Several Issues Concerning the Application of the Law in the Trial of Technology Contract Disputes Interpretation

(Promulgated by the Supreme People's Court on December 16 2004 and effective as of January 1 2005.)

SPC Interpretation [2004] No.20

With a view to correctly trying technology contract disputes, we hereby issue the following interpretation on relevant issues based on relevant provisions of such laws as the PRC Contract Law, the PRC Patent Law, the PRC Civil Procedure Law (2nd Revision), etc. while taking into account trial practice.

1. GENERAL PROVISIONS

Article 1: The term "technological achievement" means a technological solution relating to a product, process, materials or the improvement thereof accomplished through the utilization of scientific and technological knowledge, information and experience, and includes patents, patent applications, technological secrets, computer software, integrated circuit layout designs, new plant varieties, etc.

The term "technological secret" means technical information that is not in the public domain, has commercial value and in respect of which the rights holder has taken confidentiality measures.

Article 2: For the purposes of the second paragraph of Article 326 of the Contract Law, the phrase "performing work duties assigned by a legal person or other organization" includes:

(1) performing the duties attached to a position in the legal person or other organization or undertaking another technology development task assigned thereby; and

(2) within one year of leaving the legal person or other organization, continuing to engage in technology development work related to the duties attached to the position in the former legal person or other organization or a task assigned thereby, unless otherwise specified in laws or administrative regulations.

If a legal person or other organization and its staff have specified provisions concerning the rights and interests in technological achievements accomplished by staff while in the service of the legal person or other organization or after leaving the same, the people's court shall make its determination in accordance with such provisions.

Article 3: For the purposes of the second paragraph of Article 326 of the Contract Law, the term "material and technological resources" includes funds, equipment, apparatus, raw materials, unpublished technical information and data, etc.

Article 4: For the purposes of the second paragraph of Article 326 of the Contract Law, the phrase "chiefly by utilizing the material and technological resources of a legal person or another organization" includes staff wholly or for the most part utilizing such material resources of a legal person or other organization as funds, equipment, apparatus or raw materials in the course of the research and development of a technological achievement, where such material resources had a substantive effect on the accomplishment of the technological achievement, and, additionally, includes circumstances where the substantive content of the technological achievement was based on an unpublished technological achievement or initial technological achievement of the legal person or other organization, except in the following circumstances:

(1) where it is provided that funds would be returned or a use fee would be paid for utilizing the material and technological resources provided by the legal person or other organization; or

(2) where the material and technological resources of the legal person or other organization are utilized after the accomplishment of the technological achievement to verify and/or test the technical solution.

Article 5: If a technological achievement accomplished by an individual was an assignment from the legal person or other organization with which he formerly served and was chiefly accomplished by utilizing the material and technological resources of the legal person or other organization with which he is currently serving, the rights and interests therein shall be determined in accordance with the agreement reached between the legal person or other organization with which the natural person formerly served and the one with which he is currently serving. If they fail to reach an agreement, the two parties shall share the technological achievement reasonably in proportion to their contributions to the accomplishment thereof.

Article 6: For the purposes of Article 326 and 327 of the Contract Law, the term "individual" who accomplished a technological achievement includes persons who individually or jointly made creative contributions to the technological achievement, i.e., the inventor or designer of the technological achievement. When assessing creative contributions, people's courts shall break down the substantive technological components of the relevant technological achievement. A person who proposed substantive technological components and realized the technical solution therefrom is a person who made a creative contribution.

Persons who provide funds, equipment, materials, testing resources, organizational management, assist in the preparation of drawings, collate information, translate documents, etc. do not fall into the category of individuals who accomplished a technological achievement.

Article 7: Technology contracts concluded by scientific research organizations without the status of a civil entity shall be deemed to have been concluded by a legal person or other organization, if authorized or approved by such legal person or other organization, and such legal person or other organization shall bear liability therefor. If not authorized or approved by a legal person or other organization, liability shall be borne jointly by the members of the scientific research organization, provided that if a legal person or other organization derives a benefit from such contract, it shall bear liability to the extent of such benefit.

