Antitrust Litigation 2020

Last Updated September 17, 2020

China

Law and Practice

Authors



FenXun Partners established a Joint Operation Office with Baker McKenzie in April 2015. The Baker McKenzie FenXun (FTZ) Joint Operation is the world’s leading Chinese legal platform, delivering integrated international and PRC legal services. The Joint Operation is staffed by both locally admitted and foreign-licensed lawyers from Baker McKenzie and FenXun Partners, advising leading Chinese and multinational companies on both Chinese domestic and cross-border issues across the full spectrum of corporate and commercial law.

China's Anti-monopoly Law was promulgated in 2008.

Article 50 of the Anti-monopoly Law establishes a dual-track law enforcement system: administrative law enforcement and civil litigation.

The number of anti-monopoly civil litigation cases has been increasing over recent years, with a particular focus on the telecommunications industry and internet industry related to standard essential patents (SEPs).

At present, China's anti-monopoly civil lawsuits frequently overlap with intellectual property (IP) cases, especially concerning disputes over licensing fees for SEPs and the infringement of SEPs. That is to say, in the standard essential patents licensing area, particularly the telecommunications industry, when an implementer of an SEP (a manufacturer) fails to reach an agreement with the SEP holder and so fails to pay royalties, the holder sometimes would have to seek for remedies by filing a standard essential patent infringement lawsuit and a licence fee lawsuit against the implementer who refuses to pay the licence fee, demanding the cessation of the infringement and payment of the licence fee. Then the implementer often brings a lawsuit regarding abuse of dominant market position, accusing the SEP holder of abusing the market-dominant commitments made by the obligee to the standard patent organisations for licensing in accordance with the FRAND principles (fair, reasonable and non-discriminatory).

In China, the parties involved in these lawsuits are often engaged in standard patent infringement lawsuits and anti-monopoly lawsuits in other jurisdictions, especially in the relevant product markets of the United States and Europe (the UK, Germany, etc). This latest development deserves attention, as it leads to higher requirements and challenges for judges in Chinese courts, Chinese anti-monopoly litigation lawyers and patent litigation lawyers. For example, a lawsuit dispute between a Chinese telecommunications SEP implementer and a US standard essential patentee represented by the authors just finished in 2020, which is a very typical case involving a civil antitrust dispute and a SEP royalty determination proceeding. This is, meanwhile, a cross-border dispute involving multiple jurisdictions simultaneously.

Therefore, there is a high demand for lawyers with the ability to handle such complex antitrust cases, to involve the participation of top economists and technical experts on patent issues, to understand and apply the laws of various jurisdictions and different common and civil law systems. This case has also attracted much attention in the legal profession and in the field of telecommunications in China and other countries.

It is also worth noting that a senior member of the Supreme Court supervising the Intellectual Property Tribunal has published a view that in hearing IP-related anti-monopoly litigation, the fact that a business operator owns the SEPs and other IP rights does not necessarily mean it possesses market dominance; rather, the court should decide this issue through a comprehensive understanding of the detailed circumstances of a case.

The antitrust authorities of China were integrated into a single state agency in 2019: the newly formed State Administration of Market Supervision. As a consequence, on 1 September 2019, the three supporting regulations of the Anti-monopoly Law promulgated by the State Administration of Market Supervision became effective, namely:

  • the Provisional Provisions for Prohibiting Monopoly Agreements;
  • the Provisional Provisions for Prohibiting Abuse of Market Dominance; and
  • the Provisional Provisions for Suppressing Abuse of Administrative Power, Eliminating and Restricting Competition.

During the one year of its existence, the State Administration of Market Supervision enforced its regulatory power based on the above three rules in a number of administrative enforcement cases.

Another recent change for antitrust civil lawsuit procedure is that from 1 January 2019, all appellate antitrust litigation will be directly handled by the Intellectual Property Tribunal internally set up in the Supreme Court of China.

The government of China has repeatedly emphasised its regulation of antitrust behaviours. In 2020, the State Council of China re-emphasized its decision to strengthen antitrust enforcement through a number of its regulatory documents. For example, pursuant to its Regulation on Optimising the Business Environment (effective from 1 January 2020), government departments are required to strengthen the enforcement of anti-monopoly and anti-unfair competition laws.

On 27 July 2020, the State Council also issued and implemented the Notice on Several Policies to Promote the High-quality Development of the Integrated Circuit Industry and Software Industry in the New Era. Article 34 provides that it is necessary to "further standardize the market order of the integrated circuit industry and the software industry, strengthen the anti-monopoly law enforcement..."

In addition, the Overall Plan for the Construction of Hainan Free Trade Port issued by the State Council on 1 June 2020 also requires the strengthening and optimisation of anti-monopoly law enforcement, the breaking of administrative monopoly, the prevention of market monopoly and the maintenance of fair competition market order.

China's Anti-monopoly Law has relatively general provisions on the right to claim damages for violations of it, with Article 50 stipulating that if a business operator carries out monopolistic actions and causes losses to others, the operator shall bear civil liability. But Article 50 provides general rules only, and does not list in detail the kind of damages or their calculation methods or formulas.

This Article does not limit the application of civil liability to monopoly actors for compensation for damages, but uses a higher concept of "civil liability". Therefore, the Anti-monopoly Law leaves a great choice for the civil liability of monopoly.

In essence, the civil liability of monopoly is a kind of tort liability, therefore the way to bear monopoly liability should be applied to the relevant provisions of the Tort Liability Law.

Article 50 of the Anti-monopoly Law does not stipulate fault as being an important element of civil liability for tort when stipulating the civil liability of operators who carry out monopolistic acts, which means that monopoly liability in China is a liability without fault.

According to this liability imputation principle, a victim of a monopoly can obtain compensation relief only by proving the following:

  • that the defendant has carried out a monopolistic act;
  • that the victim has suffered actual losses; and
  • that there is a causal relationship between loss and monopoly.

Article 14, paragraph 1 of the Supreme Court's 2012 Judicial Interpretation of Civil Anti-Monopoly Disputes clarifies the above three elements. According to the nature and characteristics of a monopoly, it stipulates the two most common methods of civil liability: stopping infringement and compensating for losses. These two modes comply with the rules under the General Principles of Civil Law.

In terms of case filing, there are two ways of demanding compensation for damages in violation of the Anti-monopoly Law: a successive/subsequent lawsuit and a separate lawsuit. Anti-monopoly separate litigation refers to civil litigation that does not take the enforcement of administrative organs as a prerequisite or condition; subsequent litigation refers to the civil litigation brought by the victim of a monopoly to the object of punishment after the administrative penalty is imposed by the anti-monopoly law enforcement organs.

