China legal update: SAMR Invites Opinions on the Reform of the Enterprise Name Registration System

I. Legal News

The State Administration for Market Regulation (“SAMR”) recently issued the Circular on Ensuring the Transition for the Cancellation of the Pre-Approval Administrative Licensing Concerning Enterprise Names (Draft for Comment) (the “Draft for Comment”) to seek for public opinion by March 10, 2019.

At present time, an enterprise’s name pre-approval is the first step in establishing an enterprise in China, and an enterprise was required to go to regional Administration for Industry and Commerce (“AIC” which is the former name of SAMR) and to submit relevant application materials in person. On November 1, 2015, reform was made to allow an enterprise to complete its name pre-approval procedure online by uploading photocopies of required documents. Upon approval by AIC, an enterprise will obtain an Enterprise Name Pre-approval Certificate.

According to the Draft for Comment, an enterprise’s name pre-approval will be canceled gradually. It targets that by the end of May 2019, the Enterprise Name Pre-approval Certificate will not be issued anymore, and an enterprise can first declare its name through a self-declaration system. Such self-declaration system will have a prior intelligent examination on the enterprise name based on its big database containing all company names in China, which will guide the enterprise to declare a correct name.

An enterprise’s name pre-approval is one of the 25 administrative licensing items to be cancelled released by the State Council on 20 February 2019, with the purpose of promoting the transition of the government’s function and to optimize the environment for business operation. Besides the purpose of stimulating the market’s vitality, this reform also has the advantages of simplifying the administrative process, as well as lowering the transaction cost of an enterprise.

(http://www.saic.gov.cn/hd/zjdc/201903/t20190304_291623.htm)

The State Council has recently announced the Decision regarding Cancelling and Delegating Several Administrative Licensing Items (“the Decision”) to cancel 25 administrative licensing items and to delegate 6 others to lower-level authorities.

According to the Decision, the cancelled items include approval for overall developing plans of petroleum and natural gas with foreign companies, certificate issuance for seagoing boaters, the aforementioned name pre-approval for companies and individual-owned business, etc. For the 6 administrative licensing items to be delegated to authorities at lower level, a good example is for conducting passenger vessel business (including passenger-cargo vessels) shipping of dangerous bulk liquid cargo between the mainland and Hong Kong/Macau, issuance of such license will be delegated from the Ministry of Transportation to Departments of Transportation at provincial level which will make the process more efficient.

The Decision has not only listed each items’ authorities concerned and their legal basis, but also the present and subsequent supervising steps that needs to be strengthened item-by-item. The State Council has requested the authorities concerned to ensure the implementation of the measures, and to publish specific supervision regulations within 20 working days after the Decision’s release.

(http://www.gov.cn/zhengce/content/2019-03/06/content_5371253.htm)

II. Case

On March 12, 2019, Chief Justice Zhou Qiang delivered a work report of the Supreme People’s Court (“SPC”) at the third plenary meeting of the Second Session of the 13th National People’s Congress at the Great Hall of the People in Beijing, in which he reported that Chinese courts concluded 15,000 foreign-related civil and commercial cases of first instance in 2018 and China improved judicial services for foreign businesses. Zhou Qiang cited “Peppa Pig” copyright infringement case as a good example.

As pig is a symbol for the lunar year of pig. Peppa Pig, as one of the most popular cartoon figures in China, has earned her incredible popularity among Chinese kids as well as young adults. However, the Peppa Pig character suffered from the fake Peppa merchandise industry in China. The case cited by Zhou Qiang was a copyright infringement case adjudicated by the Hangzhou Internet Court in last August.

The plaintiffs in this case, Astley Baker Davies Limited (“Astley”) and Entertainment one UK limited (“eOne”), who are “Peppa Pig” character’s copyright owners, claimed that Jiale Toy Industry Co., Ltd.(“Jiale”) infringes their copyright and demanded compensation.

The Hangzhou Internet Court found that “Peppa Pig” presents vibrant characters and artistic effects in lines, colors or combinations, which is regarded as the art works protected by PRC Copyright Law. Further, the court held that the defendant, Jiale, does not have the authorization to use “Peppa Pig” figure on their commodities sold online. The court pronounced that Jiale should stop its infringement acts immediately and compensate the economic losses amounting to RMB 150,000 to the plaintiffs.

It is reminded by this case that when conducting the business activities in China, enterprises shall respect the IP rights of others and at the same time, IP right owners shall be active in taking the legal tools to safeguard their IP rights.

(http://www.sohu.com/a/249827341_241593
http://www.sohu.com/a/249185512_158711)

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