Law of the People's Republic of China on Promoting the Transformation of Scientific and Technological Achievements (Revised in 2015)

Order of the President of the People's Republic of China No.32

August 29, 2015

(Adopted at the 19th Session of the Standing Committee of the 8th National People's Congress of the People's Republic of China on May 15, 1996; and revised according to the Decision of the Standing Committee of the National People's Congress on Revising the Law of the People's Republic of China on Promoting the Transformation of Scientific and Technological Achievements at the 16th Session of the Standing Committee of the 12th National People's Congress of the People's Republic of China on August 29)

Content

Chapter I General Provisions
Chapter II Arrangements for Implementation
Chapter III Guarantee Measures
Chapter IV Technological Rights and Interests
Chapter V Legal Responsibility
Chapter VI Supplementary Provisions

Chapter I General Provisions

Article 1 The Law of the People's Republic of China on Promoting the Transformation of Scientific and Technological Achievements (hereinafter referred to as the "Law") is enacted in order to promote the transformation of scientific and technological achievements into real productive forces, standardize such transformation, hasten scientific and technological progress, and facilitate economic and social development.

Article 2 The phrase "scientific and technological achievements" as used in this Law means achievements made as a result of scientific research and technological development which have practical value. On-duty scientific and technological achievements mean achievements made as a result of executing the work tasks of research and development institutions, institutions of higher learning, enterprises and other entities, or made by mainly using material and technological resources of the aforesaid entities.
The phrase "transformation of scientific and technological achievements" as used in this Law means the entire process of the follow-up tests, development, application, and widespread use of the applicable scientific and technological achievements, through to the final creation of new technologies, new techniques, new materials, new products, and new industries - all for the purpose of enhancing the productive forces.

Article 3 Transformation of scientific and technological achievements shall be instrumental to accelerating the implementation of the innovation-driven development strategy, to promoting the combination of science, technology and economy, to increasing economic and social results, to protecting the environment and reasonably using natural resources, as well as to promoting economic and social development and safeguarding national security.
In transforming scientific and technological achievements, the persons concerned shall respect the law of the market, let the enterprises play the main role, abide by the principles of voluntariness, mutual benefit, fairness and good faith, and shall, in accordance with law or contractual agreement, enjoy interests and bear risks. Intellectual property involved in the transformation of scientific and technological achievements shall be protected by law.
In the transformation of scientific and technological achievements, laws shall be observed and State interests safeguarded, and no public interests or legitimate rights and interests of others shall be damaged..

Article 4 The State shall reasonably allocate fiscal funds to the transformation of scientific and technological achievements, guide the investment of social funds in the transformation of scientific and technological achievements, and facilitate the investment of funds in the transformation of scientific and technological achievements from diversified sources.

Article 5 The State Council and local people's governments at various levels shall strengthen the coordination of their policies of science and technology, public finance, investment, taxation, talents, industries, finance, government procurement, military and civilian integration, and other policies so as to create a sound environment for thetransformation of scientific and technological achievements.
The local people's governments at various levels may, in accordance with the principles specified herein and in light of local conditions, take measures which can better facilitate the transformation of scientific and technological achievements.

Article 6 The State encourages the scientific and technological achievements to be implemented in China first. Relevant laws and administrative regulations as well as relevant provisions of the State shall be followed when Chinese entities or individuals transfer their scientific and technological achievements to overseas organizations or individuals, or license them to implement such scientific and technological achievements.

Article 7 For the needs of national security, national interests, and major public interests, the State may organize the implementation of or license others to implement relevant scientific and technological achievements according to law.

Article 8 The administrative department for science and technology, the administrative department for comprehensive economic and trade affairs, and other relevant administrative departments under the State Council shall, within their functions and responsibilities as prescribed by the State Council, administer, guide, and coordinate efforts for the transformation of scientific and technological achievements.
The local people's governments at various levels shall be responsible for administering, guiding, and coordinating efforts for the transformation of scientific and technological achievements within their respective administrative regions.

