China Law Update : China Business Law Lawyers & Attorneys : Sheppard Mullin Law Firm : Direct Investment, Dispute Resolution, Intellectual Property, Antitrust, Venture Capital

Since the Anti-Monopoly Law of China (the "AML") came into effect in August 2008, attention has been focused on its enforcement and effect on the Chinese market. While the public doubts the government has motivation in enforcing the law robustly against state-owned giants, individuals and private firms have been actively bringing private actions in court against these business giants. Chongqing Insurance Association, China Mobile, China Netcom, Baidu, Shanda Interactive Entertainment, and Sinopec have been defendants in the first batch of anti-monopoly litigations.

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China has played a leading role in cutting greenhouse gas emissions and providing carbon credits under a United Nations-backed trading scheme. According to the World Bank, China was involved in 73% of deals made under the Kyoto Protocol's Clean Development Mechanism (CDM) in 2007, and 84% in 2008, ranking first in the world. Under the CDM, if developed countries invest in clean energy projects in developing countries, they can receive Certification of Emission Reduction (CER) in return. They can then sell the CERs for profit, or use them to meet the emission targets under the Kyoto Protocol.

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On Sept. 28, 2009, comScore released August 2009 online video visit statistics from the comScore Video Metrix service, showing that the online video visit volume exceeded 25 billion in August, the largest number ever recorded. Google accounted for more than 10 billion visits during the month, while Hulu nailed fourth place with 488 million.

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On December 27, 2008, China's top legislature (the National People's Congress) approved the revision of the Patent Law. It became effective on October 1, 2009. The law was promulgated in 1984 and had previously been revised in 1992 and 2000. The first amendment added pharmaceutical compositions to the list of patentable items and introduced China's membership in the Patent Cooperation Treaty ("PCT"). The second amendment responded to the Trade-Related Aspects of Intellectual Property Rights ("TRIPS") Agreement.

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On March 31, 2009, the China Securities Regulatory Commission ("CSRC"), the nation’s securities watchdog, issued the Measures on Administration of Initial Public Offering and Listing on the Growth Enterprise Market (the "Measures"). The long-awaited Growth Enterprise Market (GEM) was finally launched when the Measures came into effect on May 1, 2009. GEM is a NASDAQ-style stock market designed to nurture cash-hungry, innovation-driven startup firms in China. The Measures require applicants to have a minimum 10 million yuan, or nearly 1.5 million U.S. dollars in accumulated net profit in the two years prior to a listing. In Comparison, an application to list on the main boards requires a minimum 30 million yuan in accumulated net profit in the three previous three years.

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China’s State Administration of Taxation (“SAT”) issued a Notice on the Issues concerning the Application of Royalty Clauses in Tax Treaties (Circular No. 507, hereinafter referred to as the “Circular”) on September 14, 2009. The Circular clarifies the definition and scope of royalty clause involved in tax treaties to avoid double taxation and to prevent fiscal evasion with respect to taxes on income. It will be effective on October 1, 2009.

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