In China, these two litigation modes coexist because the Anti-monopoly Law establishes a dual-track parallel law enforcement system of administrative law enforcement and civil litigation; ie, anti-monopoly civil litigation does not need to take the administrative identification of the anti-monopoly law enforcement agencies as a prerequisite.

There are no special antitrust tribunals or judges in China. However, due to the strong professional nature of such disputes, the Supreme Court implemented the Provisions on the Causes of Civil Cases, on 1 April 2008, which centralised the provisions on monopoly disputes and various unfair competition disputes, and unified them into the scope of IP disputes. This not only clarifies that the Intellectual Property Tribunal of the Court (as well as the specially established Intellectual Property Courts of Beijing, Shanghai and Guangzhou) shall be responsible for hearing all kinds of monopoly civil disputes, but also determines that monopoly civil disputes shall be subject to centralised jurisdiction, just like IP cases.

According to the Supreme Court’s 2012 Judicial Interpretation of Civil Anti-Monopoly Disputes, and the latest Supreme Court ruling about jurisdiction of its own internal IP tribunal, the trial case of antitrust litigation will be centralised under the jurisdiction of certain specified intermediate courts (or IP courts), as well as provincial-level high courts, but regardless of the level of the trial court, all appellate litigation will be directly appealed to the Intellectual Property Tribunal of the Supreme Court.

Anti-monopoly disputes may be transferred between courts in China in two situations: (i) if the court of appeal has no jurisdiction over anti-monopoly civil disputes, it shall transfer the case to the court with jurisdiction; and (ii) where two or more plaintiffs file lawsuits in different courts with jurisdiction for the same monopoly, a court that has filed the case shall transfer the case to the court that has filed the case first after learning about the situation of the court that filed the case first. If the court to which the case was forwarded considers that the forwarded case does not fall within its jurisdiction in accordance with the provisions, it shall report it to the higher court for the appointment of jurisdiction, and shall not transfer it to a third court.

After the enactment of the Anti-monopoly Law in 2008 and before the institutional reform of the State Council in March 2018, the anti-monopoly law enforcement departments in China were scattered among the Ministry of Commerce, the State Development and Reform Commission, and the former State Administration for Industry and Commerce, and three higher departments of these organs were set up in the State Council.

In March 2019, the State Council's institutional reform retained the Anti-monopoly Committee of the State Council, and set up the State Administration of Market Supervision to integrate the responsibilities of the three anti-monopoly law enforcement agencies to form a unified law enforcement model. The Anti-monopoly Bureau of the State Administration of Market Supervision is responsible for the anti-monopoly law enforcement of abuse of market dominance, monopoly agreements, abuse of administrative power to exclude/restrict competition, and the anti-monopoly review of concentration of operators.

At the same time, the State Administration of Market Supervision has authorised provincial market supervision departments to take charge of anti-monopoly law enforcement in their respective administrative regions by issuing the Notice on Authorisation of Anti-monopoly Law Enforcement.

The Anti-monopoly Law and the Supreme Court's 2012 Judicial Interpretation of Civil Anti-Monopoly Disputes do not specify whether the administrative decision of the anti-monopoly organ of the state has any binding force or effect on the court. However, the authors believe it is not binding for the following reasons.

Article 50 of the Anti-monopoly Law does not stipulate the preconditions for administrative law enforcement in anti-monopoly civil litigation, but establishes a dual-track law enforcement system of administrative law enforcement and civil litigation. In the process of drafting the Anti-monopoly Law, China stipulated the pre-procedure of administrative law enforcement, but this has been deleted from the final legal text, which shows that the Anti-monopoly Law does not have the legislative intention of setting up the pre-procedure of administrative law enforcement.

The Supreme Court's 2012 Judicial Interpretation of Civil Anti-Monopoly Disputes (Draft for Opinion) once stipulated that "the fact that has been determined by the decision of the Anti-monopoly Administration to determine that it constitutes a monopoly act is established by the parties concerned in the relevant cases of monopoly civil disputes without proof, but the opposite party has the opposite. Except where the evidence is sufficient to overturn it." However, the article was deleted when the interpretation was formally promulgated. Therefore, in China's subsequent anti-monopoly civil litigation, there are disputes about whether the determination of administrative organs has the effect of exemption from evidence.

As a consequence, the decision of administrative organs would be treated as a type of statutorily defined civil evidence: “official written evidence”. Its impact on a civil court is usually persuasive for two reasons: (i) China’s antitrust authorities are very professional, therefore their opinion on antitrust issues is professional and convincing; and (ii) according to Article 77 of the Supreme Court’s Judicial Rules on Civil Evidence, the power of proof from official written evidence is generally bigger than normal written evidence. Therefore, it is not binding on Chinese courts but is inevitably persuasive.

With respect to the above understanding, a senior judge of the Supreme Court has indicated a view in one article that the facts recognised by a regulatory enforcement agency in its administrative decision are merely facts that can be considered by the court, and that in circumstances where there is sufficient evidence to overturn such evidence, the court can recognise a new version of the truth.

In China's subsequent anti-monopoly civil litigation, the anti-monopoly administrative organs cannot directly intervene in civil litigations as a plaintiff or defendant, nor, the authors believe, may they be added by a court as third parties. There is also no amicus curiae system in China. However, because, as mentioned above, their opinion is very persuasive in court, the court may usually ask those administrative organs for their administrative decision, or the party to civil antitrust litigation may request court to do so.

China is a continental law country, and under the antitrust law system of China, there are generally four constitutional elements to constitute monopoly liability:

  • the existence of monopolistic conduct;
  • such conduct has the effect of eliminating and restricting competition;
  • the plaintiff suffered damages; and
  • a causational relationship between the monopoly and the damages.

According to the general rules regarding the distribution of the burden of proof, the claimant shall bear the burden of proof to prove all the above elements. Detailed rules are below.

The Burden of Proof in Disputes over Monopoly Agreements

For the five horizontal agreements with very obvious negative effects provided by paragraph 1 of Article 13 of the Anti-monopoly Law of China, the law directly assumes their effect of excluding or restricting competition, therefore lowering the plaintiff’s burden of proof. These five statutorily categorised horizontal agreements are those:

  • fixing or changing commodity prices;
  • restricting the quantity of production or sale quantity of commodities;
  • dividing sales markets or raw material procurement markets;
  • restricting the purchase of new technologies, new equipment or restricting the development of new technologies and products; and
  • boycotting transactions.

