To What a Sum can a Trademark Infringement Constitute a Crime in China?
January 31, 2010
According to Interpretation by the Supreme People’s Court and the Supreme People’s Procuratorate on Several Issues of Concrete Application of Laws in Handling Criminal Cases of Infringing Intellectual Property, using an identical trademark on the same merchandise without permission of its registered owner in any of the following circumstances falls under the definition of “the circumstances are serious” stipulated in Article 213 of the Criminal Law and shall be sentenced to fixed-term imprisonment of not more than three years or criminal detention and shall also, or shall only, be fined for committing the crime of forging registered trademarks:
(1) the amount of illegal business volume being more than RMB 50,000 or that of illegal gains being more than RMB 30,000;
(2) forging more than two registered trademarks, the amount of illegal business volume being more than RMB 30,000 or that of illegal gains being more than RMB 20,000;
(3) other circumstances of a serious nature.
Whoever having any of the following acts that falls under the definition of “the circumstances are especially serious” stipulated in Article 213 of the Criminal Law shall be sentenced to fixed-term imprisonment of not less than three years but not more than seven years and shall also be fined for committing the crime of forging registered trademarks:
(1) the amount of illegal business volume being more than RMB 250,000 or that of illegal gains being more than RMB 150,000;
(2) forging more than two registered trademarks, the amount of illegal business volume being more than RMB 150,000 or that of illegal gains being more than RMB 100,000;
(3) other circumstances of an especially serious nature.
Whoever knowingly sells commodities bearing counterfeited registered trademarks, if the amount of sales is more than RMB 50,000, and thus falls under the definition of “the amount of sales is relatively large” stipulated in Article 214 of the Criminal Law shall be sentenced to fixed-term imprisonment of not more than three years or criminal detention and shall also, or shall only, be fined for committing the crime of selling commodities bearing counterfeited registered trademarks.
Whoever selling such commodities of more than RMB 250,000 in value falls under the definition of “the amount of sales is huge” stipulated in Article 214 of the Criminal Law and shall be sentenced to fixed-term imprisonment of not less than three years but not more than seven years and shall also be fined for the crime of selling commodities bearing counterfeited registered trademarks.
Whoever forges or makes representations of another person’s registered trademarks without authorization of the person or sells such representations in any of the following circumstances and thus falls under the definition of “the circumstances are serious” stipulated in Article 215 of the Criminal Law shall be sentenced to fixed-term imprisonment of not more than three years, criminal detention or public surveillance and shall also, or shall only, be fined for committing the crime of illegally making registered trademarks and selling illegally-made registered trademarks:
(1) the amount of the representations of other person’s registered trademarks forged or made without authorization or that of the sold representations of other person’s registered trademarks forged or made without authorization being more than 20,000 copies, or the amount of illegal business volume being more than RMB 50,000, or the amount of illegal gains being more than RMB 30,000;
(2) the amount of the representations of other person’s registered trademarks forged or made without authorization or that of the sold representations of more than two of other person’s registered trademarks forged or made without authorization being more than 10,000 copies, or the amount of illegal business volume being more than RMB 30,000, or the amount of illegal gains being more than RMB 20,000;
(3) other circumstances of a serious nature.
Whoever having any of the following acts that falls under the definition of “circumstances of an especially serious nature” stipulated in Article 215 of the Criminal Law shall be sentenced to fixed-term imprisonment of not less than three years but not more than seven years and shall also be fined for committing the crime of illegally making registered trademarks and selling illegally-made registered trademarks:
(1) the amount of the representations of other person’s registered trademarks forged or made without authorization or that of the sold representations of other person’s registered trademarks forged or made without authorization being more than 100,000 copies, or the amount of illegal business volume being more than RMB 250,000, or the amount of illegal gains being more than RMB 150,000;
(2) the amount of the representations of other person’s registered trademarks forged or made without authorization or that of the sold representations of more than two of other person’s registered trademarks forged or made without authorization being more than 50,000 copies, or the amount of illegal business volume being more than RMB 150,000, or the amount of illegal gains being more than RMB 100,000;
(3) other circumstances of an especially serious nature.
