HONG KONG OFFICE 15/F, One Exchange Square 8 Connaught Place Central Hong Kong

1. INTERNATIONAL BAR ASSOCIATIONAUCKLAND, NEW ZEALAND 2004INTERNET IMBROGLIO – OUTLINE FOR THE PEOPLE’S REPUBLIC OF CHINAGeorge Ribeiro, PartnerVIVIEN CHAN & CO. Email: ribeiro@vcclawservices.comWebsite: www.vcclawservices.com HONG KONG OFFICE 15/F, One Exchange Square 8 Connaught Place Central Hong Kong Tel: (852) 2522-9183 Fax: (852) 2845-9160 SHANGHAI OFFICE Unit 1106B, 11th Floor 333 Huai Hai Zhong Road Shanghai 200021 People’s Republic of China Tel: (8621) 6387-9222 Fax: (8621) 6387-9111 Email: shanghai@vcclawservices.com BEIJING OFFICE Suite 508, Changnan Tower 10 East Changnan Street Beijing 100006 People’s Republic of China Tel: (8610) 6522-7069 Fax: (8610) 6522-6967 Email: beijing@vcclawservices.com CHONGQING Affiliate Office 1

2. Overview of Unfair Competition Laws in the People’s Republic of China • Unfair Competition Laws include:- • Law of PRC against Unfair Competition (“Unfair Competition Law”); • Advertisement Law; • Administrative Rules, e.g. • Regulations on the Prohibition of Trade Secrets 2

3. Overview of Unfair Competition Laws in the People’s Republic of China • The Unfair Competition Law • 3 elements constituting unfair competition by business operator:- • Obtain business opportunities by using unfair means/acts; • Damages the legal interest of others • Social economic disorder 3

4. Unfair Competition Acts • In respect of a product • Copying name, package or get up of another; or similarity causing confusion • Trademark infringement • Using name of another enterprise to cause confusion • Creation of monopoly with restrictions of supplies – patent misuse • Commercial bribery • False labeling, advertising or description • Dumping 4

5. Advertisement Law • Any publisher, advertisement operator or advertiser:- • False description of the function, place of manufacture, quality, manufacturer, etc. • Disvalue other competitors • Fabricate data, statistics, results of questionnaire, etc is liable to general damages through court proceedings. 5

6. Fair Trade Bureau • Powers of the Bureau • Enquiry and Inspection • Interrogation • Provision of evidence relating to unfair competition acts • Preservation and destruction of the goods • Impose fine of not more than RMB200,000 or 1-3 times of the illegal earnings • Confiscate the illegal earnings • Order for cessation of unfair competition acts • In theory, any individual may make complaints to the Fair Trade Bureau 6

7. Advertisement Regulatory Bureau • Power of Advertisement Regulatory Bureau • Restrict the publication of the advertisement • Use same amount of the costs of advertising to correct the advertisement • Impose a penalty of RMB10,000 – 100,000 or 1-5 times of the costs of advertising • Suspend/cancel business licence • Any individual may be complainant 7

8. Liability of Vendor situate in PRC To Purchaser, if:- • False description (e.g. quality, ingredients, etc.) • Confusion as to manufacturer or brand owner • Not actionable in China under the Product Quality Law • Goods are not manufactured or sold in China • Not actionable in China under the Unfair Competition law at court level • No locus standi as the purchaser’s rights are not the subject of infringement 8

9. Liability of Vendor situate in PRC (Cont’) To Purchaser (Cont’) • Actionable under Contract Law and Civil Procedure Law • If PRC law is the governing law; • If governing law is foreign law, but no exclusive foreign forum clause; or • If no governing law or jurisdiction clause. 9

10. Liability of Vendor situate in PRC (Cont’) To IPR/Name/Brand owner • Actionable under unfair competition laws in China if the infringer is in China:- • Complaints to be made to Fair Trade Bureau, IPRs need not be registered in China • Court Proceedings 10

11. Liability of Vendor situate in PRC (Cont’) To IPR/Name/Brand owner (Cont’) • Actionable under trademark laws in China if it relates to an infringement of registered PRC trademark:- • Complaints to be made to Trademark Bureau • Court Proceedings, if it is proved that:- • Use of identical or similar trademark; • Knowingly sell goods with infringed trademark; or • Produce false trademarks. • Remedies available at court level • Account of profits; or • Actual damages. 11

12. Liability of Vendor situate in PRC (Cont’) To IPR/Name/Brand owner (Cont’) • Actionable under advertisement law in China if the vendor is in China:- • Complaints to be made to Advertisement Regulatory Bureau • Court Proceedings • Remedies available at court level – general damages 12

13. Liability of Internet Service Provider situate in PRC To the Purchaser, if:- • there is false description of the product • Actionable in China as long as the server/publisher of the advertisement is in China • Remedies available at court level – general damages 13

14. Liability of Internet Service Provider situate in PRC (Cont’) To the IPR/Name/Brand Owner, if the advertisement:- • Infringe the patent of the owner; • Disvalue the owners’ products or services; or • Unauthorized use of the name / image of the owner. • Actionable in China once the server / publisher of the advertisement is in China • Complaints to be made to Advertisement Regulatory Bureau • Court Proceedings • Remedies available at court level – general damages 14

15. Liability of Internet Service Provider situate in PRC (Cont’) To the IPR/Name/Brand Owner (Cont’) • Actionable under trademark laws in China if it relates to an infringement of registered PRC trademark:- • Complaints to be made to Trademark Bureau • Court Proceedings, if it is proved that:- • Use of identical or similar trademark; • Knowingly sell goods with infringed trademark; or • Produce false trademarks. • Remedies available at court level • Account of profits; or • Actual damages. 15

16. Enforcement of Judgments • Court Litigation • China does not have Reciprocal Enforcement Treaty with most jurisdictions • No point in suing in foreign Courts, unless they have assets there • Suing on foreign judgment in China is questionable, as it has no common law • Buyer in China to sue in China if foreign seller have Foreign Investment Enterprise in China • Arbitration • China is party to New York Convention • Convention award registrable at Second Intermediate Court 16