form of Judicial Interpretation to provide guidance for patent infringement litigations in different tiers of Chinese judicial system. But for controversial issues, such as the relationship between patent and national standard, the determination of contributory patent infringement, the Interpretation remains silent. Therefore, it is foreseeable that the rules of determining patent infringement will undergo continuous revision in China and more rules shall be developed in patent infringement field....

China Law 0 Comment June 24, 2010, 5:56 pm

Stronger New Tort Laws Will Better Protect IP Rights in China

By Brendan Baker

The new Tort Law of the People’s Republic of China will take effect on July 1, 2010, ushering in several major changes for intellectual property rights in China. Currently, there are several holes in the body of tort law concerning IP rights, so there has been no legislative basis on which the People’s Courts can determine legal liability for some types of infringement. The new law changes three major areas concerning the enforcement of IP rights: first, it provides a basis for deterring contributory IP infringement; second, it allows for moral damage compensation for infringement; third, it creates new liabilities for network and service providers who allow infringements to continue after they have been notified it is occurring.

Currently, the trademark, patent, and copyright laws do not speak to contributory infringement – that is to say, liability when one party provides assistance to another in the manufacturing or sale of infringing goods. Though the General Principles of the Civil Law indicate that, in theory, contributory infringement should be illegal, there are no specific provisions through which government officials could enforce the provisions. The new Tort Law fills this gap, allowing joint and several liability for all acts of contributory infringement.

There is also a lack of legal authority on whether moral (i.e. non-economic) damages can be awarded as part of compensation in an infringement action. To date, courts have been reluctant to award any moral damages; indeed, they have awarded them only in one instance. In the case of Zhuang Yu v. Guo Jingming the Beijing Higher People’s Court allowed some moral damage compensation after finding that the defendant had plagiarized the plaintiff’s novel, though the moral compensation awarded was equal to only 5% of the economic compensation. The new Tort Law makes it clear that these sorts of damages are appropriate, and its implementation should increase the number of judgments granting moral damages whenever “serious mental distress” has been inflicted as a result of an infringement.

Finally, the new Tort Law holds network users and internet service providers responsible for allowing infringement to continue on their networks. There is no current cause of action for allowing infringement, but under the new system, any damaged party may contact a network user or service provider in order to notify him or her of the infringement being conducted through the network. If the provider does not take timely action to halt the infringement, it will be jointly and severally liable for the infringement that occurred over the network. This process is called the “notice and remove” rule, under which the burden is shifted to the network or internet service provider to remove the infringing content after it has received notice. This, too, should increase the number of damaged parties who are able to recover when their IP rights have been violated.

Edward E. Lehman, Managing Director of Lehman, Lee & Xu, commented that the new Tort Law “fills important holes in the existing law and should help to protect intellectual property rights in China.” He added that, while the laws will not provide complete protection for intellectual property in China, “they should prove to be an important step towards holding infringers responsible, and compensating the parties who have had their IP rights violated.” ...

China Law 0 Comment June 24, 2010, 5:55 pm

China scraps export tax rebates

Chinese State Council has agreed to the abolishment of tax rebates for 406 exported products. The new policy effective July 15th, includes steel and non-ferrous metals products, fertilizers, in addition to specific plastic, rubber, and glass products, according to the Chinese Finance Ministry in a Tuesday statement. The Ministry has yet to offer an explanation for the policy change.

“It is likely this policy’s purpose is to help curb environmental pollution, as these products come from high energy industries,” said Edward E. Lehman, Managing Director of Lehman, Lee & Xu. “The move coming so soon after the government’s recent pledge to allow more flexibility with the Chinese RMB exchange rate is a surprise. This will increase production costs, lowering China’s economic advantage, a major reason why the government was concerned over letting the RMB appreciate against foreign currencies,” adds Lehman. ...

China Law 0 Comment June 23, 2010, 12:27 pm

The strike at the Toyota plant in Tianjin

Workers at the Toyota automotive manufacturing plant in Tianjin agreed to resume work on Sunday morning in exchange for a pay raise of 200 yuan a month. This represented a 13 percent improvement over their existing salaries, short of the 20 percent they had demanded at the outset of the three-day strike. It was unclear how many of the plant’s 1,300 workers had accepted the offer, and whether their return to work indicated a permanent acceptance of the deal, or merely a temporary reprieve.

Workers organized the strike over the internet, and the company offered a 17 percent raise before the strike even began. The workers typically receive a 15 percent annual raise. Edward E. Lehman, Managing Director of Lehman, Lee & Xu, commented that “labor disputes are an unfortunate byproduct of the expanding Chinese manufacturing sector.” Furthermore, he added that he “remains optimistic” that firms will be able to negotiate equitable wages for workers in the future “without resorting to strikes that threaten to interrupt global supply chains.”...