For the purposes of the preceding paragraph, the term "scientific research organizations without the status of a civil entity" includes task groups, work rooms, etc. engaging in such activities as technology research and development, transfer, etc. that are organized and established by legal persons and other organizations.

Article 8: If the production of a product or the provision of a service requires, in accordance with the law, the examination and approval of the relevant department or the obtaining of administrative permission and such approval or permission is not obtained, the validity of the related technology contract concluded by the parties shall not be affected.

If the parties failed to specify or did not expressly specify which party was obligated to carry out the procedures for the examination and approval or permission mentioned in the preceding paragraph, the people's court shall order the party that works the technology to carry out the same, unless otherwise specified in laws or administrative regulations.

Article 9: If a party uses fraudulent means, such as concluding an entrusted development contract under which the subject matter of the research and development is its existing technological achievement and charges a research and development fee therefor, or, in respect of one research and development task, it successively concludes separate entrusted development contracts with two or more clients and charges each a research and development fee, and the injured party requests the amendment or rescission of the contract pursuant to the second paragraph of Article 54 of the Contract Law, the people's court shall uphold such claim.

Article 10: The following circumstances fall under the "illegally monopolizes technology, impedes technological progress" mentioned in Article 329 of the Contract Law:

(1) restricting one of the parties from conducting new research and development on the basis of the subject technology under the contract, or restricting it from using improvements made to the technology, or the terms for the exchange of improvements made to technology between the parties are not equitable, including requiring one party to provide the improvement it itself made to the technology to the other party without consideration, transfer it to the other party on a non-reciprocal basis, or take exclusive possession of or jointly enjoy the intellectual property rights in the improvement without consideration;

(2) restricting one of the parties from obtaining from another source technology similar to, or that competes with, that of the providing party;

(3) preventing one party from fully working the subject technology under the contract in a reasonable manner as required by the market, including restricting in a markedly unreasonable manner the quantity, type or price of, or sales channels or export markets for, the products produced or services provided by the technology recipient in working the subject technology under the contract;

(4) requiring the technology recipient to accept attached conditions that are not necessary for the working of the technology, including purchasing unnecessary technology, raw materials, products, equipment, services or accepting unnecessary personnel, etc.;

(5) unreasonably restricting the channels through, or sources from, which the technology recipient purchases raw materials, parts and components, products or equipment, etc.; or

(6) prohibiting the technology recipient from challenging the validity of the intellectual property rights in the subject technology under the contract or attaching conditions to such challenge.

Article 11: If a technology contract becomes invalid or is rescinded and the researcher/developer under the technology development contract, the transferor under the technology transfer contract, or the consultant under the technical consulting or technical service contract has performed or partly performed his obligations thereunder and the fault for the invalidity or rescission of the contract lies with the other party, the people's court may rule that the research and development fee, technology use fee or remuneration for provision of the consultancy services in respect of that part of the contract that has been performed by the researcher/developer, transferor or consultant is a loss incurred by him as a result of the contract becoming invalid or being rescinded due to a reason attributable to the other party.

If a technology contract becomes invalid or is rescinded and the parties fail to reach a new agreement to determine the vesting of the rights and the sharing of the interests in the new technological achievement accomplished through performance of the contract or in the follow up improvement made to the technological achievement on the basis of another's technological achievement, the people's court may render a judgment that the same belongs to the party that accomplished the technological achievement.

Article 12: Once a technology contract that infringes upon the technological secret of another is confirmed as invalid pursuant to Article 329 of the Contract Law, a party that obtained such technological secret in good faith may, unless otherwise specified in laws or administrative regulations, continue to use the same within the scope existing at the time it obtained such technological secret, provided that it pays a reasonable use fee to the rights holder and undertakes a confidentiality obligation in respect thereof.

If the parties colluded in bad faith or if one party knew or ought to have known that the other party was infringing upon the rights of another but nevertheless concluded a contract with such party or performed such contract, the parties shall be deemed to have jointly committed infringement, and the people's court shall order the infringers to jointly and severally bear damages and an obligation of confidentiality, and the party that obtained the technological secret as a result thereof may not continue to use the same.

