Examining regulations amended for tech import and export

The State Council promulgated the Decision on Amending Certain Administrative Regulations (Order No. 709 of the State Council) on 18 March 2019, to amend some provisions of 49 administrative regulations, including the amendment in article 38 to some provisions of the Regulations of the People’s Republic of China on Technology Import and Export Administration.

Main contents amended

The following contents in chapter 2 ,“Technology Import Administration”, are deleted:

First of all, the original paragraph 3 of article 24 is deleted, which provided that, “If the transferee of a technology import contract uses the technology provided by the transferor in accordance with the contract and infringes the legitimate rights and interests of others, the transferor shall bear the responsibility.”

Before the amendment, the paragraph mandatorily provided that the infringement liability should be borne by the transferor. After the amendment, both parties have more autonomy in the issue of assuming infringement liability. Reference may be made to article 353 of the Contract Law for the issue of infringement liability, that is, the agreement between the contracting parties shall be applied first to determine the infringement liability, and, in case of no agreement, the transferor should bear the liability.

Second, the original article 27 is deleted, which provided that, “The achievements of improved technology shall belong to the improving party in the period of validity of a technology import contract.”

Before the amendment, the regulations provided that the technical improvement achievements should be owned by the improving party. After the amendment, the attribution of the improved technology can be determined by reference to article 354 of the Contract Law, that is, it should be settled based on the autonomy of the parties, and the improving party shall own the improved technology in the case of no clear agreement, and failure to reach a supplementary agreement.

Third, the original article 29 is deleted, which provided that, “Any technical import contract shall not contain the following restrictive provisions: (1) requiring the transferee to accept any conditions that are not essential for the import of technology, including purchase of non-essential technologies, raw materials, products, equipment or services; (2) requiring the transferee to pay the royalties or assume relevant obligation for the technology, the patent of which has expired or been declared void; (3) restricting the transferee from improving the technology provided by the transferor, or from using the improved technology; (4) restricting the transferee from obtaining other technologies similar to, or competing with, the technology provided by the transferor from other sources; (5) unreasonably restricting the channel or source through, or from which, the transferee purchases raw materials, components, products or equipment; (6) unreasonably restricting the production quantity, type or sales price of the transferee’s products; and (7) unreasonably restricting the export channel of products made by the transferee with the imported technology.”

Before the amendment, no technology import contract was allowed to include the provisions of the above seven types of restrictive provisions. After the amendment, the transferor and the transferee can impose various reasonable restrictions on the technology contract, subject to the provisions on prohibition of illegal monopoly technology, impediment to technological progress, or infringement on the technical achievements of others as provided in article 329 of the Contract Law.