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Trademark Infringement Dispute Between Savio Macchine Tessili And Q-Savio Wuxi Textile Machinery

By Tsolmon Shar

Savio Machine Tessili S.P.A (hereinafter ¡°Savio¡±) brought the lawsuit against Q-Savio Wuxi Textile Machinery Co., Ltd. (hereinafter ¡°Q-Savio¡±) with the Municipal Intermediate People¡¯s Court of Jiangsu claiming that Q-Savio illegally used Savio¡¯s registered trademark of ¡°SAVIO¡± in its brochure of ¡°Automatic Winder¡± which Q-Savio distributed to the public at 2007 International Textile Machinery Exhibition and on Internet. After the Municipal People¡¯s Court of Jiangsu held the case, Q-Savio was ordered to cease the unlawful acts and pay damages occurred to Savio.

The higher People¡¯s Court of Jiangsu province entertained the case appealed by Q-Savio, argued that the words of SAVIO appeared on the brochures didn¡¯t deceive the public and Q-Savio didn¡¯t violate any laws and regulations. However, the higher People¡¯s Court dismissed the appeal and upheld the original judgment based on following facts:

 Savio brought at court enough materials which provide evidences that Q-Savio used the related brochures and websites for its publicity purpose. The business, introduction, contact details, including IP address and phone number inserted on the brochures and websites were identical, and the major products information contained in the product introduction section were also consistence.
 Q-Savio violated the article 3 of P.R.C Regulation for the Implementation of the Trademark Law which stipulates an act of using a mark same as or similar to a registered trademark on the same types of products without the permission of the registered trademark owner constitutes trademark infringement.
 Q-Savio failed to support adequate evidences which prove the products named in its brochures manufactured by the Qingdao Hongda Textile Machinery Co., Ltd. in cooperation with Savio. Even though such information on the brochures was authentic, Q-Savio could not prove that Savio permitted Q-Savio to use the registered trademark of ¡°SAVIO¡± on the products.

Mr. Edward Lehman, managing director of Lehman Lee & Xu Law Firm commented on the trademark rights enforcement in China that ¡°combating unauthorized use of trade names does not fall within the provisions of the Chinese trademark law. Rather, trade name owners must bring a Court action under the Trademark Law and Chinese Anti-Unfair Competition Law for misuse of a trade name.¡± He further stated that ¡°because of the challenges presented in attempting to combat counterfeiting and unauthorized trade name and trademark use in China, Lehman, Lee & Xu consists of trademark attorneys who have experience in dealing with these issues and taking appropriate action against infringers and counterfeiters.¡±

Lehman, Lee & Xu is one of top practices in Intellectual Property Law in China employing more than 250 lawyers. Lehman, Lee & Xu¡¯s Intellectual Property team provides its clients a wide range of legal services and essential legal solutions.

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
www.lehmanlaw.com
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China Law 0 Comment December 31, 2009, 9:13 am

The State Council Solicits opinions for the Regulations on the Customs Protection of IPRs

Tsolmon Shar

The Legislative Affairs Office of the State Council issued the ¡°Decisions of the State Council on Revising the ¡®Regulations of the People¡¯s Republic of China on Intellectual Property Rights Protection by Customs¡¯ (Draft for Approval)¡±, inviting public to give comments and suggestions by 25 December 2009. The Public provided their comments in three ways: first, the Chinese government the Rule of Law Login Information Network (Web site: http://www.chinalaw.gov. cn); second, through correspondence; third, through e-mail.
Available at: (Chinese version) http://www.chinalaw.gov.cn/article/cazjgg/200912/20091200144478.shtml

The draft made 6 important revisions upon the original Regulations on the Customs Protection of Intellectual Property Rights, i.e. the alteration and cancellation of IPR records, counter guarantee, the retrieval of protection application made by the IPR holders and the legal responsibility due to import and export of infringing goods. With respect to auctioning off infringing goods, the draft amended Regulations and proposed to introduce one of the two possible sub-article governing destruction of infringing goods rather than auctioning them off: (1) except for certain circumstances, just removing the illegal trademarks on the infringing goods or counterfeit goods is insufficient to allow such goods to be sold in business activities; or (2) except for certain circumstances, not just removing the infringing trademarks on the infringing goods or counterfeit goods will prevent them from being sold in business activities. Considering the serious situation that the offenders export infringed goods by mailing, the draft amended the 28th article in the original regulations to "the import and export goods brought by individuals or mailed by express will be regarded as infringement goods if the goods exceed self use and reasonable quantity and infringe IP rights regulated in the second article of the draft regulations".

