CEPA FURTHER LIBERALIZATION MEASURES IN 2010
June 12, 2010
The market access conditions in 14 service sectors will be further relaxed under Supplement VII to CEPA. The 14 service sectors include construction; medical services; technical testing, analysis and product testing; specialty design; audiovisual services; distribution; banking; securities; social services; tourism; cultural services; air transport; qualification examinations for professionals and technicians; and individually owned stores. Among them, “technical testing, analysis and product testing” and “specialty design” are new service sectors. In other words, the service sectors covered by liberalization of trade in services under CEPA will expand from 42 to 44.
Major market liberalization measures under Supplement VII to CEPA are highlighted below:
A. Medical services – Hong Kong service suppliers (HKSS) are allowed to set up wholly-owned hospitals in the municipalities of Shanghai, Chongqing, and the provinces of Guangdong, Fujian and Hainan; and to set up convalescent hospitals in the form of wholly-owned, equity joint venture or contractual joint venture in Guangdong Province. No requirement is imposed on the total investment in setting up hospitals by HKSS on an equity joint venture or contractual joint venture basis in Guangdong Province; and no restriction is imposed on the ratio of capital investment between Hong Kong and Mainland partners in setting up hospitals in the form of equity joint venture or contractual joint venture in the municipalities of Shanghai, Chongqing, and the provinces of Guangdong, Fujian and Hainan. Twelve categories of statutory healthcare professionals who are registered to practise in Hong Kong (medical practitioners, Chinese medicine practitioners, dentists, pharmacists, nurses, midwives, medical laboratory technologists, occupational therapists, optometrists, radiographers, physiotherapists and chiropractors) are allowed to provide short-term services in the Mainland.
B. Tourism – Hong Kong travel agents established on a wholly-owned or joint venture basis in Beijing and Shanghai Municipalities are allowed to apply for the operation, on a pilot basis, of group tours to Hong Kong and Macao for registered permanent residents of the Beijing and Shanghai Municipalities.
C. Banking – A Hong Kong bank that has maintained a representative office in the Mainland for more than one year (previously required more than two years) can apply to set up a wholly foreign-funded bank or a foreign bank branch. A Hong Kong bank’s operating institution in the Mainland which has been operating for more than two years and profitable for one year prior to the application (previously required profitable operation for two consecutive years prior to the application) can apply to conduct Renminbi business. Foreign banking institutions established in the Mainland by Hong Kong banks can establish specialized institutions to provide financial services to small enterprises.
D. Securities – Mainland and Hong Kong will deepen the cooperation in financial services and product development, and launch, in the Mainland at an appropriate time, ETF (open-end index-tracking exchange-traded fund) constituted by Hong Kong listed stocks.
E. Construction – Hong Kong professionals who have obtained Mainland’s class 1 registered architect qualification or class 1 registered structural engineer qualification, can act as partners to set up construction and engineering design offices in the Mainland in accordance with the relevant qualification requirements, without restrictions on the ratio of the number of Hong Kong partners to the number of the Mainland partners, the ratio of the total capital contributed by the Hong Kong partners to that by the Mainland partners, or the Hong Kong partners’ period of residence in the Mainland. Hong Kong professionals who have obtained Mainland’s class 1 registered architect qualification or class 1 registered structural engineer qualification by mutual recognition, can register and practise in Guangdong;
F. Air Transport – Airport transport sales agencies set up by HKSS in the Mainland in the form of wholly-owned enterprises, equity joint venture or contractual joint venture, can operate air transport sales agency services in the domestic routes in the Mainland. HKSS can also operate aircraft repair and maintenance services in the Mainland in the form of wholly-owned enterprises or with majority shareholding in the enterprises.
G. Distribution – Distribution enterprises set up by HKSS in the Mainland can sell books published in Hong Kong.
H. Technical testing, analysis and product testing services – Testing organizations in Hong Kong to cooperate with designated Mainland organizations to undertake testing of products under the China Compulsory Certification (CCC) System on a pilot basis, in respect of selected products listed in the CCC Catalogue and processed in Hong Kong (i.e. the processing facilities are located in Hong Kong). These testing organizations have to be accredited by the accreditation body of the HKSARG (i.e. the Hong Kong Accreditation Service) to be capable of performing testing for the relevant products under the CCC System.
I. Audiovisual services – HKSS can set up enterprises on a wholly-owned, equity joint venture or contractual joint venture basis in the Mainland to produce video and sound recording products.