Source: www.ipr.gov.cn
Tags: Interpretation, trademarks, registered trademarksRelated Posts:
China’s Industrial Profits Fall in First 8 Months
September 27, 2009
China’s major industrial enterprises reported a combined profit of 1.67 trillion yuan ($245.2 billion) in the first eight months this year, down 10.6 percent from a year earlier. The fall compares to a 19.4-percent increase during the January-August period last year. The NBS statistics cover the profits of major industrial enterprises, defined as those with more than 5 million yuan in revenue from their main business annually. The bureau said profits in state-owned industrial companies declined 25.2 percent to 504.5 billion yuan. However, profits in privately-owned industrial firms rose 6.6 percent year-on-year to 439.9 billion yuan. Profits in the power generation sector increased by 194 percent during the January-August period. Oil refineries and coking plants moved to a profit of 71.2 billion yuan from a loss of 94.2 billion yuan in the same period last year. Profits in other sectors, including oil and gas exploration, steel and non-ferrous metal smelting, dropped more than 50 percent.
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What Does CEPA Offer?
September 12, 2009
CEPA
■ Zero tariffs on 90% of Hong Kong exports to China
■ Faster/easier China market access for 18 service sectors
■ Lower entry thresholds for smaller players (capital/trading history
requirements)
■ 100% ownership of many China ventures
■ Manufacturers in China able to use Hong Kong services
■ Makes Hong Kong the easiest route into/out of China
WHO BENEFITS FROM CEPA?
Hong Kong-based service providers (in 18 sectors):
■ Company must be incorporated in Hong Kong
■ Doing business in Hong Kong for past 3-5 years
■ Liable for Hong Kong profits tax
■ Employing 50% of staff in Hong Kong
■ Any nationality
Manufacturers/distributors of goods (for 273 categories):
■ Goods must qualify as ‘made in Hong Kong’
■ Not necessary for company to be based in Hong Kong
■ To qualify, goods must be‘substantially transformed’ – 30% of
value must be added in Hong Kong (includes R&D, design costs)
CEPA – YOUR SPRINGBOARD TO CHINA
WHAT IS CEPA?
■ A free trade agreement between Hong Kong and mainland China
■ Effective from 1 January 2004
■ Preferential access to China’s market from Hong Kong
■ Significant China market liberalisation
■ Goes further than China’s WTO commitments CLOSER ECONOMIC PARTNERSHIP ARRANGEMENT HOW CAN OVERSEAS COMPANIES BENEFIT?
Service companies
■ Partner with, invest in, or buy into a Cepa-qualified firm in Hong Kong
Manufacturers or traders of goods
■ Partner with, or outsource to, a Hong Kong manufacturer
(no need for your company to have a base in Hong Kong)
HOW CAN COMPANIES APPLY?
■ Hong Kong-based service companies must apply for a Cepa certificate
■ Manufacturers must apply for a Cepa certificate for their products
Easy application procedure through Hong Kong’s Trade and Industry Department
MORE INFORMATION?
www.tid.gov.hk/cepa/eng – detailed information from Hong Kong’s Trade
and Industry Department
www.tdctrade.com/cepa – Hong Kong Trade Development Council’s Cepa
section
www.hktrader.net – e-newsletter with Cepa section for overseas companies
1HOW CEPA CAN HELP YOU
1 What is Cepa?
Cepa stands for Closer Economic Partnership Arrangement. It is a free
trade deal, operating from 1 January 2004, between Hong Kong and the
Chinese mainland. It is the first bilateral free trade deal signed by China.
2 What are the main provisions of Cepa?
Cepa is broadly divided into three sections:
Trade in goods
Any company (Hong Kong-based or from outside Hong Kong) can benefit
from zero tariffs on 273 categories of products exported from Hong Kong
into the Chinese mainland, as long as the products are classified as
‘Made in Hong Kong’.
Your company does not have to have an office in Hong Kong, but your
products must satisfy ‘Rules of Origin’ to classify as ‘Made in Hong Kong’.
Trade in services
Under Cepa provisions, the Chinese mainland has opened up its market to
Hong Kong-based service providers in 18 sectors.
Advertising, accountancy, audiovisual, banking, construction and real
estate, convention and exhibition services, distribution services, freight
forwarding, insurance, legal, logistics, management consultancy,
medical and dental, securities, storage and warehouse services,
telecommunications, tourism and transport.
Trade and investment facilitation
The main provisions relate to liberalising customs clearance, business
regulations and the standardisation of e-commerce.