Article 13: If a dispute over the payment of the use fee between the party that may continue to use the technological secret in accordance with the first paragraph of the preceding Article and the rights holder, either party may petition a people's court to resolve the dispute. If a party continues to use the technological secret but refuses to pay a use fee, the people's court may, at the request of the rights holder, order the user to cease using the same.

When determining the use fee, the people's court may do so based on the use fee normally charged by the rights holder when licensing the technological secret to others or the use fee paid by the user to obtain such technological secret, while reasonably considering such factors as the costs of researching and developing the technological secret, the degree of conversion and application of the achievement, the scale of use by the user and the economic benefits derived therefrom by the user, etc.

Regardless of whether the user continues to use the technological secret, the people's court shall order it to pay the rights holder a use fee for the period during which it used the same. The transferor under the invalid contract shall be responsible for refunding to the user the use fee paid to it by the user.

Article 14: If the parties failed to specify or did not expressly specify the price, remuneration or use fee in their technology contract, the people's court may handle the matter in accordance with the following principles:

(1) for a technology development contract or technology transfer contract, it can make a reasonable determination based on the costs of researching and developing the technological achievement, its degree of advancement, its degree of conversion and application, the rights and interests enjoyed and the liability borne by the parties and the economic benefits derived from the technological achievement, etc.; and

(2) for a technical consultancy contract or technical service contract, it can make a reasonable determination based on the technological content, quality and quantity of the relevant consulting or service work and the economic benefits that have been generated and those that are anticipated, etc.

If the price, remuneration or use fee under a technology contract contains non-technology related amounts, they shall be calculated separately.

Article 15: If a party to a technology contract delays performance of its main obligations, still fails to perform the same within 30 days of a reminder and the other party asserts its right to terminate the contract pursuant to Item (3) of Article 94 of the Contract Law, the people's court shall uphold such claim.

If the party includes a period of time for performance in its reminder notice and such period of time exceeds 30 days, the people's court shall hold such time limit for performance to be a reasonable period of time as specified in Item (3) of Article 94 of the Contract Law.

Article 16: If a party makes a capital contribution to an enterprise in the form of a technological achievement but does not expressly specify ownership thereof and the enterprise that accepted such capital contribution asserts that such technological achievement belongs to it, the people's court shall, in general, uphold such claim, unless the value of such technological achievement and the percentage of the capital contribution accounted for by such technological achievement are markedly unreasonable, thus prejudicing the interests of the capital contributor.

If the parties have specified a percentage for ownership of a technological achievement, it shall be deemed jointly owned, and the use of the rights and the allocation of the benefits therein shall be handled in accordance with provisions concerning jointly owned technological achievements, unless the parties have provided otherwise, in which case such provisions shall prevail.

If the parties have specified percentages for the use rights to a technological achievement, the people's court may deem such percentages to be the percentages according to which the parties allocate the benefits derived from working such technological achievement, unless the parties have provided otherwise, in which case such provisions shall prevail.

2. TECHNOLOGY DEVELOPMENT CONTRACTS

Article 17: For the purposes of Article 330 of the Contract Law, the phrase "a new technology, new product, new process or new material, and of its system" includes technical solutions for products, processes, materials and their systems that were not yet at the command of the parties at the time of conclusion of the technology contract, but excludes changes of model of existing products, changes in processes and adjustments in materials formulas that do not involve technological innovation as well as the verification, testing and use of technological achievements.

Article 18: For the purposes of the fourth paragraph of Article 330 of the Contract Law, a technology conversion contract "concluded by the parties concerning the conversion of a scientific or technological achievement with industrial application value" means a contract between the parties that provides for follow-up testing, development and application, etc. for the purposes of realizing the industrial application of a scientific or technological achievement with industrial application value that has not yet been converted for industrial application, and includes initial technological achievements.

Article 19: For the purposes of Article 335 of the Contract Law, the phrase "participate in the research and development work in accordance with their allocated tasks" includes the parties jointly or separately undertaking such tasks as design, process, testing, trial manufacture, etc. in accordance with their agreed upon plan and allocation of tasks.

