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PROVISIONAL
RULES OF SHENZHEN SPECIAL ECONOMIC ZONE
ON IMPORT OF TECHNOLOGY
(Ratified
by the Fifth Session of the Standing
Committee of the Sixth People's Congress of
Guangdong Province on January 11, 1984 and
promulgated by the People's Government of
Guangdong Province on February 8, 1984)
SUBJECT: SPECIAL ECONOMIC ZONES
ISSUING-DEPT: GUANGDONG PROVINCE
ISSUE-DATE: 01/11/1984
IMPLEMENT-DATE: 02/08/1984
LENGTH: 1812 words
TEXT:
[Article 1] These Interim Provisions are formulated in accordance with the pertinent laws and decrees of the People's Republic of China and the "Regulations of the People's Republic of China on Special Economic Zones of Guangdong Province".
[Article 2] These Interim Provisions are applicable to the technology imports by enterprises, undertaking units and other economic organisations (hereinafter referred to as the "receiver") in the Shenzhen Special Economic Zone (hereinafter referred to as the "special zone") from foreign enterprises, other economic organisations or individuals (hereinafter referred to as the "supplier").
[Article 3] The persons concerned in technology imports must observe the laws and decrees of the People's Republic of China and their legitimate rights and interests are protected by the laws of the People's Republic of China.
[Article 4] The persons concerned in technology imports must sign a contract on the technology transfer (hereinafter referred to as the "contract"). In signing the contract, the principles of equality, mutual benefit and reaching unanimity through consultations must be implemented.
[Article 5] The imported technology must be applicable, advanced and characteristic of tangible economic results. It includes:
(1) Technology which has won effective patent rights;
(2) Technology for which patent rights have been applied; and
(3) Technological inventions.
[Article 6] When such advanced technology is imported, the persons concerned on both sides should apply to the taxation office and land management department in Shenzhen City for preferential treatment by presenting the certificates issued by the Scientific and Technological Development Centre of Shenzhen City and the pertinent scientific research institutes of the State. After ratification, they shall achieve special preferential treatment in the fields of taxation and land use fees in accordance with the relevant regulations of the special zone.
[Article 7] When technology which has won patent rights is transferred, the supplier shall provide the receiver with the manual of the patent rights and patent rights certificate. The certificate for the transfer of patent rights should also be presented at the same time if it is available.
[Article 8] When technology for which patent rights have been applied is transferred, the supplier shall provide the receiver with the written application, the manual of invention, the application items, digests, figures and other documents as well as the progress of the application. A certificate for the transfer of application rights should also be presented at the same time if it is available.
[Article 9] When a technological invention is transferred, the supplier shall provide the receiver with the design drawings, technical rules and diagrams, technical data, directions for production, formulae, key equipment, models, samples, lists of materials, operation manuals, methods of quality control and examination for products, methods and equipment for maintenance and related commercial information.
[Article 10] The supplier shall impart to the persons appointed by the receiver all transferred techniques during the time limit described in the contract and shall bear the responsibility of training to ensure that the receiver masters all techniques and operation methods.
[Article 11] If the supplier has transferred the same technology to others, he should provide the receiver with a copy of the transfer contract.
[Article 12] The supplier should ensure the legal effect and expected technological results of the imported technology.
The products made through use of the imported technology should find a legal and fair sale on international markets. The supplier should compensate the receiver for losses caused by the impacts on sales of the products if such impacts are caused by the supplier.
If the patent rights lose effectiveness or if the application for patent rights is refused, the receiver has the right to ask for a revision of the contract or for its termination. The supplier shall compensate the receiver for the losses sustained.
If the transferred technology fails to reach the standards described in the contract, the supplier shall bear the responsibility for the violation of the contract and shall compensate the receiver for the losses sustained.
[Article 13] The receiver shall strictly observe the regulations of the contract and respect the supplier's patent rights to the technology.
The receiver shall commit himself to keep secret the secret part of the imported technology within the scope and time limit described in the contract. The receiver shall compensate the supplier for any losses sustained caused by the divulgence of the secret by the receiver in violation of the contract.
Working personnel with knowledge of the secret part of the transferred technology shall commit themselves to keep the secret. Violators shall be held legally responsible for compensation for losses.