23 How does Cepa add to Hong Kong’s position as Asia’s business centre?
Cepa offers preferential access to China’s markets, over and above
commitments made by China under WTO. Cepa adds to the long list of
reasons why international businesses choose Hong Kong as a base for
their China and Asia operations.
Three broad groups stand to benefit:
■ Companies already based in Hong Kong (of any nationality)
■ Overseas companies interested in developing their China business strategy
through Hong Kong
■ Chinese mainland enterprises that wish to use Hong Kong services to
streamline and expand their businesses overseas
Section 1
TRADE IN GOODS – HOW CEPA CAN HELP YOUR BUSINESS
4 What products are eligible for zero tariffs?
273 product categories have been selected to be tariff free from 1 January
2004. This covers 90 percent of Hong Kong products. The majority of
remaining products will be tariff free by 2006, at the latest.
For a full list, see www.tid.gov.hk/english/cepa
5 Do you have to have an office in Hong Kong for your products to qualify as
‘Made in Hong Kong’?
No. Cepa provisions that a company be based in Hong Kong for three to
five years; be liable to pay tax; and employ 50 percent of its workforce
locally, only applies to service companies.
For goods to qualify as ‘Made in Hong Kong’ they simply have to qualify
under the Cepa ‘Rules of Origin’.
36 Do your products have to be manufactured in Hong Kong to enjoy zero tariffs?
What are the Rules of Origin (ROO)?
Products must be classified as ‘Made in Hong Kong’ under Cepa ‘Rules of
Origin’ (ROOs). For goods to qualify as made in Hong Kong, they must
have been substantially transformed in Hong Kong.
Currently 273 product codes are covered by Cepa.
■ 187 of these will adopt Hong Kong’s existing origin rules (these include
textiles and clothing, jewellery, cosmetics, pharmaceutical products, and
plastic and paper articles).
■ 46 products (such as some chemical and metal products, some electronic
products and electronic components) will adopt a ‘Change in Tariff
Heading’ (CTH) approach. CTH is widely used by most WTO members.
■ The remaining 40 products (electrical and optical components, watches
and clocks) will adopt a 30% value added requirement. R&D and design
will be counted under this value adding requirement.
7 Will you need a Certificate of Origin to benefit from zero tariffs?
Yes. Hong Kong’s Trade and Industry Department has set up a new unit to
administer certification. Companies do not have to wait until 1 January
2004 to seek certification. Please click on www.tid.gov.hk for details.
8 Do the zero tariffs apply to taxes levied by the Chinese government?
Cepa only covers import tariffs. VAT and other domestic taxes in China
are not exempt.
49 Will Cepa help you to source products efficiently from the Chinese mainland?
Yes. Cepa opens up the Chinese mainland to more Hong Kong companies
working in the trade support industries.
In particular, Cepa looks set to further integerate the economies of
Hong Kong and the Pearl River Delta region of southern China.
The economy of the Pearl River Delta is dominated by manufacturing,
while Hong Kong excels in trade services, such as sourcing, financing,
logistics and transportation. The combination of these two regions (often
called the Greater Pearl River Delta) offers a compelling and competitive
way to do business.
10 If you want to sell products into China, how can Hong Kong and Cepa help?
Under Cepa, Hong Kong-based companies can set up wholly-owned
distribution ventures to manage the full process of getting your products to
retailers and consumers.
Working with a Hong Kong partner, you can find suitable markets, better
understand local consumers and distribute to all regions on the mainland.
Please note that your products will still be subject to mainland Chinese
import tariffs, unless they have Cepa certification.
511 What are the advantages of manufacturing in Hong Kong – and how can you satisfy the ‘Rules of Origin’?
Cepa establishes Hong Kong as a competitive manufacturing location for
high-value goods, especially those with strong design content, or valuable
trademarks. Hong Kong’s strict intellectual property legislation and strong
service sectors support the manufacture and distribution of high value
products.
Using Hong Kong’s free port system, raw materials or semi-made products
can be imported into Hong Kong tariff free. ‘Boutique’ factories in Hong
Kong can manage the specialised stages of the design, manufacturing
and IP protection of the product. Your products can then be exported tariff
free to China (i) for further mass production (ii) for China-wide distribution,
or (iii) exported to the rest of the world.
You can either invest in your own production lines, or license/outsource to
Hong Kong factories to satisfy the Rules of Origin.
