(Adopted on June 23, 1987 by the 21st Session of the Standing Committee of the 6th National People's Congress)
CHAPTER I General Principles
Article
1.This Law is formulated
in order to give impetus to scientific and technical development,
to promote the service of science and technology for the construction
of socialist modernization, to protect the legitimate rights and interests
of the parties to technology contracts and to maintain order in the
technology market.
Article 2.This Law applies to contracts made between
legal persons, between legal persons and citizens, and between citizens,
which establish civil rights and obligations in technical development,
technology transfer, technical consultancy and technical service.
It does not apply however, to contracts in which one party is a foreign
enterprise, other foreign organization or foreign individual.
Article 3.The formation of a technology contract
shall be in conformity with laws and regulations, be of benefit to
the progress of science and technology and accelerate the application
and dissemination of scientific and technical results.
Article 4.The formation of a technology contract
shall conform to the principles of voluntary participation and equality.
mutual benefit and compensation, and trust and integrity.
Article 5.Where the content of a technology contract
touches on national security, or where the greater interest demands
confidentiality, this shall be handled in accordance with the relevant
State regulations.
Article 6.Technical results arising out of the execution
of a unit's tasks or as a result mainly of the utilization of the
material technical resources of a particular unit shall be professional
technical results. The right to utilize and transfer professional
technical results. The right to utilize and transfer professional
technical results lies with the unit concerned, which has the right
to conclude technology contracts relating to those professional technical
results. The unit shall reward the individual responsible for achieving
the said technical results in accordance with the income obtained
by the unit through the utilization or transfer of the professional
technical results.
The right to utilize and transfer non-professional technical results
lies with the individual responsible for achieving those results,
who shall have the right to conclude technology contracts relating
to the non-Professional technical results.
Application for patent and the award of patent rights with regard
to professional or non-professional technical results shall be handled
in accordance with the Patent Law and relevant regulations.
An individual responsible for achieving technical results shall have
the right to state clearly on documents relating to the technical
results that he is the person responsible for achieving them, and
shall have the right to obtain a certificate of honor and a reward.
Article 7.The relevant State Council department
in charge and the people's governments of the provinces, autonomous
regions and directly administered municipalities shall have the right
as required by the national and common social interest, to decide
upon the dissemination to and utilization by designated units of non-patented
technical results of major significance achieved by units under the
ownership of the whole people, which fall within their particular
system or scope of jurisdiction. A unit utilizing technical results
has the responsibility to maintain the confidentiality of those results.
The utilizing unit shall pay a fee for use in accordance with the
agreement between the two parties. If the two parties are unable to
reach an agreement, the designating organ shall determine a reasonable
fee.
The dissemination for use of non-patented technical results achieved
by collectively-owned units or by individuals, which are of major
significance to the national or common social interest, shall, where
necessary, by handled in accordance with the aforementioned provisions,
following approval by the relevant State Council department in charge.
Article 8.The bodies responsible for administering
technology contracts shall be stipulated by the State Council.
CHAPTER
II
Formation, Performance, Modification And Termination of Technology
Contracts
Article
9.The formation,
modification and termination of a technology contract shall all be
in written form.
Article 10.A technology contract shall be formed
once the parties affix their signatures or personal seals to the contract.
Where State regulations require approval by relevant organs, the contract
shall be formed from the time of approval.
Article 11.The parties may stipulate guarantees
for technology contracts. A contract under which a third party is
guarantor shall be formed once the guarantor and guarantee affix their
signatures or personal seals to the contract.
Article 12.The price or remuneration in a technology
contract and its method of payment shall be stipulated by the parties
to the contract.
Article 13.A party may appoint an agent to form
a technology contract on his behalf. The appointing party shall provide
the agent with a power of attorney. The agent shall, within the scope
of authority granted to him by the appointing party, conclude a contract
in the name of the appointed party.
Article 14.Any body which provides introductory
services in the formation of a technology contract which complies
with the provisions of this Law and abides by the principle of trust
and integrity may accept reasonable compensation therefor.
