Copyright Due Diligence Investigations in China: Legal Entity Work or Occupational Work?

Posted on February 11, 2009 by King & Wood

The Chinese legislature created a hybrid from the different approaches adopted by civil and common law jurisdictions through the Copyright Law of the People's Republic of China (the “Copyright Law") and the Regulations on the Implementation of the Copyright Law of the People’s Republic of China (the“Implementation Regulations"), and produced the twin concepts of “legal entity work” and “occupational work” for assigning rights to works made in the course of an employment relationship. For example, a book written by a group of employees organized by an entertainment company for celebrating the company's anniversary would likely be considered “legal entity work”, but a piece of music composed by a composer employee (not for specific purposes) is “occupational work”, because in the former case, supervision of the company would be involved but the latter case it would not.


Being able to draw a clear line between “legal entity work” and “occupational work” is crucial during a due diligence investigation in terms of copyrighted materials in employment relationships- ascertaining an accurate chain of title from the author turns out to be a thorny issue. Though these two types of works are seemingly similar, the attribution of the copyright ownership between a legal entity employer and an employee is critical. Though the determination of “legal entity work” and “occupational work” can be extremely confusing, neither the legislatures nor judicial organs have ever promulgated any guidance. Thus far, only the National Copyright Administration of the People’s Republic of China (the “NCA") has expressed its viewpoints on this matter in the circular “Reply to the Liaoning Tieling Mediate Court Regarding How to Determine Legal Entity Work and Occupational Work” (the “NCA Circular”), which however does not have judicial binding force.
 

 

Wang Rui, Partner, International Trade

 

 

 

“Legal Entity Work”
The NCA Circular recognized a three-point standard concerning “legal entity work.” I.e., creation of a “legal entity work” should at least satisfy three conditions: (i) supervised by the legal entity; (ii) developed according to the intentions of the legal entity; and (iii) the legal entity is responsible for the work.


This standard sheds some light on the issue but is far from clear. Point (ii) is especially difficult to apply due to uncertainties regarding a legal entity's intention. Three issues are often considered in practice to identify the existence of a legal entity's intention:
 

(a) Signature on the work. According to Article 11 [paragraph (4)] of the Copyright Law, so long as the legal entity’s name is mentioned in connection with a work and there is no proof to the contrary, the legal entity should be deemed to be the author of the work and therefore the work should have reflected the intention of legal entity.
 

(b) Content of the work. Does the content of the work likely reflect the legal entity’s intention or only the employee's own creative expression?
 

(c) The nature and purposes of the work. Given the nature and intended purposes of the work, in which party’s name will the work be published? For example, the advertising and explanatory materials created by a governmental agency for policy making, or an agency’s declaration or statement on certain events or actions (such as the “China's Situation in IPR Protection” issued by the Press Office of the State Council of PRC)—are all considered having reflected the intention of the legal entity.
 

“Occupational Work”
According to the NCA Circular, “occupational work” should meet two criteria: (i) the citizen who created the work should have an employment relationship with the legal entity; (ii) the work is created to fulfill tasks assigned by the legal entity employer. While criterion (i)--existence of employment relationship is to be decided in accordance with the labor law of China, Article 11 of the Implementation Regulations interpreted the term “work assignment” in criterion (ii) as –“a work within the scope of the duties that a citizen should fulfill for the legal entity or body.”
 

Two issues are often considered in practice to identify whether a work falls within the scope of the duties to be fulfilled by the employee: (a) whether the duties are specified in the employment contract or labor rules & regulations of the company, or reflected in the company's long term work planning; (b) whether the work has significant and direct correlations with the normal business of the legal entity employer.

 
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Employment Contract Law Implementation Regulations: Initial Thoughts

Posted on October 8, 2008 by King & Wood

The Implementation Regulations of the PRC Employment Contract Law, which has been anticipated for over a year, became effective on September 18, 2008. Overall, the Regulations are consistent with the spirit of the Employment Contract Law and resolves certain problems in its implementation. However, the Regulations have a relatively limited impact and failed to meet many expectations.