As a consequence, the plaintiff only needs to prove that the defendant has implemented a specific horizontal agreement.

However, the second paragraph of Article 13 of China's Anti-monopoly Law stipulates the conditions of "exclusion and restriction of competition" for monopoly agreements other than the above five horizontal agreements, and for all vertical agreements. That is to say, the plaintiff must prove such an effect, with no assumption this time, and the court will decide based on the principle of reasonable analysis.

The proof of "the effect of exclusion and restriction of competition" is a complex and comprehensive evaluation process, which generally follows the following steps:

  • the plaintiff first provides evidence of the effect of exclusion and restriction of competition of the defendant's monopoly agreement;
  • if the plaintiff meets the proof standard, then the burden shifts to the defendant to provide evidence that the litigated monopoly agreement may have the effect of promoting the competition; and
  • if the evidence provided by the defendant proves the effect of promoting competition, then it turns back to the plaintiff to further prove that the monopoly agreement in its totality circumstance does exclude or restrict competition. This process is usually accompanied by more comprehensive surveys and complex economic analysis.

The Burden of Proof in Disputes over Abuse of Market Dominance

The plaintiff should have market dominance over the relevant market, the defendant has market dominance and the defendant has abused market dominance. If the plaintiff has proved that the defendant has conducted the above-mentioned behaviour, then the burden of proof will be transferred to the defendant if the defendant's action to defend himself is justified, and the defendant shall bear the burden of providing evidence for the defence. The Supreme Court has long recognised this principle in judicial practice.

However, the abuse of a dominant market position by public enterprises or other operators with an exclusive position according to law has certain particularities, because their market is often a natural monopoly or there is inadequate market competition, and their dominant market position is often inherent. Therefore, the plaintiff's burden of proof in proving the dominant position of such market players can be moderately reduced.

As for the burden of proof of "transferring defence", it is understood that "transferring defence" means that when the defendant's direct purchaser (such as a wholesaler or retailer) brings an anti-monopoly civil damage compensation lawsuit against the defendant's monopoly practitioner (such as a producer), the defendant will argue that the plaintiff has already transferred all or part of its monopoly price difference loss to the indirect purchasers, who are typically represented by the vast number of consumers.

The Standard of Proof

The standard of proof of probability (75%) is adopted in general civil litigation. According to the above judicial practice of lowering the burden of proof for five statutorily provided horizontal agreements, the presumption rule is also adopted by China for those antitrust litigations. The defendant’s burden to deny the evidence would be satisfied so long as it can make the issue become “unclear for truth” (ie, lower the probability from 75% to below 50%).

Recently the vice president of the Supreme Court of China who is in charge of IP litigation indicated that, considering the difficulty for a plaintiff to satisfy the above burden of proof in civil antitrust litigation, the burden of proof will be appropriately decreased and so if the plaintiff has made reasonable efforts to exhaust its ability of proof, but still cannot obtain all the evidence to prove existing monopoly behaviours, it may be inferred by the court that certain behaviour has the effect of excluding and restricting competition, and it turns to the defendant to provide counter-evidence.

Claims can be brought by direct and indirect purchasers. The Anti-monopoly Law and the judicial interpretation are consistent with this understanding and judicial practice has also confirmed it.

The law stipulates that the trial period of civil litigation of a first-instance hearing by ordinary procedure is six months. If there are special circumstances, it may be extended for another six months with the approval of the Chief Judge of the court. If there is any further specific extension, it shall be submitted to the higher court for further approval, with no stipulation of how long the extension can be. Anti-monopoly litigation is no exception. It follows the above statutory trial period system and rules.

In practice, a number of anti-monopoly litigations are highly controversial and usually involve complex professional issues. Therefore, they often exceed the trial period and need to be extended. Two to three years of a trial timing is a usual situation.

As introduced above, the Anti-monopoly Law of China implements the dual-track law enforcement system of administrative law enforcement and anti-monopoly civil lawsuits, and does not regard an administrative law enforcement procedure as a precondition of a civil lawsuit. Therefore, a civil court will not suspend the proceeding to wait for the outcome of a parallel administrative antitrust investigation. The revision history of the Supreme Court's 2012 Judicial Interpretation of Civil Anti-Monopoly Disputes also reflected such an understanding.

According to the provisions of Article 150 of the Civil Procedure Law, a party to a civil litigation does have the right to apply for suspension but it is limited to several statutorily provided reasons; for example, the death of one party or the loss of litigation capacity by one party.

Such rules also apply to anti-monopoly civil litigation.

Under China's litigation system, there is no class action/collective action that directly corresponds to the American litigation system, but there is a common litigation system (including joint trial system and representative litigation system) and a public interest litigation system under the civil litigation system.

Consolidated Trial under Joint Action

If one party or both parties are made up of more than two persons, the object of the action is the same, or the object of the action is the same kind, and the people's court considers that it is possible to hear the case jointly, with the consent of the parties, it is a joint action.

After the promulgation of the Supreme Court's 2012 Judicial Interpretation of Civil Anti-Monopoly Disputes, the Supreme Court of China pointed out that there may be a large number of victims of a monopoly, who can choose to sue individually or jointly, on behalf of others and in other ways prescribed by law. Therefore, there may be cases in which multiple plaintiffs sue the same court for the same monopolistic act.

In the case of multiple defendants jointly carrying out monopolistic acts, it is also possible for multiple plaintiffs to sue different courts for the same monopolistic acts.

In order to hold the merger hearing more effectively, the court of appeal needs to obtain the litigation information of related cases in time. For this reason, Article 6 also stipulates the information disclosure obligation of the defendant, so that the court of appeal can understand the relevant information in a timely manner, and do a good job in the transfer of cases.

Representative Litigation

A joint action involving a large number of parties may be initiated by the parties selecting their representatives. In representative litigation, the court will generally issue a public announcement explaining the case and the litigation request, notifying the obligee to register with the people's court within a certain period, and the registered obligee will elect the representative, or the people's court will agree with the registered obligee that the representative will participate in the litigation procedure. The litigation action of the representative has effect on the party he represents (therefore, it belongs to selective participation). The judgments and rulings rendered by the people's court shall be effective for all the obligees participating in the registration. However, if a right-holder who has not participated in the registration brings a lawsuit during the limitation period, the judgment or ruling shall also apply.

