PART I Regulations Update

China not to revise labor law amid crisis: lawmaker
China will not revise the Labor Contract Law to compromise workers' rights as suggested by some people to help enterprises cope with the global financial turmoil, a legislator said in Beijing Monday.
"The labor contract law has nothing to do with the financial crisis and won't be revised for it," said Xin Chunying, deputy director of the Legislative Affairs Commission of the Standing Committee of the National People's Congress (NPC), China's legislative body.
"China's labor relations are basically stable and orderly, and it can weather through the test of time," she told a press conference on the sidelines of NPC's annual session, when asked if the law will be changed because increased labor costs have led to rising cases of bankruptcy on the Pearl River Delta.
Citing a survey that tracts figures in the first nine months of the 2008, she said the law has indeed driven up enterprises' labor costs by two percent, but it has also greatly curbed labor relations issues that have been afflicting workers as well as employers for years.
Such chronical issues include the tendency of employers avoid signing long-term contracts with employees, the lack of proper protection of workers' rights, said Xin.

The proportion of workers protected by a written labor contracts in "sizable enterprises" has witnessed a remarkable rise since the labor contract law took effect in January 2008, she said.

"Sizable enterprises" is a statistical term in China that refers to all state enterprises or private firms with an annual turnover of two million yuan if they are manufacturers, or five million yuan if they are in trade.

According to Xinhua, 93 percent of the workers in "sizable enterprises" have signed contracts with their employers, compared to less than 20 percent before the enaction of the new law.

Li Shouzhen, a senior official with the All China Federation of Trade Unions, said at the same press conference that the federation is against the lifting of the minimum wage standard.

The minimum wage standard was a major measure to safeguard workers' rights. "Abolishing the standard will hurt employee's initiative and confidence in tiding over difficulties with enterprises," he said.

"Eying long-term development, the employers should strive to pool wisdom and strength of the employee and optimize company structure," he said.
"Don't have your eyes on the employee's salary alone," he said.

The minimum wage standard in the country varies from city to city, with the southern Shenzhen city reporting the highest standard of 1,000 yuan a month.
(Source: China Daily)

New China patent law is unveiled 
China's top legislature approved a revision of the Patent Law on Dec 29, 2008, and made a number of amendments to the patent application process and expanded patent protection.

From 2001 to April 2008, State Intellectual Property Office processed 9,571 cases of patent disputes and investigated 11,639 cases of patent infringement. To better protect intellectual property rights of patent holders, the newly revised law contains more detailed and specific patent protection measures than the old ones.

The amendment applies to all inventions completed in China.
The revised law, which takes effect on Oct 1, 2009, was adopted by 154 votes and four abstentions at the closing meeting of the sixth session of the 11th National People's Congress (NPC) Standing Committee.

This was the third revision to the law promulgated some 25 years ago. The previous two amendments were enacted in 1992 and 2000. The first added pharmaceutical compositions to the list of patentable items and inaugurated China's membership in the Patent Cooperation Treaty ("PCT"). The second amendment brought China's Patent Law into compliance with the Trade-Related Aspects of Intellectual Property Rights ("TRIPS") Agreement.

The changes were aimed at encouraging innovation and improving China's "international competitiveness", Chen Guangjun, a senior official with the NPC's Education, Science, Culture and Health Committee, said before the revision came out.

At the LexisNexis Advisory Committee meeting, a United States-based information and business solutions provider to law firms, journalists and others, member Cheng Yongshun, former vice president of intellectual property law court of the higher people's court of Beijing, told China Business Weekly in an interview that the Patent Law made several important changes to application process and enforcement of the law.

The revision of the Patent Law enhanced the protection standard of a patent. An important change involves the adoption of the so-called "absolute novelty" standard that is applied internationally. Under this standard, patent examiners are required to consider public use evidence both inside and outside China when processing patent applications.