[Article 14] Technology imports may be carried on in the following forms:
(1) The supplier provides technology or special equipment and its technology and operates it in cooperation with the receiver;
(2) Licence trade;
(3) Compensation trade;
(4) Technological consultation and technological service; and
(5) Investment in technology as capital stock.
[Article 15] The person who applies for technology imports shall go through the following procedures relative to application:
(1) To file with the People's Government of Shenzhen City a letter of intent concerning applications and a report for a feasibility study;
(2) To obtain an application form for technology transfer after approval by the People's Government of Shenzhen City of the above-mentioned letter of intent and report;
(3) To sign a contract; and
(4) To present to the People's Government of Shenzhen City three copies of the contract and the following certificates for examination and approval;
a. three copies of the application form for technology transfer;
b. three copies of the transcription of the certificate of the supplier's legitimate identity (one copy of the original certificate of authorisation or entrustment and two copies of its transcription if the application is carried out by a legal person or trustees); and
c. three copies of the receiver's business licence (the enterprise which has applied for establishment and that which will be established after the approval of the contract of technology transfer shall present three copies of the transcription of the articles of association of the enterprise).
[Article 16] The People's Government of Shenzhen City will notify the applicant of the examination results within three months.
The contract will come into force upon approval by the People's Government of Shenzhen City.
The persons concerned in the contract shall, in the light of the relevant regulations of Shenzhen City, file the copy of the contract with the Shenzhen Municipal Administrative Bureau for Industry and Commerce for registration, and shall also register with the taxation office of Shenzhen City.
[Article 17] The contract shall include:
(1) The name of the items and names and addresses of the persons concerned on both sides;
(2) The definitions of the key words;
(3) The content and scope of the technology, a detailed list of the technological data and the date of transfer;
(4) The use of trade marks;
(5) The plan and progress of implementation, the technical service and technical training;
(6) The guarantee and examination and acceptance of the technology;
(7) Any part of the contract relating to secret information;
(8) Rights and duties of both sides for the improvement of the technology;
(9) The method of calculation and payment of technological rewards;
(10) The responsibility for violation of the contract;
(11) Force majeure;
(12) The arbitration agreement or other ways of settling conflicts;
(13) The time limit of the contract;
(14) The date and place for signing the contracts; and
(15) Other matters considered as necessary by the two sides.
[Article 18] The contract should not include an article which brings to either side unfair restriction or violates the principle of equality.
[Article 19] The time limit of a contract is generally five years or less except for those contracts in which technology is invested as capital stock. In the latter case, it shall be appropriately extended by the agreement of both sides and approval by the People's Government of Shenzhen City. The application for an extension of the time limit of a contract shall be presented six months before its expiration. The People's Government of Shenzhen City shall give a reply within a month.
The termination date of a contract for the transfer of patent rights shall not be later than the termination date of the patent rights except in the case of a contract in which technology is transferred as capital stock.
[Article 20] The People's Government of Shenzhen City shall annul the approval of a contract which is not implemented within six months of approval. The persons concerned may apply for an extension of up to three months upon submitting legitimate reasons. The application should be presented within the time limit.
[Article 21] The time limit of a contract begins from the day the contract is approved. The time limit of the extension begins from the day the extension is approved.
[Article 22] If one side transfers, entirely or partly, the rights and duties of a contract to others without the agreement of the other side during the period of validity of the contract, it should bear the responsibility for the violation of the contract.
[Article 23] When the supplier invests technology as capital stock under joint operation with the receiver, the proportion of the capital stock in the form of technology shall not exceed 20 per cent of the joint venture's registered capital and at the same time, the supplier shall invest cash or materials to the same value as the invested capital stock.
If one side transfers to others without the agreement of the other side the technology which has been invested as capital stock, it should bear responsibility for the violation of the contract.
[Article 24] These Interim Provisions are applicable to the technology imports by enterprises, undertaking units or other economic organisations in the special zone from overseas Chinese, compatriots from Xianggang (Hong Kong), Aomen (Macao) and Taiwan and their enterprises.
[Article 25] These Interim Provisions shall come into force on the date of promulgation.
