(Adopted by the 21st Session of the Standing Committee of the Sixth National People's Congress on June 23, 1987, and effective on November 1, 1987)
Contents
Chapter I General Provisions
Chapter II Conclusion, Performance, Modification and Termination of Technology Contracts
Chapter III Technology Development Contracts
Chapter IV Technology Transfer Contracts
Chapter V Technical Consultancy Contracts and Technical Service Contracts
Chapter VI Arbitration and Litigation Concerning Disputes over Technology Contracts
Chapter VII Supplementary Provisions
Chapter I General Provisions
Article 1
For the purposes of promoting the development of science and technology, making science and technology to better serve socialist modernization, ensuring the lawful rights and interests of the parties to technology contracts and maintaining the order of technology markets, this Law is enacted.
Article 2
This Law applies to contracts concluded between legal persons, between legal persons and citizens and between citizens whereby relations of civil rights and obligations are established with respect to technology development, technology transfers, technical consultancy and technical services, however, does not apply to contracts to which a foreign enterprise, organization or individual is a party.
Article 3
The conclusion of technology contracts must comply with the laws and regulations, facilitate the progress of science and technology, and accelerate the application and dissemination of the achievements of science and technology.
Article 4
The conclusion of technology contract must follow the principles of voluntariness and equality, mutual benefit and compensation, and honesty and trustworthiness.
Article 5
In case where the contents of a technology contract involve the security or vital interests of the State and need to be kept confidential, it shall be dealt with in accordance with the relevant regulations of the State.
Article 6
Technological achievements obtained by a person in the course carrying out a task of the unit to which he or she belongs or mainly through using the technological and material means of such a unit shall be job-related technological achievements. The right to use or transfer a job-related technological achievement shall belong to the unit, which shall have the right to conclude technology contracts concerning such a technological achievement. The unit shall reward the individuals who accomplished the technological achievement on the basis of the proceeds realized from the use and transfer of such an achievement.
The right to use and transfer a non-job-related technological achievement shall belong to the individuals who accomplished it, who shall have the right to conclude technology contracts concerning such a non-job-related technological achievement.
Where application for a patent is filed or a patent right is granted for a job-related or non-job-related technological achievement, the relevant provisions of the Patent Law shall apply.
An individual who has accomplished a technological achievement shall have the right to be named as such in the documents related to the technological achievement and the right to receive certificates of honor and awards.
Article 7
The competent departments under the State Council and the people's governments of provinces, autonomous regions or municipalities directly under the Central Government shall, as required by State interests or public interests, have the authority to decide on the dissemination for wider application by designated units of non-patent technological achievements that are of great significance and belong to units owned by the whole people within their sectors or under their administration. The unit using such technological achievements shall commit itself to keep the technological achievements confidential and shall pay a use fee according to the agreement between the two parties. If the two parties can not reach an agreement, the authorities that have made the decision shall determine a reasonable use fee.
Non-patent technological achievements of collectively owned units or individuals that are of great significance to State interests or public interests and need to be applied on a wider scale shall be handled by taking reference of the provisions of the preceding paragraph after the competent departments under the State Council have obtained approval from the State Council.
Article 8
The administrative authorities in charge of technology contracts shall be specified by the State Council.
Chapter II Conclusion, Performance, Modification and Termination of Technology Contracts
Article 9
The conclusion, modification and termination of a technology contract shall be made in written form.
Article 10
A technology contract shall establish once the parties have signed their names and put their seals on it. Contracts subject to approval by the relevant authorities pursuant to the regulations of the State shall establish upon such approval.
Article 11
Parties to a technology contract may stipulate on the guarantee for the contract. A contract with a third party as the guarantor shall establish upon the signing and sealing of the contract by the guarantor and the guaranteed party.
Article 12
The price or remuneration and the modes of payment shall be agreed upon by the parties to a technology contract.
Article 13
A party may entrust an agent to conclude technology contract on its behalf. The entrusting party shall issue a power of attorney to the agent. The agent shall conclude contracts in the name of the entrusting party and within the scope of authority authorized by the entrusting party.