China Business 0 Comment June 23, 2010, 11:47 am

Harbin Pharm

In September 2009 the Chinese Ministry of Commerce (MOFCOM) granted conditional approval to the merger of Pfizer and Wyeth, two pharmaceutical giants, with the condition that Pfizer divest its swine flu vaccine business in China. This conditional approval represented the first instance of MOFCOM ordering a foreign company to divest itself of a China-based business in order to win approval of a merger.

Earlier this month, in order to comply with MOFCOM’s order to divest, Pfizer sold its swine flu vaccine business to Harbin Pharmaceutical Group, the largest pharmaceutical company in China. It acquired the swine flu business from Pfizer for a reported US$50 million, beating out bids from Novartis, Eli Lilly, Boehringer Ingelheim, and Agenix Biopharma.

Harbin’s purchase of the business from Pfizer will give it the largest market share in the sector, and also access to all of Pfizer’s required intellectual property. However, the required IP includes only the information necessary to produce the vaccine in China, though there may be trade secrets and proprietary information required to work the technology that applies to Pfizer’s business worldwide. Under Chinese law, Pfizer will have to guarantee a complete, accurate transfer of the associated technology in order to completely divest this branch of its company. This untangling of the requisite IP could present an arduous task for Pfizer, and it remains to be seen if any litigation will come from the exchange of trade secrets and confidential information between the two companies.
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China Law 0 Comment June 23, 2010, 10:11 am

2 YEAR ANNIVERSARY OF CHINA’S ANTI MONOPOLY LAW APPROACHES

China’s 2008 Anti Monopoly Law has brought China into the modern world of anti-trust and competition laws. As the two year anniversary of the bill approaches, some areas of uncertainty have been made clear.

One issue that was relatively unclear at the time of AML implementation was what precisely triggers an anti-monopoly investigation of a company. AML’s enforcement authority is divided among MOFCOM, the NDRC and SAIC. Article 38 of the AML governs the procedures for commencement of an AML case. Any suspected monopolistic behavior is investigated by the AML Enforcement Authority. Any entity or individual has the ability to report suspected monopolistic behavior. If the report has merit, the AML Enforcement Authority is required to investigate. Furthermore, the SAIC has published its own procedural rules, the “SAIC Private Sector Investigation Procedures”, and the “SAIC Procedures Regarding the Abuse of Administrative Power”. The NDRC is in the process of drafting procedures of their own.

A second issue relates to the field of mergers and acquisitions. More specifically, what types of companies have been reviewed. In foreign mergers, a summary of MOFCOM’s review is released to the public. In domestic merger reviews, no such publication is required. “This has created some uncertainty as to whether foreign or domestic mergers are under higher scrutiny,” said Edward E. Lehman, Managing Director of Lehman, Lee & Xu. “Since no data is available for domestic merger reviews there is no definitive answer available,” Lehman added.
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China Law 0 Comment June 23, 2010, 9:35 am

China Increasing Efforts to Attract Foreign Talent

Chinese officials have presented new policies aimed at attracting top-notch foreign professionals in order to improve the economic and social development of the nation. The recently announced National Medium and Long-Term Talent Development Plan is more open for high-caliber foreign talent willing to work in China than previous policies. Main areas of focus are taxation, insurance, housing, children and spouse settlement, career development, research projects, and government awards. Additionally, the new plan will improve the system for granting permanent residence rights and migration programs.

“The new policy measures will help curb many of the doubts foreign citizens have when contemplating a move to China, and will ultimately result in a shift from China being labor-rich to talent-intensive,” said Edward E. Lehman, Managing Director of Lehman, Lee & Xu. “Foreign talent is crucial in improving the long term sustainability of the Chinese economy,” Lehman added.
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China Law 0 Comment June 17, 2010, 10:09 am

US IMPOSES PRELIMINARY DUTY ON CHINESE DRILL PIPE

The US Commerce Department recently announced a preliminary duty on the importation of drill pipe from China, an industry that generates over US$100 million annually. The move comes after findings that Chinese exporters of drill pipe have received countervailable subsidies of over fifteen percent. The department will make its final decision regarding the duty in August. In the interim, US Customs officials will collect a cash deposit or bond based on the preliminary rates.