"Adoption of an absolute novelty standard will have the effect of reducing patent infringement. In the past some Chinese companies purchased the products from foreign expos that were not published overseas, and manufactured them in China. But this situation was no longer legal in China, and the new revision regarded those activities as illegal and increased the ceiling of punishment," said Cheng.

Another change was the extent of protection becoming clearer. In the amendment, similar designs can apply to the patent as long as they are owned by the same owner, while under the old Patent Law the owner only can apply one.

And the application of design patent will become stricter than before. Designs such as beer or soft drink bottles or wine labels can no longer be awarded design patents.

Another important change is the removal of the requirement for all Chinese individuals and entities to first file applications in China for inventions made in China. The revision allowed Chinese individuals and entities to file their patents for the first time in other countries, not necessarily China. In other words, applicants can apply for foreign patents even before obtaining Chinese patents.

But the applicants are supposed to go through a security check held by patent authorities of the State Council, China's Cabinet, said Tian Lipu, director of the State Intellectual Property Office. Inventions which have not undergone security checks will not be granted Chinese patents, according to the new law.
The checks are intended to block the leak of some foreign applicants or foreign-owned research labs in China applying for patents to outside of China and circumventing the foreign filing requirement of the current Chinese patent law. This foreign filing license regime is the same as the system in the United States.

The amendment raised the penalty and damage payments in cases of patent infringement. The amendment increased the penalty for IPR infringement to 400 percent from 300 percent of the illicit profits and raised the damage payment from 50,000 yuan to 200,000 yuan even if there was no profit from infringement.
And the draft for first time contains a statute that the people's court can fine the infringer between 10,000 yuan to 1 million yuan in compensation when the damage cannot specifically identified.

The process of a patent lawsuit had a change, too. The revision permits protecting evidence before prosecution. The protection will be overseen by the court and applied by the plaintiff. The applicant should provide guarantee, and court should make the protection decision within 48 hours. "This new article can effectively protect the patentee's legal rights and the evidence," said Cheng.

According to Cheng, there are still some problems not solved in the amendment. "Some problems in dispute were not covered in the amendment, like indirect infringement and the process of the intellectual property right identification. It's a pity these unsolved problems are not resolved in this revision."
Editor's note: The IPR Special is sponsored by the State Intellectual Property Office and published by China Business Weekly. To contact the Intellectual Property Office, the IPR Special hotlines are 8610-64995422 or 8610-64995826, and the e-mail address is ipr@chinadaily.com.cn.
 (Source: China Daily)

PART II Forthcoming Legislations
New consumer protection laws to take effect
HONG KONG: New regulations aimed at protecting consumers come into effect next Monday, March 2nd.
The Trade Descriptions Ordinance (Amendment) prohibits four sales practices which lawmakers consider misleading and unethical. These include deceptive pricing and making false representation concerning after-sale services/warranty for goods.

Dealers in electronic products, including mobile phones and digital cameras, are required to inform customers in advance about prices of essential parts (batteries and chargers) for which charges apply over and above the stated price for the appliance.

The revised law also provides statutory definitions for jade, diamond, gold and platinum to prevent confusion or deception.
In recent years, consumers, including tourists, have complained that some shops have engaged in fraudulent practices to cheat customers. Retailers were accused to highlighting low prices for goods on display but once customers agreed to purchase, shops would argue the sticker prices reflected the price per tael but not per catty.

In sales of high-cost jewelry, dishonest vendors provide false assessments of quantities of gold or platinum.
Addressing a press conference yesterday, Marcus Lau, Head of the Customs & Excise Department's Trade Descriptions and Transshipment Controls Bureau, reminded retailers of the requirements under the amended legislation and consumers of their new rights.

He added that vendors are required to provide customers with invoices bearing the full name/address of the retailer, the price, product name, date of supply and description of products, etc. Retailers are required to retain the records for not less than three years. In enforcing the law, Customs will enhance shop inspection. Officers will be deployed to work under cover, acting as customer.