Article 14
Intermediary agencies that provide services for the conclusion of technology contracts shall comply with the relevant provisions of this Law and adhere to the principles of honesty and trustworthiness, and may collect reasonable fees.
Article 15
The clauses of a technology contract shall be agreed upon by the parties. The following shall be normally included:
(1). title of the project;
(2). contents, scope and requirements of the subject matter;
(3). plan, schedule, time limits, place and manner of performance;
(4). confidentiality of technological information and materials;
(5). sharing of responsibility and risks;
(6). ownership and sharing of technological achievements;
(7). standards and methods of inspection and acceptance;
(8). price or remuneration and modes of payment;
(9). computing method of fine for breach of contract or the amount of compensation for losses;
(10). methods for settling disputes; and
(11). interpretation of terms and technical expressions.
Background materials on the technology, reports on feasibility studies and technological appraisal, project descriptions and plans, technological standards, technological norms, original designs and documents on technological processes as well as blueprints, charts, data and photographs that are pertinent to the performance of the contract may, by agreement between the parties, constitute integral parts of the contract.
Article 16
As soon as a technology contract is duly established, it shall have legally binding force, and the parties shall fully perform the obligations agreed upon in the contract, No party may unilaterally modify or dissolve the contract.
Article 17
In case where a party to a technology contract fails to perform the contract or its performance of the contractual obligations does not conform to the agreed terms, which constitutes a breach of the contract, the other party shall have the right to demand performance of the contract or adoption of remedial measures, and shall also have the right to claim compensation for its losses.
The liability for compensation of a party that breaches a contract shall be equivalent to the losses suffered by the other party as a result of the breach, but may not exceed the losses that the party responsible for the breach should have foreseen at the time of concluding the contract.
The parties may agree in the contract that when one party breaches the contract, the party shall pay a certain amount of breach of contract damages to the other party; may also agree upon the methods for computing the amount of compensation to be paid for losses arising from a breach of contract.
The party that has suffered losses due to the other party's breach of contract shall promptly adopt appropriate measures to prevent the losses from being aggravated; if the party fails to promptly adopt such appropriate measures and as a result the losses are aggravated, it shall not have the right to claim compensation for the aggravated part of the losses.
Article 18
In case where all parties breach a technology contract, each party shall bear its liability accordingly.
Article 19
In case where a party fails to perform its obligations under a technology contract for reasons attributable to authorities at a higher level, it shall, according to the clauses of the contract, pay compensation to the other party or take other remedial measures, and then the authorities at a higher level shall be responsible for dealing with the losses suffered therefrom by the party.
Article 20
In case that a party is prevented from performing a technology contract by force majeure, it shall be exempted from the liability for its failure to perform the contract.
Article 21
Any of the following technology contracts shall be void and invalid:
(1). those that violate the laws or regulations or infringe upon State interests or public interests;
(2). those that illegally monopolize technology or obstruct technological progress;
(3). those that infringe upon the lawful rights and interests of others; or
(4). those that are concluded by means of deceit or coercion.
A void contract shall have no legally binding force from the time it is concluded. Where a contract is void in part while the validity of the rest of the contract is not affected, the rest shall remain valid.
Article 22
Any person who concludes a technology contract that violates the laws and regulations or infringes upon State interests or public interests and engages in illegal activities shall be investigated according to law for administrative liability or criminal liability.
Article 23
A technology contract may be modified or rescinded through consultation and agreement between the parties.
With respect to technology contracts approved by relevant authorities, consent of the original authorities giving approval shall be obtained for their modification or rescission.
Article 24
If, as a result of the occurrence of any of the following circumstances, the performance of a technology contract becomes unnecessary or impossible, either party shall have the right to notify the other party on the termination of the contract:
(1). the other party has breached the contract;
(2). an event of force majeure has occurred; or
(3). the technology which is the subject matter of a technology development contract has been made public by others.
Article 25
Modification or termination of a technology contract shall not affect the rights of the parties to claim compensation for their losses.
Article 26
Within the validity period of a technology contract, no party may, without the consent of the other party, transfer all or a part of its contractual rights or obligations to a third party.
