New Customs Enforcement Process Regarding IPR

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.

• New China Customs Enforcement Regulations of IPR (0)
• Protection Measures for IPRs during Exhibitions in China (0)
• To What a Sum can a Trademark Infringement Constitute a Crime in China? (0)
• Trademark Law of the Peoples Republic of China (the 2nd amended edition) (0)
• Stipulations For Recognition And Protection Of Well-Known Trademarks (0)
• Sino-Japanese IPR Memorandum of Understanding: What Does It All Mean? (0)
• Protection Against Intellectual Property Rights Infringement (0)
• Chinese Commerical Arbitration – Alternative Approach for Resolving International Disputes (0)
• China Machine Tools Industry (0)
• Yuan’s climb so far exceeds last year (0)

Establishment of Franchising Enterprises and Procedures for Opening Stores

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:

1. Application letter and resolution of the board of directors.
2. Corporate business licence and Certificate of Approval of Foreign-Invested Enterprises (photocopy).
3. Agreements on the modification of contracts and articles of association (for foreign enterprises, only the modified articles of association are required).
4. Relevant documents showing compliance with Article 7 of the Measures.
5. Basic information reflecting the provisions of Article 17 of the Measures.
6. Sample of franchising contract.
7. 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.

• Surcharge from Shipping Lines (1)
• Suggestions By MOC to Support China’s Exports (0)
• Starbucks’ troubles with IP Protection (0)
• Procedures for Establishment of Resident Representative Offices by Foreign Companies (0)
• Privately-Owned Companies in China Plans to Enter Overseas Markets (0)
• Minimum Registered Capital Requirement (0)
• Income Tax on Enterprises with Foreign Investment and Foreign Enterprises (0)
• How To Shut Down Your China Business? (0)
• How To Conduct Arbitration in China (0)
• Hong Kong – No. 1 freest economy (0)

Establishment of Wholesale Enterprises (Distribution in China)

Application Procedures

1. Examination and Approval of Project Proposals, Contracts and Articles of Association

The Chinese party (in the case of a wholly foreign-owned enterprise, the foreign investor or its appointed Chinese agency which is qualified to provide foreign investment consultation services) must submit to the local foreign economic and trade authorities the feasibility study report, contract, articles of association and other documents required. Trademark and trade name licensing contracts, technology transfer contracts, management contracts, service contracts and other legal documents signed by foreign-invested commercial enterprises should be submitted at the same time as annexes to the contract (in the case of wholly foreign-owned commercial enterprises, as annexes to the articles of association).

2. Registration at the industry and commerce administration

Foreign-invested wholesale enterprise granted approval to set up should complete its registration formalities at the industry and commerce administration within one month after obtaining the approval certificate issued by the provincial-level foreign economic and trade authorities.

3. Tax registration

After its incorporation, the enterprise should have an official seal made at the local public security bureau, apply for enterprise code from the technical supervision bureau, and complete tax registration formalities at the tax registration department.

Documents Required

Documents Required for Examination and Approval of Feasibility Study Reports, Contracts and Articles of Association

• Feasibility study reports, contracts, articles of association (for foreign commercial enterprises, only articles of association required) signed by the investing parties, together with annexes to these documents.
• Bank credit proofs of the investing parties, registration certificates (photocopy) and legal representatives’ certificates (photocopy). Personal identification papers are required if the foreign investors are individuals.
• The latest annual audit reports of all investing parties.
• Evaluation report on the state-owned assets to be invested by the Chinese party in a Sino-foreign equity or contractual joint venture commercial enterprise.
• Import/export commodity catalogues of the proposed foreign-invested commercial enterprise.
• Application and approval papers of the feasibility study.
• Names of members of the board of directors of the proposed foreign-invested commercial enterprise and their letters of appointment.
• Notification on pre-approval of enterprise name issued by the industry and commerce administration.
• Land-use right certificates (photocopy) and/or tenancy agreements (photocopy), except for stores with a business area of less than 3,000 sqm.
• Document proving compliance with the requirements of urban development and urban commercial development issued by the commerce department where the proposed stores are to be located.
• Letter of attorney signed by the legal representatives for documents not signed by the legal representatives.
• Other relevant documents.

