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Chapter IV Technological Innovation

Article 32 [Original Text]

Article 32 Private economic entities shall be encouraged to actively cultivate and utilize knowledge-based, skilled, and innovative talent, nurture and employ highly skilled personnel in critical positions and processes, and advance the development of the industrial workforce.

[Interpretation]

Legislative Background and Purpose: Talent is the primary resource, and innovation-driven development is fundamentally talent-driven. The growth of private enterprises hinges on a high-caliber workforce. This provision aims to encourage private enterprises to prioritize talent cultivation and utilization.

Interpretation:

a. “Knowledge-based, skilled, and innovative talent”:

● Knowledge-based talent: Individuals possessing systematic theoretical knowledge and professional skills capable of performing complex intellectual labor.

● Skilled talent: Individuals mastering specific vocational skills capable of performing specialized technical operations or services.

● Innovative talent: Individuals possessing innovative awareness, innovative capabilities, and entrepreneurial spirit. b. “Cultivating and utilizing highly skilled personnel in key positions and critical processes”: Emphasizes the cultivation and deployment of senior technicians, master technicians, and other high-level skilled workers who significantly impact corporate core competitiveness and production efficiency. c. “Advancing the development of the industrial workforce”: Refers to enhancing the technical proficiency, professional ethics, and innovation capabilities of the entire industrial workforce to meet the demands of industrial transformation and upgrading. This is not merely an individual enterprise's responsibility but also concerns the overall competitiveness of the nation's manufacturing sector. d. “Actively cultivate and utilize”: This encompasses both internal development (such as on-the-job training, external training programs, and apprenticeship systems) and external recruitment with effective utilization.

【Relevant Regulations】

● Labor Law of the People's Republic of China, Labor Contract Law of the People's Republic of China: Establishes fundamental labor rights and principles for vocational training. ● Vocational Education Law of the People's Republic of China: Encourages enterprises to establish or participate in vocational education institutions. ● National and local policy documents on talent recruitment, skilled workforce development, vocational skills enhancement initiatives, and industry-education integration.

【Practical Guidelines】

a. Talent Strategy for Private Enterprises: ● Integrate talent development into corporate strategy by establishing comprehensive employee training systems and career advancement pathways. ● Increase recruitment and incentives for high-skilled and innovative talent (e.g., equity incentives, project profit-sharing). ● Improve working environments and benefits to foster a culture that respects talent and maximizes individual potential. ● Actively participate in government-organized vocational skills training programs and leverage subsidy policies. b. Government Support: ● Governments should increase investment in vocational education and skills training, deepening industry-education integration and school-enterprise cooperation. ● Refine evaluation and incentive mechanisms for skilled personnel, enhancing their social status and compensation. ● Provide conveniences such as residency registration, housing, and children's education for enterprises recruiting high-level talent. c. Industrial Workforce Development: ● Encourage industry associations to organize sector-specific skill competitions and training exchanges. ● Promote the establishment of a skill formation system for industrial workers that meets modern industrial development requirements. d. Leveraging the Role of Entrepreneurs: Entrepreneurs themselves should prioritize learning and self-improvement, leading by example to foster a corporate culture that values talent, respects knowledge, and champions skills.

Article 33 [Original Text]

Article 33. The State shall strengthen the protection of original innovation by private economic entities and their operators. It shall enhance the protection of intellectual property rights for innovative achievements, implement a punitive damages system for intellectual property infringement, and investigate and punish illegal acts such as infringement of trademark rights, patent rights, copyrights, trade secrets, and counterfeiting and confusion in accordance with the law. Regional and departmental collaboration on intellectual property protection shall be enhanced to provide private economic entities with services including expedited and coordinated intellectual property protection, diversified dispute resolution, rights enforcement assistance, guidance on handling overseas intellectual property disputes, and risk warnings.

[Interpretation of the Provision]

Legislative Background and Purpose: Intellectual property constitutes the core outcome and vital safeguard of scientific and technological innovation. Rigorous intellectual property protection is essential for incentivizing innovation, maintaining fair competition, and optimizing the business environment. This provision aims to strengthen the protection of intellectual property rights for private enterprises.

Interpretation of Provisions: a. Paragraph 1: Strengthening Protection and Strict Crackdown: ● “Protection of Original Innovation”: Emphasizes safeguarding pioneering innovations that create something entirely new. ● “Enhancing IP Protection for Innovative Achievements”: This is an overarching requirement. ● “Implementing punitive damages for intellectual property infringement”: For malicious or severe infringements, higher compensation may be awarded beyond calculated losses to increase the cost of infringement and effectively deter such acts. ● “Investigating and punishing violations of trademark, patent, and copyright rights, as well as trade secret infringement, counterfeiting, and confusion-inducing acts in accordance with the law”: This enumerates primary types of intellectual property infringement and unfair competition practices. b. Paragraph 2: Collaborative Protection and Service Support: ● “Strengthen regional and departmental coordination in intellectual property protection”: Promote coordination between different regions and among administrative enforcement agencies (e.g., market regulation, copyright, customs) and judicial bodies (courts, procuratorates) to form a cohesive protection force. ● “Rapid and coordinated intellectual property protection”: Establish fast-track channels for expedited examination, swift rights confirmation, and rapid rights enforcement. ● “Diverse Dispute Resolution”: Encourage non-litigation methods like mediation and arbitration to resolve IP disputes.

● “Rights Protection Assistance”: Provide eligible private enterprises (especially SMEs) with legal consultation, evidence preservation, and representation services for IP rights enforcement.

