1. General

• China’s legal system is based on Civil Law principles. It is sometimes said to be a hybrid, with selected elements of common law inserted. 
• Chinese courts are divided into four levels. At the top is the Supreme People’s Court (SPC), followed by the High People’s Court (the top court of all provinces, autonomous regions, and municipalities directly under the Central Government), next the Intermediate People’s Courts, and finally the Primary People’s Courts. 
• Most courts have designated tribunals responsible for handling the full range of IP cases, criminal, civil and administrative.  These are referred to as “three-in-one courts”.
• Plaintiffs must usually file suit in the jurisdiction where a defendant resides or where the infringing behavior occurred.  In cases where infringing goods are sold through online trade platforms, jurisdiction may also be asserted in the city where the platform is based (e.g., in the case of Alibaba, Hangzhou City).
• Plaintiff usually prefer to file complaints with higher-level courts to access higher-quality judges. However, jurisdiction between Primary and Intermediate People’s Courts will mainly depend on the amount in controversy.  The threshold varies by region, but in general, claims under US$ 700,000 (RMB 5 million) will be handled by Primary People’s Courts in the first instance.
• There is generally only one level of appeal, after which decisions are deemed final.  A dissatisfied party may apply to a higher level court for retrial through the trial supervision procedure, which serves as the functional equivalent of a second appeal. There is also a procedure for review of decisions by prosecutors, but this is extremely rare.
• All defendants must be clearly identified natural or legal persons, i.e., there is no equivalent to a “John Doe” action.
• China does not follow the English Rule, whereby the winner may seek reimbursement of all legal expenses.  In IP cases, Chinese courts will award compensation for legal and investigation expense to successful plaintiffs.  However, such awards are generally lower than actual expenditures, and in many cases, the court will refrain from breaking out such compensation from the damages for harm caused. 
• Losing plaintiffs are not required to compensate the defendant’s legal costs.

2. Collection

• Plaintiffs are primarily responsible for collecting evidence and ensuring it is admissible by properly preserving it through notarization or “time-stamping” of online data. 
• Evidence that is later secured from the files of government bodies – including administrative enforcement authorities and the police – can also be relied upon.
• In intellectual property cases, private investigators are routinely deployed in evidence gathering by right holders. While the legal regime regulating the activities of investigators is minimal, their activities are generally regarded as legal.  Investigation costs are relatively high by global standards, but the service levels of reputable firms are generally acceptable.
• However, courts will normally ignore reports and declarations issued directly by investigators.  To ensure evidence generated by investigators is admissible, Chinese notaries must physically participate in on-site visits, e.g., witnessing infringer admissions, sample purchases, etc. and issue notarial deeds stating the relevant facts.  Alternatively, conversations and sample purchases can be proved through time-stamping of audio-visual recordings of the events.  
• There is no discovery process, and in general, the parties are not obligated to disclose relevant evidence.  But in certain circumstances, a defendant’s failure to provide disclosures may be deemed acquiescence to the facts alleged by the plaintiff.
• Plaintiffs may apply to the court for an order instructing defendants and third parties (including government bodies, online trade platforms, banks, and others) to disclose specific evidence or information they are holding.

3. Complaint Filing Formalities

• Foreign plaintiffs must entrust Chinese lawyers to represent them in proceedings before PRC courts.
• A plaintiff must issue a notarized and apostilled Power of Attorney (POA) in favor of local lawyers, and the original POA must be submitted to the court before the case will be formally accepted.  As such, it is generally advisable to issue POAs early to local counsel. 
• In some regions of China, courts will accept POAs issued by parties that hold a master POA.  But some courts will only accept POAs issued directly from the plaintiff to their designated local lawyers.
• The POA must be supported by a notarized and apostilled “Certificate of Identity of the Legal Representative” (CILR) which confirms that the person signing the POA is authorized by the company to do so.  This must be supported as well by evidence that the signatory of the CILR is also properly authorized, e.g., by virtue of provisions in the company’s articles of association, board minutes, etc.
• Foreign complaints must also be supported by a certified and apostilled copy of a government document confirming the legal existence of the foreign entity. This will normally be a Certificate of Incorporation, Certificate of Formation, Certificate of Good Standing, or a company’s registry extract.

