China Regulates Evidence in Civil IP Lawsuits

Ms. Wen Peng and Mr. Tingxi Huo, Chofn IP

On 16 November 2020, the China Supreme People’s Court (SPC) announced the Rules Concerning Evidence in Civil IP Lawsuits, a judicial interpretation which took effect as of 18 November 2020.

China has already made laws to regulate civil evidence in general through its Civil Procedure Law and the judicial interpretation as well as the IP laws, namely the Trademark Law, Copyright Law and Patent Law. However, as the relevant provisions are not accurately made for IP-related evidence, effective IP enforcement remains difficult in civil cases.

The SPC, after years of research and solicitation of opinions, tailored the Rules to IP-related evidence. There are altogether 33 rules covering such issues as the principle of honesty and creditability, non-infringement affirmation, fair share of burden of proof, legitimate sources of products, patented methods, preservation of evidence, judicial appraisal, trade secret or confidential information and damage-related evidence.

The SPC stresses the principle of honesty and creditability, and requires all parties to submit evidence actively, fully, correctly and honestly. If a party refuses to submit the evidence in its possession or destroys the evidence, the court may directly accept the opposing party’s claim, even if unsupported by evidence. This can better solve the hard-to-prove problem and force the evidence-holding party to cooperate.

As legalization of evidence from outside China is often troublesome and resource-consuming, the SPC allows the acceptance of evidence confirmed by other effective judgments and arbitral decisions or proved by other publications. If an opposing party recognizes the authenticity and only challenges the procedure of legalization, such evidence shall be accepted.

In general, we expect that the Rules will facilitate IP enforcement and prevent the trend of massive IP infringement in mainland China.

For more details, please refer to the full translation annexed hereto.

The Rules Concerning Evidence in Civil Intellectual Property Lawsuits

Translated by Mr. Tingxi Huo and Ms. Wen Peng, Chofn IP

Passed in the 1815th Meeting of the Supreme People’s Court (SPC) Judicial Council on November 9, 2020 and effective as of November 18, 2020.

In order to protect and facilitate the relevant parties’ right to lawfully exercise their litigation rights and ensure that the People’s Courts try the civil intellectual property cases in a fair and timely manner, the Rules are made in accordance with such relevant legal provisions as the Civil Procedure Law of the Peoples Republic of China and in combination with the trial reality of intellectual property cases.

Rule 1 The parties in civil intellectual property litigation shall follow the principle of honesty and creditability and actively, fully, correctly and honestly submit evidence in compliance with the law and judicial interpretation.

Rule 2 The parties that make claims shall provide evidence to prove. Under the trial circumstances, the People’s Court may apply Article 65.2 of the Civil Procedure Law and require the parties to provide relevant evidence in accordance with the parties’ claims and the facts to be proved, the parties’ possession of evidence and proving ability.

Rule 3 Where a product made through a patented method is not a new product, the plaintiff in a patent infringement dispute shall provide evidence to prove the facts below:

The product made by the defendant is a product identical with the product made through the patented method.
The product made by the defendant is very likely made through the patented method.
The plaintiff has made reasonable efforts to prove that the defendant has used the patent method.

After the plaintiff provides the evidence in the preceding paragraph, the People’s Court may require the defendant to provide evidence to prove that the method for making the product is different from the patent method.

Rule 4 Where a defendant defends itself by claiming the lawful sources in compliance with the law, the defendant shall provide evidence to prove the facts that it lawfully obtained the sued infringing products or reproduction, including the lawful channels of purchase, the reasonable price and the direct suppliers.

Where the evidence that the defendant provides relating to the source of the infringing products and reproduction matches its reasonable duty of care, the defendant may be regarded as having finished providing the evidence in the preceding paragraph and presumed as having not known that the product or reproduction infringed the intellectual property right. The defendant’s business scale, professional degree, and trading habits in the market may be evidence to determine that it has paid its duty of care.

Rule 5 The defendant that sues for affirmation of non-infringement on intellectual property shall provide evidence to prove the facts below:

The defendant’s warning to the plaintiff about infringement or complaint against the plaintiff for infringement;
The plaintiff’s interpellation of the defendant to use its litigation right, the interpellation date and delivery date; and
The defendant’s failure to lodge a lawsuit in reasonable time.

Rule 6 Where the basic facts are recognized in an administrative action which is not sued within the statutory time limit or the basic facts in part are recognized in an administrative action and are determined in an effective judgement, the parties need not to prove again in a civil intellectual property lawsuit unless the overturning contrary evidence is sufficient.

Rule 7 The material objects or bills that the right owner acquires in person or entrusts another person with the purchase of the infringing matter from the sued infringer in the name of an ordinary buyer in order to discover or prove intellectual property infringement may be deemed evidence for suing the infringer for infringement.