If one party to a technology development contract only provides such material resources as funds, equipment, materials, etc. or undertakes ancillary or assistance tasks and the other party undertakes the research and development tasks, such contract shall be deemed an entrusted development contract.

Article 20: For the purposes of Article 341 of the Contract Law, the phrase "all the parties have the right of use and transfer" includes the right of a party, without the consent of the other party, to itself use the technological secret or to license the use thereof to another by way of a simple licence and to exclusively enjoy the benefits derived therefrom. If a party assigns the right to transfer the technological secret to another or licenses the use of the technological secret to another by way of an exclusive or sole licence, such assignment or licence shall be deemed invalid unless consented to or subsequently endorsed by the other party.

Article 21: If a party to a technology development contract intends to work a patent or use a technological secret itself in accordance with the Contract Law or the provisions of the contract, however, due to the fact that it does not have the resources to independently work the patent or use the technological secret, licenses the working or use thereof to another by way of a simple licence, the same shall be permitted.

3. TECHNOLOGY TRANSFER CONTRACT

Article 22: For the purposes of Article 342 of the Contract Law, the term "technology transfer contract" means a contract under which the rights holder that lawfully owns a technology, including other parties that have the right to transfer the technology to another, transfers existing specific rights in a patent, patent application or technological secret to another or one under which the rights holder licenses the working or use thereof to another, and excludes contracts for technological achievements that have not yet been researched and developed and ones for knowledge, technology, expertise and information not relating to a patent, patent application or technological secret.

Provisions in a technology transfer contract concerning the provision by the transferor to the transferee of proprietary equipment or raw materials for the working of the technology or the provision of relevant technical consulting or technical services shall be deemed an integral part of the technology transfer contract. Disputes arising in respect thereof shall be handled as a technology transfer contract dispute.

If parties conclude a joint operation contract under which technology is injected in return for an equity interest, but the party that injected such technology in return for the equity interest does not participate in the operation and management of the jointly operated entity, and payment of the price of, or use fee for, the technology by the jointly operated entity or the other party to the joint operation is provided for in the form of a guaranteed payment clause, such contract shall be deemed a technology transfer contract.

Article 23: If a party to a patent application right transfer contract petitions for the termination of the contract on the grounds that the patent application has been rejected or been deemed to have been withdrawn and such event occurred prior to the registration, in accordance with the third paragraph of Article 10 of the Patent Law, of the patent application right transfer, the people's court shall uphold such claim. If the event occurred after registration of the transfer, the people's court shall reject the claim, unless the parties have provided otherwise.

If an existing prior patent application for an unpublished similar invention or creation has been rejected at the time a patent application right transfer contract is concluded and a party submits a petition requesting that the contract be modified or rescinded in accordance with item (2) of the first paragraph of Article 54 of the Contract Law, the people's court shall uphold the claim.

Article 24: If the transferor has already worked the invention or creation before the conclusion of a patent right transfer contract or patent application right transfer contract and if the transferee demands that the transferor cease working the invention or creation after the contract enters into effect, the people's court shall uphold the claim, unless the parties have provided otherwise.

The conclusion of a patent right or patent application right transfer contract between the transferor and transferee shall not affect the validity of related patent licence contracts or technological secret transfer contracts concluded by the transferor before the formation of the patent right or patent application right transfer contract.

Article 25: Patent licences include the following types:

(1) an "exclusive licence", which means one under which the transferor licenses the working of the patent to one transferee within the specified scope of the patent licence and, as provided, the transferor may not work such patent;

(2) a "sole licence", which means one under which the transferor licenses the working of the patent to one transferee within the specified scope of the patent licence but, as provided, the transferor may itself work the patent; or

(3) a "simple licence", which means one under which the transferor licenses others to work the patent within the specified scope of the patent licence, and may itself work the patent.

If the parties failed to specify or did not explicitly specify the type of patent licence, it shall be deemed a simple licence. If the patent licence contract specifies that the transferee may sublicense the patent to another, such sublicence shall be deemed a simple licence, unless otherwise provided by the parties.