Mr. Edward Lehman, managing director of Lehman, Lee & Xu Law Firm commented that: ¡°this decision of the State Council is one of the significant results of the 2009 IPR Protection Action Plan.¡± And He further mentioned: ¡°to solicit the public opinions on Regulations, which will enable legal professionals and law firms to provide inputs to the law and provide better quality legal services to our IP clients¡°¡£


Lehman, Lee & Xu Law Firm, is one of top practices of IPR in China maintaining offices in Beijing, Shanghai, Shenzhen, assists its clients in registration and enforcement of patents, trademarks and copyrights in China and around the world, via an efficient global network.


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
www.lehmanlaw.com
...

China Law 0 Comment December 29, 2009, 3:17 pm

Double Filing under China¡¯s New Patent Law

Tsolmon Shar

The Third Amendment of China¡¯s Patent Law, which is in effect since October 1, 2009, introduced one of the important changes on ¡°double filing¡± issue, which allows applicants to file applications for both invention and utility model patents at the same time. A utility model patent is usually granted within eight to 12 months of filing the application. Currently, it takes between two and four years for an invention patent application to proceed to grant.

Under the new Patent Law, the applications for both an invention patent and a utility model patent for the same invention are permitted only if the following conditions are met:

The two different types of patent application are filed on the same day;

The applicant informs the Patent Office that it is filling two patent applications for the same invention; and

One of the two patents is abandoned when the invention patent is eventually granted.

The advantages of adopting a double filing strategy are similar under both the old and the new Patent law. A patent applicant can obtain a utility model patent quickly and rely on it to deal with infringers while the invention patent is undergoing examination.

Mr. Edward Lehman, managing director of Lehman, Lee & Xu commented on the changes that: ¡°compared to Chinese old Patent Law, the new law reduced the flexibility of the double filing by a requirement which demand the two applications be filed on the same day. In regard of this change, patent applicants must now think further ahead to determine whether patent infringement in China is likely to occur in the near future. If it is, it may be worth applying for both a utility model patent, which can be obtained quickly and readily enforced, and an invention patent¡±.

Lehman, Lee & Xu, is widely recognized as one of the largest and influential law firms in China, provides diversified legal services. The Intellectual Property Team, is one of the most highly regarded professional teams in Lehman, Lee & Xu Law Firm, provides a full range of China Patent Services which includes prosecution, licensing and dispute resolution. The IP team at Lehman, Lee & Xu, consists of senior partners and professional lawyers with many years of IP and legal advisory experience. The lawyers in this team are familiar with domestic IP laws and international treaties and some have backgrounds such as in electronic engineering, software design, e-commerce, international trade and other professional fields. Lehman, Lee & Xu Law Firm¡¯s IP team members bring their extensive knowledge of IP laws to the team for the benefit of their 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
www.lehmanlaw.com
...

China Law 0 Comment December 28, 2009, 2:55 pm

BEIJING NO. 1 INTERMEDIATE PEOPLE¡¯S COURT DISMISSES BAIDU ANTI-MONOPOLY LAWSUIT

December 18, 2009, Beijing. The Beijing No. 1 Intermediate People¡¯s Court has dismissed an abuse of dominance case against Chinese most popular search engine, Baidu.

On December 25, 2008 the litigation was filed with Beijing No. 1 Intermediate People¡¯s Court by Tangshan Renren Information Service Company (TRICS), claiming that Baidu restricted the access of searchers to their website. Baidu stated that Tangshan had illegally created links to increase traffic on its website, which results Baidu had to restrict the access to the site.

As the result of examination of the case, the Court concluded that Baidu did not abuse the legitimate right of TRICS. Therefore, the Court states that the actions taken by Baidu were neither discriminatory nor coercive.