He warned that violation of the law is subject to a maximum fine of HK$50,000 and five-year imprisonment upon conviction.
The Consumer Council, Travel Industry Council (TIC), industry and individual tourists welcomed the amendment, saying it would enhance the confidence of consumers and Hong Kong's image as a shopping paradise. The amended law clarifies responsibilities and rights for shops and customers, thus to eliminate many disputes, said TIC executive director Joseph Tung.

A Hong Kong-based mainland resident welcomed the new law because it provides greater protection for consumers.
Gary, an Australian who has visited Hong Kong three times, said he was pleased with the extra protection pertaining to after-sales service and international warranties.
(Source: China Daily)

Cabinet drafts rule over Food Safety Law
The State Council is busy drafting a detailed rule for the new Food Safety Law to ensure its implementation from June 1, a senior legislator said during an online interview yesterday.

It will "definitely" be announced before June and may include the role and responsibility of the planned national food safety commission, said Li Yuan, director of the administrative law division of the National People's Congress (NPC) Standing Committee's legislative affairs commission.
The rule will come into force together with the law, he said.

On Saturday, the NPC Standing Committee passed the long-awaited Food Safety Law after five years of deliberation. It will streamline the current food safety supervision mechanism and establish a national commission to direct regulations after a series of scandals affected consumer confidence.
The law also increases criminal and civil penalties for violations by food producers and managers, with cases where the management clearly know a company is selling below-standard food resulting in them having to compensate the consumer 10 times the price of the product.
Li said such new rules are to improve supervision and raise producers' awareness on food safety. "But as usual, most stipulations in the law are in principle and lack details. There must be a detailed implementation rule to go with it," Li said.

Experts spoke highly of the law and Luo Yunbo, a professor at China Agricultural University, said he considered the establishment of a national food safety commission the most important progress.
The country's current system of splitting food safety over different government departments has resulted in uneven enforcement; the commission is expected to improve coordination and eliminate loopholes, Luo said.

"In the Sanlu scandal, the most problematic section was the private milk-collecting stations. But under the current system no government agencies are responsible for such stations," he said.
The government said unscrupulous milk-collectors added the industrial chemical melamine into raw milk to give a false protein reading. The tainted milk killed six babies and sickened 30,000 others.

The seventh amendment to the Criminal Law, which aims to hand out stiffer punishments to government officials and their families convicted of taking bribes, and the revision of the Insurance Law also got nods from the legislators on Saturday.
(Source: China Daily)

PART III Economy and Law

Global crisis is an opportunity for Chinese lenders

While many global banks have seen their fortunes tumble in the financial crisis, banks in China are experiencing strong growth. Lending by Chinese banks saw record monthly growth in the first two months of 2009. But are there potential risks in the recent lending surge? Xiao Gang, chairman of Bank of China, shared his opinions with China Daily reporter Yang Zhen in an exclusive interview at the Beijing headquarters of the country's third-largest bank.
Q: Some economists and analysts suggest that China's economy would be able to recover from the global financial crisis by the end of this year. How long do you think the impact of the global financial crisis will last?

A: I believe that the central government's stimulus efforts will help China's economy maintain 8 percent growth this year.
However, from my personal point of view, the impact of the global financial crisis will last five to 10 years. And I think it will take a long time for China's export-oriented economy to transform into an economy driven by domestic consumption.

The scale of the global financial crisis is unprecedented because, this time, it started from the collapse of the real estate market. This is a completely different story from previous crises that originated from the stock market.

The impact of this financial crisis is much stronger because people can live without owning stocks, but they can't survive without a place to live. According to some experts' observation, it usually takes two and half years for an economy to recover from a crisis begun in the stock market, but to recover from a crisis started from the real estate market needs at least four years.

More importantly, this time the problems not only occurred in the financial institutions, but also expanded into the capital market. And the reactions from the governments around the world showed that this is a crisis no one has ever seen or expected before.
The post-crisis era is really unpredictable.