Chapter III Technology Development Contracts
Article 27
Technology development contract refers to contracts concluded between parties for the purpose of conducting research in and development of new technologies, new products, new processes and new materials as well as their systems.
Technology development contracts include commissioned development contracts and cooperative development contracts.
Article 28
A commission development contracts refer to a contract whereby one party commissions the other party to undertake research and development.
The main obligations of the commissioning party shall be:
(1). to provide funds and remuneration for research and development according to stipulations of the contract;
(2). to provide technical materials and original data and to accomplish coordinated undertakings according to stipulations of the contract; and
(3). to accept the result of research and development according to the schedule.
The main obligations of the party commissioned to undertake research and development shall be:
(1). to work out and implement research and development plans;
(2). to use research and development funds in a rational way; and
(3). to complete research and development work and deliver the results according to schedule, to provide relevant technical materials and necessary technical guidance, and to help the commissioning party master the results of research and development.
Article 29
In case that a commissioning party breaches the contract and thereby causes a standstill, delay or failure in research and development work, the party shall pay a fine for breach of contract or compensate for the losses.
In case where a party commissioned to undertake research and development breaches the contract and thereby causes a standstill or delay in research and development work, the party shall pay a fine for breach of contract or compensate for the losses besides adopting remedial measures and continuing the performance of the contract; if research and development work fails as a result of the breach, the party shall refund all or part of the research and development funds and remuneration received, and pay breach of contract damages or compensate for the losses.
Article 30
Cooperative development contracts refer to contracts concluded between parties for the purpose of jointly carrying out research and development.
The main obligations of each party to a cooperative research and development contract shall be:
(1). to make investment according to the stipulations of the contract, including contribution of technology as investment;
(2). to take part in research and development according to the division of work stipulated in the contract; and
(3). to cooperate and coordinate with other parties to the contract.
Article 31
In case that any party to a cooperative development contract breaches the contract and thereby causes a standstill, delay or failure in research and development work, the party shall pay breach of contract damages or compensate for the losses.
Article 32
The principles governing the ownership and sharing of technological achievements obtained in performing technology development contracts shall be:
(1). With respect to inventions and creations made in execution of a commission for development, the right to apply for a patent shall, unless otherwise provided in the contract, belong to the party that undertakes research and development. If the party that undertakes research and development is granted a patent right for the inventions or creations, the commissioning party may exploit that patent without paying a fee.
If the party that undertakes research and development assigns the right to apply for a patent for its inventions or creations, the commissioning party may have priority to acquire such right.
(2). With respect to inventions or creations made through cooperative development, the right to apply for a patent shall, unless otherwise provided for in the contract, be jointly owned by the parties that carry out the cooperative development. If one party assigns its part of the jointly owned right to apply for a patent, the other party or parties may have priority to acquire such right.
In case that one party to a cooperative development contract declares that it renounces its part of the joint right to apply for a patent, the other party may apply for it alone or the other parties may apply for it jointly. If a patent for the invention or creation is granted, the party that has renounced its right to apply for the patent may exploit the patent without paying a fee.
In case that one party to a cooperative development contract does not agree to apply for a patent, the other party or parties may not apply for it.
(3). The right to use non-patent technological achievements made through commission development or cooperative development, the right derived to transfer them, and the methods of distributing benefits from them shall be stipulated by the parties in the contract. In the absence of contractual stipulations, each party shall have the right to use and transfer the achievements, except that the party undertaking research and development under a commission development contract may not transfer the results of research and development to a third party before delivering them to the commissioning party.
Article 33
The liability for risks involved in a failure or partial failure in research and development caused by insurmountable technical difficulties occurring in the process of performing a technology development contract shall be stipulated by the parties in the contract. In the absence of contractual stipulations, such liability shall be rationally shared by the parties.
When one party discovers that the situation mentioned in the preceding paragraph is likely to cause a failure or partial failure in research and development, the shall promptly inform the other party of the situation and take appropriate measures to reduce losses; in case where one party fails to promptly inform the other party and take appropriate measures and as a result the losses are aggravated, the party shall bear the liability for the aggravated part of the losses.