Section 2
TRADE IN SERVICES ñ HOW CEPA CAN HELP YOUR BUSINESS
12 If you have a services company, can you take advantage of Cepa provisions to enter the China market?
Cepa provisions cover 18 service areas. You must also qualify as a
‘Hong Kong company’. To satisfy these criteria, your company must:
■ Be incorporated in Hong Kong for three to five years (depending on
the sector)
■ Be liable to pay profits tax
■ Employ at least 50% of staff in Hong Kong
Any company, regardless of nationality, which satisfies this criteria, can
benefit from Cepa provisions.
613 How will Cepa make it easier for you to access the China market?
The exact provisions vary according to the sector. Please see page 9
for an overview, or click on www.tid.gov.hk/english/cepa for a sector-by-sector breakdown. However, broadly speaking, Cepa helps in four key areas:
■ Earlier market entry – Under WTO commitments China is gradually making
it easier for overseas companies to set up. Cepa offers a one to five year
head start to Hong Kong-based companies.
■ Setting up wholly-owned companies – Currently overseas companies have
to partner with Chinese companies. In many cases Cepa allows for the
creation of wholly-owned companies.
■ Lower capital thresholds – Capital requirements to set up in China have
been reduced substantially opening up the field to smaller players.
■ Recognition of qualifications – Many Hong Kong professional qualifications
will be recognized in China, and access to sit China professional exams will
be broadened.
14 If you would like to take advantage of Cepa provisions, but you do not have an office in Hong Kong, what should you do?
If you do not qualify as a ‘Hong Kong company’ under the criteria set out
in Q12, you can partner with, invest in, or buy into, a Hong Kong-based
company that already qualifies. You may then enjoy the advantages offered
by Cepa.
7 General questions
15 How does Cepa differ from China’s WTO commitments?
Cepa provisions offer two key benefits over and above WTO commitments:
■ Earlier implementation – in most cases, Cepa advantages will be available
to Hong Kong-made products and Hong Kong-based service providers
one to five years ahead of WTO benefits.
■ Better benefits – For ‘Made in Hong Kong’ products, Cepa provisions offer
zero tariffs on 90 percent of goods from 1 January 2004, and will offer zero
tariff on all goods by 2006, at the latest. Even under full WTO commitments, tariffs will remain between five and 30 percent.
Cepa-eligible service companies (of any nationality), benefit from lower
capital and asset requirements, no global quota restrictions and being able
to set up wholly-owned ventures. WTO commitments have no timetable for
wholly-owned ventures in areas such as logistics and exhibition services.
16 What is the difference between a Free Trade Agreement and Cepa?
Normally FTAs are signed between two countries. Because of the ‘one
country, two systems’ between the Chinese mainland and Hong Kong,
a different name has been used. In other ways, Cepa is comparable to a FTA.
8
“Made in Hong Kong” products covered by Cepa
• Electrical and electronic products • Metal products • Chemical products • Pharmaceutical products • Plastic articles • Paper articles • Textiles and clothing • Cosmetics • Clocks andwatches • Jewellery
For more detail, check www.tid.gov.hk/english/cepaService sectors covered by Cepa NB. Any company that satisfies Cepa-eligibility can benefit, regardless of nationality.
Accounting: One year permits for Hong Kong companies to conduct auditing services on the mainland. Hong Kong-qualified accountants who have practised on the mainland will be treated as Mainland accountants.
Advertising: Firms from Hong Kong can establish wholly-owned advertising companies on the mainland.
Audiovisual: Hong Kong-produced Chinese language movies will be exempt from the 20 overseas film quota and can be distributed on the mainland. Co-produced movies will be treated as mainland films.
Banking: Asset requirement for banks to establish mainland branches is reduced from US$ 20 bn to US$ 6 bn.
Conventions: Hong Kong firms can set up wholly owned operations.
Construction and real estate: Hong Kong firms can set up wholly-owned operations.
Distribution (exc tobacco): Hong Kong firms providing distribution services, retailing or franchising can set up wholly-owned operations. Hong Kong car dealers can open up to 30 wholly-owned retail outlets.
Freight forwarding: Hong Kong firms can operate on a wholly-owned basis.
Insurance: Max limit of capital by a Hong Kong insurance firm in a mainland firm is 24.9 per cent. Hong Kong insurance agents can practice with mainland professional qualifications.