The types of technological secret licences shall be determined with reference to the first and second paragraphs of this Article.

Article 26: The transferor under a patent licence contract shall bear an obligation of maintaining the validity of the patent right during the term of the contract, including paying the annual patent fee in accordance with the law and actively responding to petitions from others seeking to have the patent right declared invalid, unless otherwise provided by the parties.

Article 27: If the transferor under a sole patent licence contract does not have the resources to independently work the patent itself and grants a simple licence to another to work the patent, the people's court may rule that the transferor is working the patent itself, unless otherwise provided by the parties.

Article 28: For the purposes of Article 343 of the Contract Law, the phrase "scope of the working of the patent or the use of the technological secret" includes the term for working the patent or using the technological secret, the territory in, and the method by, which this is done, and the persons who have access to the technological secret, etc.

If the parties failed to specify or did not expressly specify the term for working the patent or using the technological secret, the transferee's working of the patent or use of the technological secret shall not be subject to a time limit.

Article 29: The "obligation of confidentiality" borne by the transferor under a technology secret transfer contract as specified in Article 343 of the Contract Law shall not restrict its applying for a patent, unless the parties have provided that the transferor may not apply for a patent.

Where parties conclude a licence contract concerning a technological achievement for which a patent has been applied, the provisions on technological secret transfer contracts shall apply until the patent application has been published. Where the invention or creation application has been published, reference shall be made to provisions that apply to patent licence contracts until the patent has been granted. Once the patent has been granted, the original contract shall be deemed a patent licence contract and the provisions on patent licence contracts shall apply.

A people's court shall not rule a contract invalid on the grounds that the parties have concluded a patent licence contract in respect of technology for which a patent has been applied but not yet granted.

4. TECHNICAL CONSULTANCY CONTRACTS AND TECHNICAL SERVICE CONTRACTS

Article 30: For the purposes of Article 356 of the Contract Law, the term "specific technology project" includes soft science research projects for the coordination of scientific/technological and socioeconomic development and specialized technology projects in that scientific knowledge and technical means are applied in surveying, analysis, evaluation, assessment and forecasting for the purposes of promoting scientific and technological progress and modern management, improving economic efficiency and social efficiency, etc.

Article 31: If the parties failed to specify or did not explicitly specify which party is to bear the expenses incurred by the consultant under a technical consulting contract in carrying out the survey, research, analysis, assessment, testing, etc., the consultant shall bear the same.

If the parties did not provide for an obligation of confidentiality in respect of the technical information and data provided by the client under a technical consulting contract or the consultancy report or opinions submitted by the consultant, and one of the parties cites or publishes the same, or provides the same to a third party, such act shall not be ruled a breach of contract. However, if the other party's legitimate rights and interests enjoyed in respect thereof are prejudiced, civil liability shall be borne in accordance with the law.

Article 32: If the consultant under a technical consultancy contract discovers that the information, data, etc. provided by the client is evidently wrong or defective and fails to notify the client thereof within a reasonable period of time, it shall be deemed to have approved the technical information, data, etc. provided by the client. If the client fails to respond and make corrections within a reasonable period of time after receipt of a correction notice from the consultant, the losses incurred shall be borne by the client.

Article 33: For the purposes of the second paragraph of Article 356 of the Contract Law, the term "specific technical problem" includes such specialized technical problems as improving the structure of a product, improving a production process, improving the quality of a product, reducing product costs, saving on energy use, protecting resources and the environment, achieving safe operation, improving economic efficiency and social efficiency, etc. that require the application of specialized technical knowledge, experience and information to resolve.

Article 34: If a party provides technology that is in the public domain in the name of a technology transfer or if the subject technology under a technology transfer contract enters the public domain during the performance of the contract, but the technology provider provides technical guidance and imparts technical knowledge, thus complying with the agreed upon terms in resolving the other party's specific technical problem, the contract shall be treated as a technical service contract and the specified technology transfer fee may be deemed the remuneration and expenses for providing technical services, unless otherwise specified in laws or administrative regulations.

If, in accordance with the preceding paragraph, deeming the technology transfer fee to be the remuneration and expenses for provision of technical services is markedly unreasonable, the people's court may make a reasonable determination of the same at the request of the parties.