J. Specialty design – HKSS can set up wholly-owned enterprises in the Mainland to provide specialty design services.
Apart from benefiting the larger enterprises, measures in Supplement VII to CEPA would also benefit individuals and small businesses, such measures include allowing registered healthcare professionals to provide short-term services in the Mainland, allowing Hong Kong permanent residents to take the qualification examination for real estate valuer in the Mainland, and allowing Hong Kong permanent residents with Chinese citizenship to set up individually owned stores in the Mainland to provide services in the areas of marriage, renting and leasing of comics books, and pet clinics.
All the service liberalization measures under Supplement VII to CEPA will take effect from 1 January 2011.
In accordance with Article 5 of Annex 4 of CEPA, Hong Kong will not impose any new discriminatory measures on the Mainland’s services and service suppliers in the service sectors covered by CEPA. This commitment will also apply to sectors covered by the liberalisation of trade in services measures under Supplement VII to CEPA.
Enhancing cooperation in area of trade and investment facilitation
To enhance trade and investment facilitation, in addition to strengthening the cooperation in testing and certification, the Mainland and Hong Kong have also included under Supplement VII to CEPA cooperation in the cultural, environmental, innovation and technology industries, as well as cooperation on education.
For cooperation in cultural and environmental industries, Supplement VII to CEPA fosters the joint development of the industries of both sides, mainly through strengthening exchanges and communication between relevant organizations and the trade of both sides, as well as cooperating in organization of visits and trade exhibitions and seminars. For cooperation in innovation and technology industry, both sides agree to progressively involve Hong Kong research institutes and enterprises in the national innovation system and encourage Hong Kong research personnel and organizations to participate in national science and technology projects, and also to strengthen exchanges and cooperation between the two places in high technology research, development and application, fundamental scientific research, etc.
As regards cooperation on education, both sides agree to strengthen exchanges, communication, and exchange of information in respect of education, to strengthen cooperation in training and organizing visits, etc. to support the Mainland’s education institutions and Hong Kong’s higher education institutions to jointly provide education programmes, to establish joint research facilities and to nurture talents at undergraduate or above level in the Mainland
Moreover, for testing and certification, both sides agree to strengthen co-operation between relevant authorities of both sides, and the Mainland will also assist Hong Kong’s testing laboratories to be recognized under the international multilateral systems on mutual recognition of testing and certification that are open to national member bodies.
By establishing the above cooperation mechanisms, we hope to promote long-term cooperation in the aforementioned industries or service sectors between the two sides, and to jointly open up business opportunities and scope for development.
Conclusion
Inclusive of the measures in Supplement VII to CEPA, the two sides have so far announced nearly 280 liberalization measures in trade in services.
The measures under Supplement VII to CEPA will expedite and facilitate Hong Kong service industries to enter and expand in the Mainland market, and foster service industries integration and professional exchanges between the two sides. Moreover, most of the new measures cover the four pillar industries and six economic industries that Hong Kong has competitive edge, and as such will help consolidate Hong Kong’s status as an international financial, trade, logistics and high value-added service centre, and will lay the foundation for the two sides to jointly develop education, medical services, as well as testing and certification, environmental, innovative technology and cultural industries.
Since 2008, the Mainland and Hong Kong announced 41 measures (including related measures in Supplement VII to CEPA) for “early and pilot implementation” in Guangdong Province. These pilot measures serve to demonstrate the effect of liberalization in the respective service sectors and contribute positively to the exploration of cooperation and integration of the service industries of Hong Kong and Guangdong, and substantively respond to the policy direction of enhancing cooperation between the service industries of Guangdong and Hong Kong as stipulated in the “Framework for Development and Reform Planning for Pearl River Delta Region”; as well as to the positioning with respect to fostering the development of modern service industries under the “Framework Agreement on Hong Kong/Guangdong Co-operation”.
ECONOMIC IMPACT OF CEPA
HKSARG has been closely monitoring the implementation of CEPA from 1 January 2004. We collect statistics relating to the Certificates of Hong Kong Service Supplier (HKSS) and “Individual Visit Scheme” (IVS) etc. to conduct statistical analysis, as well as to assess the impact on Hong Kong’s economy. HKSARG has just updated the assessment of the impact of CEPA liberalisation of trade in services and IVS on Hong Kong’s economy. As reflected by the assessment report, during 2007-2009, liberalisation of trade in services and IVS have continued to bring benefits to Hong Kong enterprises and the economy as a whole.