Article 15.The articles of a technology contract
shall be stipulated by the parties. They shall generally include the
following items:
(1) Name of the project;
(2) Content, scope and requirements of the object of the contract;
(3) Performance plan, progress projection, duration, place, and method
of performance;
(4) Confidentiality of technical information and data;
(5) Liability for risk;
(6) Ownership and Sharing of technical results;
(7) Standard and method of acceptance;
(8) Price or remuneration and method of payment;
(9) Method of calculation of penalties or damages;
(10) Dispute resolution method;
(11) Definition of names and technical terms.
Technical background material relevant to the performance of the contract,
and feasibility and technical evaluation reports, project task and
planning documents, as well as drawings, tables, data and photographs
may, as agreed between the parties, form an integral part of the contract.
Article 16.A technology contract formed in accordance
with the law shall immediately become legally binding. The parties
shall perform their duties fully as stipulated in the contract. One
party may not, of its own accord, modify or terminate the contract.
Article 17.If one party fails to execute a technology
contract or if their performance of their contractual obligations
does not conform to the stipulated conditions, thereby rendering them
in breach of contract, the other party shall have the right to demand
performance or to adopt remedial measures, as well as have the right
to demand damages.
The liability for compensation by the party in breach of contract
shall be equivalent to the loss suffered by the other party as a result
of the breach, but shall not exceed the amount which should have been
foreseen by the party in breach at the time of forming the contract.
The parties may agree in the contract that if one party is in breach
of contract it shall pay a stipulated monetary penalty to the other
party. They may, alternatively, stipulate a method for the calculation
of damages.
A party which suffers a loss as a result of breach of contract by
the other party shall promptly take appropriate steps to prevent the
loss form increasing. Should it fail to promptly take appropriate
action, thereby causing an increase in the loss, it shall not have
the right to demand compensation for the additional loss.
Article 18.If all parties are in breach of contract,
they shall all bear equivalent liability.
Article 19.If one party is unable to fulfil its
contractual obligations as a result of the actions of a higher authority
it shall, as stipulated by the contract, compensate the other party
for damages or adopt other remedial measures, after which higher authority
shall be responsible for dealing with the loss incurred in doing so.
Article 20.If a party is unable to perform a technology
contract for reasons of force majeure, it shall be relieved form its
liability for non-performance.
Article 21.The following technology contracts shall
be invalid:
(1) Those which violate the law or regulations or which are harmful
to the national or common social interest;
(2) Those which illegally monopolize or obstruct the progress of technology;
(3) Those which violate another's legitimate rights or interests;
and
(4) Those concluded by way of deception or coercion.
An invalid contract shall have no legally binding force from the time
it is made. The invalidity of a portion of a contract shall not affect
the remainder of the contract which shall retain its validity.
Article 22.If the formation of a technology contract
which violates the law or regulations or which is harmful to the national
or common social interest involves an illegal activity, administrative
or criminal liability shall be investigated and determined in accordance
with the law.
Article 23.If the parties are in unanimous agreement,
a technology contract may be modified or terminated.
The modification or termination of a contract approved by a relevant
organ shall be agreed to by the original approving body.
Article 24.If any one of the following circumstances
arises, rendering the performance of a technology contract unnecessary
or impossible, one party shall have the right to notify the other
party of termination of the contract:
(1) Breach of contract by the other party;
(2) Force majeure;
(3) Public disclosure by another person of the specific technology
of a technical development contract.
Article 25.The modification or termination of a
contract shall not affect the rights of the parties to demand damages.
Article 26.Within the period of validity of a technology
contract, one party may not, without the agreement of the other party,
transfer its rights or obligations in whole or in part to a third
party.
CHAPTER
III
Technical Development Contracts
Article
27.A technical development
contract refers to a contract concluded between parties for the research
and development of new technology, products, new processes, new materials
and their systems.
Technical development contracts include commission development contracts
and co-operative development contracts.