Q: According to figures from the central bank, Chinese banks issued a record 1.62 trillion yuan of new loans in January. What's the main reason behind such strong lending growth?
A: The central government's economic stimulus plan definitely played an important role in boosting loan growth and most of the new loans also went to infrastructure projects that are part of the 4-trillion-yuan stimulus package.

But there were also some other reasons that contributed to the rapid loan growth.
Before the government lifted the annual lending quota on Chinese banks last November, many lenders in China extended loans in the name of "financial products".

As a result, a lot of the new loans that were given out in the past few months were actually issued before or during the first half of 2008. Therefore, the borrowers didn't really receive any new capital. I'm not sure how much of a percentage such loans accounted for in new loans, but quite a few new loans were issued in this way.
At the same time, Chinese banks offered about 600 billion yuan of new loans in January in the form of bill discount, an act by which the legal holder of a commercial bill transfers it to the bank to acquire cash before its maturity date. And some of the loans were transferred between banks instead of from a bank to a borrower.

Q: Foreign media always believed that Chinese lenders extended a large amount of new loans under enormous pressure from the central government. Is this true? Did you get a call from the president or the premier?
A: No, I didn't get any call from either of them. It is actually quite the opposite.
The pressure is not from the central government but market demand.

Since the reform in China's banking sector in 2003, most banks in China have become publicly traded corporations. The shareholders pay much attention to profits and competition between Chinese lenders has also become more intense.
The recent interest rate cuts by the central bank have also made it harder for Chinese banks to generate a profit. Therefore, Chinese lenders have to try to lend early and lend a lot.

Q: Do you think the rapid loan growth will trigger the rise of non-performing loans (NPLs)?
A: I would say that it is possible for large amounts of non-performing loans to emerge. That's also why Chinese banks have to be more careful. But the way domestic banks do business is different from what it was five years ago.
Before the reform in China's banking sector in 2003, the banking industry in China was never thought to be risky. But since then, international financial reporting standards have been introduced.

China's banking regulator has raised its requirement for provision coverage ratio in Chinese banks many times. The reserves for bad loans in most Chinese banks are much higher than their outstanding non-performing loans. Sufficient reserves for NPLs have enhanced Chinese banks' capability of handling bad loans.
And, take BOC for example, we have centralized the power of loan issuance. Only BOC's provincial or higher level branch can approve loan applications.
A centralized approval process has reduced chances for bad loans to occur.
Financial transparency in Chinese banks has also improved thanks to the improvement of corporate governance and the employment of international accounting companies.

Q: In the latest market value ranking of the banks around the world, Industrial and Commercial Bank of China (ICBC), China Construction Bank (CCB) and Bank of China (BOC) took the top three spots respectively. How do you look at this?
A: It shows that China's banking industry has improved significantly in the past few years. But the fall of world banking giants such as Citigroup as a result of the global financial crisis has also contributed to the higher ranking of Chinese banks. So we can't be overly optimistic about this.
The ranking based on market value also has its limitations.

Chinese banks' tradable shares usually account for only about 5 percent of their market value. But shares of international banks are normally 100 percent tradable. That's also why when one of the strategic investors decides to sell its stake in a Chinese bank, the bank's market value will be affected consequently.
If Chinese banks' shares become completely tradable, their market value is likely to decline.
Chinese banks still have to learn from their global counterparts to improve their innovation, risk management and profitability. The global financial crisis has given Chinese lenders a great opportunity to grow.

Q: What do you think is the best business model for banks in the post-crisis era?
A: Citigroup's failure has proved that it's not a good choice for a bank to be involved in various kinds of financial services.
I think that a bank has to focus on its role of a commercial bank first and then explore other options to diversify its services.
The banking industry can't go back to the era when banks were only dealing with traditional banking business.
Q: Is this also the ideal business model for BOC in the future?