Application for Changes

Existing foreign-invested commercial enterprises should submit applications to the original examination and approval authorities for permission to engage in wholesaling or retailing business, open branches or change partners in accordance with regulations governing foreign-invested enterprises. The following documents must be submitted when making application:

• Application form.
• The modified contract and articles of association if modifications are involved.
• Feasibility study report on the opening of stores.
• Resolution of the board of directors on the opening of stores.
• The latest annual audit report of the enterprise.
• Capital verification report (photocopy).
• Registration certificates of the investing parties (photocopy) and certificates of the legal representatives (photocopy).
• Land-use rights certificates (photocopy) and/or tenancy agreements (photocopy) for the proposed stores, except for stores with a business area of less than 3,000 sqm.
• Document proving compliance with the requirements of urban development and urban commercial development issued by the government where the proposed stores are to be located.
• Letter of attorney signed by the legal representatives for documents not signed by the legal representatives.

• China Tightening Foreign Investment Restrictions (0)
• The Company Law of the People’s Republic of China (0)
• Industrial output grows less than 2007 (0)
• Income Tax on Enterprises with Foreign Investment and Foreign Enterprises (0)
• Establishment of Franchising Enterprises and Procedures for Opening Stores (0)
• Chinese Commerical Arbitration – Alternative Approach for Resolving International Disputes (0)
• China’s FDI norms look set to be tweaked (0)
• Yuan’s climb so far exceeds last year (0)
• Yuan seen to remain stable in long term (0)
• Yuan gains stall against firm dollar (0)

Stipulations For Recognition And Protection Of Well-Known Trademarks

Rule 1 These stipulations are hereby formulated in accordance with the Trademark Law of the People’s Republic of China (hereinafter referred to as the Trademark Law) and the Implementing Regulations of the Trademark Law of the People’s Republic of China (hereinafter referred to as the Implementing Regulations).

Rule 2 The “well-known trademark” prescribed in the stipulations refers to a trademark which the relevant general public is very well aware of and which enjoys the high prestige.
The “relevant general public” shall include consumers who use some products or services bearing the trademark, merchants who produce the above-mentioned products or furnish the service and relevant sellers and employees concerned in their business channels

Rule 3 The following documentation could be used as the evidence to prove well-known nature of a trademarks:
(1) Documentation to prove the extent to which the relevant general public is aware of the trademark,
(2) Documentation to prove the duration of the use of trademark, including the history and sphere of the use and registration of trademark.
(3) Documentation to prove the duration, geographical areas and extent to which the knowledge of the trademark covers, including but not limited to the mode and geographical areas of advertising and sales promotion, the types of promoting media as well as the budget fixed for the advertising.
(4) Documentation showing the record of the trademark protected as a well-known trademark, including the trademark being protected as a well-known trademark in China or other countries and regions.
(5) Other documentation to prove the well-known nature of the trademark, including the output, sales volume, sales income, profit and taxes paid as well as sales areas and so forth of the principal products bearing the trademark.

Rule 4 If the party concerned holds that others’ preliminarily approved and published trademark contravenes the regulation of Article 13 of the Trademark Law, he could, under the Trademark Law and the Implementing Regulations thereof, file an opposition with the Chinese Trademark Office and submit the evidential documents to prove the well-known nature of the trademark involved.
If the party concerned holds that other’s registered trademark contravenes the regulation of Article 13 of the Trademark Law, he could, under the Trademark Law and the Implementing Regulations thereof, request the Trademark Review and Adjudication Board of the State Administration for Industry and Commerce (hereinafter referred to as the Trademark Review and Adjudication Board) adjudicate on the cancellation of the registered trademark and submit the evidential documents to prove the well-known nature of the trademark involved.

Rule 5 During the process of administrating the trademark, if the party concerned holds the trademark used by others falls into the circumstances prescribed by Article 13 of the Trademark Law and pleads for protecting the well-known trademark, he could submit a written application for prohibiting the use of the trademark together with the evidential documents proving the well-known nature of the trademark involved to the municipal (provincial) administrative authority for industry and commerce at the location where the case is carried out, and at the same time reports to the provincial administrative authority for industry and commerce.

