Most foreign companies may have panicked, if they find any clue of infringement of their IP right from China. It might be a product photo or some product-information on internet sales platform. For the first thought the right holders would like to take action against infringement immediately, like sending a warning letter to the opposing party in order to declare their lawful rights and in hopes of stopping the infringement. But such action may have adverse effects for protecting your right, especially in China. According to Art 18 of the Interpretations of the Supreme People´s Court on several Issues concerning the Application of Law in the Trial of Patent Infringement Dispute Cases since 01.01.2010:
If the right holder gives a warning to the opposing party regarding the infringement upon patent rights, but the opposing party gives a written response demanding the right holder to exercise the right of action, then the right holder shall either withdraw the warning or file a lawsuit within one month after receiving such written response or within two months after the written response has been given. Otherwise, the opposing party is entitled to institute a proceeding to a Chinese court requesting to confirm that its act does not infringe upon the patent right.
This means through the warning letter the right holder has set a time limit for himself to file the lawsuit, or even to be sued regarding the response of non-infringement of the opposing party. Furthermore, this rule is not only applied to patent lawsuit, but also to other IP lawsuits in practice in China.
Herewith we don´t want to deny the legal effect of a warning letter, such as recounting the limitation period of the IP right from the date on the right holder knows or should know the infringement; proving the bad faith of the opposing party etc. But just make sure you have collected, saved all proofs and be ready for any legal consequences as filing a lawsuit or defending you in a lawsuit, before you send a warning letter.