At the same time, there is an increasing opinion in academic and practical circles that the public interest litigation system should be applied to the field of anti-monopoly. For example, when the new Civil Procedure Law and the Anti-monopoly Law were revised, some National People's Congress representatives proposed to apply public interest litigation to the field of anti-monopoly law.

Public Interest Litigation

Public interest litigation refers to a procedure in which a public interest social organisation or procuratorial organ initiates a lawsuit as a plaintiff, requiring the defendant to assume the responsibilities of stopping infringement, removing obstruction, eliminating danger and apologising for compensation. If the facts and illegal acts have been confirmed by the effective judgment of public interest litigation, and the victim who has suffered damage from the same tort initiates a civil action as the plaintiff separately, they may claim that the facts and illegal acts determined by the public interest litigation should be directly applied.

The qualified subjects of public interest litigation are relevant social organisations, such as provincial consumer associations; procuratorial organs can also initiate public interest litigation.

However, judicatory practice shows that there are no antitrust disputes brought by the qualified subjects of statutory public interest litigation. One antitrust lawsuit of the nature of public interest litigation has been brought, but was rejected by the courts.

Direct and Indirect Buyers

Neither the Anti-monopoly Law nor the Supreme Court's 2012 Judicial Interpretation of Civil Anti-Monopoly Disputes has any restrictions on the types of victims of a monopoly. As long as it can be proved that they have suffered actual losses due to a monopoly, both direct and indirect victims can initiate litigation. Therefore, representative cases and public interest litigation cases should be able to represent direct and indirect purchasers.

However, if the plaintiff is a direct purchaser, whether the plaintiff can bring a representative action to represent the indirect purchaser depends on at least two aspects: first, China’s law requires that the object of action and the claims filed to court by the parties must be completely identical, but the authors do not think those for the direct purchaser and the indirect purchaser could overlap that accurately; second, even if they are identical, whether the obligee of the indirect purchaser will represent them wholeheartedly is another practical question. Therefore, it is necessary for the legislature to promulgate specific provisions, or for the courts to make judicial interpretations or interpret them through judicial practice.

Because public interest litigations for anti-monopoly do not exist in China, only the procedure for representative actions will be introduced. If a court believes that a representative action could be organised, the court will issue a public announcement explaining the case and the request for action, informing the obligee to register with the people's court within a certain period; after that, the registered obligee shall elect a representative to carry out the action, and if no representative can be selected, the people's court may negotiate with the obligee who participates in the registration to represent him.

There are two types of settlements: an in-litigation mediation process held by court judges and a private out-of-court settlement between the anti-monopoly litigation parties. For the first choice, if the parties reached settlement, the court will officially issue a “Statement of Settlement”, which has the same legal effect as a judicial judgment that can be forced for execution. For the latter choice, once the parties privately reach a settlement agreement, the plaintiff will report to the court to apply to withdraw the litigation. Both practices have existed in anti-monopoly litigations.

There is no system of dismissal/summary judgment in China's civil procedure system. An analogous system is the simplified procedure. The law divides the procedure of first instance into ordinary procedure and simplified procedure. In the cases accepted by grass-roots courts, the simplified procedure can be used to hear civil cases with clear facts, clear relationships between rights and obligations, and little controversy, including anti-monopoly litigation cases. Compared with the ordinary procedure, the simplified procedure is relatively flexible, involving oral prosecution, a hearing by a judge alone, a hearing within three months of the date of filing a case, etc (the hearing period of the ordinary procedure is six months). The period of reply, the period of proof and the trial procedure can also be simplified. There is no evidence exchange before the court. In the trial, if the court finds that the simplified procedure is inappropriate for a case, it may decide to convert it to the ordinary procedure.

Because anti-monopoly disputes are generally complex and controversial, the ordinary procedure is generally applied, and, in principle, monopoly cases of first instance are tried by intermediate courts (including local intellectual property courts established in recent years); only grass-roots courts specially designated by the Supreme Court can hear antitrust disputes.

In practice, some grass-roots courts have adopted the practice of the simplified procedure hearing. But from 1 January 2019, only an intermediate court and high court can have jurisdiction over an anti-monopoly litigation trial, and only grass-roots courts can use the simplified procedure; therefore, the authors estimate the possibility of applying the simplified procedure will become zero.

The jurisdiction of anti-monopoly civil litigation in China includes the following aspects.

Regional Jurisdiction of Monopoly Disputes

The jurisdiction of monopoly civil disputes shall be determined in accordance with the provisions of the Civil Procedure Law and relevant judicial interpretations concerning tort disputes (for example, plaintiff for litigation of abuse of dominance) and contract disputes (for example, a case filed by one signing party to a monopoly agreement), because monopoly civil disputes include not only infringement disputes but also contract disputes and other disputes.

Tort disputes fall under the jurisdiction of the people's court of the place of tort and the place of the defendant's domicile; contract disputes fall under the jurisdiction of the people's court of the place of performance of the contract and the place of the defendant's domicile.

However, it is not just the courts that satisfy the above conditions that have jurisdiction: because of the particularity of China's monopoly civil disputes, which often involve a high degree of professionalism, complexity and great influence, the Supreme Court centralised monopoly disputes and various unfair competition disputes into the scope of intellectual property disputes as early as 2008. If the case is not filed as a monopoly dispute, the parties will lodge a defence or counterclaim in accordance with the Anti-monopoly Law in the trial. For example, in contract disputes, the defendant raises a defence or counterclaim on the ground that the plaintiff has carried out monopolistic acts. At this time, this kind of defence and counterclaim directly affects the effectiveness of the contract. If the court of acceptance refuses to hear the case because it does not have jurisdiction over monopoly disputes, or if it requests the parties to sue separately, it may cause conflicts in the judgment of the same contract dispute by different trial courts, and affect the authority and credibility of the judiciary. This means that the case belongs to monopoly civil disputes, and the jurisdiction system of monopoly civil disputes needs to be applied.

The intellectual property courts specially established in Beijing and Shanghai have jurisdiction over cases of first-instance monopoly civil disputes within their municipal jurisdictions. The Guangzhou Intellectual Property Court, established in Guangdong Province, exercises cross-regional jurisdiction over civil disputes of first-instance monopoly in Guangdong Province.

In terms of the amount, in litigation whose subject matter falls under the jurisdiction of the intermediate people's court in civil cases of first instance implemented on 1 May 2019, the jurisdiction of the above-mentioned intermediate courts applies to cases involving amounts between CNY5 million and CNY5 billion. If more than CNY5 billion is involved, the provincial high court shall have jurisdiction over monopoly cases in the first instance. All appellate cases will be directly appealed to the IP Tribunal internally set up in the Supreme Court of China.