“This protectionist move by the Obama administration has the potential to escalate trade disputes between the countries and may hurt US-China relations,” said Edward E. Lehman, Managing Director of Lehman, Lee & Xu.
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China Law 0 Comment June 17, 2010, 9:27 am

CHINA GOES GREEN

China continues to make efforts to go green by introducing new policies that encourage energy conservation. The recently announced policies will offer financial support in hopes of boosting technological innovation and developing a recycling economy. The plan calls for nearly 9 billion RMB to be invested into conservation sectors. This financial support comes after a 4 trillion RMB stimulus package during the height of the global financial crisis that included 48 billion RMB for environmentally friendly projects. Additionally, preliminary plans have been announced to reform the resource tax and increase efforts to implement effective policies for green credits, green trade, green securities, green tax and punishment for environmental infringements.

“These new policies show a strong commitment by the Chinese government to make efforts to reduce harm to the environment,” said Edward Lehman, Managing Director of Lehman, Lee & Xu. “However, it is unlikely that these efforts alone will outpace what the country consumed or lost during the growth of its economy,” Lehman added....

China Law 0 Comment June 17, 2010, 9:15 am

CHINESE ECONOMY CONTINUES TO IMPROVE AS HIRING PLANS HIT 6-YEAR HIGH

Increasing optimism regarding the Chinese economy as well as the global economy has generated a six year high in hiring plans within mainland China. Employment service provider Manpower Inc. reports that over thirty percent of Chinese employers plan to increase their workforce in 2010. This is approximately a twenty percent improvement over last year’s figures. The growing demand for labor is not limited to major cities, as more and more foreign companies are expanding further into Western China.

The hiring increase comes amidst growing employee frustration regarding poor pay and wretched working conditions, highlighted by a recent string of suicides at electronics manufacturer Foxconn. “The increasing hiring demand could result increased competition and a worsening of labor conditions,” said Scott Garner, Direct of Lehman, Lee & Xu Shanghai Office.
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China Law 0 Comment June 17, 2010, 9:05 am

China Increasing Efforts to Attract Foreign Talent

Beijing, China – June 11, 2010 - Chinese officials have presented new policies aimed at attracting top-notch foreign professionals in order to improve the economic and social development of the nation. The recently announced National Medium and Long-Term Talent Development Plan is more open for high-caliber foreign talent willing to work in China than previous policies. Main areas of focus are taxation, insurance, housing, children and spouse settlement, career development, research projects, and government awards. Additionally, the new plan will improve the system for granting permanent residence rights and migration programs.

“The new policy measures will help curb many of the doubts foreign citizens have when contemplating a move to China, and will ultimately result in a shift from China being labor-rich to talent-intensive,” said Edward E. Lehman, Managing Director of Lehman, Lee & Xu. “Foreign talent is crucial in improving the long term sustainability of the Chinese economy,” Lehman added. ...

China Law 0 Comment June 11, 2010, 6:21 pm

CHINA’S RECENT WAVE OF WAGE INCREASES

SHENZHEN - The minimum wage in Shenzhen City in Guangdong Province will increase by ten percent to 1,100 RMB per month ($161.04) in July from 1,000 RMB ($146.41). In addition, part-time employee hourly wages will increase to 9.8 RMB. Foxconn, an IT contract manufacturer, will experience the most dramatic wage increases. In Shenzhen, assembly worker salaries will increase by 66 percent to 2,000 RMB per month beginning October 1. Shenzhen is following a recent wage raise trend that has been sweeping through China. On July 1st, Beijing will increase its minimum wage by 20 percent to 960 RMB ($140.55) per month from 800 RMB ($117.13).

"The rises in wages will obviously effect labor-intensive companies the most. Manufacturers, in order to stay competitive, will need to promote increased worker output, and by investing in more efficient technology," said Scott Garner, Director of Lehman, Lee & Xu Shanghai Office.

“With the increased cost of living in certain parts of China, it was only a matter of time before wages would need to be increased. Hopefully this is just a sign of good economic times rather than a roadblock to future foreign direct investment,” comments Edward E. Lehman, Managing Director of Lehman, Lee & Xu.
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China Law 0 Comment June 11, 2010, 9:49 am

RECENT DEVELOPMENTS IN CHINA’S LABOR CONDITIONS

A recent string of suicides at Foxconn factories has highlighted the urgent need for China to improve labor conditions. At Foxconn’s Shenzhen plant ten workers have died and three others have attempted suicide within the past year. In response, Foxconn has increased worker pay by nearly seventy percent. Several other companies have also announced wage increases amid poor working conditions.

Provincial governments have responded to poor labor conditions by increasing minimum wage. Beijing, Guangdong, Shanghai and Zhejaing have all recently raised the minimum wage. “The Foxconn incidents were a likely catalyst for the wage increases,” commented Scott Garner, Director of Lehman, Lee & Xu Shanghai Office.

“These developments indicate that the era of incredibly cheap labor in manufacturing within China is beginning to come to an end,” said Edward E. Lehman, Managing Director of Lehman, Lee & Xu....