A few limitations include:


(1) The Regulations do no resolve the question of whether a company may unilaterally make a final decision in formulating and revising internal rules, regulations, and other material matters or if the company must jointly formulate such internal policies along with its employees. Basically, the Regulations do not clarify whether the employer can determine the matters by itself when trade unions or employee representatives disagree. It is unfortunate that the differing views and practices on this question are not addressed as this is a major point of contention.


(2) The Regulations do not define the terms “temporary”, “auxiliary” and “substitute” employees as described in the Employment Contract Law. The three terms are used to classify those job positions that qualify for labor dispatch. Although the Regulations intentionally omitted definitions to preserve flexibility, the omission still makes that corresponding article in the Employment Contract law difficult to implement in practice and does not provide clarity for how to handle labor dispatch.


Resolving the above issues will most likely now be addressed by local rules promulgated in the future. Therefore, it is very important for employers to keep an eye on the local legislation (of both the place of the company’s registration and the place of performance of the employment contract). As always, the employer also then needs to continually update its internal regulations and rules in accordance to latest national and local legislation.
 

Duan Haiyan, associate, Labor & Employment

 

读《劳动合同法实施条例》有感
金杜劳动部 段海燕
2008年9月18日，人们翘首以盼的《劳动合同法实施条例》（以下简称“条例”）正式出台。这部备受社会公众关注、体现了各方利益搏弈最终结果的行政法规，主要体现了如下三个方面的特点：
1、协调一致性。从整体上看，条例保持了与《劳动合同法》的一致性，体现了《劳动合同法》确立的“保护劳动者合法权益，构建和发展和谐稳定的劳动关系”的立法宗旨。尽管条例第十九条列举了14种情形下的用人单位对劳动合同的单方解除权，以此刻意地强调无固定期限劳动合同的“非终身性”，但是，其内容仅仅是《劳动合同法》相关条款的简单照搬与罗列，没有超出《劳动合同法》规定的范围。正如《劳动合同法》起草人之一、全国总工会民主管理部部长郭军对该条款的评价：“除了向用人单位解释了一下原有条文外，没有任何积极意义”。
2、可操作性。主要表现是：一是明确了未签订书面劳动合同的法律责任。条例规定了用人单位因未签订劳动合同而支付双倍工资的起始时间，以及导致“视为无固定期限劳动合同”的起始时间。同时，针对员工拒绝签订书面劳动合同这一现实问题，赋予了用人单位及时终止劳动合同的权利。二是规范了经济补偿的计算标准。针对《劳动合同法》第四十七条有关解除劳动合同经济补偿给付标准的规定，条例进一步明确了该标准中“月工资”的范围，即“包括计时工资或者计件工资以及奖金、津贴和补贴等货币性收入，且不得低于当地最低工资标准”。三是明确了劳动合同履行地规定优先适用。对于劳动合同履行地与用人单位注册地不一致的情形下员工的最低工资标准、劳动保护、劳动条件、职业危害防护和本地区上年度职工月平均工资标准等事项的确定，条例第十四条规定原则上适用劳动合同履行地规定。但是，双方约定适用用人单位注册地规定，且用人单位注册地规定的标准高于劳动合同履行地标准的，从其约定。这一规定为解决劳动合同涉及的地域性差别问题提供了明确的法律依据；四是明确规定了工作年限连续计算的原则。一方面，针对无固定期限劳动合同订立条件，条例第九条明确了“连续满10年” 的起始时间，还特别规定包括劳动合同法施行前的工作年限。这一规定明显针对部分企业赶在《劳动合同法》实施前采用“突击裁员，重新雇用，工龄归零”方式规避法律的行为而定，目的就是要使其计划落空。另一方面，条例第十条规定，员工非因本人原因从原用人单位被安排到新用人单位工作的，其在原用人单位的工作年限合并计算为新用人单位的工作年限。如果原用人单位已经向员工支付经济补偿的，新用人单位在依法解除、终止劳动合同计算支付经济补偿的工作年限时，不再计算员工在原用人单位的工作年限。

