News

March 2017

Highlight Analysis of Key Articles of the General Provisions of the Civil Law of the People’s Republic of China

I. Highlight Analysis of Key Articles of the General Provisions of the Civil Law of the People’s Republic of China (hereinafter referred to as General Provisions of the Civil Law)

As the first step for formulating the Civil Code in China, the General Provisions of the Civil Law was passed in the Fifth Session of the 12th National People’s Congress of the CPC on March 3, 2017. The Law plays a dominating role in the whole civil law system, and will be implemented as of October 1, 2017. Chang Tsi & Partners holds that new regulations regarding aspects such as intellectual property right and limitation of action as stipulated in the General Provisions of the Civil Law are closely related to enterprise operations, and thus a close attention shall be paid thereto.

First of all, objects of the intellectual property right are explicitly stipulated in Article 123 of the General Provisions, where objects of traditional works, trademarks, inventions, utility models, and designs are clearly defined, and geographical indications, commercial secrets, layout designs of integrated circuits, new varieties of plants, and so forth are also explicitly stipulated.

Secondly, it is stipulated in Article 188 of the General Provisions that limitation of action is amended to three years from two years as stipulated in the General Principles of the Civil Law of the Civil Law of the People’s Republic of China (hereinafter referred to as General Principles of the Civil Law), which is more helpful for obligees to realize reliefs.

II. Highlight Analysis of Amendments Made to Key Articles of the Law of the People’s Republic of China against Unfair Competition (Draft)

This Draft is the first amendment made to the law against unfair competition since 1993. This Law, although not passed currently, relates to numerous articles closely concerning the benefits of enterprises, which reflects a positive response of the law to the new social reality.

1. Classification of detailed commercial logos

It is newly added in Article 6 of the Draft that the name, the name for short, and brand of an enterprise, the names, pseudonyms and stage names of others, and the name and the name for short of a social organization shall be protected; in addition, the main parts of domain names, website names, and webpages of others, and the name and logo of a channel, a programme, and a column are also brought into objects of protection. Meanwhile, the act of using the registered trademarks of others and an unregistered famous trademark as the brand in an enterprise name is also governed by the Article.

2. The newly added regulations governing unfair competition acts in the internet field

The regulations on four categories of unfair competition acts in the internet field are newly added in Article 14 of the Draft, mainly relating to: forcibly inserting links; modifying, closing and unloading legitimate network products and services; disturbing and destroying legitimate network products and services; and viciously implementing incompatibility on legitimate products or services. Express regulations on unfair competition acts in the internet field provide more clear applicable bases for judiciary authorities and administrative law enforcement organs.

3. Increasing costs incurred due to the violation of law, and the civil compensation liability prior to administrative penalties

According to the regulations as stipulated in the law in force, the administrative penalty against unfair competition acts generally ranges from CNY 10,000 Yuan to CNY 200,000 Yuan. Such a penalty range is amended to more than CNY 100,000 Yuan but less than CNY 500,000 Yuan in the Draft. Where the circumstance is serious, a penalty of more than 500,000 but less than 3,000,000 shall be imposed. Such an increased amount increases the cost incurred due to the violation of law, and enhances the warning effect of the law.

Besides, it is initially stipulated in the Draft that where a law breaker shall assume the civil liability for compensation and pay the penalty simultaneously, but the property thereof is insufficient to make such a payment simultaneously, the law breaker shall take the priority to assume the civil liability for compensation. Such a change also reflects the priority and adequate protection of obliges.