Application of Law for Anti-monopoly Disputes

Firstly, the supreme law applicable to monopoly disputes is the Anti-monopoly Law of the People's Republic of China, which applies to monopolistic acts in domestic economic activities and monopolistic acts that, although occurring abroad, have exclusive and restrictive effects on domestic market competition. Specific monopoly behaviour includes three types:

  • monopoly agreement reached by operators;
  • abuse of dominant market position by operators; and
  • concentration of operators with the (possible) effect of the exclusion and restriction of competition.

At the same time, China's anti-monopoly law enforcement agencies have the power to investigate and punish suspected monopoly acts in accordance with the Anti-monopoly Law, so a series of administrative regulations have been issued, mainly including the following.

Major substantive law provisions

  • The Interim Provisions on Prohibiting Abuse of Market Dominance, implemented by the State Administration of Market Supervision on 1 September 2019.
  • The Provisional Provisions on Prohibiting Monopoly Agreements, implemented by the State Administration of Market Supervision on 1 September 2019.
  • The Interim Provisions for Suppressing Abuse of Administrative Power, Eliminating and Restricting Competitive Behaviours, implemented by the State Administration of Market Supervision on 1 September 2019.

Major procedural provisions

The procedures for investigation and punishment shall be governed by the Provisions on Procedures for the Investigation and Disposal of Monopoly Agreements and Cases of Abuse of Market Dominance by Administrative Organs for Industry and Commerce, implemented by the former State Administration for Industry and Commerce on 1 July 2009, and the Provisions on Procedures for Suppressing Abuse of Administrative Power, Eliminating and Restricting Competition issued by Industry and Commerce regulatory organs.

The plaintiff in an anti-monopoly civil action cannot only bring a civil action directly to the court, but can also bring a civil action to the court after the decision of the anti-monopoly law enforcement agency that constitutes that a monopolistic action has legal effect. Therefore, the above-mentioned regulations are mainly used in a large number of anti-monopoly law enforcement cases, but the courts will also be used as the basis for judgment in anti-monopoly civil lawsuits.

In monopoly civil litigation, the litigants often make claims for damages and stop infringement. The object of limitation of action is the claim for creditors' rights, so only the claim for damages can be applied to the limitation of action, and the rule of the limitation of action cannot be applied to stop infringing upon the claim. With regard to the commencement of limitation of action, Article 16, paragraph 1 of the Supreme Court's 2012 Judicial Interpretation of Civil Anti-Monopoly Disputes stipulates that the limitation period of the claim for damages shall be calculated from the date when the original notification or the infringement of rights and interests should be known. In the case of sustained tort causing loss to others, the limitation of action should be calculated separately for each individual damage. Therefore, Article 16, paragraph 3 of the Supreme Court's 2012 Judicial Interpretation of Civil Anti-Monopoly Disputes stipulates that if the monopolistic action prosecuted by the plaintiff has lasted for more than two years, then when the defendant protests against the claim for statute of limitation, the amount of damages shall only be calculated for two years backward from the date when the plaintiff files the lawsuit to the court.

After the implementation of the General Provisions of the Civil Law on 1 October 2017, however, the civil litigation statute of limitations has been generally changed to three years. Certain local high courts believe that means specified law rules should also be changed to three years. The Supreme Court has not provided a settled opinion yet.

A senior member of the Supreme Court has indicated that for IP infringement actions, the statute of limitations would be three years. It is unclear yet whether this position is also applicable to antitrust cases. Further observation is needed.

The Civil Procedure Law of China does not stipulate a system of document discovery or evidence discovery that corresponds to that of the British and American jurisdictions. The same is true of anti-monopoly litigation. The law stipulates that the parties have the burden of proof for their claims, and if the burden of proof is not completed, they will bear the legal consequences. However, the law does not stipulate an obligation to co-operate with each other in providing evidence. Therefore, in practice, it is very difficult for the plaintiff to collect evidence, especially in anti-monopoly cases.

However, there is a pre-trial evidence exchange system in civil litigation in China. The parties may apply for the exchange of evidence before the court, and the courts of complex cases should also organise the exchange of evidence before the court. In the practice of an anti-monopoly lawsuit, a large number of pre-trial evidence exchange procedures are adopted.

Evidence exchange usually takes place under the supervision of judges. In the process of evidence exchange, the parties' facts and evidence to which the judges have no objection will be recorded in the file; the evidence that does raise an objection will be recorded in the file according to the facts that need to be proved, and the reasons for the objection will be recorded. Evidence exchange does not usually occur more than twice. Through the exchange of evidence, the main issues of disputes between the parties in anti-monopoly civil litigation are determined.

The procedure of evidence exchange has no effect on the other party's compulsory disclosure, so it cannot realise the same function as that under the evidence discovery system in Anglo-American jurisdictions.

However, the law stipulates that when a party carries on its burden of proof, if there is evidence to prove that the other party holds the evidence it needs and refuses to provide it without justified reasons, the court may presume that the facts against the holder are established. In practice, judges are very cautious when they use this rule to make factual presumptions.

But in June 2020, the Supreme Court published its draft rule regarding IP-related civil litigation, under which the Supreme Court established the system of "Evidence Submittal Order". If a party holds IP civil litigation evidence but refuses to provide it to court, the court has the power to order that party to submit it, per the court's discretion or application of the other party.

Furthermore, although the Evidence Submittal Order system is also available for other civil litigation, the Order in other non-IP civil litigation can only be used to unearth "document evidence", but the Order here under the June 2020 Draft Rule is proposed to be applicable to all types of evidence, so long as it is IP civil litigation, which covers antitrust civil litigation in China's legal system.

According to the Civil Procedure Law of China, the parties have the responsibility to provide evidence for their own claims. In China's civil procedure laws and regulations, the parties and their procedural agents are not granted the right to exempt certain evidence from being submitted to the court for certain reasons.

In China, there is no system directly corresponding to the "lawyer-client privilege" system in Anglo-American law.

Lawyers are obliged to keep the following information confidential: business secrets, the privacy of the parties, the situation and information that clients are unwilling to disclose. However, this does not constitute a reason for refusing to provide evidence to the court.

As mentioned earlier, China actually has the opposite system of obstruction of proof. The parties shall still provide evidence involving state secrets, business secrets and personal privacy, or other evidence that should be kept confidential as stipulated by law, to the court, but they may apply for special treatment in the cross-examination procedure (such as not exchanging it with the other party and only allowing it to be examined in court).