During 2004-2009, cumulative business receipts obtained by companies in Hong Kong due to CEPA from Mainland-related business reached HK$61.6 billion. During 2007-2009, CEPA-induced business receipts obtained by operations established by Hong Kong service suppliers on the Mainland amounted to HK$198.5 billion. During the same period, companies in Hong Kong obtained additional business receipts totalling about HK$55.1 billion due to CEPA.
IVS is a tourism cooperation measure first introduced under CEPA in 2003. By now, the scheme has been extended to 49 Mainland cities. By March 2010, over 49 million Mainland visitors have come to Hong Kong under the scheme. The number of IVS visitors has drastically increased from 4.26 million in 2004 to 10.59 million in 2009, representing a robust average annual growth rate of 20%. In 2009, benefiting from the implementation of the “multiple-entry” individual visit endorsement to Hong Kong for Shenzhen permanent residents with effect from 1 April, an additional HK$26.4 billion in spending was generated by IVS visitors in 2009, which was almost 40% higher than that in 2008. In cumulative terms, during 2004-2009, IVS visitors brought about additional spending totalling over HK$84.8 billion.
As at end 2009, due to liberalization of trade in services and IVS under CEPA, a total of 54,700 jobs were created in Hong Kong, while 40,600 jobs were created on the Mainland.
CEPA also has a positive impact on attracting Mainland and foreign investments to Hong Kong. According to the information provided by InvestHK, among the 265 foreign companies assisted by InvestHK to invest or expand in Hong Kong in 2009, 70 (or 26%) cited CEPA as one of the key considerations for investing in Hong Kong. Moreover, since the Mainland streamlined the application procedures for Mainland enterprises to invest in Hong Kong in August 2004, the trade and investment between the Mainland and Hong Kong has further increased. According to the information provided by the Ministry of Commerce, between September 2004 and December 2009, 2,602 Mainland enterprises were granted approval to invest in Hong Kong, involving over US$24.4 billion of investment.
We would wish to point out that, as implementation of CEPA deepens, the economic impact of CEPA has become more closely interwined with the overall macro economic environment, and as such it has become more and more difficult to single out the CEPA-induced benefits for quantitative analysis. Also, the longer CEPA has been implemented, the respondents’ impression of the CEPA-induced effects might become less clear with the passage of time, and the value of conducting quantitative analysis of CEPA-induced impact through opinion survey would reduce over time.
Source: HK Trade and Industry Department
http://www.tid.gov.hk
Tags: liberalization, Trade, mainlandRelated Posts:
New Tax Rules For Representative Offices Of Foreign Enterprises
March 12, 2010
On February 20, 2010, China’s State Administration of Taxation (the “SAT”) issued a Notice On Interim Measures For Tax Administration Of Representative Offices Of Foreign Enterprises (Guoshuifa [2010] No. 18, also referred to as “Circular 18″). Circular 18 states measures governing enterprise income tax (EIT), business tax, and value added tax (VAT) on representative offices of foreign enterprises (including those in Hong Kong, Macau and Taiwan). It takes effect retroactively as of January 1, 2010.
Main Points
Enterprise Income Tax
According to Article 6 of Circular 18, a legally registered representative office of a foreign enterprise must set up accounting books pursuant to relevant laws, regulations and rules. Furthermore, it must maintain the books based on legitimate vouchers, calculate the amount of its taxable income and tax liabilities according to the principle that function should match the risks taken, and declare EIT and business tax amount 15 days before the end of a quarter.
In a case where a representative office cannot correctly keep the books or calculate its costs and expenses, or where it does not objectively declare taxes as required, the governing tax authority can determine its taxable income by either of the two following methods:
1. Expenditure-Based Method – This method applies to representative offices that can correctly calculate its expenditure on operation but not its gross income or costs and expenses.
The formulas are:
Deemed gross income = Expenditures for operation of current period / (1 – Deemed profit rate – Business income tax rate;
Deemed payable tax amount = Deemed gross income x Deemed profit rate x EIT rate.
Expenditures for operations include: (i) salaries, bonuses, allowances, welfare allowances paid inside and outside of China to its personnel; (ii) payments on equipment and immovable properties; (iii) communication expenses; (iv) traveling and accommodation expenses; rental payments for equipment, and other expenses. The other expenses include: (i) cost of samples (including its transportation) purchased by the representative offices within China for the head quarter; (ii) storage and customs clearance expenses incurred within China when samples are shipped to China; (iii) interpretation and translation expenses for personnel of the headquarter who visit China; (iii) bid documents expenses for projects in China paid by the headquarter on behalf of its representative office.