4. Case Acceptance Process

• The initial complaint must include clear claims and reasonably detailed arguments, all supported by preliminary evidence.
• The court’s Case Acceptance Tribunal will review the complaint for sufficiency and confirm whether the case falls within its jurisdiction.  The Tribunal generally has seven days to approve complaints.
• Once the complaint is formally accepted, it will be registered and served to the defendant by the court.

5. Preservatory Measures

• Before the defendant is served, or at any time during the proceedings, the plaintiff may request “preservation measures”.  These includes (a) preservation of assets of the defendant (including those held by third parties); (b) preservation of evidence, and (c) preliminary injunction.  The courts normally require bonds for assets preservation and preliminary injunctions.
• When filed before the defendant is served, usually, the defendant will have no prior notice of or opportunity to challenge the preservation order.
• In practice, preliminary injunctions are very difficult to secure.  Where courts are open to considering them, the plaintiff is normally required to provide extensive evidence of the harm that is being inflicted on them.  This will preferably include extensive evidence explaining the factual and legal grounds for the application, and the urgency, including the risks of irreparable harm if an injunction is not granted.

6. Evidence Submission / Cross-Examination

• After a complaint is formally accepted and mediation process (if applicable) is completed, the court will issue a notice on evidence submission and schedule a date for “evidence exchange”.  Typically, this will take place within a week of the trial itself.
• The parties will typically be presenting more extensive evidence during evidence exchange. 
• During evidence exchange sessions, the parties and the judge will go through each item of evidence to discuss its authenticity, legality, and relevance.
• While Chinese law allows judges to impose criminal sanctions for contempt of court, they rarely do so.  That said, where a party knowingly files forged evidence, courts may impose penalties, including fines.

7. Trial / Hearing

• Courts sometimes schedule hearings with as little as one week notice to the parties.
• During the trial, there will be a broader discussion of the evidence and the merits of the case.
• Trials are normally completed within half a day or a full day, while complex cases may require two to three hearings.
• Witnesses are rarely called, and decisions are largely based upon written records and arguments.
• Following the hearing, the court will normally ask the parties to file post-hearing submissions that summarize the key points discussed during the hearing and offers final observations on key issues.

8. Timeline For First-Instance Judgments

• For normal cases involving exclusively local litigants, the law requires that decisions be issued within six months after their formal acceptance.
• For cases involving foreigners, there is no deadline for the court to issue decisions, but most cases are decided within 12 months. 
• Judges are under pressure to decide as many cases as possible by the end of the calendar year.

9. Appeals

• As noted above, only one level of appeal is permitted.
• The parties will sometimes file new evidence in support of appeals.  Courts typically accept such evidence but have the discretion to reject it.
• The timeline for receiving a decision on an appeal is typically four to eight months after filing.
• The second-instance judgment is technically final , dissatisfied parties may apply to a higher court for retrial arguing that the law was clearly applied incorrectly.  But retrial requests are generally not successful.

10. Enforcement of Judicial Awards

• If a defendant fails to comply with the obligations set out in the final judgment, including payment of compensation, the plaintiff may request “compulsory enforcement” measures. The court will then take steps to enforce the judgment. If this involves payment of the compensation, the court will conduct investigations into the defendants’ assets and may seize or freeze them.
• If the full amount of compensation is not paid in a timely manner, the court may place the the party subject to enforcement on a “social credit” blacklist managed by the SPC.  Once added, the defendant, or in the case of a corporation, its legal representative (CEO), will be subject to so-called “consumption restrictions” that include prohibitions on travel by air or fast trains.  These sanctions generally result in voluntary payment of judgements, sooner or later.
• Chinese civil awards may be enforced against an infringer’s assets located overseas in cases where China has a treaty in place with the relevant jurisdiction on the mutual recognition of judicial awards, or where China and the relevant jurisdiction enforce foreign judgements based on the principle of reciprocity (as is now the case for the US and China).