China Culture 0 Comment June 11, 2010, 8:42 am

RECENT DEVELOPMENTS IN CHINA’S LABOR CONDITIONS

Beijing, China – June 9, 2010 – A recent string of suicides at Foxconn factories has highlighted the urgent need for China to improve labor conditions. At Foxconn’s Shenzhen plant ten workers have died and three others have attempted suicide within the past year. In response, Foxconn has increased worker pay by nearly seventy percent. Several other companies have also announced wage increases amid poor working conditions.

Provincial governments have responded to poor labor conditions by increasing minimum wage. Beijing, Guangdong, Shanghai and Zhejaing have all recently raised the minimum wage. “The Foxconn incidents were a likely catalyst for the wage increases,” commented Scott Garner, Director of Lehman, Lee & Xu Shanghai Office.

“These developments indicate that the era of incredibly cheap labor in manufacturing within China is beginning to come to an end,” said Edward E. Lehman, Managing Director of Lehman, Lee & Xu.
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China Law 0 Comment June 10, 2010, 11:25 am

LEHMAN, LEE & XU FIGHT TO SAVE WOMAN FROM DEATH PENALTY IN FINAL APPEAL

On November 30, 2008, Janice Bronwyn Linden, a South African resident, was found to be in possession of approximately three kilograms of methamphetamine after arriving at Guangzhou Baiyun International Airport in the People’s Republic of China from Dubai. Ms. Linden was subsequently convicted of drug smuggling and sentenced to death. The Supreme Court is reviewing the death penalty now.

Ms. Linden has now enlisted the services of the law office of Lehman, Lee & Xu. Lehman, Lee & Xu has prepared the pleading for Ms. Linden during the death penalty review procedure. The first argument proffered by the Lehman attorneys is that the case lacks sufficient evidence. The lower court judge asserted that Ms. Linden had a subjective intention of drug smuggling. “This subjective intent does not satisfy the requisite burden of proof and a sentence of death would be contrary to the basic principles of justice,” said Hao Junbo, Attorney for Lehman, Lee & Xu.

The second argument presented by Lehman, Lee & Xu is that in light of the circumstances punishment by death is excessive. Lawyers from Lehman argue that the crime alleged was an attempted crime, not an accomplished crime. “Ms. Linden was discovered during the customs inspection and had not yet passed through customs. It was an attempted crime, not an accomplished crime. Therefore, a sentence of death is too heavy,” commented Hao Junbo.

Although China’s legal system is based on civil law rather than case law, associates from Lehman have proffered an additional argument that Ms. Linden’s case is similar to a 2009 case involving a South African woman who was discovered to be smuggling heroin into China. The woman in the 2009 case was initially sentenced to death. However, the sentence was overturned by Changsha Intermediate People’s Court. Lehman’s associates have argued that this similar case can be used as reference to prove that a death penalty for Ms. Linden is excessive.

Lehman, Lee & Xu is a prominent Chinese full-service law firm with offices in Beijing, Shanghai, Shenzhen, Hong Kong, Macau and Mongolia. The firm has been recognized as one of the top law firms in China by several magazines and is managed by Mr. Edward Lehman, a leading expert on corporate law with 20 years of practice experience in Mainland China.

To learn more about us, please visit our website at www.lehmanlaw.com.
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China Law 0 Comment June 10, 2010, 11:21 am

CHINA’S NEW EVIDENCE GUIDELINES BAN TORTURE IN CAPITAL CASES

Beijing, China – June 4, 2010

The SPC, SPP, MPS, MSS and MOJ have jointly announced new guidelines regarding evidence in capital cases. The new evidence rules will ban the use of torture to obtain confessions in capital cases. Public pressure for evidence reform mounted after the wrongful imprisonment of a Henan farmer was brought to light. Zhao Zuohai was released in May, 2010 after the man he confessed to killing was found alive. Zhao was tortured for nearly a month prior to his confession.

Under the new regulations evidence obtained through torture, violence or threats, physical evidence obtained without being properly documented and evidence certified by unqualified organizations may not be used for conviction in death penalty cases. “Although this seems to be a strong statement on the prohibition of torture, limiting these rules purely to capital crimes leaves a substantial portion of suspects subject to tortuous practice,” said Scott Garner, Director of Lehman, Lee & Xu Shanghai Office.

The regulations also raise the burden of proof in capital cases from “beyond a reasonable doubt,” to “exclude all other possibilities.”