A: Yes. BOC is looking to become a commercial bank with diversified services, both in China and in the global market.
While the bank will be very cautious when making decisions on overseas acquisitions, it has to accelerate its expansion in the overseas market. BOC will concentrate on supporting the overseas operations of Chinese companies.
Since it takes a longer time to set up new branches abroad, BOC will seek to cooperate with foreign financial institutions to expand its presence overseas and provide adequate financial support to Chinese companies.
Q: The Royal Bank of Scotland (RBS) has reportedly decided to sell its business in China. As a strategic partner of RBS in China, will Bank of China be affected by the decision?

A: I have already talked to the new CEO of RBS and its decision to quit China was inevitable. RBS was still optimistic about the potential in the market in China but it had to pull out temporarily in order to survive.
We value the partnership with RBS and will continue to strengthen the business cooperation between the two institutions.
(Source: China Daily)

PART IV Introduction to the Firm

Guangdong United Intellectus Law Firm is a full-service law firm with over 20 Chinese and international lawyers of whom some have practiced law in the United States, China and Hong Kong.

In cooperation with law firms around the world, especially with Tsoi & Associates in Los Angeles, California, and Sinkler & Boyd in Columbia, South Carolina, we are able to serve our clients around the clock, as well as working in all kinds of litigation and non-litigation commercial and IPR matters. The allocation of work in the association is based on expertise of the working staff rather than who they work for.

Through this close cooperation, we are able to provide clients with quality legal services that match international practice standards and meet their sensitive needs in the unique Chinese legal environment. We have advised foreign invested enterprises in all industries and assisted many in acquisition and shareholding interests transfer transactions.

The Chinese and foreign lawyers in the association are experienced in domestic and foreign related dispute resolution process, including mediation, arbitration and litigation.

LEGAL SERVICES

Chinese and foreign attorneys of the association have profound practical experience in domestic business litigation, mediation, arbitration and litigation on disputes in foreign economics. These attorneys have represented international clients such as Kodak, Cartier, Montblonc, Piaget, Nissan, Wrigley and Microsoft in
protection of their legal rights.

The main legal services of the association cover but not limited to the following areas:

Annual retainer services, including providing general commercial counseling and contract review requiring no substantial research work, one hour of corporate internal legal training each month, and China Law Update, a quarterly publication of the association;

Commercial transactions, trade, manufacturing, corporate, merger and acquisition, liquidation and bankruptcy, customs and tax planning, labor practices, registration and enforcement of intellectual property rights, real estate development and property management, contract drafting and revision, government approval and public relations, advertisement and unfair competition claims, due diligence and legal opinion to be issued by qualified Chinese lawyers;

Overseas investment and listing, establishing foreign branches for domestic companies, overseas applications and enforcement of intellectual property rights, overseas merger and acquisition; and

Domestic and international dispute resolution through mediation, arbitration and cross-border civil litigation.

MEMBERS OF THE FIRM

Rose Baochun Zeng, B.A., LL.M and J.D., admitted to practice law in China and California, U.S.A. With over thirteen (13) years of practice experience, Ms. Zeng’s major practice areas include corporate and commercial matters, IPR enforcement, dispute resolution and litigation. She is a director of Guangdong Society of Intellectual Property Rights and a panel arbitrator of Guangzhou Arbitration Commission;

William C. Ren, B.A. and J.D., admitted to practice law in China and California, U.S.A. With over six (6) years of practice experience, Mr. Ren’s major practice areas include foreign investment project setup, corporate and commercial matters, IPR protection and labor law;

Michael Y. Qin, B.A. and LL.M, admitted to practice law in China. With over thirteen (13) years of practice experience, Mr. Qin’s major practice areas include foreign investment project setup, commercial matters, civil and criminal litigation;