Mr. Edward Lehman, managing director of Lehman, Lee & Xu, commented that ¡°since Anti-Monopoly Law became in effect in 2008, one of the features in these areas is that rise of a number of litigation launched by private parties challenging the market behaviour of large enterprises. Thus, this phenomenon may further increase in the litigation in near future involving such large enterprises.¡±

Lehman, Lee & Xu is one of the few truly top and premium law firms which engage in Anti-Monopoly practices able to deal with clients¡¯ broad diversity needs. At all Lehman, Lee & Xu¡¯s offices, many anti-monopoly and competition lawyers throughout the People¡¯s Republic of China (PRC) understand that its clients¡¯ legal strategies must be well-coordinated but tailored to relevant requirements. Since its first establishment in 1992, Lehman, Lee & Xu has extended its branch affiliated offices to 31 throughout in PRC with more than 250 lawyers who have outstanding legal education and practical background. Today, Lehman, Lee & Xu is recognized as leading Corporate and Commercial Law Firm which provides a wide range of customized legal services and practical solutions to its clients.

Tsolmon Shar

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
www.lehmanlaw.com
...

China Law 0 Comment December 23, 2009, 9:04 am

A More Practical Guidance on Tax Treatment of Treaty-Based Royalties

The Notice of the State Administration of Taxation on Certain Issues Regarding the Tax Treatment of Treaty-based Royalty Payments (¡°Circular 507¡±), issued in September, is aimed at some practical issues concerning avoidance of double taxation with respect to taxes on royalty payments.

By this circular, the State Administration of Taxation clarifies some terms involved in treaty articles and specifies the applicants of several categories of the royalty payments.

Circular 507 clarifies the difference between providing service and licensing or transferring certain technologies, and in which the key is whether the recipient has the use right. Besides, Circular 507 also lists four specific situations in which the service fees would be considered as service incomes instead of royalty payments.

Circular 507 also illustrates the definition of Information Concerning Industrial, Commercial or Scientific Experience, a term contained and listed in royalty payment article.

Under Circular 507, once a particular treaty¡¯s royalty article clearly defines the term ¡°royalties¡± to include the income derived from the use of industrial, commercial or scientific equipment ( the rental payments under Chinese tax rules), such income should be treated as royalties. While this rule does not apply to the incomes from the immovable properties, the one governed by other specific treaty.

Last but not the least, Circular 507 also points out to which beneficiary owners shall the royalty article be applied to, which can be a resident of the Contracting State, and those received the royalty payment from a Chinese PE of a foreign enterprise....

General 0 Comment December 15, 2009, 9:42 am

Corporate Asset Reorganization Does Not Enjoy a VAT Exemption

A new notice from the State Administration of Taxation (¡°SAT¡±) makes the illustration of VAT on asset reorganization more specific.

The SAT once issued a notice in 2002 (¡°2002 notice¡±), addressing that company¡¯s overall assets transfer could enjoy a VAT exemption. Since this 2002 notice merely presented a principal guideline, the following practice also has to comply with the concrete instructions from the SAT on a case-to-case base. The latest notice is also a concrete order towards the transaction of a company called Dalian Jinniu Corporate, providing the outline for VAT exemption on assets transfer a step further.

Dalian Jinniu, a listed company, conducted asset reorganization, transferring its assets to its controlling company while remaining itself a listed company, the SAT considers that VAT exemption should not be applied on this transaction, which the 2002 notice provided for the overall assets transfer. Therefore, according to the notice, VAT should be collected on such transfer when a listed company conducts assets reorganization but remains a listed company. But it remains to see that whether the key for the VAT exemption is the position afterward in stock market.

Consequently, it is advised for companies to consult with local taxation bureaus for the definition for ¡°transfer all assets¡±, the key to the VAT exemption based on 2002 notice. And an evaluation in advance is recommended to avoid dispute on taxation issues.
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China Blawg's thoughts 0 Comment December 15, 2009, 9:39 am

An interpretation from the CIRC

On November 19th 2009, the CIRC issued a notice to explain the article 6 of its "Measures on Administering Disclosure of Information about Newly Launched Life Insurance Products" (Measures) which come into effect on October 1st 2009.