Rule 6 Upon receiving the application for the protection of a well-known trademark, the administrative authority for industry and commerce should examine whether the case falls into the circumstances as provided in Article 13 of the Trademark Law:
(1) Whether others arbitrarily use the trademark similar to or identical with an unregistered well-known trademark in China with respect to the identical or similar goods of the party concerned, and the likelihood for the creation of confusion;
(2) Whether others arbitrarily use the trademark similar to or identical with a registered well-known trademark in China with respect to goods not identical or similar to which the well-known trademark covers, and is likely to mislead the public and damage the interests of the owner of the registered well-known trademark;

The municipal (provincial) administrative authority for industry and commerce should, as soon as it decides that the case falls into the above-prescribed circumstances, transfer all materials in the case file to the provincial (autonomous region, municipality directly under the Central Government) administrative authority for industry and commerce at the location with fifteen (15) working days from the date of accepting the filed application of the party concerned, and issue a Notification of Case Accept (notice of filing of the application) to the party concerned; the provincial (autonomous region, municipality directly under the Central Government) administrative authority for industry shall transfer all materials in the case file to the Chinese Trademark Office within fifteen (15) working days from the date of accepting the application filed by the party concerned. The provincial administrative authority for industry and commerce at the location of the party concerned could also, if it decides that a case falls into the above-prescribed circumstances, transfer all the materials in the case file to the Chinese Trademark Office.

If a case is decided to not fall into the above-prescribed circumstances, it should be, under the Trademark Law and the Implementing Regulations thereof, settled without delay.

Rule 7 The provincial (autonomous region, municipality directly under the Central Government) administrative authority for industry shall examine the materials in the case file transferred by the municipal (provincial) administrative authority for industry and commerce within the area under its jurisdiction.
The provincial (autonomous region, municipality directly under the Central Government) administrative authority for industry shall, if it decides a case falls into the circumstances prescribed by Rule 6, Item 1 of the Stipulations, transfer all the materials in the case file to the Chinese Trademark Office within fifteen (15) days from the date receiving the same transferred by the municipal (provincial) administrative authority for industry and commerce with the area under its jurisdiction.
The provincial (autonomous region, municipality directly under the Central Government) administrative authority for industry shall, if decides a case does not fall into the circumstances prescribed by Rule 6, Item 1 of the Stipulations, return the relevant materials to the original case accepting authority, which should, under the Trademark Law and the Implementing Regulations thereof, settle the case without delay.

Rule 8 The Chinese Trademark Office shall make the recognition within six (6) months from the date the relevant materials were received, inform the recognition result to the provincial (autonomous region, municipality directly under the Central Government) administrative authority for industry at the location the case is carried out, and copy to the provincial (autonomous region, municipality directly under the Central Government) administrative authority for industry at the location the party concerned locates.
The Chinese Trademark Office shall, except the evidential materials to prove the well-known nature of the trademark, return all other materials in the case file to the provincial (autonomous region, municipality directly under the Central Government) administrative authority for industry at the location the case is carried out.

Rule 9 As to the trademark which is not recognized as a well-known trademark, the party concerned shall not, within one (1) year from the date the recognition was made, plead for recognizing the same well-known nature of the trademark on the basis of the same facts and grounds.

Rule 10 The Chinese Trademark Office and the Trademark Review and Adjudication Board shall, when recognizing the well-known nature of a trademark, take into comprehensive consideration the factors prescribed in Article 14 of the Trademark Law, but is not required that a trademark should fit all the factors prescribed in Article 14.
Rule 11 The Chinese Trademark Office, the Trademark Review and Adjudication Board and the local administrative authority for industry shall, when protecting a well-known trademark, take into consideration the extent to which the trademark is well-known and the distinctiveness thereof.

Rule 12 Where the party concerned pleads for the protection for its trademark in accordance with Article 13 of the Trademark Law, he should furnish the documentation of record showing the trademark was protected by the Chinese competent authority as a well-known trademark.

Where the accepted case shares a similar scope of protection as the case in which the trademark was protected as a well-known trademark, and the opposite party has no objection to the well-known nature of the trademark involved, or even raised an objection but could not furnish the evidential documentation against the well-known nature of the trademark involved, the administrative authority for industry accepting the case could, according to the conclusion drawn from the protection record, pass judgment.

Where the scope of protection of the accepted case is different from that of the case in which the trademark was protected as a well-known trademark, or the opposite party raised an objection and furnished evidential documentation against the well-known nature of the trademark involved, the Trademark Office or the Trademark Review and Adjudication Board should re-examine the documentation proving the well-known nature of the trademark involved and make the recognition.

Rule 13 Where the party concerned holds that others record its well-known trademark as the name of others’ enterprise, and the public are liable to be deceived or misled, he could apply to the enterprise name recording authority to cancel such enterprise name. The enterprise name recording authority should settle the case according to Enterprise Name Recordal Management Regulations.

Rule 14 The administrative authority for industry at all levels shall reinforce the protection for the well-known trademarks, and duly transfer to the relevant authority the case being suspected of the crime of counterfeit trademark.