The evidence formed by the sued infringer’s infringement of intellectual property due to others’ act may be evidence for the right owner to lodge lawsuit for infringement, unless the sued infringer has conducted the infringement of intellectual property only because of the right owner’s collection of evidence.

Rule 8 Where a party raises an opposition to the evidence below that is formed outside the territory of the People’s Republic of China only because the evidence fails to meet such procedural requirements as notarization or legalization, the People’s Court shall not sustain the opposition.

Confirmed in a People’s Court’s effective judgement;
Confirmed in an arbitration agency’s effective decision;
Publications or patent documentation available from governmental organs or open channels; and
Authenticity able to be proved by other evidence.

Rule 9 Where the evidence that is formed outside the territory of the People’s Republic of China has one of the scenarios below and a party raises an opposition to the evidence only because the evidence fails to be legalized, the People’s Court shall not sustain the opposition.

The opposing party has explicitly recognized the authenticity of the evidence; or
The opposite party has provided the witness testimony to confirm the authenticity of the evidence and the witness has explicitly indicated his willingness to accept penalty for perjury.

Where the witness commits perjury as mentioned in the second scenario of the preceding paragraph and constitutes a scenario prescribed in Article 111 of the Civil Procedure Law, the People’s Court shall handle the matter in compliance with the law.

Rule 10 Where the notarized, legalized power of attorney or other authentication procedures have been conducted in the first instance according to Articles 59 and 264 of the Civil Procedure Law, the People’s Court may refrain from requiring the above-mentioned authentication procedures of the power of attorney in the following litigation instance.

Rule 11 Where a party concerned or an interested party applies for preservation of evidence, the People’s Court shall put the factors below into examination:

Whether the applicant has provided preliminary evidence for his claim;
Whether the evidence can be collected by the applicant himself;
The possibility that the evidence will lose or be difficult to be obtained in the future and the influence on the facts to be proved; and
The influence of the possible preservation of evidence on the evidence holder.

Rule 12 The People’s Court shall limit the preservation of evidence to effectively fixing the evidence and try its best to reduce the harm on the value of the preserved subject matter or the impact on the evidence’s holder’s normal production or business.

Where preservation of evidence involves technical solutions, it is possible to use such preservation measures as on-the-spot inspection transcript, drawings, photographs, sound recordings, video recordings, and copying design and production drawings.

Rule 13 Where a party refuses cooperation or without justifiable reasons or hinders the preservation of evidence, which makes the preservation of evidence impossible, the People’s Court may decide to let the party bear the unfavorable result. Where the situation constitutes a scenario under Article 111 of the Civil Procedure Law, the People’s Court shall handle the matter in compliance with the law.

Rule 14 Where a party arbitrarily disassembles the evidential matter, tampers with the evidential materials, or takes other act to damage evidence to make the evidence unusable after the People’s Court has taken measures to preserve evidence, the People’s Court may decide to let the party bear the unfavorable result. Where the situation constitutes a scenario under Article 111 of the Civil Procedure Law, the People’s Court shall handle the matter in compliance with the law.

Rule 15 Where evidence is to be preserved, the People’s Court may require a party or its litigation agent to be present. Where necessary, professionals may be notified to be present under the party’s request or technical investigating officers may be assigned for the preservation of evidence.

Where the evidence is held by an outsider of the case, the People’s Court may preserve the evidence he holds.

Rule 16 When preserving evidence, the People’s Court shall take notes, list the preserved evidence, record the time, location, preservers, persons present, the process of preservation, and the status of the preserved subject matter, ask the preservers and the persons present to sign or seal. Where the relevant persons refuse to sign or seal, the effect of preservation shall not be influenced and the People’s Court may take explicit notes and take photographs and videos.

Rule 17 Where the respondent opposes the scope, measures, or necessity of preservation and provides the relevant evidence and the People’s Court examines to find the opposition tenable, the preservation of evidence may be changed, terminated, or released.

Rule 18 Where the applicant renounces the use of the preserved evidence, but the preserved evidence involves discovery of the basic facts of the case or other parties concerned claim use, the People’s Court may examine and determine the evidence.

Rule 19 The People’s Court may make appraisal by entrustment of specialized issues on the facts below to be proved:

The dissimilarity and similarity of such corresponding technical features in terms of method, function, and effects between the sued infringing technical solutions and the patented technical solutions or the prior art;
The dissimilarity and similarity between the sued infringing works and the claimant’s works;
The dissimilarity and similarity between a party’s claimed trade secret and the information known to the public in the field, or the dissimilarity and similarity between the sued infringing information and the trade secret;
The dissimilarity and similarity between the sued infringing matter and the authorized variety in terms of features and characteristics, whether the dissimilarity is caused by non-genetic variation;
The dissimilarity and similarity between the sued layout designs of integrated circuit and the layout designs of integrated circuit to be protected;
Whether the technology relating to the contract has any defects;
The authenticity and integrity of the electronic data; or
Other specialized issues to be appraised by entrustment.

