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-Oscar Wilde

New Regulations Regarding Customs Enforcement of IPR

In an attempt to streamline the customs enforcement process regarding intellectual property rights, the General Administration of Customs passed several new regulations that aim to strike a balance between IPR holders and those who import and export goods.
Under old regulations, customs officials were allowed to “dispose” of confiscated counterfeit goods by removing unlawfully affixed trademarks, and auctioning off the goods. These goods commonly reappeared in the market and thus caused monetary harm to the rights owner.
The new regulations now require customs officials to seek the opinion of the relevant IPR owners before it may dispose of any confiscated counterfeit goods. This regulation is a direct attempt to bring China up to the WTO TRIPS agreement standard, which specifically states that sized goods should be disposed of “outside the channels of commerce in such manner as to avoid any harm caused to the right holder, or destroyed" and "the simple removal of the trade mark unlawfully affixed shall not be sufficient.”
While this move is undoubtedly a step in the right direction, it is important to note that the regulation requires customs officials to seek the “opinion” rather than the “consent” of the relevant IPR owner. It thus does not give IPR owners the right to demand the destruction of counterfeit goods rather than the auctioning off of such products.
Another salient feature of these new regulations is that IPR owners will now be able to seek settlements with the infringing party without undergoing a formal customs investigation. It is hoped that this will allow IPR owners to gain valuable information regarding the supply and distribution chains of such counterfeit items while also substantially reducing the resources required of the Customs Department to investigate each and every claim.
The new regulations also contained several smaller modifications such as changes to the notification protocol, the processing of renewal applications, and the cancellation of recordals. All of these modifications are designed to streamline and expedite the customs enforcement process.
Mr. Edward Lehman, managing director at LEHMAN, LEE & XU, said that these regulations “ Demonstrate China’s commitment to bringing itself up to the global standard of intellectual property rights enforcements.” Mr. Lehman also expressed that he is “ excited to see how these new regulations will unfold in practice.”
LEHMAN, LEE & XU is the third largest corporate commercial law firm in China, established in 1992 by a group of Chinese lawyers devoted to developing excellence in the practice of law and to the founding of modern law practices in China, providing a full range of China IP services including prosecution, licensing and dispute resolution. LEHMAN, LEE & XU's IP lawyers have a wealth of experience in the IP law of China and in the international laws and conventions which govern the procurement and enforcement of IP worldwide. The Firm is recognized as a leading Law Firm providing the best and most diversified legal services and solutions to its clients. Today, LEHMAN, LEE & XU has extended its affiliate offices across China employing more than 250 licensed lawyers, patent and trademark attorneys and legal assistants.
To learn more about the Lehman, Lee & Xu, please visit to website: www.lehmanlaw.com

Alexander N. Pan
Lehman, Lee, and Xu...

China Business 0 Comment January 27, 2010, 2:46 pm

4G Technology tests and conferences

Four important 4G Technology tests and conferences took place in December of 2009. First, the Ministry of Industry and Information Technology (MIIT) announced the beginning of next-stage TD-LTE tests for 4G internet network on the 28th of December 2009. ZTE, Huawei, Datang, and Motorola will be the first group of manufacturers to execute these tests and will be evaluated by the MIIT. According to both the MIIT and these leading manufacturers, LTE is premier in extending the mobile communication industry to the mobile Internet. Base stations with a similar preexisting platform in TD-SCDMA mode will only need to upgrade their software to TD-LTE mode or TD/TD-LTE dual mode, minimizing costs. The stages of testing include the concept testing stage, technology research, development and experiment stage, and scale experiment stage expected to be completed in the latter half of 2010.

Secondly, the first 4G technology selection conference in China was held in Beijing this past December. Various assessment boards have tested 4G standards and proposals, headed by Wen Kun, head of the Division of Technology of the MIIT. Although the assessment boards are all from different countries and will produce different results based on their home wireless communications environment, China will base its 4G assessment on its own environment. The results of one country may not necessarily be applied to other countries, so further discussions are necessary before deciding final results. The International Telecommunications Union (ITU) will assist in determining frequency and introducing other important 4G technologies. China’s share of involvement in 4G technologies and standards will be at least 40%.

Thirdly, a joint seminar on new network, future internet, home networking, IPTV, CDN and environmental standards took place between the China Communications Standards Association (CCSA) and the European Telecommunications Standards Institute (ETSI) on the 17th of December 2009 in Beijing. The key point of this seminar was the mutual understanding that if different sectors want to realize the sharing of information globally, sensor network technology will be the key. The ETSI also emphasized the direction of home networking as the future direction of internet development.

Finally, after the world’s first 4G LTE network was introduced in Norway and Sweden, the Chinese telecommunications company Huawei won a bid to provide the network with base stations, operation support systems, and network planning and implementation. This amazingly fast network can offer users a download rate of up to 100Mbs/s, realizing its success thanks to Huawei’s assistance and support.

Morgan Crank
Lehman, Lee, and Xu

China News 0 Comment January 27, 2010, 2:43 pm

Notice Concerning the Enforcement of the Amended Patent Law

The State Intellectual Property Office issued a notice concerning the Enforcement of the Amended Patent Law on the 29th of September 2009 in order to clarify the submission of patent applications and rules governing patent issues. When an applicant applies for both a patent of utility model and a patent of invention on the same day and in respect of the same invention, the statements must be filed separately to indicate that both patents in respect of the same invention have been submitted. Organizations or individuals who apply for a patent in a foreign country in respect of an invention or utility model created in China must apply in advance for a confidentiality assessment to be conducted by the SIPO and complete the required request form. An invention that is created based on genetic resources must complete the Source Disclosure Registration Form when applying for a patent in respect to the invention in order to explain the direct and original sources of its genetic resources. Where the applicant is unable to explain the original source, reasons must be given. New patent applications related to the above events as well as all request and registration forms filed after the application date must be delivered by the applicants in person or by post to the Patent Office under the SIPO. An applicant applying for a design must submit a description of the proposed design in writing, referencing the “Brief Description Design” (October 2009 version) or else the application will be rejected. Evaluation reports on patents of utility models and design will be conducted by the SIPO on any whose date of application is after 1 October 2009.

Morgan Crank
Lehman, Lee & Xu

China Law 0 Comment January 27, 2010, 2:42 pm

Tax updates: January 2010

Government benefits offered for new car purchases

Looking to buy a new passenger car with an engine capacity of 1.6L or less? Well as from January 1, 2010, such customers are eligible to benefit under the Notice on Simultaneous Entitlement of Subsidies for Car Replacement and Vehicle Purchase Tax Reductions, jointly issued by the Ministry of Finance and the Ministry of Commerce. The Notice allows purchasers to receive a subsidy when replacing their old vehicles. Additionally, the purchaser will be able to benefit from tax reduction also.

Administration of Accounting Firms

As from July 1, 2010, the Ministry of Finance’s new measures titled “Interim Measures on the Administration of the Office of Accounting Firms” (“the Measures”) shall become effective. The Measures differentiates between an office of an accounting firm, and an actual accounting firm. Additionally, the Measures also address issues regarding firm’s liabilities.

CICPA looks to the future

The Chinese Institute of Certified Public Accountants (“CIPCA”) are corresponding with local CPA institutions on the proposal of expanding the scope of services to include dealings with tax consultations, and judicial procedures. Comments are invited to be given by February 5, 2010.

Founded in 1988, the CICPA derives its statutory rights from the Law of the People’s Republic of China on Certified Public Accountants, the Charter of the Chinese Institute of Certified Public Accountants and other supplementary laws and regulations. CICPA’s responsibilities include; the review and approval of CICPA membership, the organisation of training activities; the organisation of annual reviews of the CPA qualification, and the monitoring and implementation of rules CPAs should adhere to.

The CICPA’s website can be located at the following location: http://www.cicpa.org.cn/english/

China Law 0 Comment January 26, 2010, 10:42 am

Trademark dispute case: Volkswagen

Case Name:
Volkswagen v Trademark Review and Appraisal Board of the State Administration for Industry and Commerce of the People’s Republic of China (“TRAB”)

- Volkswagen sought to registered the trademark “Tuan”, and submitted an application with the TRAB. Volkswagen applied on June 8, 2004;
- Their trademark application was in respect numerous items surrounding the auto trade;
- Zhejiang Shaoxing Kesiweiteli Electromechanical Co., Ltd (“Zhejiang”) registered the trademark “Antu” on October 10, 1986, and sort to extend this until January 29, 2017.
- In light of Zhejiang’s extension, the TRAB rejected Volkswagen’s application for registration;
- Volkswagen appealed to Beijing No.1 Intermediate People’s Court

Volkswagen claimed the following:
- There were no similarities between the two names;
- There were distinct differences between the two trademarks;’
- Proposed use of trademark was on different products to the trademark already in use;
- Volkswagen claimed In light of these factors that registration of the “Tuan” mark would not cause any confusion amongst the public.

Beijing No.1 Intermediate People’s Court decision:
- The court found in favour of Volkswagen, in that the two trademarks would not cause confusion amongst the public;
- TRAB’s decision was overruled and a review is required.

China Culture 0 Comment January 25, 2010, 5:11 pm

IPR Updates January 2010

Patent Law Enforcement Rules amended

The State Council have issued amendment rules pertaining to the enforcement of the PRC’s Patent Law. The release, titled “"Decisions of the State Council on Amending the 'Rules on Enforcing the Patent Law of the People's Republic of China’” shall be effective as of February 1, 2010.

One such amendment made to the enforcement rules, deals with Article 20 of the Patent Law. China made its third amendments to the PRC Patent Law in 2008 which became effective on October 1, 2009. Previous amendments took place in 1984, and 2000. The 2008 amendment came around through a voluntary need for change, in accordance with the State Council’s National Intellectual Property Strategy, rather than international pressure.

The State Council’s new release can be located at the following location: http://www.gov.cn/zwgk/2010-01/18/content_1513398.htm

Push for stronger copyright laws

IPR protection is a continual concern and a number one priority for China. It’s importance is evident by State releases, such as the National IP Strategy. Director General of the General Administration of Press and Publication (“GATT”) and the National Copyright Administration (“NCA”), Liu Binjie, expressed the need to push the need for reforms of copyright law in China. Currently, the PRC’s Copyright Law is lagging behind, with revisions having already been made in 2008 to the Patent Law, and the Trademark Law currently undergoing revisions.

GATT is the administrative agency in China responsible for the distribution of news, and internet publications. The two agencies are very active in the promotion of copyright issues. In October 2009, Liu Binjie met with Director General Francis Gurry of WIPO in Geneva, exchanging views on joint cooperation within the field of copyright.

China is a binding signatory to international conventions concerning the protection of copyright, including the Universal Copyright Convention (1952), and the Berne Convention (1979).

Outsourcing & data protection

The protection of private and confidential data should be an immediate priority when outsourcing to a third party. As from February 1, 2010 Chinese domestic companies shall be subject to a Ministry of Commerce and Ministry of Industry and Information Technology release which addresses the need to protect such data. The release outlines what is meant by confidential data, and steps required to be taken to ensure there are no breaches, or to limit the number of potential breaches by unauthorised personnel. ...

China Law 0 Comment January 25, 2010, 4:50 pm


Microsoft filed the lawsuit against Beijing Strong Well at the Beijing No. 1 Intermediate People’s Court on the ground of copyright infringement.

Microsoft claimed that Strong Well installed the Microsoft Windows XP and Microsoft Office 2003 on computers without their permission which Strong Well sold. Microsoft also proved that Strong Well had been continuously infringing their copyright by way of pirated software installation on computers, which caused huge amount of loss to Microsoft.

Strong Well argued that it had never manufactured or sold any assembled computers. Therefore, Strong Well prohibited its staff showing assistances to customers with installation of any software and advised to customers not to install any pirated software.

Later, It was proved that Microsoft own the Microsoft Windows XP and Microsoft Office 2003, released in the USA, which was also protected in China under the "Computer Software Protection Regulations". The court also found that the warranty cards issued by Strong Well included a word “Strong Well DIY-assembled computer (with computer case) guaranteed” even Strong Well argued in the court they sold only computer accessories.

After the Court held the case, Strong Well was found at fault and ordered to compensate for damages caused to Microsoft with the amount of RMB350000.

China Law 0 Comment January 25, 2010, 4:32 pm

Mongolia Will Hold The Inaugural Mongolia Economic Forum 2010

Tsolmon Shar

On February 8th and 9th of 2010, the Inaugural Mongolia Economic Forum of 2010 will be held in Ulaanbaatar under the auspices of the Prime Minister of Mongolia with active support of the President of Mongolia and Parliament (State Great Hural) of the Country. The main purpose of the Forum is to consulate and discuss with policy-makers, scientists and domestic and international investors on development issues. Holding this Economic Forum is significantly important for Mongolian and international business community.

During the Forum 2010, efficient utilization of the nation’s human and natural resources to improve the competitiveness of the country will be key agenda issues. Other key issues which will be discussed in the Forum include budget reforms, mining development and related infrastructure, improvement of financial and stock markets, green economy and land rehabilitation, preparing educated labor force for development and improving overall business environment of Mongolia.

The Forum will be annually organized in February by Mongolian Economic Forum NGO involving many participants from different backgrounds such as government officials, local governors, scientists, NGOs, media and business leaders.

Edward Lehman, Managing Director at Lehman, Lee & Xu Law Firm, commented that “it is great opportunity for business leaders to share their business operations with officials and find a way for further business environment improvement in Mongolia during the Forum”.

Lehman, Lee & Xu is the first international law firm opened its branch office in Ulaanbaatar, the capital city of Mongolia. The lawyers at Lehman, Lee & Xu provides a wide range of legal advices and best solutions to their clients. ...

China Business 0 Comment January 22, 2010, 5:55 pm


Chinese police have concluded an investigation into a detained Australian Rio Tinto Ltd executive and three colleagues arrested on charges of infringing trade secrets and bribery and sent the case to prosecutors, the Australian government and Chinese state media said last Monday. Four Rio staff, including Australian citizen Stern Hu, has been in Chinese custody since July over accusations of illegally obtaining commercial secrets.

Rio Tinto and the Australian government have urged China to allow the four, including Stern Hu, an Australian citizen who headed Rio Tinto's iron ore business in China, legal representation and to handle the case in a transparent way.

Hu and the three other employees were detained last July on charges of bribery and commercial espionage during iron ore price talks. They were charged in August with paying bribes to obtain confidential information about China's steel industry.

A brief statement by Shanghai's public security bureau, carried by state news agency Xinhua late on Monday, did not specify on what charges the four might be tried. It noted they were investigated for infringing trade secrets and bribery.

"The case is now in the hands of the Shanghai People's Procuratorate (prosecutor) who will decide whether it should be brought to trial," said Australia's Department of Foreign Affairs & Trade (DFAT), after being notified by Chinese authorities.

“We are not in a position to say how long this phase of the case will take, and are not prepared to speculate about the outcome. Details of the actual charges are not likely to be known until the prosecutors have made their decision on whether the case should proceed to trial," DFAT said in a statement.
China is Australia's biggest trade partner, with trade worth $53 billion last year. Australia exported $15 billion worth of iron ore to China in 2008, or 41 percent of China's iron ore imports.

China Law 0 Comment January 22, 2010, 5:46 pm


Tsolmon Shar
China approved stock index futures, giving investors a tool to protect against losses and profit from any declines. Until now, Chinese investors could only profit from gains in equities.

Chinese government also approved margin trading and short selling, the China Securities Regulatory Commission said. According to Commission’s statement it may take three months to complete preparations for index futures.

Index futures are essentially agreements to buy or sell an index at a preset value on an agreed date. Investors can also borrow money to buy securities or borrow securities to sell under the business of margin trading and short selling.

“China has opened great opportunities for future investors in the stock market” said Mr. Edward Lehman, managing director of Lehman, Lee & Xu law firm, which is one of the largest commercial law firms in China maintaining offices in Beijing, Shanghai, Shenzhen and Hong Kong.

Analysts expect the new tools to improve liquidity by attracting more capital into the equity market as the government plans to cut back bank lending to 7.5 trillion yuan ($1.1 trillion) in 2010 from last year’s 9.21 trillion yuan.

Index futures are part of China’s push to make more investment options available in the world’s third-biggest stock market by value. China restricts overseas investors to buying B shares that trade in U.S. dollars in Shanghai and Hong Kong dollars in Shenzhen. China’s A shares are mostly limited to local investors. Foreign ownership of fund management companies is restricted to 49 percent.

China Law 0 Comment January 22, 2010, 5:46 pm


Tsolmon Shar

Since gold prices have risen, many investors have been seeking investment opportunities elsewhere within the mining sector.

China National Gold Group Corp (CNGG), the country's second largest gold producer, was in talks to buy several gold mines overseas. The group’s target investment destinations include Mongolia, Russian, North America, Australia and Africa.

CNGG prefers low risk and mature projects in terms of foreign investment. The capital operation manager Wu Zhanming said in China Daily interview: “We are only interested in operating mines, and will not get involved in grassroots risk exploration projects.”

According to the China Daily News, CNGG added 92.4 tons of new resources to its 1,200 tons of gold reserves in 2009, entrenching its position as the Chinese largest gold reserves holder. It produced 123.19 tons of gold last year, up 37 percent from 2008. CNGG prefers to increase even more its gold reserves and output in 2010.

The company will mainly focus on gold mining to take advantage of rising gold prices. In the meantime, it will tap into mining other metals, including copper, silver and zinc, as a hedge against the risk of gold price fluctuations.

Mongolia is one of few countries in the world which has a rich of mineral resources. Currently, over 6,000 mineral showings/deposits of 80 different minerals are known in Mongolia (including coal, copper, gold, iron ore, tungsten, molybdenum, phosphate, uranium, and oil). With such large scales of minerals and discoveries of the world’s largest Oyu Tolgoi copper/gold deposit, Mongolia is the top destination of foreign investors. At the end of March 2009, some 5,221 exploration and mining licenses had been issued covering a total area of approximately 48 million hectares of land (32% of the total land of Mongolia). ...

China Business 0 Comment January 22, 2010, 5:39 pm

Notice On Identifying And Concluding The “Beneficial Owner” UnderThe Double Tax Agreement

If two countries enter into Double Taxation Agreement, investors of both countries enjoy special treatment in respect of dividends, interest, and royalties. The State Tax Administration issued the Notice which addresses on identification and determination of a “Beneficial Owner” under the Double Tax Agreement.

Qualification of a “beneficial owner” under the Notice
The Notice defines a “beneficial owner” is a person who owns and controls an income or the rights and property from which an income is derived. A beneficial owner, which can be an individual, a company, or any other group, is generally engaged in substantial business activities, under the Notice.
According to the Notice, an agent or a conduit company is not considered as a beneficial owner. Therefore, Notice defines a "conduit company" as a company that is incorporated for the purpose of the avoidance or reduction of tax, or the transfer or accumulation of profits. This type of company merely registers in a country in order to satisfy a legally required organization form; it does not conduct substantial business activities such as production, trading, and management.

Determination of a Beneficial Owner
The Notice lists the following factors, which are not in favor of positive determination of a "beneficial owner":
1. The applicant is obligated to pay or distribute the income in full or a majority portion thereof (e.g., 60 percent or more) to residents of a third country or region within a prescribed time period (e.g., within 12 months after receiving the income).
2. The applicant has few or no business activities other than holding the rights or assets that generate the income.
3. If the applicant is a company, the assets, operation scale, and personnel of the applicant are small in size or amount, which does not match the amount of income.
4. The applicant has no or almost no right to control or dispose of the income or the rights or assets generating the income and assumes no or little risk.
5. The contracting country (region) does not tax the income, or the effective tax rate is very low.
6. The lender to a loan agreement that generates interest income has another loan agreement or deposit contract with a third party; the amount, interest rate, and the time of conclusion with respect to the third-party contract is similar to those of the first loan agreement.
7. The licensor to an agreement on copyright, patent, and technology licensing or transfer has a contract to license or transfer those from a third party.

When an applicant applies for tax relief under the DTA, he or she should prove himself as a beneficial owner providing the information relevant to the factors listed. The tax authorities should determine whether the applicant is a beneficial owner by analyzing the above factors relevant to the income. If necessary, they may confirm the information relevant to the identification of a beneficial owner through information exchange with a treaty country....

China Culture 0 Comment January 20, 2010, 5:24 pm

AML Update: Salt Reforms

Sam Engutsamy, January 20 2010.

Having been operational for over 2000 years, China’s monopoly on the sale and production of salt appears to be drawing to an end.

The National Development and Reform Commission (“NDRC”) are looking to submit proposals to the State Council to bring a conclusion to the two thousand year old monopolistic practice. The salt monopoly grew from the need to raise revenue from taxes, and to tackle the iodine deficiency in the populace’s diet within certain areas of China.

China National Salt Industry Corporation, the largest producer and seller of salt for the last sixty years, has functioned as regulator under the NDRC’s supervision.

Post AML enactment, there were concerns that the state owned enterprises (“SOEs”) provision found under Article 7, would allow SOEs to be exempt from the AML. This consequently led to concerns that the AML may, during its enforcement, be based upon a policy of protectionism. If the NDRC’s proposals are approved by the State Council, it would endorse the AML’s important, and equality, whilst at the same time set to rest any stakeholder worries. Additionally, such a move can only benefit China, as it continues in implementing a market economy.

China Business 0 Comment January 20, 2010, 4:00 pm

International Trade: Abbreviations

What does “MFN” stand for?“MFN” stands for “Most Favourite Nation”. The MFN principle is used within World Trade Organisation (“WTO”) Agreements, and is based upon the principle that member states should treat others fairly. Such principles form solid foundations of the General Agreement on Tariffs and Trade (“GATT”), the General Agreement on Trade in Services (“GATS”) and the Agreement on Trade-Related Aspects of Intellectual Property Rights (“TRIPS”). There are some exceptions to the MFN principle, however theses are only operational under strict conditions.

Example of MFN duty rates being reduced?
Tariff No. Product 2008 (%) 2009 (%) 2010 (%)

08101000 Strawberries 16.9 15.5 14
08129000 Fruits and nuts 26.8 25.9 25

What does “FTA” stand for?
“FTA” stands for Free Trade Agreements. FTAs are operational normally between two countries with an aim to reduce tariffs to trade. China currently has ten FTAs in operation, including agreements with New Zealand (http://www.chinafta.govt.nz/) and Singapore (http://www.fta.gov.sg/fta_csfta.asp?hl=27). Additionally, China has six FTAs under negotiations, with countries such as Australia, Iceland, and Norway, and two FTAs under consideration with India and Korea. Under such agreements, certain products are capable of enjoying conventional duty rates.

For further details on China’s FTAs please visit: http://fta.mofcom.gov.cn/topic/ennorway.shtml

China Business 0 Comment January 20, 2010, 3:30 pm

Tax updates 2010

A. State Council’s “Notice on the Promotion of Stable and Sound Development of the Real Estate Market”Recently released by the State Council, the Notice on the Promotion of Stable and Sound Development of the Real Estate Market (“the Notice”) outlines that down payment mortgage ratios shall not be less than forty percent where a loan has been used to purchase a house, and a second house is being purchased.

The Notice supports first time buyers in China, by outlining that financial institutions should adhere to rigorous policies regarding the management of mortgages for secondary purchases.

B. MOFCOM’s Circular No.1, 2010China’s Ministry of Commerce (“MOFCOM”) clarified and expanded upon previous issues regarding extension of anti dumping duties. The MOFCOM announcement provides that sixty days prior to the termination of anti dumping measures, a petition may be made with MOFCOM via written format in order for the Ministry to make a final review as to whether such termination of measures shall allow for the re-emergence of problems the original duties sort to remove.

C. MOF’s Circular No.155, 2009
China’s Ministry of Finance (“MOF”) Circular No. 155 (“the Circular”) issued on December 24th, 2009 deals with the tax policies related to the operation of student departments and restaurants within universities. The Circular outlines the following:
(i) Student’s apartments are exempt from property taxes;
(ii) Apartment’s signed by students are exempt from stamp duty;
(iii) Accommodation incomes are exempt from sales taxes; and
(iv) Income via dinning facilities are exempt from sales taxes.

D. CICPA issue draft auditing rules
The Chinese Institute of Certified Public Accountants have issued draft revisions to the 10 of the 38 auditing rules. These draft amendments concern aspects such as terms and conditions of auditing services, and issues relating to evidence found under Rule No. 1311....

China News 0 Comment January 20, 2010, 3:22 pm

Celebrating Jerome Cohen’s 80th birthday

Georgetown and George Washington, two universities based in Washington D.C, USA, will join hands to celebrate Jerome A. Cohen’s upcoming 80th birthday.

The conference titled “Six Decades of Asian Law: A Celebration of Professor Jerome Cohen” is scheduled to take place on February 19th 2010, between 14.00 – 18.00, and to held at George Washington’s University School of Law.

Jerome Cohen, a Professor of Law at New York University School of Law (“NYU”), received his J.D from Yale Law School in 1955, and was appointed to his position as Professor at NYU in 1990. Previous to this, he had been made Professor of Law at Harvard Law School, and the University of California at Berkeley School of Law, in 1964, and 1959 respectively. As well as holding the position of professor at NYU, Jerome Cohen is also a senior partner at Paul, Weiss, Rifkind, Wharton & Garrison. Professor Cohen is world renowned as an expert of the Chinese legal system.

Edward Lehman, Managing Director of Lehman, Lee & Xu commented that “Professor Cohen is a permanent and predominant figure of Chinese law. His wealth of knowledge and experience of Chinese law is evident by his publications, and academic offices he has, and currently holds.”

Professor Cohen’s background can be located on the NYU website: http://its.law.nyu.edu/facultyprofiles/profile.cfm?personID=19840

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 is recognised as a leading expert in corporate law and intellectual property law. Lehman, Lee & Xu operates an academic partnership with Georgetown School of Law, whereby international summer internships are offered for students to spend time working within one of the firm’s offices within China. In addition to Georgetown, Lehman, Lee & Xu also operates academic partnerships with other universities both within China, and abroad, such as China University of Political Science and Law and Renmin University School of Law.

Further Information:
For updates and information regarding legal news and our firm please visit www.lehmanlaw.com, or feel free to contact us directly by email on mail@lehmanlaw.com should you have any questions concerning this article, or any legal queries you may have.

Lehman, Lee & Xu
10-2 Liangmaqiao Diplomatic Compound
No. 22 Dongfang East Road, Chaoyang District
Beijing 100600 China
Tel: (86)(10) 8532 1919
Fax: (86)(10) 8532 1999

Podcast 0 Comment January 15, 2010, 4:00 pm

Ed Lehman Named One of China's Top Immigration Lawyers.

Edward Lehman of Lehman, Lee, and Xu has been named one of the best Immigration lawyers in China by the International Legal Who's Who 2010. This award accompanies Mr. Lehman’s award from the same publication as one of China’s best Trademark lawyers and one of China’s best Franchise lawyers.

Who’s Who is an independent research firm that was named the Strategic Research Partner of the ABA Section of International Law, in addition to its position as Official Research Partner of the International Bar Association. The firm compiles thousands of nominations from clients and private professionals to determine the leading individuals in their respected practice areas. The winners were formally announced in theThe International Who's Who of Franchise Lawyers 2009....

China Law 0 Comment January 15, 2010, 3:25 pm

Hollywood in Beijing

On Tuesday, January 26 AmCham-China and METAN Development Group will be hosting an open discussion on the rise of branded entertainment in China. The event will be held from 4:00 to 7:00 PM at the Kerry Centre Hotel.

The event will cover an array of topics focusing on how the worlds of content and advertising are quickly converging together into one. Advertisers are becoming more involved in the creation and ownership of content as an array of opportunities for marketers and companies are created by the day. Larry Namer will be headlining the event as he discusses branded entertainment and the major shifts that are shaping China’s media industry today. The event welcomes everyone interested in the industry to come and join us discuss the trends of branded entertainment and how they will increasingly impact your marketing strategies in China.

China News 0 Comment January 15, 2010, 3:03 pm

Ed Lehman, Managing Director of Lehman, Lee & Xu, Nominated to Loyola Academy Athletic Hall of Fame

In a track and field discipline requiring speed, explosive power, exquisite timing, and delicate body control, only a few possess the physical gifts necessary to meet its demands. Elite high jumpers, faced with the challenge to leap over a bar several inches above their head, are rare performers indeed. Between 1976 and 1978, Edward E. Lehman proved one of the few and rare as he rewrote the Loyola record book in the high jump with a long string of glittering performances.

Lean and lanky, Ed looked the part. A three-sport athlete in football, basketball, and track, Ed possessed a natural athleticism that served him well as a multi-event performer on the track and in the field. He worked the sprints, the mile relay, and the long jump, but it was w the high jump that became the special province in which he established a record of consistent accomplishment unrivalled by any jumper in Loyola Academy track and field history.

In the esoteric world of high jumping, clearing a height of six feet is considered a benchmark that separates the pretenders from the contenders. Reaching it once in a high school career is a notable accomplishment. With each increment above the threshold, the list of achievers grows even smaller. As a high jumper of remarkable consistency, Ed leapt over the six-foot barrier an amazing twenty-two times in his career. He cleared 6’4” four times, topped only by his indoor record of 6’5”, a mark that still stands today. Ed left Loyola the owner of ten of its top thirteen high jump performances ever, including what were then the top five all-time Loyola jumps. His most dramatic moment came in the 1978 Catholic League Indoor Championship meet at the University of Chicago. With the title on the line between Loyola and Brother Rice, and with the high jump the lone event remaining, Ed decided the meet with a victorious 6’3” leap to nail down the title for Loyola and to secure Loyola Academy’s 100th CCL championship in all sports. In three years of varsity competition, Ed finished in the top three of CCL high jump six straight times in three years, indoors and outdoors, and twice qualified for the state finals.

Upon graduation from Loyola, Ed headed to DePauw University, where he lettered four years on the Tigers’ track team, competing in the high jump, long jump, 400-meters, and the 1600-meter relay. After earning his bachelor of science from DePauw in 1982, he attended law school at the University of Notre Dame and then Loyola University, earning his degree from Loyola in 1985. Not long after the reestablishment of diplomatic relations between the United States and China, Ed journeyed to Beijing, where he served as a corporate attorney with an American firm. On June 4, 1989, amid the chaos and uncertainty of Tianamen Square, Ed’s life suddenly changed. When ordered by his firm to leave the country for Hong Kong because the firm could no longer guarantee his safety, Ed refused to leave the mainland, the only foreign attorney who chose to remain behind. Dismissed by his firm for insurance reasons, Ed continued practicing law for a Chinese state-run firm. With the reintroduction of private law firms to the country in 1992, Ed and his partners founded Lehman, Lee & Xu, the eighth private law firm to be founded in the People’s Republic of China and the first Chinese law firm ever to be managed by a foreign national. He remains the longest serving managing director of any Chinese law firm. Ed resides with his family in Beijing.