In June 2020, the Supreme Court proposed to establish a "Secret Confidentiality Order" and parallel "Secret Objection Hearing" system in its draft for public comments regarding Several Rules on Intellectual Property Evidence. Under this rule, if the evidence to be exchanged or cross-examined involves trade secrets, the court may, under the application of the parties or the court's own discretion, make an Order to order the party viewing the secret evidence to sign a confidentiality undertaking or organise all participants in the proceedings to sign a confidentiality agreement. Those who violate such Order are subject to punishment under the civil procedure law, and even criminal liability for serious violation.

On the contrary, if any party has different opinions on whether it constitutes a trade secret, the court is supposed to hold a hearing to review rebuttal evidence from that opposing party and allow cross-examination. If the court granted the objection, the challenged evidence will be treated as non-secret evidence in the following evidence exchange.

In China, the administrative reconciliation mechanism to achieve lenient treatment from anti-monopoly law enforcement agencies refers specifically to the "operator’s commitment" system.

According to Article 45 of the Anti-monopoly Law of China, if the operator under investigation commits to take specific measures to eliminate the consequences of the suspected monopolistic behaviour investigated by the anti-monopoly law enforcement agencies within the period approved by the anti-monopoly law enforcement agencies, the anti-monopoly law enforcement agencies may suspend the investigation. The decision to suspend the investigation shall state the specific content of the undertaking of the operator under investigation. After the operator has fulfilled his promise, the anti-monopoly law enforcement agency may terminate the investigation.

At present, China's laws and regulations do not clearly stipulate whether the agreement reached between the operator and the supervisory authority, or the commitment made by the operator, can be exempted from public disclosure or from submission to the courts in civil proceedings under the operator commitment system. However, according to the Guidelines on Operators' Commitments in Anti-monopoly Cases promulgated by the National Development and Reform Commission in 2016 (Draft for Opinions, not in force yet), law enforcement agencies believe that the suspected monopolistic behaviour of operators has affected the legitimate rights and interests of other operators and consumers or the public interests of society, on the premise of safeguarding operators' business secrets. Under the precondition of safeguarding operators' business secrets, law enforcement agencies shall suspend the investigation decision and terminate the investigation according to law, within 20 working days of making the decision to do so. The decision is made public.

Fact witnesses are often used in anti-monopoly cases, and their testimony is one of the eight types of legal evidence in China's procedural law. They often testify for business mode, business operation conducts, and content of the agreement. After verifying the facts, the testimony can be used to prove the facts of cases related to antitrust litigation disputes.

In principle, witnesses should testify in court; ie, provide oral statements. However, with the permission of the court, those who cannot appear in court for legitimate reasons – such as health reasons, long distances and inconvenient traffic – can testify by means of written testimony, audio-visual transmission technology or audio-visual materials.

All legal evidence, including witness testimony, shall be presented in court and cross-examined by the parties concerned. Evidence without cross-examination by the parties shall not be used as the basis for ascertaining the facts of the case.

However, cross-examination here does not necessarily require witnesses to appear in court. The law does not stipulate that the court can force witnesses to testify in court, nor does it have adverse consequences for refusing to testify in court. In practice, some witnesses do not testify in court, but only issue written testimony; the court still adopts such testimony when it can verify it with other evidence.

In China, similar to Western litigation procedures, expert witnesses are usually expert assistants and professionals with specialised opinions.

First, the identification of a monopoly often requires the use of more complex economic analysis, and judges are usually not economic experts, so expert assistants with economic expertise play a very important role in anti-monopoly civil litigation. In this regard, the Supreme Court's2012 Judicial Interpretation of Civil Anti-Monopoly Disputes clearly stipulates that the parties can apply to the court for one or two persons with expertise in economics to appear in court to explain the speciality of the case. The purpose is to guide the litigants to actively apply for expert assistants with economic expertise to appear in court, so as to provide help for the court to more clearly ascertain the facts of the case and more accurately identify monopolistic acts.

In the practice of hearing monopoly disputes, courts attach more importance to the role of expert assistants. During the trial, the adjudicators will enquire about the expert assistants appearing in court, allow the expert assistants to ask questions of the other party, allow the expert assistants of both parties to confront each other, and allow the expert assistants to ask questions of the professionals who make market investigations or economic analysis reports, so as to facilitate understanding and investigation.

In addition to expert assistants, expert opinions are often involved in anti-monopoly civil litigation, and also play an important role in solving key economic issues in cases. Article 13, paragraph 1 of the Supreme Court's 2012 Judicial Interpretation of Civil Anti-Monopoly Disputes clearly stipulates that: "The parties may apply to the court for entrusting professional institutions or professionals to make market investigations or economic analysis reports on the specificity of the case. With the consent of the court, the two parties may negotiate to determine professional institutions or professionals; if the consultation fails, the court shall appoint them."

Considering the similar nature of expert opinions in anti-monopoly civil litigation, especially market investigations or economic analysis reports, Article 13, paragraph 2 of theSupreme Court's 2012 Judicial Interpretation of Civil Anti-Monopoly Disputes stipulates that, for such market investigation or economic analysis reports, reference can be made to the Civil Procedure Law and relevant judicial interpretations. The provisions of the concluding opinions shall be examined and judged. Therefore, if the expert reports of the parties have objections or if the court considers it necessary for the expert to appear in court, the expert shall testify in court. If an expert refuses to testify in court after being notified by the court, his opinions shall not be taken as the basis for ascertaining the facts; the party who pays the expenses for the expert's report may request the return of the expenses.

In addition to referring to the general practice of examining and judging expert opinions, the court will pay attention to the following questions when examining and judging:

  • whether the report has sufficient factual or data basis;
  • whether reasonable and reliable market investigation or economic analysis has been used, considering the characteristics of the market investigation or economic analysis report itself;
  • whether the relevant facts that may change the results of market research or economic analysis are taken into account; and
  • whether the experts have met the prudence and diligence requirements of professionals, and so on.

The civil procedure of the Chinese courts allows the courts to organise evidence exchange and pre-trial meetings after the expiry of the defence period, in order to prepare for the trial. The evidence exchanged will include expert opinions or reports issued by experts from both sides, and the focus of disputes will be summarised in the pre-trial meeting. The court will inform the parties of whether to apply for witnesses, experts and expert assistants to appear in court; however, it will not require experts from both sides to appear in court directly to point out the similarities and differences between the two sides' opinions, which is usually done by both parties and their lawyers.

Compensation for monopoly damages adopts the principle of compensating and filling the loss only, not punitive damages.