Chapter IV Technology Transfer Contracts
Article 34
Technology transfer contracts refer to contracts concluded by parties with respect to the transfer of patent rights, the transfer of rights to apply for patents, the licensing of patent exploitation, and the transfer of non-patent technology.
Article 35
Technology transfer contracts may stipulate the scope of patent exploitation or of the use of non-patent technology by the transferor or the transferee, except that no restriction on technological competition or technological development may be placed in any contract clause.
Article 36
The contracts concluded for transferring patent rights or rights to apply for patents shall comply with the relevant provisions of the Patent Law.
Article 37
The main obligations of the transferor under a contract on patent exploitation license shall be:
(1). to permit the transferee to exploit the patent within the scope stipulated in the contract; and
(2). to deliver the technical materials related to the exploitation of the patent and to provide necessary technical guidance.
The main obligations of the transferee under a contract on patent exploitation license shall be:
(1). to exploit the patent within the scope stipulated in the contract, and not to permit any third party, except as provided for in the contract, to exploit such patent; and
(2). to pay royalty according to the stipulations of the contract.
Article 38
Technology transfer contracts involving patents shall indicate the titles of the inventions or creations, the names of the patent applicant and patentee, the filing date of the application, the application number, the patent number and the term of validity of the patent right.
A contract for patent exploitation license shall be valid only within the duration of that patent right. Upon the termination or invalidation of the patent right, the patentee may not conclude with others any contract for patent exploitation license.
Article 39
The main obligations of the transferor under a non-patent technology transfer contract shall be:
(1). to provide technical materials and technical guidance according to the stipulations of the contract;
(2). to guarantee the practical applicability and reliability of the technology; and
(3). to undertake the obligations of maintaining confidentiality stipulated in the contract.
The main obligations of the transferee under a non-patent technology transfer contract shall be:
(1). to use the technology within the scope stipulated in the contract;
(2). to pay royalty according to the stipulations of the contract; and
(3). to undertake the obligations of maintaining confidentiality stipulated in the contract.
Article 40
A transferor that breaches a contract shall bear the following liabilities:
(1). if a transferor fails to transfer the technology in accordance with the contract, the party shall, in addition to returning part or all of the royalty, pay breach of contract damages or compensate for the losses;
(2). if it exploits the patent(s) or uses the non-patent technology beyond the scope stipulated in the contract, or unilaterally permits, in violation of contractual stipulations, a third party to exploit the patent(s) or use the non-patent technology, it shall stop its contract-breaching acts and pay breach of contract damages or compensate for the losses; and
(3) if it violates the obligations of maintaining confidentiality stipulated in the contract, it shall pay breach of contract damages or compensate for the losses.
Article 41
A transferee that breaches a contract shall bear the following liabilities:
(1). If it fails to pay royalty in accordance with the contractual stipulations, the party shall make up such payment(s) and, in addition, pay breach of contract damages according to the stipulations of the contract; If it fails to pay the royalty overdue or to pay breach of contract damages, it must stop exploiting the patents or using the non-patent technology, return the technical materials, and pay breach of contract damages or compensate for the losses;
(2). If it exploits the patents or uses the non-patent technology beyond the scope stipulated in the contract, or permits, without the consent of the transferor, a third party to exploit the patents or use the non-patent technology, it shall stop its contract-breaching acts and pay breach of contract damages or compensate for the losses; and
(3) If it violates the obligations of maintaining confidentiality stipulated in the contract, it shall pay breach of contract damages or compensate for the losses.
Article 42
If the exploitation of a patent or the use of non-patent technology by the transferee in accordance with the stipulations of a contract leads to an infringement upon the lawful rights and interests of others, the transferor shall bear the liabilities.
Article 43
The parties may, in accordance with the principle of mutual benefit, stipulate in a contract the methods of sharing technological achievements obtained from follow-up improvements made in the exploitation of a patent or the use of non-patent technology. In the absence of such contractual stipulations, neither party shall have the right to share the technological achievements made by the other party from follow-up improvements.
Chapter V Technical Consultancy Contracts and Technical Service Contracts
Article 44
Technical consultancy contracts refer to contracts whereby one of the parties undertakes to provide for the other party feasibility studies, technological forecasts, special technical investigations, and analytical evaluation reports regarding a specific technological project.