● “Overseas IP Dispute Guidance and Risk Early Warning”: Assist private enterprises in addressing overseas IP challenges during international expansion and proactively mitigating risks.

【Relevant Regulations】

● Patent Law of the People's Republic of China: Article 71 stipulates punitive damages for patent infringement.● Trademark Law of the People's Republic of China: Article 63 stipulates punitive damages for trademark infringement.● Copyright Law of the People's Republic of China: Article 54 stipulates punitive damages for copyright infringement.● Anti-Unfair Competition Law of the People's Republic of China: Contains provisions on trade secret protection and counterfeiting/confusion practices.● Civil Code of the People's Republic of China (Intellectual Property Section): Provides overarching provisions for protecting various intellectual property rights. ● Judicial Interpretation of the Supreme People's Court on the Application of Punitive Damages for Intellectual Property Infringement. ● Policy documents from the National Intellectual Property Administration and other departments on strengthening intellectual property protection and building a strong intellectual property nation.

【Practical Guidelines】

a. Intellectual Property Management for Private Enterprises: ● Establish and improve internal intellectual property management systems; promptly apply for patents, register trademarks, and conduct copyright registrations. ● Strengthen trade secret protection measures (e.g., signing confidentiality agreements, establishing secure storage areas). ● When facing infringement, actively gather evidence and pursue remedies through administrative complaints, civil litigation, etc. ● Before “going global,” conduct thorough intellectual property planning and risk assessments in target markets. b. Judicial and Administrative Enforcement: ● Judicial authorities should accurately apply the punitive damages system, increase award amounts, and enhance deterrence against infringement. ● Administrative enforcement agencies should improve efficiency and strengthen coordination between administrative and criminal enforcement. c. Public Services: ● IP authorities should refine rapid, coordinated protection mechanisms to provide businesses with efficient rights protection services. ● Establish a National Overseas IP Dispute Response Center to support enterprises in overseas rights protection. d. Professional Service Providers: Law firms, patent agencies, trademark agencies, and similar entities should elevate professional service standards to deliver comprehensive IP legal services to businesses.

Chapter V: Standardized Operations

Article 34 [Original Text]

Article 34. Party organizations and Party members within private economic entities shall conduct Party activities in accordance with the Constitution of the Communist Party of China and relevant intra-Party regulations, playing a political guiding role through Party organizations and exemplary vanguard roles through Party members in promoting the healthy development of private economic entities.

Interpretation of the Provision

Legislative Background and Purpose: Strengthening Party building within private enterprises is an inherent requirement of the socialist system with Chinese characteristics. It is also a crucial measure to ensure the private economy develops in the correct direction and to promote the healthy development of enterprises themselves. This provision clarifies the basis for activities and the role of Party organizations and Party members in private enterprises.

Interpretation of the Provision: a. “Party organizations and Party members within private economic entities”: Refers to grassroots Party organizations such as Party branches, general Party branches, and Party committees established within private enterprises, as well as Communist Party members working in private enterprises. b. “Conduct Party activities in accordance with the Constitution of the Communist Party of China and relevant intra-Party regulations”: Clarifies the legal basis and behavioral norms for Party organization activities. c. “Exercising the political leadership role of Party organizations in promoting the healthy development of private economic organizations”: ● Political leadership: Propagating and implementing the Party's lines, principles, and policies; guiding enterprises to comply with national laws and regulations; uniting and rallying employees; safeguarding the lawful rights and interests of all parties; leading corporate culture development; and promoting scientific enterprise development. d. “Exemplary role of Party members”: Requires Party members to take the lead in production and operations, technological innovation, law-abiding conduct, and serving the masses.

【Relevant Regulations】

● Constitution of the Communist Party of China: The Party's fundamental law, which clearly stipulates the establishment and basic tasks of Party grassroots organizations. ● Regulations on the Work of Party Branches (Trial): Standardizes the work of Party branches. ● Regulations on the Education and Management of Communist Party Members. ● Opinions on Strengthening Party Building in Private Enterprises (Trial) issued by the General Office of the CPC Central Committee, and other relevant documents. ● Company Law of the People's Republic of China: Article 19 stipulates that Party organizations shall be established in companies in accordance with the Party Constitution to conduct Party activities. Companies shall provide necessary conditions for the activities of Party organizations.

【Practical Guidelines】

a. Private Enterprises Supporting Party Building:

● Eligible private enterprises shall provide necessary venues, funding, and personnel support for Party organization activities in accordance with the Company Law and Party Constitution. ● Enterprise operators (especially Party member operators) should understand and support Party building within the enterprise, viewing it as a positive factor promoting the enterprise's healthy development. b. Party Organizations Playing Their Role: ● Party organizations within enterprises should conduct activities centered around the enterprise's production and operations, integrating Party building work with the enterprise's development goals to avoid a disconnect. ● They should take the initiative in guiding employee ideology, building corporate culture, coordinating labor-management relations, and fulfilling social responsibilities. ● Party members should strive to become business backbone and exemplary models in their respective positions. c. Guidance from Government Departments: Local Party committee organization departments and Party working committees for non-public enterprises should strengthen guidance and services for Party building in private enterprises, assisting in resolving practical difficulties. d. Boundary Awareness: Activities of enterprise Party organizations should be conducted within the scope permitted by laws, regulations, and corporate bylaws, and should not interfere with normal production and operational decisions of the enterprise.