Chapter II Arrangements for Implementation

Article 9 The State Council and the local people's governments at various levels shall incorporate the transformation of scientific and technological achievements in their notional economic and social development plans and make arrangements and coordinate efforts for the transformation of relevant scientific and technological achievements.

Article 10 Fiscal funds shall be used to set up the application type of scientific and technological projects and other relevant scientific and technological projects. Relevant administrative departments and management agencies shall improve and perfect their organization and management mode of scientific research, and shall hear the opinions of relevant industries and enterprises when formulating relevant scientific and technological plans and preparing project guides; in organizing the implementation of the application type of scientific and technological projects, the project undertaker's obligation of transformation of scientific and technological achievements shall be made clear, the management of intellectual property shall be strengthened, and the transformation of scientific and technological achievements as well as the creation and use of intellectual property shall be made as an important basis and content of project approval and acceptance.

Article 11 The State shall establish and improve a scientific and technological reporting system and information system of scientific and technological achievements, announce to the public information regarding the implementation of scientific and technological projects, scientific and technological achievements, and related intellectual property, and provide public interest services such as information search and screening of scientific and technological achievements. In announcing relevant information to the public, no state secrets or trade secrets shall be disclosed. As for information not to be disclosed, relevant departments shall inform the undertakers of relevant scientific and technological projects in a timely manner.
The undertakers of scientific and technological projects which are set up using fiscal funds shall timely submit relevant scientific and technological reports according to regulations and summarize and deliver information regarding scientific and technological achievements and intellectual property to the system of scientific and technological achievements.
The State encourages undertakers of scientific and technological projects which are set up using non-fiscal funds to submit relevant scientific and technological reports and summarize and deliver information regarding scientific and technological achievements and intellectual property to the system of scientific and technological achievements, for which the responsible departments of the people's governments of county level or above shall provide conveniences.

Article 12 The State shall support the following projects for the transformation of scientific and technological achievements by such means as government procurement, research and development subsidies, publishing of guide catalogs of industries and technologies, and demonstration and promotion:
1. projects that will noticeably help raise the industrial and technical level and increase economic results, or will form new industries which promote the healthy development of society and the economy;
2. projects that can noticeably increase national security capabilities and the public security level;
3. projects that can help rationally develop and utilize natural resources, conserve energy, reduce material consumption, prevent and control environmental pollution, protect the ecology, increase the capabilities in response to climate change, and prevent disasters and reduce damage;
4. projects that can improve people's livelihood and enhance the level of public health;
5. projects that can promote modern agriculture or the economic development in the countryside; and
6. projects that can help accelerate the social and economic development in areas inhabited by minority nationalities and outlying and poverty-stricken areas.

Article 13 The State, by developing appropriate policies and measures, promotes and encourages the adoption of advanced technologies, techniques, and equipment and the continuous improvement, restricted use, or elimination of backward technologies, techniques, and equipment.

Article 14 The State shall strengthen its efforts in standard setting, set national or industrial standards for new technologies, new techniques, new materials, and new products according to law and in a timely manner, and actively participate in the setting of international standards so as to drive the spread and application of advanced and applicable technologies.
The State shall establish an effective system for the mutual transformation between military and civilian scientific and technological achievements and shall improve the systems and mechanisms for the collaboration and innovation of defense-related science and technology. Advanced and applicable civilian standards shall be given priority of use according to law during the scientific research and production of military products so as to facilitate the mutual transfer and transformation of military and civilian technologies.

Article 15 When making arrangements for the transformation of major scientific and technological achievements, the people's governments at various levels may have relevant departments arrange for the transformation through open tendering. These departments shall provide the successful bidders with the funds or other conditions that they decided to offer when making the tendering.