The cost of purchasing fixes asset and the cost of decoration when an office is opened or relocated will be treated as one-time expenditures for operation when occurred. The expense that is actually incurred for marketing and public relationship is treated as an expenditure for operation. In addition, interest income cannot be used to offset against the expenditures for operation.
The following are excluded as expenditures for operation: Charitable donations made in cash within China, late payment fees and fines paid in Cash by the representative offices, and expenses unrelated to the representative office’s business and paid by it on behalf of the head quarter.
2. Gross Income-based Method – This method should be applied when an representative correctly calculates its gross income but cannot accurately compute its costs and expenses. The formula is as follows:
Deemed EIT = Gross income x Deemed profit rate x EIT Rate
According to Circular 18, the new deemed profit rate is 15%, amending the previous rate of 10% which was used for more than a decade. The actual profit-based method will replace the expenditure-based method and the gross income-based method if a representative office can accurately keep the books and compute its taxable income and gross income correctly.
VAT and Business Tax
Under Circular 18, representative offices that engage in VAT and taxable business activities will be subject to VAT and business tax according to the relevant laws and regulations. According to the relevant Chinese laws, VAT is imposed on sales of merchandise services related to processing, repairing and assembling and import of goods.
Other Matters
Detailed document list and procedure for tax registration and fillings are also provided for by Circular 18. In addition, representative offices seeking tax treaty benefits must complete tax registration and filings pursuant Article 6 of Circular 18, and must follow the applicable tax treaty and Guoshuifa [2009] No. 124 regarding nonresidents’ eligibility for tax treaty treatment.
Guishuifa [1996] No. 165, Guoshuifa [2003] No. 28 and Guoshuihan [2008] No. 945 are abolished upon Circular 18′s effective date of January 1, 2010. Local tax authorities no longer accept applications for EIT exemption by representative offices, but they will continue to handle the EIT exemption applications that have already been approved.
Source: Jingyuan Sun
www.sheppardmullin.com
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Amendments to the Implementing Regulations of the Patent Law of the People’s Republic of China
February 4, 2010
On December 30, 2009, the 95th State Council Executive Meeting considered and adopted the Decision of the State Council to Amend the Implementing Regulations of the Patent Law of the People’s Republic of China (hereinafter referred to as the “Decision”). Premier Wen Jiabao signed Decree No. 569 of the State Council on January 9, 2010 which promulgated the Decision to enter into effect on February 1, 2010.
Provided below is relevant information on the amendments to the Implementing Regulations of the Patent Law of the People’s Republic of China (hereinafter referred to as the “Implementing Regulations”).
1. Background and Process of the Amendments to the Implementing Regulations.
On December 27, 2008, the sixth session of the Standing Committee of the 11th National People’s Congress considered and adopted the Decision on Amending the Patent Law of the People’s Republic of China. The Implementing Regulations is an important supporting legal document for the Patent Law, for the successful implementation of the amended version of which, corresponding amendments to the Implementing Regulations are necessary.
The State Intellectual Property Office (SIPO) built upon its successful experience in amending the Patent Law and finished the Draft Amendments to the Implementing Regulations (for approval) which was submitted to the State Council for consideration on February 27, 2009 after themed researches by multiple task forces and extensive solicitation of opinions from all sides. In the course of consideration, the Legislative Affairs Office of the State Council again extensively collected opinions from relevant central government agencies, governments of provinces, autonomous regions and municipalities, relevant local-level courts, enterprises and public institutions, experts, scholars, patent agencies, and relevant trade associations as well as from the public over the Internet. It also sent joint research task forces with the SIPO to Chengdu, Xi’an, Shenyang, Guangzhou, Nanjing and Luoyang; held discussions and consultations with the Supreme People’s Court, the Ministry of Finance, the Ministry of Commerce, the Ministry of Science and Technology and the State Commission Office for Public Sector Reform. On top of all these efforts, the Legislative Affairs Office performed repeated studies and revisions on the draft amendments submitted for approval and worked out the Decision of the State Council to Amend the Implementing Regulations of the Patent Law of the People’s Republic of China (Draft).
2. Amendments to the Implementing Regulations
The amended Implementing Regulations has 9 new rules added, 5 old rules removed and 47 rules substantively amended, making these amendments a comprehensive overhaul of the original Implementing Regulations. It is of important significance to improve China’s patent regime.