Article 28.A commission development contract refers
to a contract under which one party commissions another party to engage
in research and development.
The primary obligations of the commissioning party shall be:
(1) To pay research and development fees and remunerations as stipulated
by the contract;
(2) To provide technical material and original data and to co-operate
in the completion of tasks as stipulated by the contract; and
(3) To take delivery on time of the results of the research and development.
The primary obligations of the party undertaking the research and
development shall be:
(1) To formulate and implement a research and development plan;
(2) To make reasonable use of research and development funds; and
(3) To complete research and development and hand over the results
of the research and development on time, to provide relevant technical
data and necessary technical guidance and to assist the commissioning
party to gain an understanding of the results of the research and
development.
Article 29.If the commissioning party is in breach
of contract, thereby causing disruption, delay or failure of the research
and development work, it shall pay a penalty or damages.
If the party undertaking the research and development is in breach
of contract, thereby causing disruption, delay or failure of the research
and development work it shall, in addition to adopting remedial measures
for the continued performance of the contract, pay a penalty or damages.
Where failure of the research and development is caused, the party
shall refund all or part of the fee or remuneration for research and
development and shall pay a penalty or damages.
Article 30.A co-operative development contract refers
to a contract concluded between parties for the purposes of joint
research and development.
The primary obligations of all parties to a co-operative development
contract shall be:
(1) To invest (including the provision of technology as investment)
as stipulated by the contract;
(2) To share research and development work as stipulated by the contract;
and
(3) To co-operate and co-ordinate with the other parties to the contract
Article 31.If any one of the various parties to
co-operative development is in breach of the contract, thereby causing
disruption, delay or failure of the research and development work,
it shall pay a penalty or damages.
Article 32.The principles of ownership and sharing
of technical results arising out of the performance of a technology
contract are as follows;
(1) The right to apply for patent of a discovery or invention which
results from commissioned development shall, unless otherwise stipulated
by the contract, lie with the party which undertook the research and
development. If the party which undertook the research and development
obtains patent rights, the commissioning party may implement the patent
free of charge.
If the party which undertook the research and development transfers
its right to apply for patent of its discovery or invention, the commissioning
party may have the right of first refusal of such transfer.
(2) The right to apply for patent of a discovery or invention which
results from co-operative development shall, unless otherwise stipulated
by the contract, lie jointly with the parties to the joint development.
If one party transfers its joint rights of patent application, the
other party or parties may have the right of first refusal of such
transfer.
If one party to co-operative development declares the relinquishment
of its jointly-held patent application right, the other party may
submit a sole application, or the other parties may submit a joint
application. Once a patent right is granted, the party which relinquished
its patent application right may implement the patent free of charge.
If one party to a co-operative development does not agree to the patent
application, the other party or other parties shall not be allowed
to submit a patent application.
(3) The rights to utilize and transfer non-patented technical results
of commissioned or co-operative development, as well as details of
the method of distribution of profit shall be stipulated by the parties
in the contract. If the contract contains no stipulation, all parties
shall have the right to utilize or transfer the technical results.
The party commissioned to undertake the research and development may
not, however, transfer the results of the research and development
to a third party prior to handing those results over to the commissioning
party.
Article 33.The parties shall stipulate in the contract
the liability for risk in the case of total or partial failure of
the research and development due to insurmountable technical difficulties
during the performance of a technology development contract. If the
contract contains no stipulation, the parties shall each bear a reasonable
share of the liability.
If one party discovers the existence of one of the abovementioned
circumstances which could lead to the total or partial failure of
the research and development, it shall promptly notify the other party
and adopt appropriate measures to reduce the loss. If one party fails
to promptly notify the other party and to adopt appropriate measures,
thereby causing an increase in the loss, it shall bear liability for
the additional loss.
CHAPTER IV Technology Transfer Contracts
Article
34.A technology
transfer contract refers to a contract concluded between parties for
the transfer of a patent, transfer of patent application rights, a
licence to implement a patent or for the transfer of non-patented
technology.