Article 16 Holders of scientific and technological achievements may have their achievements transformed in the following ways:
1. investing in the transformation themselves;
2. transferring their achievements to another;
3. allowing another to use their achievements;
4. working together with another for the transformation with their achievements as the conditions for cooperation;
5. investing with their achievements as converted shares or as proportions of capital contributions;
6. other ways as agreed upon.

Article 17 The State encourages research and development institutions or institutions of higher learning to transfer their scientific and technological achievements to enterprises or other organizations by means of assignment, licensing, contribution as an investment, or other means.
Research and development institutions or institutions of higher learning established by the State shall strengthen the management, organization, and coordination of the transformation of their scientific and technological achievements, promote the building of teams for the transformation of scientific and technological achievements, optimize the transformation process of scientific and technological achievements, and carry out the transfer of technologies through their own entities which are in charge of technological transfer or by entrusting an independent service agency for the transformation of scientific and technological achievements.

Article 18 Research and development institutions or institutions of higher learning established by the State may, at their own discretion, decide to transfer, license, or contribute as an investment scientific and technological achievements held by them provided, however, that a price shall be determined through agreement, listing for sale at an exchange market for technologies, auction, or by other means. Where a price is determined through agreement, the name of the scientific and technological achievements and the proposed transaction price shall be publicly announced within the entity concerned.

Article 19 With regard to scientific and technological achievements that are made by persons while holding positions in the research and development institutions or institutions of higher learning established by the State, the persons who made the achievements and the participants may, on condition that ownership of the achievements remains unchanged and in accordance with the agreement they reached with the units they belong to, transform the achievements, and they shall enjoy the rights and interests as stipulated in the agreement. And the units concerned should assist in the transformation of the scientific and technological achievements mentioned above..
Persons who made the scientific and technological achievements or persons in charge of research projects may neither obstruct the transformation of the scientific and technological achievements they made while holding positions in the entities nor take possession of such achievements, thus encroaching upon the legitimate rights and interests of the entities they belong to.

Article 20 The departments under which these research and development institutions or institutions of higher learning are administered and relevant administrative departments, including departments of finance and science and technology, shall establish a performance assessment and evaluation system in favor of promoting the transformation of scientific and technological achievements, make the transformation of scientific and technological achievements one of the important contents and basis for evaluating and granting scientific research funds to relevant entities and individuals, and increase the support of scientific research funds for relevant entities and individuals with excellent performance in the transformation of scientific and technological achievements.
Research and development institutions or institutions of higher learning established by the State shall establish a system of professional title appraisal, position management, and assessment and evaluation commensurate with the characteristics of transformation of scientific and technological achievements, and improve the mechanism of income distribution, incentive, and restriction.

Article 21 Research and development institutions or institutions of higher learning established by the State shall submit to their higher departments under which they are administered an annual report on the transformation of scientific and technological achievements, detailing the quantity of scientific and technological achievements they have obtained according to law, the implementation and transformation of the same as well as the distribution of relevant income; such higher departments shall forward such annual report to relevant administrative departments, including departments of finance and science and technology, according to the relevant stipulations.

Article 22 An enterprise may, for the purpose of adopting new technology, new techniques, and new materials and manufacturing new products, publish information on its own or entrust an intermediate institution engaged in trade of technology to solicit the scientific and technological achievements that it needs or to find collaborators for the transformation of scientific and technological achievements.
The administrative department of science and technology and other relevant departments of local people's governments at county level or above shall, according to the division of their duties and responsibilities, provide help and support for the enterprises to get the scientific and technological achievements needed.

Article 23 An enterprise, in accordance with the law, has the right to transform scientific and technological achievements independently or jointly with domestic or foreign enterprises, public institutions, and other collaborators.
An enterprise may, through fair competition, undertake the projects, arranged by the government, for the scientific and technological research and development or for the transformation of scientific and technological achievements independently or jointly with another.

Article 24 As for scientific and technological projects set up with fiscal funds which have market application potential and clear industrial targets, relevant departments and administrative organs of the government shall let the enterprises play the leading role in selecting the direction of research and development, implementing the project and applying the achievements, and shall encourage the enterprises, research and development institutions, institutions of higher learning, and other organizations to jointly implement such achievements.

