Notes From The China Desk

A recent decision by the federal district court in the Southern District of Florida (Xiamen Zhaozhao Trading Co., Ltd. v. The Individuals, Partnerships and Unincorporated Associations Identified on Schedule A, No. 23-61347-CV, docket entry 21 (September 27, 2024)) permitted the Chinese corporate plaintiff to serve its complaint alleging patent infringement on the putative foreign defendants via e-mail.

On June 21, 2024, the U.S. Department of the Treasury’s (Treasury) Office of Investment Security released proposed language for the Outbound Investment Security Program (hereafter, the Proposed Rule).

China recently enacted a revision to the PRC Law on Guarding State Secrets, and shortly after Hong Kong followed suit when it passed the Safeguarding National Security Ordinance.

On May 20, 2024, the PRC Ministry of Commerce (MOFCOM) announced the inclusion of three U.S. companies on its unreliable entities list over sales of arms to Taiwan. We discussed the implementation of the Unreliable Entity List here. The move mimics similar designations in February 2023, which we wrote about here, and follows recent actions by the BIS and Treasury to apply new export controls and sanctions on Chinese entities for allegedly doing business with Russia.

In a bombshell ruling in SnapRays v. Lighting Defense Group, case no. 2023-1184 (May 2, 2024), an appellate panel from the U.S. Federal Circuit determined that an accused infringer could haul its accuser—the patentee—into the federal district court of the infringer’s home state, despite the patentee not having initiated any contact with the accused or any contacts with that state.

On March 8, 2024, the Hong Kong International Arbitration Centre (HKIAC) released statistics on applications it processed under the Arrangement Concerning Mutual Assistance in Court-Ordered Interim Measures in Aid of Arbitral Proceedings by the Courts of the Mainland and the Hong Kong Special Administrative Region (Arrangement) since the Arrangement came into effect on October 1, 2019.

The Arrangement on Reciprocal Recognition and Enforcement of Judgments in Civil and Commercial Matters by the Courts of the Mainland and the Hong Kong Special Administrative Region (2019 Arrangement) will come into effect simultaneously in Mainland China (Mainland) and Hong Kong Special Administrative Region (HKSAR) on January 29, 2024.

On September 28, 2023, the Cyberspace Administration of China (CAC) published Regulations to Standardize and Promote Cross-Border Data Flows (Draft for Comments) (the Draft Regulations). In current form, the Draft Regulations appear to clarify and walk back the requirements from prior regulations, including the Data Transfer Security Assessment Measures (Security Assessment Measures) and the Standard Contract Measures for the Transfer of Personal Information (the SCC Measures).

In early September 2023, the Standing Committee of the National People’s Congress adopted an amendment to China’s Civil Procedure Law (the Amendment). The Amendment will go into effect on January 1, 2024. The Amendment provides clarity and legal justification for Chinese courts to assert jurisdiction over foreign-related cases that involve Chinese individuals or specific subject matter.

Foreign companies should be aware that Chinese companies may attempt, and Chinese courts may accept, these types of cases despite the existence of forum selection and choice-of-law provisions in a contract.

The Notice will affect all mobile apps operating on internet networks in China. Mobile app developers or operators will have until the end of March 2024 to complete the filing.

On April 20, 2022, the Hangzhou Internet Court held a Chinese NFT-trading platform responsible for copyright infringement for the conduct of one of its users in Case No. (2022) Zhejiang 0192 Minchu No. 1008, the first publicized NFT infringement case in China.

China adopted amendments to its Anti‑Monopoly Law (AML) in June 2022 that impact its premerger antitrust review process and substantially strengthen penalties for gun jumping and other AML violations.  The amendments are effective as of August 1, 2022.  Any business whose products or services are sold in China should be aware of these changes, as Chinese antitrust law extends to transactions entirely outside China’s borders where parties’ revenue from within China meets certain thresholds. This FAQ provides an overview of the AML amendments affecting merger reviews and addresses key questions for non‑Chinese companies that sell products into China or whose business may otherwise be considered to impact Chinese markets. 

Cadence Design Systems, Inc. v. Syntronic AB et al. is being recognized as one of the first significant decisions regarding discovery disputes involving Chinese companies claiming that Chinese law, specifically the recently enacted Personal Information Protection Law (“PIPL”), would prevent them from complying with discovery obligations in U.S. proceedings. 

A cross-border team of Winston & Strawn White Collar and Regulatory attorneys discusses the recent legislative acts in China, which have placed multinationals with operations in China that comply with U.S. sanction laws in a tenuous position. 

With the release of the 2021 Negative List for the Market Entry of Foreign Investment[1] (“2021 Negative List”), which went into effect on January 1, 2022, China’s policy on foreign investment became clear—foreign companies may invest in unrestricted industries or invest passively according to the restrictions in Chinese law. 

On April 12, 2021, the General Administration of Customs (GAC) of the People’s Republic of China (PRC or China) released two orders related to the import of food products into China: Order 248 and Order 249 (collectively, the Orders). Both Orders will take effect on January 1, 2022. Taken together, the Orders require numerous participants in the supply chain for import of food products to China to register with the GAC and to comply with PRC food safety laws and regulations. 

Companies invested or considering investing in variable-interest entity (VIE) structures in China should take precautionary measures to protect against risks illustrated by recent events in China and the United States. 

On September 17, 2021, the Stock Exchange of Hong Kong published a consultation paper on Special Purpose Acquisition Companies (SPACs).