According to article 6 of the Measures, an insurance company should provide its clients insurance applications with a confirmation column when selling new life insurance products. And the clients should re-write the following words as I have read the insurance articles, products introductions and insurance attentions, and understand the character of this product and the benefits in the insurance policy are unascertained.

This interpretation explains that the article 6 is aiming at prompting risk warning to the insurance applicants and helping them understand the insurance products they brought and the potential risks. And the benefits specified in the article 6 shall include both ascertained benefits and unascertained benefits. But the re-write words ¡°the benefits in the insurance policy are unascertained¡± is only constrained to the unascertained benefits in new launched products. And the risk warning sentence shall not influence the ascertained benefits the insurance applicants, insurants and the insurance beneficiaries may get according to the insurance contract.

Lehman lawyer John Lee remarks that the article 6 is a policy that used to protect the rights of the insurance applicants in case the insurance company or agencies deliberately concealing the unascertained character of the products. It reveals the CIRC¡¯s good faith in protecting the applicants.
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China Law 0 Comment December 10, 2009, 3:28 pm

The Supreme People Court¡¯s new regulation auction delegated by People¡¯s Court

The Supreme People¡¯s Court has released the ¡°Regulation on the Assessment, Auction and Sale of Property Delegated by People¡¯s Court¡± to rule the assessment, auction and sale work of the courts. This 16 articles regulation is aiming to deduce the potential corruption in the assessment, auction and sale process delegated by the People¡¯s courts.
It has detailed the way and process of selecting an access or auction agency. And it has also confirmed a punishment to who violate the regulation.
Lehman lawyer John Lee remarks this regulation as the supreme people¡¯s court¡¯s new action against court corruption as the many corruptions happened related to the access and auction process especially the process of selecting agencies.
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China Law 0 Comment December 10, 2009, 2:52 pm

SAIC Imposes Rules on Trademark Agencies

The State Administration for Industry and Commerce (SAIC) has promulgated the "Measures on the Administration of Trademark Agencies" on November 11th.
In this new regulation, the authority of trademark agencies is now the county and above level Commerce and Industry Bureau instead of the province-level in the past.
And according to the regulation, a trademark agency is an organization which files applications for trademark registration and deals with other trademark issues for and on behalf of its clients upon receiving their instructions. A trademark agent should be a sound minded person who has a good knowledge of trademark related laws, regulations, etc. and woks in a trademark agency.
The regulation also claimed that a trademark agent shall not work in two agencies at the same time and shall not disclose the un-public information to other agencies or persons. And a trademark agent shall not provide service if he/she knows that the client is asking the service in bad faith or its conduct is violating the laws or commit a fraudulent. Any agent violate this regulation will get an administration punishment.
Lehman lawyer John Lee remarks that this new regulation which rules on the trademark agencies may contribute to a better trademark agency market and provide a safer environment for clients. Also the change of the authority level means that it is easier to open a trademark agency than before. This may gives a big push to the development of China¡¯s trademark agency market.

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China Law 0 Comment December 10, 2009, 2:35 pm

Measures for the Administration of Trademark Agencies

The law is promulgated by the Administration of Industry and Commerce under the State Counsel according to the Trademark Law of People¡¯s Republic of China.

Some key law points are as follows:

Industrial and commercial administrative agencies above county level are in charge of trademark agencies and agents in their regions.

Persons who want to operate a trademark agency must apply to local industrial and commercial administrative agencies above county level for a Business License.

Trademark agencies and agents are not allowed to delegate to any other agencies or individuals their trademark agency work or to provide any assistance for such activities.

Trademark agencies can accept entrustment from the clients and handle following transactions:
a. trademark registration, change, expansion, transfer, dispute, evaluation, infringement complain, etc.;
b. provide trademark law legal advise, to be hired as trademark legal counsel;
c. any other trademark related transactions.

Trademark agencies are not allowed to accept entrustment from both sides of one trademark case.

Trademark agents must qualify for following conditions:
a. possess full civil capacity;
b. familiar with trademark and relevant law, regulations, and possess professional knowledge in trademark agency;
c. employed by a trademark agency.

A trademark agent is not allowed to work in more than two trademark agencies at the same time.