In terms of determination of the loss, two methods are adopted: to be determined by economic quantitative analysis or court discretion. The first method means the difference between the economic situation of the victim during the period of being infringed by the monopolistic act and the economic situation assumed not to be infringed by a monopoly during the period of infringement. In judicial practice, the commonly used methods of calculation are the front-and-back method, the benchmark method, the market share method, the regression analysis method, etc. But because it is usually very difficult to accomplish, the court may have to use its own discretion. The court can decide a reasonable amount of compensation according to the facts that have been identified, considering the nature, degree and duration of the illegal acts and other factors.

With regard to proof, expert assistants, judicial appraisal and market surveys are usually used. But, again, even with this evidence, the court may eventually have to decide at its own discretion.

In June 2020, the Supreme Court published a draft rule for public comments on Several Rules regarding IP Civil Litigation Evidence, which will be applicable to civil antitrust litigation once it becomes effective judicial rule. This draft clarified a list of specific types of evidence that can be used to determine infringement damages: relevant corporate records, such as financial books, accounting documents or annual reports of listed companies; company websites or brochures; industry profits information; evaluation reports; IP licensing agreements; and records of industrial and commercial bureaus, tax agencies and financial agencies, etc.

The scope of compensation for loss also includes reasonable expenses paid for investigating and stopping monopolistic acts.

The transfer defence (passing-on defence) refers to a defendant who is prosecuted by the direct purchaser for engaging in monopolistic acts. If it can be proved that the direct purchaser has transferred the loss caused by the monopoly actor's excessive high price to the follow-up consumer through onward sales, then the defendant does not need to transfer the loss part that has been transferred.

At the law level, the current Anti-monopoly Law does not specify the transfer defence system, but it has been mentioned in the discussion of the initial stage of the anti-monopoly civil litigation system in China. The Supreme Court's Provisions on Several Questions Concerning the Application of Law in the Trial of Monopoly Civil Disputes once referred to the allocation of burden of proof of "Transferred Defence", but it was deleted from the official draft. In view of the fact that the Supreme Court has clearly defined the original litigation qualification of direct buyers and other indirect buyers, including consumers, and that the scope of compensation for civil tort damage in China's Anti-monopoly Law is the actual loss caused by the illegality of monopolistic acts, there is room for the system of "transfer plea".

In judicial practice, there are no cases in which the defendant's monopolistic behaviour advocates transferring the defence. But the authors believe it should be allowed because, as introduced before, no punitive or additional damage award exists in China; the claimant can only recover for actual loss. Now, if the direct purchaser plaintiff has already transferred its loss to an indirect purchaser, it will be unfair for such plaintiff to continue to sue the defendant for compensation.

The anti-monopoly laws and regulations do not specify that the compensation for damages includes interest, but because the compensation for damages is based on the principle of compensating and filling the loss only, as a consequence, all the actual losses caused by the monopolistic actions are all compensated.

In judicial practice, there are no cases in which the plaintiff claims damages and pays interest. However, in general tort cases, the Supreme Court has supported the position that the infringer should be liable for the interest generated during the period from the occurrence of damage to compensation. The interest rate is calculated at the annual interest rate of the People's Bank of China for the same period.

In addition, if the obligation to pay money is not fulfilled within the specified period, the interest on the debt of the delayed period of performance shall be doubled.

Joint and several liability is understood to refer to a system in which the defendant in any monopoly lawsuit assumes full liability for tort when there are multiple tortfeasors of a monopolistic act. Article 50 of the Anti-monopoly Law stipulates that "if the operator carries out the monopoly act and causes losses to others, he shall bear civil liability according to law", but the judicial interpretation has not yet refined the liability system of the joint infringers of multiple monopolistic acts. In practice, there are no relevant cases. However, as a continental law country, it is a very typical joint tort action when the tortfeasors subjectively conspired with each other by, for example, reaching a horizontal monopoly agreement or vertical monopoly agreement. Therefore, the authors believe they are surely able to be subject to joint liability by a court.

The forgiveness system is an anti-monopoly law enforcement system. It means that, before the illegal monopoly behaviour is discovered by the authority, or before the law enforcement authority initiates any investigation or finds sufficient evidence, if a member of a monopoly behaviour can proactively report to the authority, and can actively co-operate with them by, for example, providing sufficient evidence, as a consequence, the authority may mitigate or exempt that member from being punished. The law does not provide whether their duty should be lowered in civil litigation, as introduced above; in principle, they should be imposed with joint liability. How to inspire their willingness to confess for forgiveness, however, is a question for the legislative authority to answer.

This procedure exists in tort litigation, in which joint and several liability is generally applied in China. That is to say, the subject of the joint tort, after assuming the liability for tort compensation to the victim, initiates a recourse lawsuit inward to other subjects of the joint tort. However, because the Anti-monopoly Law itself and the Supreme Court's 2012 Judicial Interpretation of Civil Anti-Monopoly Disputesdo not stipulate the specifics, and because there are no relevant cases in judicial practice, the procedure needs further clarification in laws and regulations.

Injunctive Relief

The "injunction" in question is an expression in American law, which generally corresponds to the behaviour preservation in China’s legal system, including the behaviour preservation before litigation and the behaviour preservation in litigation. Such injunction in China does not include the American “permanent injunction” in the final judgment of the court – in China, a permanent injunction is generally an order to stop the tort act in the final judgment.

Articles 100 and 101 of the Civil Procedure Law respectively stipulate the preservation of acts in litigation and the preservation of acts before litigation, which is the substantive law basis for the preservation (prohibition) of acts in China. In addition, the Supreme Court's Provisions on the Application of Law in Examining Cases of Intellectual Property Disputes promulgated in 2018 (the "Provisions") are specific provisions on the application of law in cases of intellectual property disputes, since anti-monopoly disputes belong to these Provisions. Under the banner of IP rights and competition disputes, the present Provisions can also be applied to the preservation of acts in anti-monopoly cases.

The Test for Granting Injunctive Relief

If a relevant party does not immediately apply for pre-litigation behaviour preservation because of the urgent situation, which will cause irreparable damage to their legitimate rights and interests, then such a party may apply to the court where the property is preserved, or the court where the defendant resides, or another court that has jurisdiction over the case for the preservation measures before filing a lawsuit or applying for arbitration (Article 100 of the Civil Procedure Law).

