China legal update: New Provisions on Environmental Protection for Power Transmission and Transformation Projects

China legal update: New Provisions on Environmental Protection for Power Transmission and Transformation Projects

I. Legal News

New Provisions on Environmental Protection for Power Transmission and Transformation Projects

The General Office of the Ministry of Ecology and Environment has recently issued the Provisions on Environmental Protection for Power Transmission and Transformation Projects (the “Draft for Comment”). It is open for comments until November 16, 2018.

The Draft for Comment provides requirements for environmental protection regarding to different aspects including electromagnetism, noise, ecology, water and atmosphere, and the precautions against environmental risks. These requirements shall be respected at every stage of a power transmission and transformation project, ranging from the site selection, route selection, design, construction, to operation.

It also stipulates that the environmental impact assessment shall be done before the project starts. If there is a very important change to the project, an environmental impact assessment should be conducted to assess the impacts of the change. Eventually, in these kinds of projects, an environmental protection fund must be set up.

The Draft for Comment also requires that the public be able to voice its opinion and supervise the environmental protection measures taken.


Environmental Protection Taxation Clarified

On October 29th, 2018, the Ministry of Finance (“MOF”), has issued the Circular on Clarifying the Application of Taxable Pollutants and Other Matters for Environmental Protection Tax Purposes (the “Circular”).

The PRC Environmental Protection Tax Law was promulgated on December 25, 2016, and the environmental protection tax has been collected since January 1st, 2018, effectively ending the pollutant discharge fee that had been in effect for the past 40 years.

The Circular aims to clarify the provisions of the law including the application of taxable pollutants, tax reliefs, the monitoring and calculation of the amount of discharged taxable pollutants and the collaboration in collection and administration of environmental protection tax.

According to the Circular, legally established household garbage incineration power plants, household garbage landfills and household garbage composting plants, are identified as sites for the centralized processing of household garbage, and will be legally exempt from paying environmental protection tax for taxable pollutants they discharge, provided that the amount of discharged taxable pollutants does not exceed the discharge limit set by the State and by the local government.

Moreover, the Circular states that a tax payer can entrust an external agency to monitor the quantity of taxable pollutant it discharges; however, he shall lay down a monitoring plan in accordance with the State provisions. This plan shall be submitted to the competent authority of ecology and environment. A taxpayer entrusting a monitoring agency is allowed to use the most recently collected monitoring data to calculate the amount of discharged taxable pollutants, when no monitoring data is available for a month during the designated monitoring period but cannot use the monitoring data across quarters for this purpose.


Draft Law on the Promotion of Basic Medical Care, Hygiene and Health to Optimize Administration of Vaccines and Drugs

During the Sixth Session of the Standing Committee of the National People’s Congress (“NPC”), China’s legislative body, a draft law on the Promotion of Basic Medical Care, Hygiene and Health (the “Draft”) was issued. The full text has been released for public comments by December 1st, 2018.

The released Draft highlights basic medical care and health services, stresses the need to consolidate grassroots management and form a tight regulation network, details rules related to medical insurance and medicine, introduces and improves relevant provisions on the administration of vaccines and drugs, among others.

Regarding to Vaccines, the Draft states that citizens have the right to and are obligated to be vaccinated with vaccines covered by the national immunization program. Vaccines used for preventive vaccination must be manufactured in strict accordance with good manufacturing practices for drugs, meet relevant national drug standards, and be kept safe and effective. Furthermore, China runs the preventative vaccination certificate system among children.

Vaccines and drugs policies have regularly made the headlines of the news in 2018. Firstly, because of the movie “dying to survive”, a story about Chinese smuggling cancer drugs from India, which has been one of the biggest success of the year. Secondly, because of scandals like the one involving Changchun Changsheng (长春长生) that was recently fined for manufacturing vaccines without respecting production standards.


Preferential Tax Policy for Goods Displayed at the China International Import Expo

Between November 5th and until November 10th, 2018, the first China International Import Expo (“CIIE”) is held in Shanghai. This event was designed to attract investors and promote trade with the PRC.

On the 31st of October 2018, The MOF has issued the Circular on the Preferential Tax Policy for Imported Exhibits Sold During the Duration of the First CIIE (The “Circular”). This Circular provides that goods displayed during the CIIE, to the extent of a reasonable amount, will be exempted from import tariffs and the import value-added tax and consumption tax will only be charged based on 70% of the taxable value. However, imports banned by the country as well as endangered animals, plants and products made of the are not eligible for this tax relief.

Meanwhile, the Circular expressly states that, each corporate exhibitor specified on the List of Exhibits Eligible for the Preferential Tax Policy for the First CIIE, could enjoy the above-said tax preference within the corresponding upper sales amount provided in such List, and other corporate exhibitors could each enjoy tax preference for the sales amount of up to USD20,000.


The NPC Clarifies Judicial Proceedings for Patents and Other Related Intellectual Property Cases

The Decision on Several Issues Concerning Judicial Proceedings for Cases Involving Patents and Other Intellectual Property Rights (the “Decision”) has been recently adopted at the Sixth Session of the Standing Committee of the 13th National People’s Congress (“NPC”) and will go into effect from January 1, 2019.

As mentioned in our last update, a specialized court for IP appeals will be set up by the Supreme People’s Court (“SPC”), and the court is mainly for civil and administrative IP disputes appeals which require more technological expertise. This Decisions was released to further clarify the following:

The appeal filed by a litigant against the first-instance judgement or ruling rendered for an IP-related civil case or IP-related administrative case that involve a subject matter containing specialized expertise, such as a patent for invention, a utility model patent, a new plant variety, an integrated circuit layout design, a technology secret, a computer software, and a monopolistic IP, shall be tried by the SPC.

The re-trial claimed or the counterappeal filed, in accordance with the law, against a legally effective first-instance judgment, ruling or mediation document rendered for an abovementioned case, may be tried by the SPC, provided that the trial supervision procedures apply; alternatively, the SPC may designate a court at a lower level according to the law to retry the case.


II. Hot Topic

How the Japanese MUJI Lost his Chinese Name

Last year, on the 25th of December, the Beijing Intellectual Property Court ruled a trademark verdict against the Japanese lifestyle products brand.

MUJI’s parent company, Ryohin Keikaku Co., was created in 1980 and is known in China under the following characters 無印良品. In 1998, Beijing Cottonfield Textile was created, it is the parent company of Natural Mill, in Chinese also known as 無印良品. The latter registered the trademark in 2004, before the Japanese company, and in 2016 Beijing Cottonfield Textile filed a trademark infringement lawsuit against Ryohin Keikaku Co. and its Chinese-registered company.

The Beijing Intellectual Property Court ruled that Natural Mill had the right to use the trademark and shall be granted due legal protection. As a consequence, MUJI is now forbidden to use “無印良品” on any of its products. Besides, it was required to pay RMB 626,000 of compensation to Natural Mill.

There were comments on the internet saying that MUJI had lost against a “copycat” company, Natural Mill’s scope of business being relatively similar. Like in France, China has a “First to File” trademark system, which means that the first company to register the trademark will be the rightful owner. In Opposition with the “First to Use” system that can be found in common law countries. Companies face regularly malicious registration of trademarks in China without other purpose than selling the right on the trademark. It is in practice difficult to get a national judge to rule in favor of the original user.

There has been lots of critics amid the trade war with the United States concerning China’s protection of foreign intellectual property, especially through the publication by the US Trade representative of the “Special 301 Report on Intellectual Property Rights”. However, in the last few years there have been initiatives taken by the authorities to tackle these issues. Specialized jurisdiction, i.e. Intellectual Property Courts have opened in Beijing, Shanghai, Hangzhou, Nanjing, Suzhou, Chengdu and Wuhan.

Trademarks are booming nowadays in China, as entrepreneurship grows, during the first six months of 2018, 3,586,000 applications for trademark registration were filed. As of June 30, 2018, 31.5 million total trademark applications had been filed, 19.4 million trademarks had been registered, and 16.8 million trademarks remained as valid registrations.



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