An additional guideline allows a procedure for a defendant to dispute the legality of a piece of testimony. The defendant bears the initial burden of presenting evidence to establish illegality. However, once the court determines that the evidence may have been obtained illegally, the burden to prove the legality of the evidence shifts to the prosecution. “This in turn creates an incentive for prosecutors to pressure law enforcement agents to follow correct procedure when obtaining evidence,” said Edward E. Lehman, Managing Director of Lehman, Lee & Xu.

“These guidelines include for the first time the fundamental principles of justice,” said Hao Junbo, Attorney for Lehman, Lee & Xu. “Shortcomings still exist in China’s criminal proceedings, but reform is a multi-step process,” commented Hao.

The full text of the new regulations is not yet available to the public.

Lehman, Lee & Xu is a prominent Chinese corporate law firm and trademark and patent agency with offices in Beijing, Shanghai, Shenzhen, Hong Kong, Macau and Mongolia. The firm has been recognized as one of the top trademark firms in China by several intellectual property magazines and is managed by Mr. Edward Lehman, a leading expert on corporate law with 20 years of practice experience in Mainland China.

To learn more about us, please visit our website at www.lehmanlaw.com.
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China Law 0 Comment June 8, 2010, 6:17 pm

“China’s Trust Sector: The Next Chapter” by KPMG and Reuters

“China’s Trust Sector: The Next Chapter” by KPMG and Reuters

KPMG China and Reuters recently released a joint report on the evolution of the trust sector in China. KPMG is a leader in tax, accounting, and advisory services, while Reuters is a prominent news service provider. The report includes the following:

A description of the trust fund sector in China, detailing how Chinese trusts are different than American trusts, and incorporate characteristics of private equity, asset management and banking sectors.

Information on the range of products offered by trusts, including single unit trusts, combined trusts, and property management trusts.

Background information on the emerging area of Real Estate Investment Trusts (REITs), which allow investors to purchase the stream of beneficial rights to a property without owning any of the underlying real estate itself.

Opportunities for trust companies to expand their offerings in the future, including IPOs and SME finance options.

Case studies of several trusts that are expanding their operations in China: Morgan Stanley, CITIC, China Credit Trust, Macquarie, and RBS.

Edward E. Lehman, Managing Director of Lehman, Lee & Xu, commented that, “though the trust sector suffered during the economic downturn, it is poised for a strong rebound.” Mr. Lehman has been working in China for over twenty years and has provided numerous foreign banks and companies with investment advice in their operations in China. “As the economy strengthens, it will increase the demand for banking and related services, including new varieties of trust products,” he added.

Lehman, Lee & Xu is one of the biggest Chinese law firms, with a dedicated team in the banking and financial practice areas. For more information about Lehman, Lee & Xu, please visit the firm's website at www.lehmanlaw.com or feel free to e-mail the Beijing office at mail@lehmanlaw.com.

The KPMG/Reuters report in its entirety is available online at: http://www.kpmg.com/CN/en/IssuesAndInsights/ArticlesPublications/Pages/China-trust-sector-next-chapter-201002.aspx....

China Law 0 Comment June 8, 2010, 6:11 pm

New Draft Regulations Related Anti-monopoly Law for Consultation

On May 25, 2010, the State Administration for Industry and Commerce (“SAIC”), one of the AML Enforcement Authorities in China, released three revised draft regulations for consultation, with comments due Monday, June 7th:

The three regulations are:

工商行政管理机关禁止垄断协议行为的规定 (SAIC Regulations regarding the Prohibition of Monopoly Agreements). A previous draft was released in April 2009 and commented on by the ABA Antitrust Section.

工商行政管理机关禁止滥用市场支配地位行为的规定 (SAIC Regulations regarding the Prohibition of the Abuse of Market Dominance). A previous draft was released in April 2009 and commented on by the ABA Antitrust Section.

工商行政管理机关制止滥用行政权力排除、限制竞争行为的规定 (SAIC Regulations regarding Provisions to Prevent the Abuse of Administrative Power to Restrict or Eliminate Competition). This is new and has not been released before.

The Consultation Announcement is available at: http://www.saic.gov.cn/gzhd/fldf/201005/t20100525_85719.html

The Draft Regulations (in Chinese) are available at: http://gzhd.saic.gov.cn/gszj/zqyj/login1.jsp
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China Culture 0 Comment June 1, 2010, 10:28 am

Edward Lehman Selected to Who's Who Among Executives and Professionals

Edward E. Lehman of Lehman, Lee, and Xu has been selected to the Who's Who Among Executives and Professionals. This nomination is only bestowed upon a select few individuals who have displayed excellence in business, law, academia, medicine, and who have shown an entrepreneurial spirit.

The Who's Who Among Executives and Professionals was created in recent years in order to properly catalog and provide contact details for leading professionals around the globe. This listing is an attempt at a comprehensive directory of producers, movers, and shakers within their respective fields.