For behaviour preservation during litigation, the court may, on the basis of the application of the other party, decide to preserve the targeted party’s property, order the targeted party to perform certain acts or prohibit it from doing certain acts in cases where the judgment may be difficult to execute due to the acts of that targeted party or other reasons, or because the targeted party may cause other damages to the party concerned. If the parties have not applied, the court may also decide to adopt preservation measures when necessary.

The Process for Obtaining an Injunction

For pre-litigation behaviour preservation, the interested party may apply to the people's court where the property is preserved, the people's court where the defendant resides or the people's court that has jurisdiction over the case for the adoption of preservation measures before filing a lawsuit or applying for arbitration.

For behaviour preservation during litigation, the parties directly apply to the court for action preservation.

In judicial practice, if the situation is not urgent or if the inquiry may affect the implementation of the measures of preservation, the court usually organises the hearings of both parties and makes a ruling after hearing the opinions of the applicant and the respondent.

Notice to the Other Parties

In principle, the court should ask both the petitioner and the respondent. But the exception is if such a step will leak confidential information that would cause failure of the preservation action or enlarge the loss to petition, then the court would not ask the respondent. 

Timeframe

For urgent situations, the court must review the application within 48 hours of receiving it; once it grants the application, the court shall execute the order immediately. In practice, the court would normally take several days or even longer to review and approve.

Consequences for Applicants if They Succeed in Obtaining an Injunction but Fail at the Trial of the Substantive Case

If the application is incorrect, the applicant shall compensate the defendant for the losses suffered due to the preservation action. Therefore, when applying for pre-litigation behaviour preservation, the applicant should provide a guarantee, or the application will be rejected. When applying for preservation during litigation, the court may order the applicant to provide a guarantee according to the circumstances of the case; if the applicant does not provide such guarantee, the application will be rejected.

The amount of the guarantee provided by the applicant shall be equivalent to the loss that the respondent may suffer as a result of the enforcement of the preservation measures, including reasonable losses such as sales proceeds and storage expenses of the products involved in ordering the cessation of the infringement.

In China, alternative dispute resolution methods include arbitration and mediation by court, and out-of-court private reconciliation between the parties.

Both the Supreme Court and local high court have the judicial opinion that an anti-monopoly litigation should not be arbitrated in China. The reason is that any arbitration agreement between the parties is only binding on themselves; however, anti-monopoly action is not only related to them but usually related to public interests or the interests of other third parties. Therefore, it must be subject to litigation and the jurisdiction of a judicial court.

Court mediation is also a major alternative dispute resolution method. It refers to litigation activities in which the parties voluntarily and equally negotiate on the disputes of civil rights and interests under the chairmanship of the judges of the people's court in order to reach an agreement and resolve disputes. Court mediation has a wide range of applicability and runs through the civil trial procedure, including the first-instance procedure, the second-instance procedure and the retrial procedure. Court mediation should always be based on the voluntary basis of the parties. In practice, anti-monopoly cases such as abuse of market dominance also exist.

The conciliation of the parties means that, after entering the litigation procedure, the parties reach an agreement to settle the dispute through independent consultation. The parties' reconciliation is the embodiment of the parties' exercise of the right of disposition, without the participation of the court. After reaching a settlement agreement, the lawsuit is usually terminated by the withdrawal of the plaintiff.

Laws and regulations do not provide for a litigation fund system. Such system does exist in practice, but is mainly limited to environmental public interest litigation and enterprise creditors' rights cases. In the past two years, with the gradual expansion of the market demand for IP rights protection in China, some litigation funds have included trade mark, patent and unfair competition infringement and other IP cases in the scope of funding.

Because there are no special provisions, the funding of litigation funds is not publicly known. Due to the lack of disclosure of funding, there are no published cases of anti-monopoly litigation funding in practice.

Access to funding depends on a two-way agreement. After the plaintiff submits a case application to the fund, the litigation foundation usually evaluates the case, including the probability of winning the lawsuit and the benefit of the lawsuit. In China, the success rate of plaintiffs in anti-monopoly litigation is very low, which may reduce the investment willingness of ordinary litigation funds. However, it is worth noting that the number of monopoly civil cases shows an overall trend of growth, and the amount of litigation cases also shows an obvious trend of growth, which may help to attract litigation funds to invest in anti-monopoly litigation.

The expenditure of litigation mainly includes the litigation fee, the lawyer fee, the appraisal fee, and so on. Litigation fees are paid to the court, and are charged according to the amount of the subject matter; they are first paid by the plaintiff, and finally shared in principle according to the proportion of the winning amount supported by the court.

The lawyer fees of the winning party are usually not supported in the litigation, but the Supreme Court does have different rules through its 2012 Judicial Interpretation of Civil Anti-Monopoly Disputes. Namely, in anti-monopoly cases, the winning party can ask the other party to pay its expenses for investigating the monopolistic behaviours and stopping the monopolistic behaviours, as well as other reasonable legal expenses. For other litigation costs, such as the judicial appraisal fee, the court will determine the proportion and amount of those costs to be borne by the parties, but generally it follows the principle that the losing party shall bear the costs.

In practice, the only case in which the guarantee of litigation costs is applied in Chinese litigation is when a party from a foreign country carries out litigation in a Chinese court, where the Chinese court will treat the issue of whether the party should provide the guarantee of litigation costs differently between his own country and foreigners in the foreign law. If dealt with according to the principle of reciprocity, the foreign party may be required to provide guarantees for litigation costs.

There are no restrictions on appeals under China’s legal system. The parties can appeal if they believe there are errors in the facts of the first-instance review, in the trial procedure or in the application of the law. The same is true in anti-monopoly litigation. According to the latest arrangement of the Supreme Court starting in 2019, the Intellectual Property Tribunal established within the Supreme Court will be unified to hear anti-monopoly appeals from the whole country, regardless of whether the first-instance court is a high court, an intellectual property court or an intermediate court.

As mentioned earlier, China implements the system of two-instance final judgment, and the judgment made by the court of second instance after appeal is the final judgment. There is still a "retrial" system in China's legal system, but the retrial system belongs to the trial supervision procedure of the effective judgment (whether it is first or second instance), and it is not the third trial procedure set up in the conventional way.

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FenXun Partners established a Joint Operation Office with Baker McKenzie in April 2015. The Baker McKenzie FenXun (FTZ) Joint Operation is the world’s leading Chinese legal platform, delivering integrated international and PRC legal services. The Joint Operation is staffed by both locally admitted and foreign-licensed lawyers from Baker McKenzie and FenXun Partners, advising leading Chinese and multinational companies on both Chinese domestic and cross-border issues across the full spectrum of corporate and commercial law.

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