George L. Sun, LL.B, admitted to practice law in China. With over five (5) years experience as a judge in a district court in Guangzhou and six (6) years of practice experience as a lawyer, Mr. Sun’s major practice areas include commercial and civil litigation;

Ke Y. Chen, LL.B, admitted to practice law in China. With over five (5) years of practice experience, Mr. Chen’s major practice areas include commercial, real estate, and civil litigation; and

Fei Huang, LL.B, admitted to practice law in China. With over five (5) years of working experience with the Legislation Committee of the Guangdong People’s Congress and two (2) years of practice experience as a lawyer, Mr. Huang’s major practice areas include commercial matters, civil litigation, and administrative proceedings.

MAJOR CLIENT LIST

A major U.S. headquartered multinational software company in IPR protection matters, including administrative enforcement, civil litigation and criminal litigation;

A major U.S. headquartered multinational imaging and photographic film company in commercial and IPR protection matters;

A major U.S. headquartered bowling equipment manufacturer in IPR protection matters;

A major Swiss headquartered multinational luxury goods group company in commercial and IPR protection matters, including administrative enforcement, civil and criminal litigation;

A France headquartered multinational fashion company in IPR protection matters, including administrative enforcement and civil litigation;

An Australia headquartered quarry company in administrative hearing, including zoning, government lobbying and administrative appeals;

A Belgium headquartered multinational construction material company in corporate and commercial, and IPR protection matters;

A leading U.S. headquartered internet information service provider in hacking and criminal litigation matters;

A major Hong Kong headquartered multinational bank in IPR protection matters;
A major U.K. headquartered group company’s Hong Kong subsidiary in unfair competition and IPR protection matters;

A major U.S. headquartered multinational confectionary company in general commercial matters and litigation matters; and

A major Japanese steel manufacturer in investment, corporate and commercial matters.

In additional to being legal counsel to the Hong Kong Chamber of Commerce in China–Guangdong, our attorneys are consulted by the U.S. Consulate General Guangzhou, Australian Trade Commission of the Australian Consulate General Guangzhou, and Hong Kong Trade Development Council for our legal opinions regarding China related matters.

QUALITY OF SERVICES AND FEES

Guangdong United Intellectus Law Firm enables our clients to enjoy legal services of international standard at reasonable charging rates. It further makes it possible for us to upgrade and rationalize our staffing and training, services and expertise, computer networking, legal information and client file management.  This, in turns, leads to a more focused and cost efficient China practice, as we may allocate work based on the expertise and legal skills of our bi-cultural staff rather than on the firm line.

Generally, our professional staff, that is, lawyers and assistant lawyers, will charge fees based on the time spent on the particular legal matter. Their billing rates vary based on the experience and legal skills of the individuals and their rates cover all our charges other than disbursements such as government fees, communication and traveling expenses. Unless instructed by the clients to work overtime, our secretaries will not charge fee for work done during normal office hours.

For budgeting purposes, we can provide our clients with a legal cost estimate or agree to work for a fixed fee in certain matters.

We may require that our clients pay a retainer or deposit some fees to our client accounts prior to the commencement of work. The clients will be billed on a monthly basis at the end of each month.  The balance of the deposit will be returned to the clients once the service is completed.

The lawyers of the association firmly believe that we can, through teamwork, provide our clients with quality full-scale legal services that meet with international standards. For additional information, please contact Ms. Rose Zeng, the coordinator of the association.

Guangdong United Intellectus Law Firm

Add: Room 1501-1502, North Tower,
Guangzhou World Trade Center,
371-375 East Huanshi Road,
Guangzhou, PR China
Direct: (8620) 8762-6262
Tel: (8620) 8769-4790 or 8769-4797
Fax: (8620) 8769-4799
Http://www.uilawfirm.com
Email: gzrose@uilawfirm.com
gzrose@pub.guangzhou.gd.cn

Affiliated Offices
Los Angeles, California
Monterey Park, California
Columbia, South Carolina
Hong Kong, China