Rule 15 The provincial (autonomous region, municipality directly under the Central Government) administrative authority for industry at the location of an authority settling a case should report the decision on protection of the well-known trademarks to the Chinese Trademark Office.

Rule 16 The administrative authority for industry at all levels shall establish a corresponding supervisory system and formulate the supervisory and restraint measure so as to reinforce the supervisory management during the procedure of recognition of the well-know nature of the trademark.
Where a member of the state personnel responsible for recognizing the well-known nature of trademarks abuses power or practices fraud for personal considerations, or reaps the unlawful profits or handles the case in violation of the stipulations of well-known trademark recognition, he shall be subject to administrative disciplinary measures according to rules and regulations; if the case is so serious as to constitute a crime, he shall be prosecuted according to law for his criminal liabilities.

Rule 17 These Stipulations shall enter into force on June 1, 2003. The Interim Stipulations for Well-Known Trademark Recognition and Management promulgated by the State Administration of Industry and Commerce on August 14th, 1996 shall be abrogated on the same date.

• Trade Mark Matters in China (0)
• Protection Measures for IPRs during Exhibitions in China (0)
• New Customs Enforcement Process Regarding IPR (0)
• Trademark Law of the Peoples Republic of China (the 2nd amended edition) (0)
• The Supreme Court of the People’s Republic of China has Issued Judicial Interpretation to Strengthen Patent Protection (0)
• Sino-Japanese IPR Memorandum of Understanding: What Does It All Mean? (0)
• Protection Against Intellectual Property Rights Infringement (0)
• New China Customs Enforcement Regulations of IPR (0)
• How To Conduct Arbitration in China (0)
• Contract Law of the People’s Republic of China (1)

Minimum Registered Capital Requirement

Under the Company Law, companies in the mainland are mainly incorporated in the form of limited liability companies or joint-stock limited companies. For limited liability companies, the minimum registered capital is lowered to Rmb30,000. For joint-stock limited companies, the minimum registered capital requirement is Rmb5 million.

According to the existing rules of government authorities overseeing different sectors, the following requirements are applied to FIEs concerning minimum registered capital:

(a) The minimum registered capital of a JV commercial enterprise engaged in wholesale or retail should comply with the requirements of the Company Law. The Company Law stipulates that the minimum registered capital of limited liability companies is Rmb30,000, while the minimum registered capital of joint-stock limited companies is Rmb5 million.

(b) The minimum registered capital of a foreign or JV bank is Rmb300 million worth of freely convertible currencies;

(c) The minimum registered capital of a foreign or JV financial institution is Rmb200 million worth of freely convertible currencies;

(d) The minimum registered capital of a JV travel agency is Rmb2.5 million;

(e) The minimum registered capital of a JV advertising agency is US$300,000;

(f) The minimum registered capital of a JV foreign trade company is Rmb50 million;

(g) The minimum registered capital of a JV international freight forwarding agency is US$1 million;

(h) The minimum registered capital of a foreign-invested printing company engaged in the printing of publications and printed materials for packaging is Rmb10 million, while the minimum registered capital of a foreign-invested printing company engaged in the printing of other printed materials is Rmb5 million;

(i) The minimum registered capital is Rmb2 billion for a company engaged in trans-provincial basic telecom business; Rmb200 million for a company engaged in provincial basic telecom business; Rmb10 million for a company engaged in trans-provincial value-added telecom services; and Rmb1 million for a company engaged in provincial value-added telecom services;

(j) The minimum registered capital of a foreign-invested insurance company is Rmb200 million or its equivalent in freely convertible currency;

(k) The minimum registered capital of a foreign-funded investment company is US$30 million;

(l) The minimum registered capital of a foreign-funded investment shareholding company is Rmb30 million.

Source: Hong Kong Trade Development Council

• Surcharge from Shipping Lines (1)
• Suggestions By MOC to Support China’s Exports (0)
• Starbucks’ troubles with IP Protection (0)
• Privately-Owned Companies in China Plans to Enter Overseas Markets (0)
• How To Conduct Arbitration in China (0)
• Hong Kong – No. 1 freest economy (0)
• Establishment of Franchising Enterprises and Procedures for Opening Stores (0)
• Chinese Commerical Arbitration – Alternative Approach for Resolving International Disputes (0)
• China’s ICBC opens first subsidiary bank in Middle East (0)
• China’s FDI norms look set to be tweaked (0)

Next Page »