The amended Implementing Regulations provides more detailed stipulations on the added and amended contents of the Patent Law for better implementation, and, on top of that, makes many improvements on the Implementing Regulations itself.
A brief introduction to the major amendments of the Implementing Regulations is provided below.
A. Security Examination for Filing for Patent in Foreign Countries
According to the amended Patent Law, inventions made in China should be submitted to the patent administration department under the State Council for security examination before filing for foreign patents. For the purpose of its implementation, the Decision provides that: 1. With the growing number of transnational cooperation in research and development in mind, in order to correctly define the scope of security examination, the Patent Law provision of “inventions or utility models made in China” is defined as “substantive content of the technical solutions made in China”; 2. Detailed stipulations are given for the procedures of the security examination to ensure both the progress of the security examination an timely feedback of the results to the applicants to enable their foreign filing as early as possible.
B. Information Disclosure of Genetic Resources
The Patent Law after amending has new stipulations on genetic resources. For the sake of better implementation, the Decision, in accordance with the Convention on Biodiversity, clearly defines genetic resources as: hereditary material with practical or potential values obtained from humans, animals, plants or microbes, etc. At the same time, taking into consideration the common scenarios in which inventions have made use of biological resources but not their hereditary functions and in keeping with the Convention on Biodiversity, the Decision defines “inventions dependent upon genetic resources” as “inventions utilizing the hereditary functions of genetic resources”. The Decision also contains provisions on information disclosure of the source of genetic resources, i.e. “For patent applications for inventions dependent upon genetic resources, the applicants should so indicate in the request and complete forms prepared by the State Council’s patent administration department.”
C. Patent Right Evaluation Report System
The amended Patent Law changed the utility model patent search report system for the evaluation report system for utility model and design patents. It establishes that petentee and other stakeholders could request patent right evaluation reports from the State Council’s patent administration department to serve as evidence in patent right trials and settlements of relevant disputes. To make access to patent right evaluation reports easier, the Decision contains specific stipulations for the format of requests for the reports by the applicants and the time limit within which the patent administration department of the State Council should produce the reports. To obtain a patent right evaluation report, the applicant should submit a letter of request for the report with the patent number provided in clarity. Each request should not cover more than one piece of patent right. The report is to be provided by the State Council’s patent administration department within two months after receiving the letter of request.
D. Compulsory License
In keeping with the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS Agreement) of the WTO and provisions of relevant international agreements, the amended Patent Law adds new types of compulsory license and establishes their scope of application. To ensure successful implementation of relevant stipulations of the Patent Law, the Decision defines “not fully exploited patents” as “the method or scale of the exploitation of the patents by the patentee or the licensee could not satisfy domestic need for the patented products or processes”. To make the compulsory license system compatible with the need to cope with public health crises, the Decision, in accordance with the WTO’s Protocol Amending the TRIPS Agreement, defines “patented pharmaceuticals” as “any patented product or product directly obtained according to patented processes in the medical and pharmaceutical field to address public health issues, including patented active ingredients needed in the production of the product and diagnostic supplies necessary for the application of the product”. The Protocol Amending the TRIPS Agreement contains detailed conditions and procedures on compulsory license of pharmaceutical patents. To harmonize the compulsory licensing of pharmaceutical patents of China with international agreements, the Decision stipulates that “Decisions by the patent administration department of the State Council to grant compulsory licenses according to Article 50 of the Patent Law should, except for cases of reservations, conform to provisions on compulsory licensing to address public health issues in relevant international agreements which China is a signatory of or a party to”.
E. Administrative Penalties against Patent Pass-off
The amended Patent Law combines the acts of passing off patents that belong to others and passing non-patented products and processes off as patented products and processes into acts of patent pass-off and stipulates relevant administrative penalties. To ensure its successful implementation, the Decision defines patent pass-off as tagging non-patented products (or their packaging) as patented, or making unauthorized use of patent numbers that belong to others on products or their packaging. Selling the above-mentioned products, referring to non-patented technologies or designs as patented in user manuals or other materials, the unauthorized use of others’ patent numbers, misleading the public into believing certain technology or design as patented, counterfeiting or alteration of patent certificates, documents or applications, constitute patent pass-off. The Decision also stipulates that, “Those who market such products without knowledge of their patent pass-off nature but able to prove the lawful origin of the products should be ordered to stop the sales of such products by the patent administration department but exempt from fines.”