Lehman Affairs 0 Comment January 15, 2010, 2:56 pm

The Administrative Measures for the Establishment of Partnership Enterprises in China by Foreign Enterprises or Individuals

On August 19, 2009, Administrative Measures on the Establishment of Partnership Enterprises by Foreign Enterprises or Individuals ( 外国企业和个人在中国境内设立合伙企业管理办法, "FIP Measures" ) was issued by the State Council, which will be effective on March 1, 2010.

The key issues concerning the Measures

According to the FIP Measures foreign individuals or enterprises are allowed to establish a partnership with either foreign investors or Chinese individuals or enterprises. The FIP Measures also apply to individuals or enterprises from Hong Kong, Macao and Taiwan. Under the new rules, foreign individuals or enterprises can join to existing Chinese and Foreign partnerships as new partners.

Under the Partnership Law, partners are permitted to make capital contributions to the partnership in cash, in kind, by labor, by intellectual property, by land use rights or by other property rights. The FIP Measures regulates that the monetary contributions by foreign partners to the partnership must be convertible currencies or lawfully earned RMB. However, it is not stated in the FIP Measures whether foreign partners may also make capital contributions in the same way as their Chinese partners. There are also no requirements about the minimum capital contributions, the minimum ratio for monetary contribution and the time limit for contributions in the FIP Measures.

The FIP Measures authorizes the State Administration of Industry and Commerce (“SAIC”) and its local counterparts rule the establishment, amendment registration and termination of FIPs without approval by the Ministry of Commerce (“MOFCOM”).However, aside from the documents required by Measures of the People’s Republic of China for the Registration of Partnership Enterprises, a written proof of compliance with foreign investment policies is required to be submitted at the time of registration. Foreign individuals and enterprises should refer to the Foreign Investment Guidance Catalog before registering the partnership. If the partnership business is in an industry subject to government approval, such approval should be obtained by the partnership.

The Measures also provide on assignment an agent or representative for registration of the partnership at the local administrative department for Industry and Commerce.

China Law 0 Comment January 15, 2010, 11:04 am

China New Rules On Foreign Tax Credits

On December 25, 2009 the Ministry of Finance and the State Administration of Taxation have issued a notice clarifying issues concerning the foreign tax credit (FTC) mechanism.

According to the Notice, foreign source income, credible tax, and credit limitation with respect to each country or region must be separately calculated. In calculating taxable income, the expenses must be allocated between China-origin income and foreign-origin income (by country). The losses of a branch in a foreign country may not offset any income originated from China or income from other foreign countries. Such losses can be used to offset income from the same country in the current year and subsequent five years.

The Notice also regulates clearly on when a resident enterprise claims indirect FTC in accordance with the relevant provisions in the Enterprises Income Tax Law, the foreign- source investment income on which the claim is based refers to the dividend income such as share interest and bonuses derived from the shares it holds directly or indirectly in a foreign subsidiary of the designated tier, with the total shares held at 20% or more. For dividend income such as share interest and bonuses, FTC claims can be made on a tier by tier basis by enterprises down to the lowest tier subsidiaries.

The notice states that for any amount of income received by resident enterprises from countries or regions, which are signatory to tax treaties with the Chinese government, those are entitled to tax exemption or deduction treatment according to the tax law of the country or region concerned. The amount exempted or deducted is also eligible for tax exemption or deduction in China. It can be treated as offshore income tax actually paid by the enterprise in applying for tax credits....

China Law 0 Comment January 15, 2010, 10:27 am

The First Lawsuit Over the Google Books Project In China

Tsolmon Shar

In October 2009, the lawsuit was filed under the Chinese Court against Google by a Chinese author Mian Mian upon violation of her copyright. The author Mian Mian argued that Google scanned her latest novel entitled “Acid House” into its online library without her permission.

Mian Mian, a counterculture writer known for her lurid tales of sex, drugs and nightlife, wants to be recovered her damages with amount of 6000Euro and a public apology, according to her lawyer Sun Jingwei.

Google removed Mian Mian’s works after it learned of the lawsuit, but Sun said that author was not satisfied. He further stated that: “we think even if they remove Mian Mian’s work their previous behavior is a violation of her rights. We demand a public apology.”

This case would be the first brought against Google in China over the Google Books project, which itself is no stranger to the courtroom.

The China Written Works Copyright Society called on Google to negotiate compensation for Chinese authors whose work was scanned into its library. Also Chinese Writer’s Association said in last December it had found more than 80,000 works by Chinese authors scanned into the library. Furthermore, the Association said it would hold talks with Google in near future on resolving the disputes.

China Culture 0 Comment January 15, 2010, 10:15 am


Tsolmon Shar
Recent IP cases filed under the Chinese courts have shown that China is taking progressive measurements regarding the infringements of Intellectual Property Rights.

Recently, MAN Nutzfahrzeuge AG was compensated US$3 million based on the fact that Chinese company allegedly appropriated their IPR by copying the design of its Starliner bus.

Following on from the Starliner bus case, on 20 August 2009 a Chinese court sentenced four people to prison and imposed fines of $1.6 million against them for various counts of software copyright infringement. Hong Lei and Xianzhong, the founders of Chengdu Gongruan Networking Technology, were accused of operating the website which provided online downloads of pirated Windows XP software. The Business Software Alliance Group, which represents a group of technology firms including Microsoft, Intel and Adobe, first filed a complaint with the National Copyright Administration of China and the Ministry of Public Security about software named Tomato Garden.

On the flip side, not all IP related disputes which were brought to the court’s attention was ruled in favor of international parties. One such example whereby Chinese companies have won over their international peers was on 16 November 2009, where a Chinese court ruled against Microsoft on the grounds of an allegation of IPR infringement of a Beijing-based software company, Zhongyi Electronic, in its use of two Chinese fonts. The court decided that Microsoft’s use of those fonts in Windows 98, Windows 2000, Windows XP and Windows Server 2003 went beyond the original agreement between the two companies. As a result Microsoft was ordered to stop selling those operating systems in China.

In the future, disputes involving IPR infringement are likely to increase in China.

