By King & Wood Mallesons, IP Department
On June 15, 2020, Supreme People’s Court of the People’s Republic of China (the “SPC”) released a draft of the SPC’s Provisions on Evidence in Civil Proceedings Involving IP Disputes for public comments (the “Draft”). The deadline for accepting comments is July 31, 2020. The Chinese version is accessible through the SPC’s website and an English translation is attached to this article for your easy reference.
Provisions related to civil procedure has been changing frequently in the past years. After a major amendment to the PRC Civil Procedure Law in 2012 (the “Civil Procedure Law”), the SPC issued the SPC’s Interpretation on Application of the PRC Civil Procedure Law (the “Interpretation of the Civil Procedure Law”) in 2015, which have some significant changes to the evidence rules for civil proceedings. The Draft is based on the abovementioned evidence rules and formalizes some special practices on evidence issues in IP disputes.
The Draft follows the SPC’s Provisions on Evidence in Civil Proceedings (the “Evidence Rules in Civil Proceedings”) in a four-chapter structure. This note serves as an overview of highlights in these four chapters with our comments.
1.Evidence Production by the Parties
(1) Reducing Burden of Proof for Patents on Process or Method (Article 3)
It has been a primary obstacle for patent owners to prove infringement of patents on process or method. The Draft provides that a court may shift the burden of proof to the accused party when the patent owner can prove that the infringing products belongs to the same product as those manufactured by the patented process, the possibility of using the patented process is relatively high, and the patent owner has used reasonable efforts to prove the infringement.
It is worth mentioning that the Draft allows the court to use its discretion to shift the burden of proof even if all three conditions are satisfied. As there is no mechanism similar to discovery under the current PRC laws, an automatic burden-shifting after all three conditions are met should be the best way to solve the patent owner’s current difficulties in proving infringement of patents on process or method, rather than relying on the court’ discretion.
(2) Self-admission not Applicable for Patent Infringement Comparison (Article 6)
The Evidence Rules in Civil Proceedings has detailed self-admission rules, one important basis of which is that self-admission applies only to facts, excluding legal analysis. With this, the Draft clarifies that ownership and status of rights in intellectual property disputes and comparison of the technical features in patent infringement disputes shall be not applied with the self-admission rules.
This article only applies to technical features in patent infringement disputes. However, disputes over trademarks and trade secrets also involve comparison, and the same rule should be applied. The draft should be further clarified at this issue.
(3) Admission of Evidence without Notarization (Article 8)
Notarized purchase has become a “standard” procedure to secure infringing goods and relevant documentary evidence in IP disputes in the PRC. This substantially increases an IP owner’s difficulty and costs to enforce its IP rights. This article seems to be intended for resolving this problem, i.e. making non-notarized infringing goods and documents as admissible evidence with certain effectiveness for case filing. However, the draft does not include any detailed rules on examining non-notarized evidence, making this article with little practical significance. In other words, IP owners would still need to secure notarized evidence of infringement to establish a solid infringement claim.
(4) Special Rules on Extraterritorial Evidence (Articles 9-11)
The Draft reflects the SPC’s efforts to simplify the formality requirements for evidence formed outside the territory of the People’s Republic of China, including the following:
- Legalization is no longer required for extraterritorial evidence if the party acknowledges its authenticity or the producing party provides testimony indicating that the witness is willing to be punished for perjury (Article 9).
- Notarization or legalization is not required for the following documentary evidence: evidence that has been already affirmed by judgments or decisions issued by PRC courts or effective arbitration documents, publications or patent documents accessible through official or public sources, and documents that can be verified through other means (Article 10).
- Court can infer that the attorney has authorization to attend all the proceedings related to the dispute if the power of attorney does not clarify which proceedings the attorney is authorized to represent, and for the purpose of convenience, the court can also infers that the attorney can receive court’s service in subsequent proceedings. Notarization and legalization can be waived for subsequent proceedings if the power of attorney issued for the first-instance proceeding has been notarized and legalized (Article 11).
The articles above are generally favorable to foreign litigants, and simplify the time-consuming and costly notarization and legalization process. However, we also notice that Article 9 is slightly stricter than the relevant provisions of the Evidence Rules in Civil Proceedings, which provides that except for evidence involving civil status, legalization is not required for all documentary evidence formed outside of the territory of the People’s Republic of China.
2.Investigation, Collection and Preservation of Evidence
(1) Factors to be Considered for Approval of Preservation of Evidence (Article 12)
This article prescribes factors to be considered by the court to decide whether to approve preservation of evidence, in which items (1) and (2) provide objective difficulty for the applicant to collect evidence on its own, item (3) provides importance of the evidence sought for preservation on case trial, and item (4) emphasizes in laws the impact of measures of preservation of evidence on the party possessing the evidence for the first time. In current judicial practice, the court has discretion, to a large extent, about whether to approve preservation of evidence. While this article lists the factors to be considered by the court, it does not specify the conditions in light of which the court should carry out preservation of evidence. To this end, we propose the wording thereof to be modified as “the court shall approve the application for preservation of evidence when the applicant proves by evidence the following factors have been met”. Additionally, this article does not stipulate such a condition that the applicant’s evidence already shows there is a relatively high likelihood of infringement. In this case, this article may be more favorable to the applicant which is the plaintiff in most infringement cases, and might be abused by the applicant.