Article 45
The main obligations of the commissioning party under a technical consultancy contract shall be:
(1). to expound the questions posed for consultation and to provide, in accordance with the stipulations of the contract, technological background information as well as the relevant technical materials and data; and
(2). to accept from the consulting party the result of its work and to pay the remuneration according to schedule.
The main obligations of the consulting party under a technical consultancy contract shall be:
(1). to complete consultation reports or answer questions from the commissioning party according to schedule by utilizing its technical knowledge and in compliance with the stipulations of the contract; and
(2). to provide consultation reports that meet the requirements stipulated in the contract.
Article 46
In case that the commissioning party under a technical consultancy contract fails to provide necessary data and materials in accordance with the stipulations of the contract and thereby affects the progress and quality of work, it shall not claim refund of the remuneration already paid and shall pay the outstanding remuneration in full.
In case that the consulting party under a technical consultancy contract fails to provide its consultation report according to schedule or if the report provided does not conform to the stipulations of the contract, it shall reduce or forfeit its remuneration and pay breach of contract damages or compensate for the losses.
Any loss resulting from the decisions made by the commissioning party under a technical consultancy contract on the basis of the consultation reports and advice of the consulting party that meet the requirements stipulated in the contract shall, unless otherwise stipulated in the contract, be borne by the commissioning party.
Article 47
Technical service contracts refer to contracts whereby one of the parties undertakes to solve particular technical problems for the other party by utilizing its technical knowledge, excluding contracts for surveying, designing, building and installation of construction projects and processing contracts.
Article 48
The main obligations of the commissioning party under a technical service contract shall be:
(1). to provide the servicing party with work facilities and to accomplish coordinated undertakings in accordance with the stipulations of the contract; and
(2). to accept the result of work from the servicing party and to pay remuneration according to schedule.
The main obligations of the servicing party under a technical service contract shall be:
(1). to accomplish services stipulated in the contract and solve technical problems according to schedule and to guarantee the quality of its work; and
(2). to impart to the other party its knowledge concerning the solution of technical problems.
Article 49
In case that the commissioning party under a technical service contract breaches the contract and thereby affects the progress and quality of the work, or fails to accept the result of the work from the servicing party or fails to accept it according to schedule, it shall pay the remuneration in full.
In case that the servicing party under a technical service contract fails to accomplish its services in accordance with the stipulations of the contract, it shall forfeit its remuneration and pay breach of contract damages or compensate for the losses.
Article 50
Unless otherwise provided for in the contract, any new technical achievements made by the consulting party or the servicing party in performing a technical consultancy contract or a technical service contract by utilizing the technical materials and work facilities provided by the commissioning party shall belong to the consulting party or the servicing party, and any new technical achievements made by the commissioning party by utilizing the results of work of the consulting party or the servicing party shall belong to the commissioning party.
Chapter VI Arbitration and Litigation Concerning Disputes over Technology Contracts
Article 51
In case where a dispute arises from a technology contract, the parties may resolve it through consultation or mediation. If the parties are unwilling to resort to consultation or mediation, or if consultation or mediation fails, they may, in accordance with the arbitration clause in the contract or a written arbitration agreement reached after the dispute occurred, apply to an arbitration institution designated by the State for arbitration.
In case that one party fails to carry out within the prescribed period an arbitral award made by an arbitration institution, the other party may apply to the people's court for compulsory enforcement.
In case that the parties have not included any arbitration clause in the contract and have not reached any written arbitration agreement subsequent to the occurrence of the dispute, they may initiate legal proceedings to a people's court.
Article 52
The limitations of action for bringing a suit and the period for applying for arbitration in connection with disputes arising from technology contracts shall be one year, computed from the date on which the party knew or should have known of the infringement on its lawful rights and interests.
Chapter VII Supplementary Provisions
Article 53
The Economic Contract Law shall not apply to technology contracts concluded after this Law goes into effect.
Article 54
The department in charge of science and technology under the State Council may, on the basis of this Law, formulate rules for its implementation, which shall go into effect after being submitted to and approved by the State Council.
Article 55
This Law shall go into effect on November 1, 1987.