Lehman, Lee & Xu is a prominent Chinese corporate law firm and trademark and patent agency with offices in Beijing, Shanghai, Shenzhen, Hong Kong, Macau, and Mongolia. The firm has also been recognized as one of the top full service as well as intellectual property firms in China by several international magazines. The law firm is managed by Mr. Edward Lehman, a leading expert on corporate law with 20 years of practice experience in Mainland China. ...

China News 0 Comment May 28, 2010, 11:15 am

Lehman, Lee & Xu admitted to International Franchise Lawyers Association

Beijing, China – May 14, 2010 - Lehman, Lee & Xu, was formally admitted to International Franchise Lawyers Association (IFLA). IFLA is a network of lawyers specializing in the field of franchise law and focusing on advising franchisors regarding the expansion of franchise networks. Many of the world’s leading franchise lawyers are members of this association. For more information on IFLA please refer to the website www.franchiselawyers.net

Lehman, Lee & Xu, with a strong team of experts in franchise law in China, is the only Chinese firm member. Edward E. Lehman, Managing Director of Lehman, Lee & Xu, is the leading expert in franchising law in China. For further information about the firm and Mr. Lehman, please visit our website at http://www.lehmanlaw.com
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China Law 0 Comment May 14, 2010, 11:43 am

"The Impact of China's Labor Contract Law on Workers" by ILRF

The International Labor Rights Forum (ILRF) released a report recently entitled "The Impact of China's Labor Contract Law on Workers." ILRF is a nonprofit advocacy organization headquartered in Washington, DC that describes itself as "an advocate for and with the working poor around the world".

According to Manfred Elfstrom, Program Officer of the International Labor Rights Forum, key findings of the report include:

More workers have signed contracts since the LCL went into effect, but the number with contracts is still exceedingly low, at least in the regions surveyed, considering that the law requires that all employees have a formal contract. Sixty percent of the interviewees had a contract at the time of their interview; 53 percent said that they had contracts before the law went into effect. Many workers interviewed during the course of this research complained that their contracts lacked provisions required by the LCL.
Enrollment in work injury insurance has increased significantly. Among interviewees, the percentage with insurance increased from 39.5 percent to 49.5 percent after the LCL went into effect. Again, this is still well below the 100 percent required by law.
The law has helped older workers less than it has younger workers, as illustrated by the gradual decline by age in the number of workers with labor contracts and social insurance. While 66 percent of workers ages 16-24 had a labor contract at the time of their interviews, for example, this percentage dropped to 64 percent for ages 25-32, 60 percent for ages 33-40, and 56 percent for workers ages 41-52.
In general, the workers interviewed relied on mass media such as television (64 percent), newspapers (46.6 percent), and the Internet (44.7 percent) as their primary source of legal information. Workers relied on informal sources, as well, such as friends (30.8 percent) and other workers (26.5 percent). Sources varied widely according to other variables, such as age and education, with older or less educated workers relying much more heavily on informal sources.
Labor protections seemed to vary widely by industry. While our small sample size for some industries may have biased our results, we noted very sharp differences between, say, workers in the furniture and hardware sector, who were least likely to enjoy social insurance (35 percent) or contracts (50 percent), and, say, service sector workers, who fared the best in our survey (74 percent of whom had insurance).
Interviews with management revealed fear of certain provisions of the law, such as open-ended contracts, but also an appreciation of the stability that the LCL could bring to Chinese labor relations more generally.

These findings have led ILRF to recommend tougher criminal and civil sanctions against business owners who refuse to sign contracts, a greater focus by the All China Federation of Trade Unions and others not only on contract coverage but on the process of signing contracts (including new avenues for collective bargaining), community-based approaches to legal education aimed at reaching older workers in particular, expanded access to affordable legal representation for workers, more monitoring of less-branded parts of supply chains, and attention to the positive aspects of the law for responsible businesses.

The report, which is based on interviews with hundreds of migrant workers and managers in the Pearl River Delta and Yangtze River Delta, is available online at: http://www.laborrights.org/creating-a-sweatfree-world/rule-of-law/china-program/resources/12318.
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China Law 0 Comment May 13, 2010, 10:02 am

NEW CHALLENGES FOR FOREIGN BANKS OPERATING IN CHINA

Foreign banks operating in China have faced more fierce competition and challenges from domestic banks, according to a poll conducted recently by Price waterhouse Coopers (PwC) LLP.