3、局限性。主要表现是：一是对于《劳动合同法》第四条第二款规定的“与工会或者职工代表平等协商确定”的含义，即用人单位内部规章制度的制定，实行用人单位“单决”制还是用人单位与工会或者职工代表“共决”制这一问题，条例没有解释，法律界在这一问题上存在的较大分歧至今未能得到统一；二是对于《劳动合同法》第六十六条规定的、可实施劳务派遣的岗位应当具有的“临时性、辅助性、可替代性”没有定义，以至该条款因缺乏可操作性而成为“纸上的法律”；三是对《劳动合同法》第二十二条规定的、可在相关协议中约定员工服务期及违约金的“专业技术培训”的定义未作解释。另外，条例第十六条虽然规定了培训费用的范围为“有凭证的培训费用、培训期间的差旅费用以及因培训产生的用于该劳动者的其他直接费用”，但是，由于条例未对其中的“直接费用”的范围未给予明确，以至 “培训费用”的范围仍然不清晰。四是条例第十八条规定的员工单方解除劳动合同的情形中包括了 “导致劳动合同无效或部分无效”的情形（即用人单位以欺诈、胁迫的手段或者乘人之危，使劳动者在违背真实意思的情况下订立或者变更劳动合同的；用人单位在劳动合同中免除自己的法定责任、排除劳动者权利的；用人单位违反法律、行政法规强制性规定的），从而混淆了用人单位及员工在劳动合同无效与解除等不同情形下的法律责任。五是条例第二十六条将员工应当支付违约金的情形仅限于其存在“严重过错”（即用人单位有权单方即时解除劳动合同的情形），忽视了员工为逃避违约责任实施“不胜任工作”这一恶意规避法律的行为（即消极怠工方式迫使用人单位“不胜任”工作为由单方解除劳动合同）。
总之，我认为，条例在“解决操作性问题”上的作用有限，我们不必有过多的期待与苛求。同时，我们还应当看到，条例存在的缺陷与不足，为地方立法提供了较大空间。因此，用人单位在今后劳动合同管理工作中，有必要密切关注相关的地方规定。在相关立法尚未出台之前，用人单位应当借助于劳动合同及内部规章制度的规范作用，对相关问题加以规定与明确，以最大限度地消除因立法缺失导致的不利风险。
 
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Labor Arbitration Decision Vacated

Posted on September 17, 2008 by King & Wood

The First Intermediate Court of Beijing recently issued a landmark decision under the new Labor Mediation and Arbitration Law (effective May 1, 2008). Under the new law, only employees can appeal certain arbitration decisions, while the employer is only able to request the court to vacate arbitration decisions on certain narrow grounds.

 

Wu Jing, Attorney, Labor & Employment

 

In this recent case, the court vacated a previous labor arbitration decision on the grounds that the Labor Contract Law (effective Jan. 1, 2008) did not apply retroactively to the case at hand. The plaintiff in this case started to work for a Beijing medical technology company in Nov. 2007 with a probation period that lasted until Jan. 2008. In Feb. 2008, he was terminated for incompetence. He filed for a labor arbitration and was awarded RMB 3600 compensation under the Labor Contract Law. The company requested the court vacate the decision. Upon review, the court determined that the arbitrator retroactively applied the Labor Contract Law on severance calculation and vacated the arbitrator's decision on that ground.

 

This is the first reported case of a court vacating a previous labor arbitration award. Once vacated, the case could not be submitted to arbitration for a second time and the only recourse is now to seek judicial remedies before the courts.

 

In light of recent labor employment legislation, this decision will become persuasive authority for similar employment disputes. Unlike other countries in terms of costs and processing time, to arbitrate an employment dispute in China requires no filing fee and a final decision will be obtained within a couple of months. Labor arbitration filings have tripled since the promulgation of the new Labor Contract Law. Previously, either party could appeal the arbitration decision to the court to have a completely new trial of both factual disputes and legal issues. Under the new Labor Mediation and Arbitration Law, as illustrated by this case, arbitration decisions will now have certain limitations as to judicial appeal/review. In the short term, it will effectively reduce the court's case load. In the long term, it will teach the public to have a more rational view of employment litigation. For practitioners, the amount in controversy now becomes an important factor in evaluating the overall procedural strategy, since certain small claims of employment disputes will have limited grounds to appeal arbitration decisions.
 

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