(2) ourt carrying out Preservation of Evidence and Modes of Preservation (Articles 13 and 14)
These articles provide the court carrying out preservation of evidence and the applicable modes of preservation, and undue influence on normal business operation of the party possessing the evidence shall be avoided as much as possible. These provisions are consistent with the current judicial practice.
(4) Service of Ruling for Preservation of Evidence and Outcome for hindering Preservation (Articles 15 and 16)
These articles prescribe the service of court ruling for preservation of evidence, the outcome for refusing to cooperate or hindering preservation of evidence, and the outcome for dissembling, replacing or altering the evidence subject to preservation without any authorization, which are actually consistent with current judicial practice. In practice, in order to prevent the party possessing the evidence being informed of the litigation or the ruling for preservation of evidence ahead of the preservation conducted by the court and then hiding or altering the pertinent evidence, the court usually serves the court documents and the ruling to the party possessing the evidence on the spot of preservation.
(4) Pertinent Measures of Onsite Preservation of Evidence (Articles 17-19)
These articles prescribe pertinent measures of onsite preservation of evidence, including attendees of the preservation and specific measures of preservation. In terms of the attendees, even if the party possessing the evidence claims the evidence to be preserved involves trade secrets, the court shall allow the attorneys, patent agents or technical experts of the applicant to be present for the preservation, who nevertheless shall execute an NDA. In current practice, the litigants usually cannot reach consensus on the attendees participating in the preservation. In this case, the court is more inclined to take more conservative measures and does not allow any person from the applicant to be present there, which substantially deprives the applicant of opportunities to express opinions or advices on the spot of preservation and further decreases efficiency of preservation. Such a problem shall be addressed to a large extent by Article 19.
(5) Relief to Wrong Preservation and Outcome of Abandonment of Evidence Preserved by the Applicant (Articles 20 and 21)
These articles prescribe relief available to the party possessing the evidence when the preservation is filed incorrectly and how the court shall react when the applicant waives use of the evidence preserved. Such provisions are not different from the current laws and practice.
(6) Scope of Appraisal Items (Articles 22 and 23)
These articles prescribe scope of items subject to appraisal, in which item (4) of Article 23 provides that an appraisal could be done to decide “whether the technology at issue involves any drawback”. We understand such drawbacks probably refer to drawbacks existing in the patent at issue per se, including insufficient disclosure of the Description or unclear scope of claims, which shall belong to grounds of patent invalidation. We tend to opine the appraisal institute is not in a good position to give opinions on such an issue under the current legal system.
(7) Appraisal Institute (Articles 24 and 25)
These articles prescribe an appraisal institute could engage other test institutes to do a test, and the court could directly engage a professional institute and person with a corresponding level to conduct appraisal in such a business sector that a uniform registration and management system has not been in place for appraisal persons and appraisal institutes. The said provisions give solutions to two scenarios that usually occur current judicial practice. In the first scenario, the party dissatisfying with the appraisal opinion usually contends for a procedural drawback that arises out of the test institute engaged by the appraisal instate lack of adequate qualifications. And in the second scenario, the court could not involve any appraisal when a uniform registration and management system has not been in place for appraisal persons and appraisal institutes in a particular sector. These scenarios shall be able to be addressed with explicit legal grounds thanks to introduction of these provisions into judicial interpretations.
(8) Alteration of Scope of Appraisal (Article 26)
This article involves alteration of scope of appraisal in the course of appraisal, e.g., when the scope of appraisal is altered because the patent claims to be appraised are amended in the invalidation proceeding. This article does not make differences from the current judicial practice either.
(9) Probative Power of Ex-parte Appraisal Report (Article 27)
This article prescribes the probative power of an ex-parte appraisal report. In judicial practice, both the plaintiff, for purpose of proving infringement, and the defendant, for purpose of proving non-infringement, could retain, on their own, an appraisal institute and persons to issue an appraisal report on relevant facts. The courts usually have different attitudes towards the ex-parte appraisal report. In particular, some courts organize cross-examination on the appraisal institute and persons, and then decide objectively the probative power of the ex-parte appraisal report; while some other courts tend to deny the appraisal report simply because the counter party expresses different opinions, and arrange another appraisal. The courts will be more inclined to the former approach with introduction of this article into the Judicial Interpretations, and determine the probative power of the appraisal report after fully listening to cross-examinations of both parties upon the report.
(10) Other Special Issues (Article 28)
This article prescribes that a litigant could apply with the court to retain a professional institute to issue an appraisal report, economic analysis report or market survey report against other special issues. According to this provision, the court could also retain an adequate institute to conduct objective evaluations on damages, trademark reputation and likelihood of confusion or misleading. This provision will make the calculation of damages more professional and scientific.