Article 35: If the parties failed to specify or did not explicitly specify which party is to bear the expenses incurred by the consultant under a technical service contract in providing the services, the consultant shall bear the same.

If the consultant under a technical service contract discovers that the resources for the task, such as information, data, samples, materials, premises, etc., provided by the client do not comply with the provisions of the contract but fails to notify the client thereof within a reasonable period of time, it shall be deemed to have approved the resources for the task provided by the client. If the client fails to respond and make corrections within a reasonable period of time after receipt of a correction notice from the consultant, the losses incurred shall be borne by the client.

Article 36: For the purposes of Article 364 of the Contract Law, the term "technical training contract" means a contract under which one party engages the other party to provide specialized technical training and technical guidance on specific items to designated trainees, and excludes vocational training and cultural studies as well as education provided to staff and workers in their spare time in accordance with the plan of the industry, legal person or other organization.

Article 37: If the parties failed to specify or did not explicitly specify which party is responsible for providing and managing the resources necessary for the technical training, such as the premises, facilities and testing resources, etc., the client shall be responsible for the provision and management thereof.

If the trainees assigned by the client under a technical training contract do not meet the agreed upon conditions, thus affecting the quality of the training, the client shall pay the remuneration in accordance with the provisions of the contract.

If the instructor assigned by the consultant does not meet the agreed upon conditions, thus affecting the quality of the training, or if the consultant fails to provide the training in accordance with the plan and items, making it impossible to achieve the specified training objectives, it shall reduce the remuneration or exempt the client from the payment thereof.

If the consultant discovers that the trainees do not meet the agreed upon conditions or the client discovers that the instructor does not meet the agreed upon conditions and fails to notify the other party thereof within a reasonable period of time, or if the party that received the notice fails to assign (a) replacement(s) as specified within a reasonable period of time, the corresponding civil liability shall be borne by the party that bore the performance obligation.

Article 38: For the purposes of Article 364 of the Contract Law, the term "technical intermediary contract" means a contract under which one party provides liaison services and introduction services for the conclusion of a technology contract between the other party and a third party and professional services for the performance of the contract between the other party and a third party by using its knowledge, technology, experience and information.

Article 39: The phrase "expenses incurred by the intermediary in engaging in the intermediary activities" means such expenses as communications expenses, travel expenses and necessary expenses for investigation and research, etc. incurred by the intermediary while engaging in liaison and introduction activities prior to the client and third party concluding the technology contract. The term "remuneration of the intermediary" means the benefit to which the intermediary is entitled for the services it provided in respect of the conclusion and the performance of the technology contract by the client and the third party.

If the parties failed to specify or did not explicitly specify which party is to bear the expenses incurred by the intermediary in engaging in the intermediary activities, the intermediary shall bear the same. If the parties have specified that such expenses are to be borne by the client, but failed to specify the specific amount thereof or the method of calculating the same, the client shall bear the necessary expenses incurred by the intermediary in engaging in the intermediary activities.

If the parties failed to specify or did not explicitly specify the amount of the remuneration of the intermediary, the same shall be determined reasonably based on the services provided by the intermediary, and shall be borne by the client. If intermediation provisions are specified only in the technology contract between the client and the third party, but such contract fails to specify or does not explicitly specify which party is to pay the remuneration of the intermediary, the remuneration payable shall be borne equally by the client and the third party.

Article 40: If the intermediary fails to cause the conclusion of a technology contract between the client and the third party, the people's court shall reject its claim for the payment of remuneration. If it makes a claim for payment by the client of the necessary expenses incurred in engaging in the intermediary activities, the people's court shall uphold such claim, unless the parties have provided otherwise.

If an intermediary has concealed important facts or provided fraudulent information relating to the conclusion of a technology contract, harming the interests of the client, the intermediary shall, based on the circumstances, not receive remuneration and bear liability for damages.