Article 35.A technology transfer contract may stipulate
the scope of patent implementation or utilization of non-patented
technology by the transferor and transferee. The terms of the contract
may not be used however, to restrict technological competition or
development.
Article 36.The formation of a contract for the transfer
of patent rights or of patent application rights shall conform to
the Patent Law and relevant regulations.
Article 37.The primary obligations of the transferor
in a contract of licence to work a patent shall be:
(1) To permit the transferee to work the patent within the scope stipulated
by the contract; and
(2) To hand over technical data relevant to the working of the patent
and to provide the necessary technical guidance.
The primary obligations of the transferee in a contract of licence
to work a patent shall be:
(1) To work the patent within the scope stipulated by the contract
and to not permit a third party not included in the contract to work
the said patent; and
(2) To pay royalties as stipulated by the contract.
Article 38.a technology transfer contract which
involves a patent shall clearly specify the name of the discovery
or invention, the patent applicant and the patentee, the date and
number of the application and the period of validity of the patent
right.
A contract of licence to work a patent shall be valid only for the
term of validity of the patent right. Upon the expiry of the validity
of the patent right, or following declaration of the patent right
as invalid, the patentee shall not conclude with another person a
contract of licence to work the said patent.
Article 39.The primary obligations of the transferor
in a contract for the transfer of non-patented technology shall be:
(1) To provide technical data and carry out technical guidance as
stipulated by the contract;
(2) To guarantee the applicability and reliability of the technology;
(3) To undertake the obligation of confidentiality as stipulated by
the contract.
The primary obligations of the transferee in a contract for the transfer
of non-patented technology shall be:
(1) To utilize the technology within the scope stipulated by the contract;
(2) To pay fees for use as stipulated by the contract;
(3) To undertake the obligation of confidentiality as stipulated by
the contract.
Article 40.If the transfer is in breach of contract,
it shall undertake liability as follows:
(1) If the party does not transfer the technology as stipulated by
the contract it shall, in addition to refunding all or part of the
fee for use, pay a penalty or damages.
(2) If the party works a patent or utilizes non-patented technology
beyond the scope stipulated in the contract, or breaches the contract
by the unauthorized granting to a third party of licence to work the
said patent or utilize the non-patented technology, it shall cease
the action which is in breach of contract and shall pay a penalty
or damages.
(3) If the party is in breach of the contractual obligation of confidentiality,
it shall pay a penalty or damages.
Article 41.If the transferee is in breach of contract,
it shall undertake liability as follows:
(1) If it fails to pay the fee for use as stipulated by the contract,
it shall make up the fee and, in addition, pay a penalty as agreed
in the contract. If it fails to make up the fee or pay a penalty,
it must cease to work the patent or to utilize the non-patented technology,
return the technical data and pay a penalty or damages.
(2) If it works a patent or utilizes non-patented technology beyond
the scope stipulated in the contract, or if it, without the agreement
of the transferor, grants licence to a third party to work the patent
or utilize the non-patented technology, it shall cease the action
which is in breach of contract and shall pay a penalty or damages.
(3) If it is in breach of the contractual obligation of confidentiality,
it shall pay a penalty or damages.
Article 42.If the violation of another person's
legitimate rights or interests is caused by the transferee's working
of a patent or utilization of non-patented technology, the transferor
shall undertake liability.
Article 43.The parties may, in accordance with the
principle of mutual benefit, stipulate in the contract a method of
sharing ongoing improvements to technical results following the working
of a patent or the utilization of non-patented technology. If the
contract contains no stipulation, no one party has the right to share
the ongoing improvements to the technical results of another party.
CHAPTER
V
Technical Consultancy Contracts And Technical Service Contracts
Article
44.A technical consultancy
contract refers to a contract concluded for the supply by one party
to another party of feasibility evidence, technical calculations and
the findings of specialist technical surveys and analysis and evaluation
relating to specified technical project.