F. Provisions on Patent Application and Review Procedures
The Patent Law, after amendment, made adjustments to patent application and review procedures and conditions for licensing, on the basis of which, the Decision incorporates corresponding additions and details, including: there are now uniform requirements for the writing of patent requests for inventions, utility models and designs; for simultaneous applications for both utility model and invention patents for the same invention-creation by the same applicant on the same day, the applicant should indicate in both applications that the other patent is being applied, and the applicant must forfeit the already granted utility model patent before being granted a patent for invention; there are clear provisions on items to be included in the brief explanation in an application for patent of design; multiple designs of the same product similar to one another in an application for design patent should be similar to the basic design of the product and should not exceed a maximum of 10 designs; if a request is withdrawn by applicant or could be deemed as withdrawn before any decision is made by the Patent Reexamination Board, provided that the Board deems it possible to invalidate or partially invalidate the patent in question on the basis of examination work already conducted, the review process shall not be terminated.
G. Other Amendments to Relevant Provisions
To encourage innovation and promote patent development, the Decision also includes measures in the following three areas:
1) Fewer charging items. To lessen the burden of parties involved, the Decision cancels four charging items including application maintenance fee, termination procedure request fee, compulsory license request fee and compulsory license exploitation fee.
2) Fewer restrictions on the right of priority. According to the Decision, errors in and omissions of one or two items among the application date, application number and the name of the original handling agency in the earlier application, which are redressed within the designated time limit, do not prejudice against its right of priority; where foreign priority of an design patent is claimed, the lack of a brief explanation of the design in the earlier application which is redressed by the submission of legally compliant brief explanation of the design in the following application, do not prejudice against its right of priority.
3) Improved incentive and remuneration system for service inventions. To allow for greater room for entities that are granted patent rights and service inventors and designers to agree on incentives and remunerations for service inventions and designs, the Decision stipulates that the entities that are granted patent rights could work out, with inventors and designers, the means and amount of incentives and remunerations as established by Article 16 of the Patent law, through negotiation or the entity’s own rules and regulations formulated in compliance with the law. The Decision goes on to stipulate that, to further encourage innovation, in cases where parties involved have an absence of agreement or rules and regulations for service invention and design incentives and remunerations, the statutory standard for incentives and remunerations shall apply. The scope of application of the statutory standard has also been expanded from state owned enterprises and public institutions to all entities. At the same time, the Decision also raises the statutory incentives standard for service inventors and designers.
Source: SIPO sipo.gov.cn
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The Supreme Court of the People’s Republic of China has Issued Judicial Interpretation to Strengthen Patent Protection
January 31, 2010
The Supreme Court of the People’s Republic of China has issued the Interpretation of Issues in the Application of the Law in Patent Infringement Disputes Trials.
The judicial interpretation covered major law applicable issues occurred in current patent infringement trials, including the clear definition of the protection on patent right of invention and utility models and judging rules on infringement, judging rules on industrial design patent infringement, the counterplea on current technology and the application of the right of prior use deraignment, the acceptance of the lawsuit of the identification of non-infringement.
This law follows such guidance: First, giving interpretations according to the law. Based on the main function of judicial interpretation, it will strictly follow the patent law, law of civil procedure and other laws to give interpretation. Second, balance of interests. On one hand, meeting the need of national strategy, we need to protect the fruit and interests of innovation, urge enterprises to enhance their capacity for independent innovation, and push forward technological innovation and economic development. On the other hand, we will give a more precise interpretation for the patent claims; clearly set the range of protection and fully respect the publication and identifying function of patent claims. We will prevent the irrational expansion the patent protection which would surpass innovation and affect public interests. Third, principles of pertinency and maneuverability. We will closely focus on the application of fundamental and universal laws in the patent judicial practices. We will review and draw lessons from years’ judicial experience. The interpretation will provide practical and standard reference for trials when making judgments.
Dec. 28, 2009
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New Customs Enforcement Process Regarding IPR
January 31, 2010
The General Administration of China Customs passed several new regulations that aim to strike a balance between IPR holders and those who import and export goods. Under old regulations, China 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 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 Chinese Customs officials to seek the “opinion” rather than the “consent” of the relevant IPR owners. 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 China 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 recordal. All of these modifications are designed to streamline and expedite the customs enforcement process.
Tags: infrigment, chinese customs, LawRelated Posts:
