Laws of the People's Republic of China

REGULATIONS OF THE PEOPLE'S REPUBLIC OF CHINA
ON THE ADMINISTRATION OF TECHNOLOGY ACQUISITION
CONTRACTS

(Promulgated by the State Council on May 24, 1985)

SUBJECT: TECHNOLOGY CONTRACTS

ISSUING-DEPT: STATE COUNCIL OF CHINA

ISSUE-DATE: 05/24/1985

IMPLEMENT-DATE: 05/24/1985

LENGTH: 1013 words

TEXT:

[Article 1] These Regulations are formulated with a view to further expanding foreign economic and technical cooperation, upgrading the scientific and technical level of the country and promoting national economic growth.

[Article 2] Importation of technology referred to in these Regulations means acquisition of technology through trade or economic and technical cooperation by any corporation, enterprise, organisation or individual within the territory of the People's Republic of China (hereinafter referred to as "the recipient") from any corporation, enterprise, organisation, or individual outside the territory of the People's Republic of China (hereinafter referred to as "the supplier"), including:

(1) Assignment or licensing of patent or other industrial property rights;

(2) Know-how provided in the form of drawings, technical data, technical specifications, etc, such as production processes, formulae, product designs, quality control and management skills;

(3) Technical services.

[Article 3] The technology to be imported must be advanced and appropriate and shall conform to at least one of the following requirements:

(1) Capable of developing and producing new products;

(2) Capable of improving quality and performance of products, reducing production cost and lowering consumption of energy or raw materials;

(3) Favourable to the maximum utilisation of local resources;

(4) Capable of expanding product export and increasing earnings of foreign currencies;

(5) Favourable to environmental protection;

(6) Favourable to production safety;

(7) Favourable to the improvement of management;

(8) Contributing to the advancement of scientific and technical levels.

[Article 4] The recipient and the supplier shall conclude in written form a technology import contract (hereinafter referred to as "the contract"). An application for approval of the contract shall be submitted by the recipient, within thirty days from the date of conclusion, to the Ministry of Foreign Economic Relations and Trade of the People's Republic of China or any other agency authorised by the Ministry (hereinafter referred to as "the approving authority"). The approving authority shall approve or reject the contract within sixty days from the date of receipt. Contracts approved shall come into effect on the date of approval. Contracts on which the approving authority does not make a decision within the specified period of time shall be regarded as approved and shall come into effect automatically.

[Article 5] The conclusion of technology import contracts must conform to the relevant provisions of the "Foreign Economic Contract Law" and other laws of the People's Republic of China.

Both parties must specify in the contract the following items:

(1) Contents, scope and essential description of the technology provided, and a list of patents and trade marks if they are involved;

(2) Technical targets to be reached and time limit and measures for accomplishing the targets;

(3) Remuneration, composition of remuneration and form of payment.

[Article 6] The supplier shall ensure that it is the rightful owner of the technology provided and that the technology provided is complete, correct, effective and capable of accomplishing the technical targets specified in the contract.

[Article 7] The recipient shall undertake the obligation to keep confidential, in accordance with the scope and duration agreed upon by both parties, the technical secrets contained in the technology provided by the supplier, which have not been made public.

[Article 8] The duration of the contract shall conform to the time needed by the recipient to assimilate the technology provided and, unless specially approved by the approving authority, shall not exceed ten years.

[Article 9] The supplier shall not oblige the recipient to accept requirements which are unreasonably restrictive. Unless specially approved by the approving authority, a contract shall not include any of the following restrictive provisions:

(1) Requiring the recipient to accept additional conditions which are not related to the technology to the imported, such as requiring the recipient to purchase unnecessary technology, technical services, raw materials, equipment and products;

(2) Restricting the freedom of choice of the recipient to obtain raw materials, parts and components or equipment from other sources;

(3) Restricting the development and improvement by the receipient of the imported technology;

(4) Restricting the acquisition by the recipient of similar or competing technology from other sources;

(5) Non-reciprocal terms of exchange by both parties of improvements to the imported technology;

(6) Restricting the quantity, variety and sales price of products to be manufactured by the recipient with the imported technology;

(7) Unreasonably restricting the sales channels and export markets of the recipient;

(8) Forbidding use by the recipient of the imported technology after expiration of the contract;

(9) Requiring the receipient to pay for or to undertake obligations for patents which are unused or no longer effective.

[Article 10] In applying for approval of contracts, applicants shall submit the following documents:

(1) Written application for approval of the contract;

(2) Copy of the contract concluded by both parties and its Chinese translation;

(3) Documents evidencing the legal status of the contracting parties.

[Article 11] Application and approval of any revision and renewal of the contract shall be made in accordance with the provisions stipulated in Article 4 and Article 10 of these Regulations.

[Article 12] The authority to interpret these Regulations and to formulate detailed rules for implementing these Regulations resides in the Ministry of Foreign Economic Relations and Trade of the People's Republic of China.

[Article 13] These Regulations shall enter into force on the date of promulgation.