Article 25 The State encourages research and development institutions and institutions of higher learning to join efforts with enterprises for the transformation of scientific and technological achievements.
Research and development institutions and institutions of higher learning may participate in the bidding or tendering conducted by relevant departments of the government or enterprises for transformation of scientific and technological achievements.

Article 26 The State encourages enterprises to cooperate with research and development institutions, institutions of higher learning, and other organizations by jointly setting up research and development platforms, technological transformation institutions, or technical innovation alliance and to make joint efforts in such activities as research and development, application and promotion of achievements, and research and setting of standards.
All parties to the cooperation shall sign an agreement specifying according to law such matters as organizational form of the cooperation, division of tasks, capital investment, ownership of intellectual property, distribution of rights and interests, sharing of risks, and liability for breach of agreement.

Article 27 The State encourages research and development institutions, institutions of higher learning, and other organizations to conduct exchange of scientific and technical personnel, to retain the scientific and technical personnel of enterprises and other organizations to be engaged in teaching and scientific research work on a part-time basis according to their professional characteristics and the technological development needs of the industries, and to support their own scientific and technical personnel to be engaged in the transformation of scientific and technological achievements in enterprises and other organizations.

Article 28 The State supports enterprises to work together with research and development institutions, institutions of higher learning, vocational colleges, and training institutions to establish practice and training bases for students as well as scientific research and practice working institutions for postgraduates and to jointly foster specialized technical personnel and talents with high skills.

Article 29 The State encourages agricultural research institutions and agricultural experiment and demonstration stations to transform scientific and technological achievements independently or in cooperation with another.

Article 30 The State fosters and develops technical markets and encourages the creation of intermediate service agencies for technologies that provide trading places, information platforms and information searching, processing and analysis, evaluation, brokerage, and other services for the transaction of technologies.
In providing services, the intermediate service agencies for technologies shall adhere to the principles of impartiality and objectiveness and may not provide false information or certification; also they shall be obligated to keep confidential state secrets and the trade secrets of the parties concerned which come to their knowledge in the course of providing services.

Article 31 The State supports the building of public research and development platforms according to the development needs of industries and areas which will provide technology integration, research and development of generic technology, intermediate and industrial experiments, development for the systematization and engineering of scientific and technological achievements, technology promotion and demonstration, and other services for the transformation of scientific and technological achievements.

Article 32 The State supports the development of technology business incubating institutions, such as technology business incubator and university science parks, and provides premises, business counseling, research and development, management consulting, and other services to small- and medium-sized technological startups.

Chapter III Guarantee Measures

Article 33 Government funds that are allocated for transforming scientific and technological achievements shall be chiefly used as initiation funds, discount loans, subsidy funds, risk investment, and other funds for promoting the transformation of scientific and technological achievements.

Article 34 The State adopts a preferential tax policy regarding the transformation of scientific and technological achievements according to the provisions of relevant tax laws and administrative regulations.

Article 35 The State encourages banking financial institutions to innovate in terms of organizational form, management mechanism, financial products, and services, encourages loan businesses to offer loans such as intellectual property pledge loans and equity pledge loans so as to provide financial support for the transformation of scientific and technological achievements.
The State encourages policy financial institutions to take steps to increase their financial support for such transformation.

Article 36 The State encourages insurance institutions to develop insurance products commensurate with the characteristics of the transformation of scientific and technological achievements to provide insurance service for such transformation.

Article 37 The State shall improve the multi-layer capital market, support enterprises to use direct financing channels, such as equity transaction, issuance of shares and bonds according to law, to finance the transformation projects of scientific and technological achievements.

Article 38 The State encourages venture capital institutions to invest in the transformation projects of scientific and technological achievements.
Venture capital guide funds set up by the State shall guide and support venture capital institutions to invest in hi-tech small- and medium-sized startups.