Trademark agencies shall refuse clients¡¯ entrustment when the clients¡¯ malice, fraud, or criminal intentions are known to the agency.
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China Law 0 Comment December 7, 2009, 5:26 pm

SAT Imposes New Rules Governing IIT on Individual Sub-Leases

On 18 November 2009, the State Administration of Taxation (SAT) has promulgated the "Notice on Levying Individual Income Tax on Income from Individual Sub-Leases".

According to the Notice, the income from sub-leases by individuals is taxable for individual income tax purposes. The Notice provides that rents payable to a landlord by a sub-lessor may be deducted from income from a sub-lease in the calculation of individual income tax, provided that the lease contract as well as legally valid receipts of the rents in question is produced.

Under the notice, the order of the items deductible before individual income tax on a lease as specified is:
(1) taxes paid in the course of leasing a property;
(2) rents paid to a landlord;
(3) the actual cost of decorating a leased property paid by the taxpayer in question; and
(4) other costs deductible in accordance with the applicable tax laws.
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General 0 Comment December 7, 2009, 3:33 pm

MOFCOM Promulgates Concentration Of Operators Assessment Rules

Qian Zhou, 2 December 2009

On 24 November 2009, the Ministry of Commerce (MOFCOM) has promulgated the "Concentration of Operators Assessment Rules", which will be effective on 1 January 2010.

According to the rules, the Ministry of Commerce acts as the designated authority of the anti-monopoly assessment of concentrations of operators and is responsible for accepting and processing applications for concentrations of operators. In the period between the commencement and conclusion of the assessment by the Ministry of Commerce, the applicants for a concentration of operators may submit a written request together with their reasons for withdrawing their application for the concentration of operators. Except for termination of the concentration in question, such withdrawal must be permitted by the Ministry of Commerce. Where the Ministry of Commerce decides not to conduct any further assessment or does not make a decision within the time limit, the operators in question may conduct the proposed concentration.
Lehman lawyer HaoJunbo remarks that due to the issue of the rules, the work of anti-monopoly will be more effective and more clearly to the relating companies. It¡¯s a significant step in the area of anti-monopoly in China.
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China News 0 Comment December 7, 2009, 3:32 pm

Good News for the Banks both in Taiwan District and Mainland

As the signed Memorandum of Understanding between the mainland China and Taiwan District (MOU) would become effective in 60 days, the representative offices for Taiwan-based banks are busy preparing files in assist of their head office in delivering applications to the Taiwan monetary regulatory institutions to be upgraded to branch offices.

And on the other hand, the Bank of China, the bank for 80% of the Taiwan related companies in mainland, announced its building of a branch office in Xinyi District of Taipei, which will focus on corporate finance.

The MOU, which is signed finally on November 16th2009, is really good news for the banks both in Taiwan and Mainland, who are now seeking for a larger market. The Taiwan Banks, who have a clear understanding of the Taiwan companies¡¯ credit conditions, would offer loans for the small and middle sized branches of Taiwan companies easier. And also, those banks are looking forward to the 1.9 billion Union Pay market.

MOU is a key for future cooperation between Taiwan District and Mainland in financial areas. In addition to the upgrading of the representative offices, the Taiwan banks are expecting a leap market-open of the mainland¡¯s money market such as the areas of RMB business and direct bank investigation.

While a representative office can only do liaison, market research, consulting and other non-profit activities, a branch office can do profit-making business. And before the effective of the MOU, a Taiwan bank can not start a branch office in mainland until it fulfills the requirements of the Regulation for Foreign Banks. According to the article 9 and article 12 of the Regulation for Foreign Banks, a Taiwan Bank should operate a representative office in mainland for two years before it upgrading to a branch office. And to apply the license of operating RMB business, a bank should run its representative office for 3 years continually and profit for two consecutive years in accordance to the article 34 of the Regulation for Foreign Banks. With the help of MOU, it might be easier for the Taiwan banks to establish a branch office.

In the mind of an enterprising Taiwan banker, the money market of mainland would be attractive as the number of potential consumers is growing with the developing of the nation. But a Taiwan bank can only become a share holder of a mainland bank with the help of a third party now. The Taiwan Fubon Financial Holding Company, for example, bought 19.99% shares of the Xiamen Commercial Bank through its Hong Kong subsidiary in 2008 and became the first Taiwan finial institution that holds shares of a mainland bank. But as the procedure of buying shares through a third party is complex and time-consuming, Taiwan banks are looking for the possibility of direct investigation.