Article 41: If the technology contract between the client and the third party becomes invalid or is rescinded through no fault of the intermediary, and if the invalidity or rescission of the technology contract does not affect the continued validity of the relevant intermediation provisions or technical intermediary contract, and the intermediary requests payment of the expenses incurred in, and the remuneration for, engaging in the intermediary activities in accordance with the provisions of the contract or the relevant provisions of the Interpretation, the people's court shall uphold the same.

The expenses and remuneration charged by the intermediary for engaging in the intermediary activities shall not be deemed as a loss incurred by either party in a technology contract dispute between the client and the third party.

5. PROCEDURAL ISSUES CONCERNING THE TRIAL OF TECHNOLOGY CONTRACT DISPUTES

Article 42: If the parties place the provisions of a technology contract and of another contract or the provisions of different types of technology contract in one contract, the nature of the case and the cause of action shall be determined based on the rights and obligations disputed by the parties.

If the name of the technology contract is not consistent with the rights and obligations specified therein, the type of contract and the cause of action shall be determined based on the rights and obligations specified therein.

If a technology transfer contract specifies that the transferor is responsible for the exclusive sale or repurchase of the products manufactured by the transferee through working the subject technology of the contract and a dispute arises solely in connection with the transferor's failure or partial failure to perform its exclusive sale or repurchase obligation, without involving technology issues, the cause of action shall be determined in accordance with the rights and obligations specified in the exclusive sale or repurchase provisions.

Article 43: In general, technology contract disputes shall fall within the jurisdiction of intermediate or higher people's courts.

A higher people's court may, based on actual conditions in its jurisdiction and subject to the approval of the Supreme People's Court, designate several basic level people's courts to exercise jurisdiction over technology contract disputes at first instance.

If other judicial interpretations provide otherwise concerning jurisdiction in technology contract disputes, such provisions shall prevail.

If a contract contains both technology contract provisions and other contract provisions, and a dispute arises between the parties concerning both the technology contract provisions and other contract provisions, a people's court with jurisdiction over technology contract disputes shall accept the case.

Article 44: If a party requests that a technology contract that is the subject matter of a legal action be ruled invalid on the grounds that it infringes upon the technological achievement of another or if a people's court discovers in the trial of a technology contract dispute that such grounds for the invalidity of the contract may exist, the people's court shall inform the relevant materially interested party thereof in accordance with the law. The materially interested party may participate in the legal action as a third party with an independent right of claim or institute a separate legal action with the competent people's court.

The failure by the materially interested party to institute a legal action within 15 days of receipt of the notice shall not affect the people's court's trial of the case.

Article 45: If a third party files a claim of ownership or infringement in respect of the subject technology of a technology contract to the people's court that has accepted a case concerning a dispute over such contract, and the people's court that accepted the case also has jurisdiction in such claim, it may join the ownership or infringement dispute with the contract dispute and try them together. If the people's court that accepted the contract dispute does not have jurisdiction over the claim, it shall inform the third party to institute a separate legal action with the competent people's court or it may transfer the ownership or infringement dispute it has accepted to the competent people's court. Once the ownership or infringement dispute has been accepted as a separate case, proceedings in the contract dispute shall be suspended.

If, in a legal action concerning a patent licence contract, the transferee or a third party petitions the Patent Review and Adjudication Board to declare the patent invalid, the people's court may opt not to suspend proceedings. If a patent is declared invalid in the course of the trial, matters shall be handled in accordance with the second and third paragraphs of Article 47 of the Patent Law.

6. MISCELLANEOUS PROVISIONS

Article 46: If relevant administrative regulations provide otherwise in respect of disputes over contracts for the licensing or transfer of integrated circuit layout designs or new plant varieties, such provisions shall apply. If no such provisions exist, the general provisions of the Contract Law shall apply and matters may be handled with reference to Part Eighteen of the Contract Law and the Interpretation.

If the Copyright Law and other laws and administrative regulations provide otherwise in respect of disputes over contracts for the development, licensing or transfer of computer software, such provisions shall apply. If no such provisions exist, the general provisions of the Contract Law shall apply and matters may be handled with reference to Part Eighteen of the Contract Law and the Interpretation.

Article 47: The Interpretation shall be implemented from January 1 2005.