Article 39 The State encourages the establishment of funds or risk funds for the transformation of scientific and technological achievements. Such funds shall be provided by the State, local authorities, enterprises, public institutions, and other organizations or individuals and shall be used to aid the transformation of such scientific and technological achievements as need substantial investment, involve considerable risks, and promise high yields and to accelerate the application of major scientific and technological achievements in industrial production.
Funds and risk funds for the transformation of scientific and technological achievements shall be established and used in accordance with relevant provisions of the State.

Chapter IV Technological Rights and Interests

Article 40 Where an entity that made scientific and technological achievements and another entity make join efforts to transform the achievements, the ownership of rights and interests related to the achievements shall be stipulated in a contract in accordance with the law. If it is not stipulated in the contract, the following principles shall apply:
1. where no invention or creation ensues from the transformation of scientific and technological achievements, the rights and interests related to the scientific or technological achievements shall belong to the entity that made the achievements;
2. where inventions or creations ensue from the collaborated transformation of scientific and technological achievements, the rights and interests related to the inventions or creations shall belong to both parties to collaboration; and
3. as to the scientific and technological achievements made through collaborated transformation, both parties have the right to put into practice the achievements thus made, provided that consent shall be obtained from both parties to collaboration for the transfer of the said achievements.

Article 41 Where an entity that made scientific and technological achievements and another entity collaborate to transform the achievements, both parties shall reach an agreement on the protection of the know-how; the parties may not, running counter to the agreement or the requirements of the right holder for keeping the know-how confidential, disclose or let another use the know-how.

Article 42 Enterprises and public institutions shall establish a system for the protection of the know-how and keep improving the same, in order to protect the know-how of their own. Employees shall adhere to the system of their own entities for the protection of the know-how.
Enterprises and public institutions may sign an agreement on the protection of their know-how with the employees who participate in the transformation of scientific and technological achievements during the period when they remain in employment or a specified period of time after they leave office or retire; the said employees may not, in violation of the agreement, disclose the know-how of their own entities or engage in transforming the scientific and technological achievements same as those of their former entities.
No employees may transfer, without authorization, the scientific and technological achievements they made while holding positions in their entities or do so in disguised form.

Article 43 Income received by research and development institutions or institutions of higher learning established by the State from the transformation of scientific and technological achievements shall be retained by such institutions, and after giving rewards and remuneration to persons who have made significant contributions to the completion or transformation of scientific and technological achievements, the remainder shall be chiefly used for works related to the research and development of science and technology as well as to the transformation of scientific and technological achievements.

Article 44 Upon the transformation of scientific and technological achievements, the units which complete such achievements shall give rewards and remuneration to persons who have made significant contributions to the completion or transformation of such achievements.
These units may stipulate or agree with the scientific and technological personnel on the form, amount, and time of rewards and remuneration. In formulating relevant regulations, these units shall fully take into account the opinions of the scientific and technological personnel and such regulations shall be made public within the units.

Article 45 Where the units which complete the scientific and technological achievements fail to stipulate and fail to agree with the scientific and technological personnel on the form and amount of rewards and remuneration, rewards and remuneration shall be given to persons who have made significant contributions to the completion or transformation of such achievements while holding positions in such units according to the following standards:
1. Not less than 50 percent of the net income from the transfer or licensing of the scientific and technological achievements shall be taken if such achievements are transferred or licensed to others for implementation;
2. Not less than 50 percent of the shareholding or contribution resulting from the scientific and technological achievements shall be taken if such achievements are contributed as an investment;
3. Not less than 5 percent of the operating profits from the implementation of the scientific and technological achievements shall be taken annually for a consecutive three to five years after such achievements are implemented and successfully put into production if such achievements are implemented by such persons on their own or jointly implemented together with others.
The form and amount of rewards and remuneration stipulated by the research and development institutions or institutions of higher learning established by the State or agreed upon with the scientific and technological personnel shall meet the standards specified in the preceding paragraphs 1 to 3.
Expenses of state-owned enterprises and institutions resulting from giving rewards and remuneration to persons who have made significant contributions to the completion or transformation of scientific and technological achievements while holding positions in such units according to the provisions of this Law shall be included in the total amount of salary of these units, but shall not be limited by the total amount of salary of these units, nor shall they be included in the base number of total amount of salary of these units.