Rule 20 Under the People’s Court’s permission or both parties’ agreement, the appraiser may entrust part of the test relating to the appraisal with another testing agency and bear the legal liability for the appraisal opinions produced according to the test results.

Rule 21 Where a system of unified registration and administration of appraisers has not been established in the industry of appraisal, the People’s Court may decide the professional agency or professional persons with the corresponding technical capability to do the appraisal, according to the selecting and deciding procedures prescribed under Rule 32 of the Supreme People’s Court’s Rules Concerning Evidence in Civil Litigation.

Rule 22 The People’s Court shall hear all parties’ opinions and consider the submitted evidence to decide the scope of appraisal. During appraisal, where a party requests for change of the scope of appraisal and the opposite party does not disagree, the People’s Court may grant permission.

Rule 23 The People’s Court shall combine the factors below to examine the appraisal opinions:

Whether the appraiser has the corresponding qualification;
Whether the appraiser has the knowledge, experience, or technique necessary for solving the specialized problems;
Whether the appraising methods and procedures are normative and whether the technical means is reliable;
Whether the material for test has been cross-examined by the parties and meets the appraising conditions;
Whether the basis of appraising opinions is sufficient;
Whether there is a statutory reason for the appraiser’s recusal;
Whether the appraiser has played favoritism and committed irregularities or has other scenarios influential on fair appraisal during appraisal.

Rule 24 Where a party responsible for proof requests in writing the People’s Court to order the opposite party in control of evidence to submit the evidence and the reason is tenable, the People’s Court shall decide and order the party to submit.

Rule 25 Where the People’s Court requires a party to submit the relevant evidence in compliance with the law and the party refuses without justifiable reason, submits false evidence, destroys the evidence or takes other actions to make the evidence unusable, the People’s Court may presume that the opposite party’s claim relating to the matter to be proved by the evidence tenable.

Where an action taken by the party listed in the preceding paragraph constitutes a scenario under Article 111 of the Civil Procedure Law, the People’s Court shall handle the matter in compliance with the law.

Rule 26 Where the evidence involves trade secret or other business information that needs to be kept confidential, the People’s Court shall require the relevant participants to sign a non-disclosure agreement or promise to keep confidential, or order them, in the form of such a legal document as decision, not to disclose, use or allow others’ use of the confidential information touched during the lawsuit for any purposes beyond the lawsuit before they get in touch with the evidence.

Where a party requests for limiting the scope of persons getting in touch with the evidence and the People’s Court examines to find the limitation indeed necessary, permission shall be granted.

Rule 27 Witnesses shall attend the court hearing and answer the questions of judicial personnel and the parties concerned.

Where both parties agree on a witness’ absence from the hearing and the People’s Court permits and the witness is absent, the People’s Court shall organize the parties to cross-examine the witness’ testimony.

Rule 28 A party may request for a person with specialized knowledge to attend the court hearing to provide opinions on a specialized issue. With the Court’s permission, the parties may ask the person with specialized knowledge questions.

Rule 29 Where the People’s Court appoints a technical investigator to attend a pre-trial meeting or the court hearing, the technical investigator may ask the parties, the litigation agents, the person with specialized knowledge, witness, appraiser, and inspector technical questions relating to the case.

Rule 30 Where a party opposes a notarized document and provides sufficient overturning contrary evidence, the People’s Court shall not accept the notarized document.

Where a party’s opposition to a notarized document is tenable, the People’s Court may require the notary public to produce explanation or make additions or corrections and examine and determine the notarized document together with other relevant evidence.

Rule 31 A party’s provided records such as financial books, accounting documents, sales contracts, purchase or sales bills, annual reports of a public company, prospectus, websites or brochures, the trading data stored in the equipment system, commodity circulation statistics of a third entity, appraisal reports, intellectual property license contracts, as well as the record of the market regulating organs, tax organs, or financial organs may function as evidence to prove the party’s amount of damage caused by intellectual property infringement.

Rule 32 Where a party claims damage according to the reasonable multiples of the intellectual property for royalties, the People’s Court may consider the factors below to examine and determine the evidence for royalties:

Whether the royalties have been actually paid and the way of payment, whether the license contract has been fulfilled or recorded;
The content of right, method, scope, and term of the license;
Whether the licensee and licensor are associated by interest; and
The regular royalties in the industry.

Rule 33 These rules shall take effect as of November 18, 2020. Where discrepancy arises between the relevant judicial interpretation that this Court announced and these rules, these rules prevail.

Note: This is not the Supreme People’s Court’s official translation. If discrepancies arise, the original official Chinese version prevails.