Article 45.The primary obligations of commissioning
party in a technical consultancy contract shall be:
(1) To clearly state the problem for consultancy and to provide technical
background material and relevant technical data and figures as stipulated
by the contract;
(2) To accept on time the results of the work of the advising party
and to pay remuneration.
The primary obligations of the advising party in a technical consultancy
contract shall be:
(1) To utilize its own technical knowledge to complete a consultancy
report as stipulated by the contract or to answer the questions of
the commissioning party;
(2) To submit a consultancy report which meets the requirements stipulated
in the contract.
Article 46.If the commissioning party in a technical
consultancy contract fails to provide the necessary figures and data
as stipulated by the contract, thereby affecting the progress and
quality of the work, it may not recover that remuneration already
paid and shall pay in full any remuneration still owed.
If the advising party in a technical consultancy contract fails to
submit its consultancy report on time, or if the report submitted
does not conform to the stipulations of the contract, it shall receive
a reduced remuneration or no payment and shall pay a penalty or damages.
Any loss suffered by the commissioning party in a technical consultancy
contract as a result of a decision taken on the basis of a consultancy
report or opinion provided by the advising party in conformity with
the requirements of the contract shall be borne by the commissioning
party, unless otherwise stipulated by the contract.
Article 47.A technical service contract refers to
a contract under which one party uses its technical knowledge to resolve
a specified technical problem for another party. It does not include
contracts for construction engineering survey, design or construction,
for installation or for contract processing.
Article 48.The primary obligations of the commissioning
party in a technical service contract shall be:
(1) To provide working conditions and complete complementary tasks
to facilitate the service, as stipulated by the contract;
(2) To accept on time results of the service work and to pay remuneration.
The primary obligations of the service party in a technical service
contract shall be:
(1) To complete the contractually stipulated service task on time,
to resolve the technical problem and to guarantee the quality of the
work;
(2) To transfer the knowledge used to solve the technical problem.
Article 49.If the commissioning party in a technical
service contract is in breach of contract, affecting the progress
and quality of the work and does not accept or is late in accepting
the results of the service work, it shall pay the remuneration in
full.
If the service party in a technical service contract fails to complete
its service as stipulated by the contract, it shall not be paid and
shall pay a penalty or damages.
Article 50.Any new technical results achieved by
the advising party or service party during the performance of a technical
consultancy or technical service contract and utilizing technical
data and work facilities supplied by the commissioning party shall
belong to the advising party or the service party. Any new technical
results achieved by the commissioning party by utilizing the results
of the work of the advising party or the service party shall belong
to the commissioning party, unless otherwise stipulated by the contract.
CHAPTER
VI
Arbitration And Litigation of Technology Contract Disputes
Article
51.Disputes arising
from technology contracts may be resolved by the parties through consultation
or mediation. If the parties are unwilling or unable to resolve the
dispute through consultation or mediation they may, in accordance
with the arbitration clause of the contract or a subsequently concluded
arbitration agreement, request arbitration by an arbitral organ stipulated
by the State.
If one party fails within the designated time to perform the terms
of an arbitration award granted by the arbitral body, the other party
may apply to a people's court for enforcement of the award.
If the parties have not included an arbitration clause in the contract
and have not subsequently concluded an arbitration agreement, they
may initiate litigation in a people's court.
Article 52.The period of limitation of actions with
regard to disputes arising from a technology contract and the limit
for application for arbitration shall be one year, to be calculated
from the day a party becomes aware or should become aware of the violation
of its legitimate rights or interests.
CHAPTER
VII
Supplementary Provisions
Article
53.The Economic
Contract Law shall not apply to technology contracts formed after
the implementation of this Law.
Article 54.The State Council departments in charge
of science and technology may formulate implementing rules on the
basis of this Law. These implementing rules shall be implemented following
approval by the State Council.
Article 55.This Law shall come into force on November
1, 1987.
(In case of discrepancy, the original version in Chinese shall prevail.)