In an effort to ward off the global economic crisis, Beijing announced a massive Rmb4 trillion ($586 billion) stimulus package in November 2008, and domestic banks extended a record Rmb9.6 trillion of new credit in 2009, nearly double the amount in 2008, following government orders. "Foreign banks didn't take part in that and they have lost many lending opportunities," said Mervyn Jacob, PwC's financial services leader for China and Hong Kong..

Moreover, the regulatory environment has also remained a source of concern. Foreign banks now have to deal with tightening regulations, including guidelines on new accounts, confirmation of account balances with their customers, new restrictions on property mortgages and the roll-out of wealth management products, according to the poll.

“Despite the challenging operating environment, China remains a key market for the future growth of foreign banks,” said Edward E. Lehman, Managing Director of Lehman, Lee & Xu, who has been working in China for over twenty years and has provided numerous foreign banks and companies with investment advice in their operations in China. “The fast-accelerating economy will generate strong demand for banking and related services,” he added.

His comments are proved by the survey which revealed that annual revenue growth prospects have improved for many foreign banks in China.

Lehman, Lee & Xu is one of the biggest Chinese law firms, with a strong team involved largely in the banking and financial practice areas. For more information about Lehman, Lee & Xu, please visit the firm's website at www.lehmanlaw.com or feel free to e-mail the Beijing office at mail@lehmanlaw.com
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China Law 0 Comment May 5, 2010, 9:12 am

New Logo of the World Intellectual Property Organization (WIPO)

New Logo of the World Intellectual Property Organization (WIPO) has got a new logo. “This forms the cornerstone of a new visual identity for our organization, in line with the new dierections we are taking to keep with the rapid evolution of intellectual property in the 21st century,” said Francis Gurry, Director General of WIPO.

http://blawg.lehmanlaw.com/english/uploadfiles/new%20logo_20505.jpg

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China Law 0 Comment April 28, 2010, 4:27 pm

"INTELLECTUAL PROPERTY PROTECTION BY CHINESE COURTS IN 2009"

On April 21, 2010, China's Supreme People’s Court issued a white paper, in both English and Chinese, entitled, "Intellectual Property Protection by Chinese Courts in 2009." It is made up of four sections in addition to the preface and the conclusion:

I. Fair and Efficient Adjudication of Intellectual Property Cases According to Law has Made the Judicial System a Leading Force in Intellectual Property Protection

II. Judicial Protection for Intellectual Property has Served the Needs of Socioeconomic Development and has Observed and Delivered the National Intellectual Property Strategy

III. Enhanced Judicial Supervision and Guidance has Created Greater Consistency in Adjudication Practices and Decision-Making

IV. Capacity Building for Intellectual Property Judges has Improved Judicial Competence and Quality

“This paper provides a general outline of China’s protection of intellectual property for the past 30 years,” Edward E. Lehman, Managing Director of Lehman, Lee & Xu. “By reading this paper, you will have a better idea of what China’s courts have done in the past and where they are heading for in the near future in the protection and enforcement of intellectual property in China.”

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China Law 0 Comment April 28, 2010, 4:07 pm

SHANGHAI EXIT-ENTRY ADMINISTRATION BUREAU ON VISA AND RESIDENCE PERMITS FOR THE 2010 WORLD EXPO

Shanghai, China - April 26, 2010 - The Shanghai 2010 World Expo is expected to draw 70 million visitors to Shanghai, creating concerns about entry and exit access for foreign investors and visitors to China. AmCham Shanghai will hold a Chinese government briefing on exit-entry visa resolutions on Thursday, May 6 at the Grand Hyatt Hotel. Mr. Cai Baodi of Shanghai’s Exit-Entry Administration Bureau (Shanghai Municipal Public Security Bureau) will be invited to share up-to-date policies and procedures for visa service and residence permit applications. Mr. Cai will also share and answer questions on how the Exit-Entry Administration Bureau will implement its management plans for the 2010 World Expo.

“We have an active visa practice in China and have successfully assisted our clients on visa issues for over ten years,” said Edward E. Lehman, Managing Director of Lehman, Lee & Xu. “As lawyers for the Expo and member of AmCham Shanghai, we will be able to help our clients as well as members of AmCham Shanghai with their visa issues.” added Mr. Lehman.

For more information about Lehman, Lee & Xu, as well as a full listing of the firm, please visit the firm's website at www.lehmanlaw.com or feel free to e-mail the Shanghai office at mail@lehmanlaw.com. ...

China Culture 0 Comment April 27, 2010, 8:45 am

Cooling Off Rule - Protection of Consumer Rights

We have often received inquiries, big or small, concerning various legal issues in China and our lawyers are always ready to provide prompt solutions. Following is one as to whether there is a cooling off rule in China relating to the protection of consumer rights.

Q: I'm a German business student, studying at the University of Mannheim, Germany. Right now I'm writing on my Bachelor's Thesis which deals with commercial returns in different countries. I'm trying to find out if there's a cooling off rule in China. There's one in the European Union, as well as in the USA, permitting the buyer to get out of a contract entered on a door-to-door sale or on the Internet. Maybe you could help me. I found your homepage by looking for the laws on Consumer Protection Rights. Thank you a lot in advance.

A: On the national level, China does not have such a cooling off rule as that of the European Union and the USA. According to China's Consumer Rights Protection law and Product Quality Law, consumers have the right for repair, replacement and return only for commodities with quality problems or for commodities inconsistent with the descriptions when the commodities were sold. Commodities may be returned without reason only if prescribed by the agreements between the sellers and the consumers.

However, one local law entitled Regulations of Shanghai on the Protection of Consumer Rights permits the buyer to return commodities without giving any reason within 7 days if they were done by door-to-door sale. The Regulations also provides that the buyer also has the right to return the commodities within 7 days bought on the Internet if the qualities or functions of the commodities are found to be different from what they were stated to be.
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China Law 0 Comment April 23, 2010, 11:57 am

CHINA’S NEW RULES FOR FOREIGN INVESTMENT

BEIJING, China -- April 15, 2010 -- The State Council of China released concerning new rules on overseas investment last Tuesday. According to the “several opinions of the State Council on further utilizing foreign capital” (“Opinions”), business conditions for foreign investment will be further improved and foreign investment utilizing structures will be optimized.

According to the “Opinions”, foreign investment in high-tech industries, service sectors, energy-saving and environmental protection are still welcome, but polluting and energy-gorging or projects in industries running at overcapacity are not wanted. Foreign-funded enterprises are also encouraged to increase their investment in China's central and western regions, particularly in environment friendly and labor-intensive companies. “This shows that the structure of foreign investment will be further adjusted,” said Edward E. Lehman, Managing Director of Lehman, Lee & Xu.

According to the “Opinions”, China will continue to support Chinese A-share listed companies in further introducing strategic investors from home and abroad, and standardize foreign companies' investment in domestic securities and corporate merger and acquisition moves. A national security examination mechanism will be built as soon as possible for foreign-funded companies' merger and acquisition operation, and qualified foreign-funded companies are allowed to go public, issue corporate bonds or medium-term bills in China. “Foreign-funded enterprises will have more opportunities and enjoy the same treatment as their Chinese counterparts”, commented John Lee, Senior Lawyer of Lehman, Lee & Xu.

“In addition, importing items for scientific and technological development by qualified foreign-funded R&D centers will be exempt from tariffs, importing value added tax and goods and service tax by the end of 2010.” said Scott Garner, Director of Lehman, Lee & Xu Shanghai Office. “This is another indication that high-tech foreign enterprises are fully encouraged in China.” Mr. Garner commented.
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China Law 0 Comment April 15, 2010, 10:40 am

H-P’S ACQUISITION OF 3COM APPROVED BY CHINA’S MINISTRY OF COMMERCE

It is reported that 3Com Corp. and Hewlett-Packard Co. has received approval from China’s Ministry of Commerce for H-P’s acquisition of Marlboro-based 3Com.

H-P, based in Palo Alto, Calif., agreed in November to pay $3 billion for computer networking and switching-gear maker 3Com Corp., with an aim to expand its product portfolio, increase sales in the fast-growing Chinese market and better compete with Cisco Systems. The approval under China’s anti-monopoly law is the last of the required regulatory approvals.

“Although both H-P and 3Com are companies listed in the U.S., a large part of 3Com’s business is in China. That is why approval under China’s anti-monopoly law for the acquisition is required,” said Edward E. Lehman, Managing Director of Lehman, Lee & Xu.

Lehman, Lee & Xu is one of the biggest Chinese law firms, with a strong team involved largely in the anti-monopoly practice area. For more information about Lehman, Lee & Xu, please visit the firm's website at www.lehmanlaw.com or feel free to e-mail the Beijing office at mail@lehmanlaw.com
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China Law 0 Comment April 8, 2010, 5:49 pm

HONG KONG GROUNDS OF REFUSAL

Recently, the Hong Kong Intellectual Property Department issued an amendment to its Work Manual Chapter on relative grounds for refusal. It clarifies that under Section 12(4), if an application is identical or similar to an earlier trade mark, it will not be registered if the earlier trade mark is a well-known trade mark.

It also clarifies that the ground under Section 12(6) that an application is refused on the ground under Section 12(4) only if the objection is raised in opposition proceedings and does not arise at the examination stage. ...

China Law 0 Comment April 8, 2010, 4:28 pm

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