Although no permission of direct bank investigation included, MOU is still a symbol of starting cross-strait financial cooperation and a prelude of ECFA.

Lehman lawyers remark that the MOU is only a memorandum with no legal effect. Although the two parties of the MOU would obey it according to international practice, the MOU can not replace the laws of the two. For the future cross-strait cooperation in financial areas, the refinement of financial laws of both Taiwan District and Mainland is inevitable....

China News 0 Comment December 1, 2009, 3:12 pm

US-based GE and China's Ministry of Railways to cooperate on building high-speed railway in US

The US-based GE and China¡¯s Ministry of Railways signed a memorandum on November 17th 2009. According to the memorandum, the two parties promised to cooperate in the competition for the US Uper-350km/h High-speed Railway Project.

The GE officer in China praised the railway technology of the corporations under the Ministry of Railways as the world¡¯s most mature and most complete. And the officer is looking forward to the success of the cooperation.

Building a railway in the US by Chinese seems a long time ago story. It¡¯s about 150 years ago when the Chinese immigrants moved to the US by ships across the ocean and worked in the building program of railway across the American continent. It is not a happy experience in the Chinese-American¡¯s memory. But the future cooperating in the US High-speed Railway Project may be another story. It is because the technology is cherished now than the labor force of the Chinese.

China had built many high speed railways in recent years. To stimulate the economic, the Chinese government had set up a project which including building a high speed railway system that can make every main cities in China be reached within 8 hours from the capital Beijing. In building this huge railway system, the Ministry of Railways gained high quality technology of building railways. And that¡¯s maybe the reason of the cooperation on November 27th2009.

To improve its situation of railway speed, the US government is now planning to launch a new and efficient high-speed passenger rail network in 100-600 mile corridors that connect communities across America. If the alleged GE and Ministry of Railways get their target successfully, a great number of job opportunities will be made for the citizens both in the US and China.

Lehman lawyers remark that in the coming cooperation, technology exporting may become part of it. In the memory of most Chinese, China is always a technology importing and products exporting country. But now China is exporting its technology to the US. Under the frame of WTO, intellectual property transactions are now a significant part of the world trade. And China is gaining benefit from this. But the intellectual property laws in China now are more focusing on the technology import than the export. Maybe it¡¯s time for the government to make a plan for technology export legislature. ...

China News 0 Comment December 1, 2009, 3:09 pm

AmCham Education Course

The American Chamber of Commerce (¡°AmCham¡±) Shanghai to hold an education and training conference on December 10, 2009.

The all day event, to be held at the Renaissance Shanghai Zhongshan Park Hotel will be addressing issues surrounding and related to effective training. Keynote speakers include Lorna Davis - Chairman and President of Kraft Foods, China; Grant Mosey ¨C Vice President and Director of Coca-Cola University, Coca-Cola (China) Beverage Ltd; and Richard Rothman ¨C Managing Director of Gap International (Asia Pacific Region).

For further details on this AmCham event please visit: http://www.amcham-shanghai.org/AmChamPortal/Event/EventDetail.aspx?EventId=3956

Lehman, Lee & Xu has offices located throughout mainland China including Shanghai. For further information related to this office, our practice areas, or any other questions please email us on mail@lehmanlaw.com, or visit our website at www.lehmanlaw.com.
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China Culture 0 Comment December 1, 2009, 3:06 pm

China¡¯s two central departments issued new tax preferential policies for individuals

On 27 September, 2009 the Ministry of Finance and the State Administration of Taxation coordinately issued the Notice On Tax-Free Policies For Business Tax On Financial Products Trading Of Individuals (hereafter referred as ¡°TPBT¡±), stating that individuals are provisionally exempt from Business Tax (BT) on provision of offshore construction, cultural and sporting services. TPBT will become effective on 1 January, 2009.

TPBT indicates that Domestic companies and individuals are provisionally exempt from Business Tax (BT) on provision of offshore construction, cultural and sporting services. Overseas companies and individuals are not subject to BT on the specified services where they are provided to domestic companies and individuals and occur entirely outside China. Individuals are exempt from BT on trading of financial commodities.