China Law 0 Comment January 15, 2010, 10:00 am

Hong Kong: Contracts

In order for a contract to become legally binding and effective, three important ingredients consisting of offer and acceptance, consideration, and intention to create legal relations are required.

The first two requirements are some what straightforward. One example of offer and acceptance could be where Party A agrees to fix Party B’s car for X dollars if Party B then agrees to this a legally binding contract has been formed. Consideration can be an exchange of anything of value between the two parties. The third requirement, intention to create legal relations, can either be clear and transparent, or not obvious at all. In the latter category, the reasonable persons test would be applied. In order to make it clear that there are no such intentions certain wording such as “subject to contract” are used.

Where parties do not intend to be bound by the content of their agreement phrases such as the one above are usually used to highlight this. The use of such phrases appears that there can be non reliance on agreement terms, a lack of enforceability options, and no liability arising from non performance however dicta from a 2003 case decided the Chancery Division of the United Kingdom’s High Court suggests otherwise. Sargant L.J. stated “Be sure that to protect yourself you introduce into any preliminary contract you may think of making the words ‘subject to contract’.” I do not say that the phrase makes the contract containing it necessarily and whatever the context a conditional contract. But they are words appropriate for introducing a condition, and it would require a very strong and exceptional case for the clear prima facie meaning to be displaced.” Confetti Records (a firm) and others v Warner Music UK Ltd suggests that the phrase “subject to contract” may be displaced only by a very strong and exceptional case. Sargant L.J. provides previous case law examples of Michael Richard Properties Ltd v. Corporation of Wardens of St Saviour’s Parish Southwark [1975], Alpenstow Ltd v. Regalian Properties plc [1985], and Cranleigh Precision Engineering Ltd v. Bryant [1965], as such examples whereby the phrase was displaced.

One example whereby the courts displaced such a phrase was in the case of Michael Richard Properties Ltd v Corporation of Wardens of St Saviour’s Parish Southwark. Here, the phrase had been typed by mistake into an acceptance letter. The courts held that since there was no room for further negotiations then the phrase could be displaced.

China Law 0 Comment January 15, 2010, 9:37 am

Article 50: Search engines and mobile phones

Sam Engutsamy, January 14 2010.

2009 saw the first full year of China’s AML in effect. During this period three private actions cases were decided upon by the courts in accordance with the powers granted by Article 50. This posting shall give a brief overview of the three private actions cases decided upon by the Chinese courts.

Tangshan Renren Information Co., Ltd (Renren) – Baidu Company (Baidu)
The first case filled under the AML dealt with allegations of dominant market position within China’s search engine market. Baidu takes the number one position as China’s most popular search engine with Google coming second. Renren paid fees to Baidu to have their website listed on search results. Higher fees allowed for higher and more noticeable rankings. Renren claimed that Baidu had a dominant position within China’s search engine market, as they felt that Baidu had restricted the Renren’s noticeability on search results. Baidu justified such actions on the basis that Renren’s website contained a number of links which were contrary to their policy. Renren sought reinstallement of their website, and compensation in the region of RMB 1,106,000 for loses incurred.

Beijing No. 1 Intermediate Court found in favour of Baidu, by concluding that Baidu’s actions did not amount to monopolistic behaviour. A lack of supporting evidence damaged Renren’s chances of success.

Beijing Sursen Electronic Technology (Sursen) – Shanghai Shanda Network Development (Shanda) and Shanghai Xuanting Entertainment Information and Technology Co (Xuanting)
Details of this case can be located under a previous post at the following location: http://blawg.lehmanlaw.com/english/archives/2009/11/10/698.html.

China Mobile
Briefly touched upon in my previous post, this case concerned a private action brought to the courts by a Beijing lawyer and customer against China Mobile. The basis of the case concerned two sets of fees China Mobile were imposing on their customers. The courts did not pass judgement on this case, as the two parties reached a settlement. The settlement included a payment to the customer which according to China Mobile was not compensation, but merely as a gesture of gratitude for bringing it to the companies’ attention.

China Law 0 Comment January 15, 2010, 9:18 am

New MOFCOM Measures become effective

On January 1, 2010 two MOFCOM regulations regarding the reporting of concentrations, and review of concentrations became effective. This posting shall give an overview of the two releases:

(1) Measures for the Reporting of Concentrations of Business Operators
These new Measures will have applicability to mergers of undertaking, acquisitions through shares or equities and acquisitions through contractual obligations. The draft version of the Measures contained definition of “control” and issues surrounding joint ventures, however both have been removed. The Measures provides details of what revenues are to be taking into consideration when assessing if the entity meets the threshold requirements. The Measures lay down the requirement that all documentation submitted to MOFCOM are required to be in Chinese.

Available in Chinese at: http://fldj.mofcom.gov.cn/aarticle/c/200911/20091106639149.html

(2) Measures for the Review of Concentrations of Business Operators
These Measures address the process MOFCOM may take during the process where an undertaking has satisfied the notification threshold requirements and submitted an application for review by the Ministry. The Measures promote and encourage voluntary submission of additional information

Available in Chinese at: http://fldj.mofcom.gov.cn/aarticle/c/200911/20091106639145.html

China Law 0 Comment January 15, 2010, 9:10 am

China faces renewed concerns after contaminated milk product are found

Actions have been implemented to bring criminal proceedings against Shanghai Panda Diary Co (“Panda”) after milk products were found to contain high levels of the chemical melamine. This recent discovery follows on from the 2008 incident where milk and infant formulas also containing melamine, affected over 300,000, led to the death of six infants, and led to a further 860 being hospitalised. In 2004, watered down milk led to the deaths of 13 infants due to malnutrition. China’s legislative response to the 2008 incident was the enactment of the Food Safety Law of the People’s Republic of China which became effective on June 01, 2009.

Melamine, a type of plastic, is known to lead to renal and urinary complication within humans and animals. Consequently, the use of melamine in food production is prohibited.

Since the discovery of melamine in Panda milk products, three executives were arrested, the company shut down, and a halt on their stocks. The forthcoming criminal case is likely to enact severe punishments. One such example of the stringent views the courts have adopted to such breaches of the law was in November 2009 where two milk producers were executed after selling contained milk.

For information regarding melamine please visit the World Health Organisation’s website at the following location: http://www.who.int/csr/media/faq/QAmelamine/en/

China Law 0 Comment January 15, 2010, 8:52 am

The Law On Prohibiting Mineral Explorations in Forest Reserves and River Basins will affect more than 500 license holders

By Tsolmon Shar
07 Januray 2009

On 16 July 2009, The Parliament of Mongolia (The State Great Khural) adopted the Law on Prohibiting Mineral Explorations in Forest Reserves and River Basins. According to the new Law, it is strictly prohibited to explore and mine the minerals in the area of forest reserves and river basins. However, this provision doesn’t apply to strategically important mineral deposits.

The approval of the law brings significant outcomes to reduce environmental pollution, however, it also causes controversial scene in the mining sector. Due to implementation of the law, all the exploring and mining licenses, which permitted within 200m from forest reserves and water basins, will be withdrawn within 5 months. It means, the State will compensate more than 500 license holders, who affected by the new Law. However, the issues about how to compensate those license holders haven’t discussed by Mongolian authorities.

LEHMAN, LEE & XU is one of top Law Firms in China, which opened its branch office in Ulaanbaatar, Mongolia. Professional lawyers at LEHMAN, LEE & XU’s provides efficient legal advices and solutions to its international and Chinese clients.

To learn more about the Lehman, Lee & Xu, please visit to website: www.lehmanlaw.com
10-2 Liangmaqiao Diplomatic Compound, No. 22 Dongfang East Road, Chaoyang District
Beijing 100600 China
Tel: (86)(10)-8532 1919 Fax: (86)(10)-8532 1999
Email: mail@lehmanlaw.com

China Culture 0 Comment January 15, 2010, 8:43 am

Latest News Related To Mongolian Mining Sector

Mongolia has been experiencing a boom in its mining sector, which brings new opportunities as well as major challenges to future investors. 2009 brought two significant events in Mongolian mining sector.

Mongolia to Repeal Windfall Profits Tax
In August 2009, the Mongolian parliament (The Great Ikh Hural) voted to abolish the windfall profits tax on copper and gold effective 1 January 2010. The windfall profits tax, which was introduced in 2006 and imposed a 68% tax on the portion of the metal sales price (defined by reference to the London Metal Exchange) in excess of US $2600 per ton of copper and US $850 per ounce of gold.
A decision to repeal the windfall profits tax is surely to be welcomed by foreign mining companies doing business in Mongolia.

The government to sign for the Oyu Tolgoi project
Following the abolishment of the Windfall profits tax, the Mongolian government has signed a long-awaited investment agreement with Ivanhoe Mines Ltd. of Canada and Rio Tinto Ltd. of Australia concerning the development of the Oyu Tolgoi copper and gold project, which is located in southern part of Mongolia. According to the agreement, the production is expected to commence in 2013 with a five-year ramp up to full outfut.
The Oyu Tolgoi deposit is regarded as the world’s largest undeveloped gold and copper deposits, which is estimated to produce in excess of 450,000 tonnes of copper and 330,000 ounces of gold per year, with a 45 year mine life, and is one of the largest investments in Mongolia since the end of the Soviet era. Under the terms of the investment agreement and associated shareholders' agreement, the government of Mongolia will own 34% of Ivanhoe Mines Mongolia Inc LLC, the license holder of the Oyu Tolgoi project.
After 6 years in the works, it is believed the Oyu Tolgoi investment agreement will set a precedent for future foreign mining company investments in Mongolia and it is believed the project will increase Mongolia's GDP by 34% annually.
Mr. Edward Lehman, managing director of LEHMAN, LEE & XU Law Firm, commented on windfall profits tax that “Mongolian authorities have made important change by repealing the windfall profits tax to grow future investments in its mining sector.”
Lehman, Lee & Xu Law Firm is regarded as one of largest commercial Law Firms in China maintaining offices in Beijing, Shanghai and Shenzhen. The mining team of the firm advices to its clients all sort of legal advices relating to obtaining the exploration and mining licenses and its procedural works.

To learn more about the Lehman, Lee & Xu, please visit to website: www.lehmanlaw.com
10-2 Liangmaqiao Diplomatic Compound, No. 22 Dongfang East Road, Chaoyang District
Beijing 100600 China
Tel: (86)(10)-8532 1919 Fax: (86)(10)-8532 1999
Email: mail@lehmanlaw.com

China News 0 Comment January 11, 2010, 11:19 am


In October 2010, the International Telecommunication Union (ITU) is scheduled to release the 4G International Standard after a further test and evaluation of the proposals for 4G Standardization.

ITU recognized LTE-Advanced and 802.16m as international advanced 4G standard proposals among six 4G technology proposals, which were submitted from China, South Korea, Japan, the European Organization for Standardization 3GPP and the North American Organization for Standardization IEEE, in the ITU conference. Two selected technology proposals will be analyzed, assessed and tested by the ITU on next stage, according to its working plan.

Next year, three meetings will be held by the ITU. According to its requirements, each assessment team is required to submit a preparatory technical assessment record by February. A meeting will be held to discuss the relevant technologies in 802.16m submitted by IEEE in the U.S. A., in January. Then each assessment team will run a simulated system to test the proposed technologies and assess their performance by applying a set of object criteria. The assessment teams will be hold meetings and submit the second-round assessment result, in June next year. In October 2010, the ITU will announce the final assessment result of 4G standard in a meeting, in China. Relevant standardization organizations will then formulate more specific system standards according to the assessment result.

Mr. Edward Lehman, managing director at LEHMAN, LEE & XU, expressed his commitment to China 4G development that “Now China’s TD-LTE-Advanced is likely to become the World’s main standard for 4G communications. If the Chinese 4G technology becomes standard, it is great opportunity for Chinese companies to save a lot in terms of costs on Intellectual Property Rights”.
LEHMAN, LEE & XU Law Firm advises on and implements intellectual property management, monetization, and protection strategies for multinational companies which have valuable portfolios of Intellectual Property assets.

To learn more about the Lehman, Lee & Xu, please visit to website: www.lehmanlaw.com
10-2 Liangmaqiao Diplomatic Compound, No. 22 Dongfang East Road, Chaoyang District
Beijing 100600 China
Tel: (86)(10)-8532 1919 Fax: (86)(10)-8532 1999
Email: mail@lehmanlaw.com

China Law 0 Comment January 7, 2010, 10:18 am

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