Legal: Hong Kong lawyers can work for mainland firms. Minimum requirements are waived for those operating in Shenzhen and Guangzhou and shortened to two months for other areas.
Logistics: Hong Kong companies can set up wholly-owned operations on the mainland.
Management/consultancy: Most companies can set up wholly-owned enterprises.
Medical and dental: Hong Kong doctors can work on the mainland for up to three years.
Hong Kong medical workers can sit exams to work on the mainland.
Securities: Hong Kong Exchanges and Clearing can set up a representative office in Beijing.
Storage/warehousing: Hong Kong companies can operate wholly-owned operations.
Telecommunications: Hong Kong companies can set up JV enterprises on the mainland.
No geographic restriction for JV enterprises formed by Hong Kong service suppliers and the mainland to provide value-added services.
Tourism: Hong Kong companies can run hotels/restaurants on a wholly-owned basis.
Transport: Hong Kong companies can operate on a wholly-owned basis.
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Establishment of Franchising Enterprises and Procedures for Opening Stores
August 26, 2009
The establishment procedures are the same as those for foreign-invested wholesale enterprises. Under existing policies, FIEs engaging in commercial franchising are treated in the same way as domestic enterprises with regard to establishment requirements, rights and obligations, information disclosure, advertising and publicity etc, but are different in terms of establishment procedures. Approval procedures carried out by the examination and approval authorities are merely a matter of formality.
FIEs that are qualified to engage in franchising should apply to their original examination and approval authorities for permission to add “engaging in commercial activities in the form of franchising” to their business scope and submit the necessary documents, including information disclosure document, sample of franchising contract and operation manual of franchising. The examination and approval authorities will make a decision in writing on whether or not to approve the application within 30 days after receiving the complete set of application materials. Upon obtaining approval and completing the necessary formalities in respect of change of registration details with the industry and commerce administration, the FIEs may start their franchising business.
The following documents must be submitted when applying for permission to add “engaging in commercial activities in the form of franchising” to a company’s business scope:
- Application letter and resolution of the board of directors.
- Corporate business licence and Certificate of Approval of Foreign-Invested Enterprises (photocopy).
- Agreements on the modification of contracts and articles of association (for foreign enterprises, only the modified articles of association are required).
- Relevant documents showing compliance with Article 7 of the Measures.
- Basic information reflecting the provisions of Article 17 of the Measures.
- Sample of franchising contract.
- Operation manual of franchising.
FIEs are not allowed to engage in any business under the prohibited category as specified in the Catalogue for the Guidance of Foreign Investment Industries in the form of franchising.
Where patent licensing is involved in franchising, patent licensing contracts should be signed in accordance with the related provisions of the Patent Law of the PRC and its implementation rules, and record filing formalities should be completed in accordance with the provisions of the Measures for the Administration of Record Filing of Licensing Contracts for the Implementation of Patents. Before conducting franchising activities, the franchiser should handle matters relating to the trademark licensing contract in line with the provisions of the Trademark Law of the PRC and its implementation rules.
Tags: foreign investment, Franchising Enterprises, TradeRelated Posts:
Establishment of Retail Enterprises and Procedures for Opening Stores
August 26, 2009
The approval procedures for foreign-invested commercial retail enterprises are the same as those for wholesale enterprises.
Stores opened by foreign-invested commercial enterprises engaging in retail in the provincial-level administrative region where they are located are approved by the local provincial-level commerce department and the applications are forwarded to MOFCOM for the record. For the opening of stores in another province, the opinions of the commerce department of that province have to be sought. The provincial-level commerce department in charge will send a letter to its counterpart in the place where the store is to be located seeking its opinion. During this process, the enterprise should cooperate by supplying the necessary documents.
Provincial-level commerce departments may grant approval to the establishment of the following stores, with the applications forwarded to MOFCOM for the record:
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Stores with a business area of less than 3,000 sqm each and not exceeding three in number; the foreign investor may not open a total of more than 30 similar stores through its foreign-invested commercial enterprise in China;
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Stores with a business area of less than 300 sqm each and not exceeding 30 in number; the foreign investor may not open a total of more than 300 similar stores through its foreign-invested commercial enterprise in China;
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Stores whose scope of business does not include television, telephone, mail order, Internet and the sale of automatic vending machines;
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Stores not engaging in tobacco retailing, and not selling chemical fertilisers
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