Comparing with Circular 111, the new TPBT makes some changes to the tax preferential policies, said Weiwei YE, legal counselor of lehman lee & xu. Circular 111 sets out BT exemptions for certain specified offshore services, in follow up to the BT taxable services prescribed by the revised Provisional Regulations on BT. BT taxable services refer to any services where the companies or individuals that either provide or receive these services are located in China. The trading of foreign currency, marketable securities, non-commodity futures and other financial commodities by any taxpayer is subject to BT. Obviously, fewer persons enjoy the tax preferential policies with the scope narrowed too. The issuance of TPBT reflects variation of policies of China¡¯s central government.

Lehman, Lee & Xu is one of the largest and most prominent law firms in China. With full-service operations in Beijing, Shanghai, Shenzhen and Hong Kong, along with offices in every significant provincial capital, the Firm provides legal counsel on all aspects of investment and business operations in the world's largest and most rapidly developing nation.
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China News 0 Comment December 1, 2009, 3:01 pm

Airlines to merge by year-end--Good news to victims of Baotou air crash

On November 24, 2009, China Eastern Airlines, the country's third biggest carrier, said that it would complete its merger transaction with Shanghai Airlines by the end of the year.
The Shanghai-based carrier said in July it would buy smaller rival Shanghai Airlines via a 9-billion-yuan share swap that would give it a market share of over 50 percent in China's financial hub.

It is reported that the profit of China Eastern Airlines reduced a lot in the financial crisis. However, the airline said that it has made a net profit of 1.2 billion yuan in the first nine months of this year.

China Eastern yesterday also inked a partnership deal with Chinese e-commerce portal Alibaba Group to include more Web-based applications in its routine operations.

The airline has set up a ticket-selling platform on Taobao.com, China's largest online shopping portal under Alibaba. Alipay, another subsidiary of Alibaba, will provide online payment services for customers who buy tickets from China Eastern's website. Earlier this month, China Eastern established a similar selling platform with Tenpay.com, the payment arm of China's Internet giant Tencent, to promote its direct ticket sales.

It is said that around 80 percent of Chinese airlines' ticket are sold through agents. This direct sale pattern can help airlines to save costs.-

Anyhow, it is good news for the families of the victims of the Baotou air crash. Hao Junbo, an attorney of Lehman lee & xu, representing the families of the victims of Baotou air crash said that, ¡° It is good news. At least, China Eastern Airlines has more money to compensate the victims of Baotou air crash¡±.

Lehman, Lee & Xu is one of the largest and most prominent law firms in China. With full-service operations in Beijing, Shanghai, Shenzhen and Hong Kong, along with offices in every significant provincial capital, the Firm provides legal counsel on all aspects of investment and business operations in the world's largest and most rapidly developing nation.
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China News 0 Comment December 1, 2009, 2:43 pm

A Jurisdiction War on Online Games

On November 2nd, the General Administration of Press and Publication ( "GAPP" ) issued a notice announcing its termination of the approval of the import online game "World of Warcraft" (The Burning Crusade) as it operates illegally without the permission from the GAPP. The GAPP also promised a future punishment on NetEase, which is the operating company. On the very next day, Li Xiong, the director of the Market Department of the Ministry of Culture (¡°MOC¡±), clarified that the GAPP¡¯s announcement is exceeding its jurisdiction as the MOC is the authority for online games, and also the Warcraft is legal as it had gained the permission from the MOC already.

This dispute over Warcraft reveals the jurisdiction war of online games between the GAPP and MOC.

Although the jurisdiction war has lasted for a long time, the Notice on the Interpretation of Certain Provisions Regarding the Regulation of Animation, Online Games and the Cultural Market in the Rules for the Reorganization of the Ministry of Culture, the General Administration of Press & Publication and the State Administration of Radio, Film and Television ( the "Interpretation" ) promulgated by the Office of the State Commission for Public Sector Reform on September 7, 2009 can be seen as a stipulation for a upgraded war. In this interpretation, the authority of online games is the MOC and GAPP. The MOC is the main authority for online games, with GAPP responsible for approving the publication of online games before their launch. The MOC has sole jurisdiction once the game is released online and it¡¯s the MOC¡¯s privilege to punish the illegal released online games while GAPP shall not do it. For imported game publications, GAPP is responsible for approving game publications under a copyright license from a foreign owner while MOC conducts unspecified "other approval work".

This Interpretation explains the jurisdiction division between the GAPP and the MOC but failed to clarify the meaning of ¡°game publications¡±. A dispute between the GAPP and MOC on the meaning of ¡°game publications¡± started. The MOC announced its sole authority on online games though a notice on September 28th. In this notice, the MOC explained that online games are not game publications as publications should in the form of physical media such as discs according to the Publishing Management Regulations by the State Council in 2001 while the online games only require digital downloads from the internet. But on October 9th, the GAPP united with National Copyright Bureau and the National Working Group to Eliminate Pornography and Illegal Publications issued a notice which warned that all the online games which had not gained permission from the GAPP will be closed. The notice revealed that the GAPP won¡¯t give up its authority on online games.

For NetEase, it is still unknown whether it should close Warcraft as the GAPP required or keep on operating as the MOC guaranteed. As of now, the game is still online.

Lehman lawyer John Lee remarks that the cause of jurisdiction war is not merely the dilution meaning of the ¡°Publication¡±. The long time unclear authority division for online games is the main cause. Although the Interpretation by the Office of the State Commission for Public Sector Reform had tried to make a difference to the situation, the division remains in the mist. For online game operating companies, getting permission from both the MOC and the GAPP is a better choice before any further interpretation comes out.
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China News 0 Comment December 1, 2009, 2:39 pm

Effective Communication

¡°Communication leads to community, that is, to understanding, intimacy and mutual valuing.¡± ¨C Rollo May (1909 ¨C 1994).

Mr May¡¯s quote has applicability to a different number of situations where by communication is a necessary tool of operation and a obligatory tool for the completion of tasks and, as a vital aspect of our day to day lives, it is important that communication is both effective and transparent.

As members of the GALA (Global Advertising Lawyers Alliance) alliance, and as advertising and marketing lawyers ourselves, we here at Lehman fully understand the need for full and clear communication. We know and recognize the implications from a lack of effective or even no communication.

On Thursday November 26, 2009 AmCham-China will be hosting a forum to discuss how best to improve internal communications within the workforce. For further details, and registration please visit: http://www.amchamchina.org/event/467

For further details regarding Lehman, Lee & Xu¡¯s advertising and marketing services, or any other questions please contact us on mail@lehmanlaw.com, or visit our website at www.lehmanlaw.com
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General 0 Comment December 1, 2009, 2:18 pm

Official Reply on Issues Concerning VAT Policies in Taxpayers' Restructuring

Nancy Sun

21 October, 2009, The State Administration of Taxation issued Official Reply On Issues Concerning VAT Policies in Taxpayers¡¯ Restructuring, and stipulate that the taxpayer¡¯s action during its assets restructuring to transfer its assets, debts and the relevant rights and obligations to its holding company but still retain its qualification as a listing company is not an action to transfer the enterprise¡¯s property rights entirely as provided in the Official reply of the State Administration of Taxation on issues concerning Exemption of VAT in the Transfer of An Enterprise¡¯s Entire Property Rights (GUOSHUIHAN [2002] No.420), which stipulates that the transfer of an enterprise¡¯s entire property rights means, transfer an enterprise¡¯s assets, creditor¡¯s rights, debts and labor force.

Actually, taxpayer, during its assets restructuring, transfer its assets, debts and the relevant rights and obligations to its holding company but still retain its qualification as a listing company, it does not transfer its entire assets (reputation), debts (holding rights) and labor force (the person who control the listing company) and other property rights, herewith, with regards to its action during its assets restructuring such as the transfer of taxable goods, VAT shall be levied in accordance with the regulations. The action shall be defined as transfer enterprise¡¯s entire assets, it is different from transfer of the enterprise¡¯s entire property rights, and action which is transfer of the enterprise¡¯s entire assets belongs to VAT taxable scope. (Selling goods, providing process, repair, replacement and labor force, and importing goods shall belong to VAT taxable scope.)
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China News 0 Comment December 1, 2009, 2:15 pm