Chapter V Legal Responsibility

Article 46 Where the undertakers of scientific and technological projects which are set up using fiscal funds fail to submit scientific and technological reports, or to summarize and deliver information regarding scientific and technological achievements and intellectual property to the system of scientific and technological achievements according to the provisions of this Law, relevant departments or administrative organs of the government which organize and implement such projects shall order them to rectify the situation; if the case is severe, a notice of criticism shall be circulated and such undertakers shall be prohibited from undertaking scientific and technological projects which are set up using fiscal funds within a certain period of time.
Where research and development institutions or institutions of higher learning established by the State fail to submit an annual report on the transformation of scientific and technological achievements according to the provisions of this Law, their competent authorities shall order them to rectify the situation; if the case is severe, a notice of criticism shall be circulated.

Article 47 Where any person who, in violation of the provisions of the Law, resorts to deception in the transformation of scientific and technological achievements and thus gets an award and honorary title, fraudulent money, or illegal profits, the person shall be ordered by relevant departments of the government according to their administrative duties and responsibilities to rectify the situation, with the award and honorary title annulled, the illegal gains confiscated, and a fine concurrently imposed thereon. If the person causes economic losses to another, the person shall bear civil liability for compensation in accordance with the law. If a crime is constituted, criminal liability shall be investigated in accordance with the law.

Article 48 Where scientific and technological service institutions and their employees, in violation of the provisions of this Law, deliberately provide false information, experimental results, or evaluation opinions to deceive a party or collude with one party to deceive another party, they shall be ordered to rectify the situation by the relevant departments of the government according to their administrative duties and responsibilities, their illegal gains shall be confiscated, and a fine shall be imposed. If the case is severe, their business license shall be revoked by the industrial and commercial authorities according to law. If economic losses are caused to another, civil liability for compensation shall be borne according to law. If the case constitutes a crime, criminal responsibility shall be investigated according to law.
Where scientific and technological intermediate service institutions and their employees, in violation of the provisions of this Law, disclose state secrets or trade secrets of the parties concerned, they shall bear corresponding legal liabilities according to the provisions of the relevant laws and administrative regulations.

Article 49 Where administrative departments for science and technology or other relevant departments or their employees, in transforming scientific and technological achievements, abuse their powers, neglect their duties, or practice irregularities for personal gain, sanctions shall be imposed on the directly in-charge persons and other directly responsible persons by the authorities which have the power to appoint or remove them or by the supervisory authorities according to law; if the case constitutes a crime, criminal responsibility shall be investigated according to law.

Article 50 Where any person, in violation of the provisions of the Law, usurps another's scientific or technological achievement by means of instigation, luring or coercion and thus encroaches upon the rights and interests of that person shall bear civil liability for compensation in accordance with law and may be imposed with a fine. If the case constitutes a crime, criminal responsibility shall be investigated in accordance with law.

Article 51 If, in violation of the provisions of this Law, an employee, without permission of his unit, discloses the technical know-how of the unit or, without authorization, transfers or does so in disguised form the scientific or technological achievement made while holding a position in the unit, or if a person who took part in the transformation of a scientific or technological achievement, running counter to the agreement reached with his unit, engages in transforming the same scientific or technological achievement as that of his unit during the agreed period of time after leaving office or retiring, and if any economic losses are thus caused to the unit, civil liability for compensation shall be borne according to law. If the case constitutes a crime, criminal responsibility shall be investigated according to law.

Chapter VI Supplementary Provisions

Article 52 The Law shall enter into force as of October 1, 1996.