(11) Distribution of Burden of Proof (Article 29)
This article essentially belong to reasonable distribution of burden of proof among the parties. The SPC’s Interpretations Concerning Certain Issues on Application of Law for Trial of Cases on Disputes over Patent Infringement II and the PRC Trademark Law already provides rules about distribution of burden of proof for damages. Since this article is not explicitly limited to proof about damages, the provision about reasonable distribution of burden of proof could also be applicable to finding of infringement, particularly when the accused infringing solution refers to a large-scale equipment or computer software. However, similar to Article 12, the wording “could” as used in the Draft still gives the courts a high degree of discretion, and we recommend listing the specific conditions for shifting the burden of proof, which, in connection with the wording “shall”, could impart to the law a higher level of guidance and foreseeability.
3. Evidence Exchange and Cross-examination
(1) Admission of the practicing the prior art/design defense and prior user rights defense in the retrial proceeding (Article 30)
This article prescribes that where the alleged infringer fails to raise a practicing the prior art/design defense and/or prior user rights defense in the first instance proceeding and the second instance proceeding, in the application for the re-trial proceeding, the alleged infringer presents evidence relevant to such defenses, the people’s court generally shall not admit such evidence. Pursuant to this article, if a party did not raise a practicing the prior art defense in the first instance and the second instance, it cannot raise such defense in the re-trial proceeding, and relevant evidence will not be admitted by the court. However, if a party has raised a practicing the prior art defense in the previous proceedings, and in the retrial proceeding further asserts the defense based on newly discovered evidence, shall the court admit the evidence and re-consider whether the practicing the prior art defense is established or not? Otherwise, shall the alleged infringer file a patent invalidation proceeding based on the newly discovered evidence, and petition the court to suspend the re-trial proceeding?
(2) Exchange and Cross-Examination of Evidence Involving Trade Secrets (Articles 31-35)
These articles prescribe the exchange and cross-examination of evidence involving trade secrets. In order to prevent trade secret misappropriation for a second time and protect the trade secret of the right holder, it is necessary to restrain the parties and litigation participants from duplicating evidence involving trade secret. Such regulation complies with current laws, judicial interpretations, and judicial practice.
Pursuant to Article 68 of the Civil Procedural Law, evidence involving nation secret, trade secret and individual privacy shall be kept confidential, if needs to be presented in court, shall not be presented in public hearing. Article 11 of the Provisions of the SPC on Several Issues Relating to Application of Law for Trial of Civil Actions Arising from Monopoly further stipulates that for evidence involving national secrets, trade secrets, individual privacy or other contents shall be kept confidential according to law, the People’s Court may, ex officio or per the application of parties, adopt protective measures including nonpublic hearing, restriction or prohibition of duplication, showing to attorneys only, and ordering to sign letters of commitment. Article 25 of the SPC’s Notice on Issues Concerning Maximizing the Role of Intellectual Property Right Trials in Boosting the Great Development and Great Prosperity of Socialist Culture and Promoting the Independent and Coordinated Development of Economy explicitly stipulates that the People’s Court may adopt measures restraining scope of knowledge and channels of distribution of the trade secret to prevent it from being misappropriated for a second time. Besides, the Jiangsu High Court clearly points out in Paragraph 13, Article 3 of Guidance on Implementing the Strictest Judicial Protection of Intellectual Property Rights to Provide Judicial Guarantee for High-Quality development issued in August, 2019 that [the People’s Court] shall effectively protect the trade secret from misappropriation during the litigation; protect the trade secret from being misappropriated for a second time by issuing a protective order, ordering the parties to sign a confidentiality agreement or commitment, prohibiting duplicating and taking photos, disclosing the trade secret step by step, and presenting evidence involving trade secret to third party experts to examine, etc. It can be seen that in practice, courts generally adopt measures to restrict or prohibit duplication of evidence involving trade secrets.
When protecting the trade secret of the plaintiff from being misappropriated for a second time, the defendant’s right to cross-examination also shall be sufficiently protected to achieve a balance of interests between the parties. Article 31 of the Draft prescribes that attorneys, patent agents, persons with expertise may inspect but not extract evidence involving trade secret. Inspection but not extraction may increase difficulty in reviewing case files for the defendant’s representatives and may impair the defendant’s right to cross-examination. Thus, it is suggested to add the right to extract evidence involving trade secret for the attorneys, patent agents and persons with expertise. Besides, Article 34 also stipulates that when an agreement not to exchange and cross-examine evidence involving trade secret is reached, the court may not organize the exchange and cross-examination of such evidence. However, in practice, it is unlikely that the parties will reach such an agreement. To take a step back, if the parties reach such an agreement, underlying issues including the admission of such evidence and the relief for a party if the court finds not in favor of it based on such evidence are left unresolved for the Draft is silent on these issues. Answers thereto is needed in the final version.
(3) Witness Testifying Before Court (Articles 36-37)
These articles relate to witness testifying before court, and prescribe that the court shall grant the application for a witness to testify where the fact to be testified and the fact to be proved is relevant and it is indeed necessary for the witness to testify before court. Where the court grants a witness to testify in written testimony, it shall organize the parties to cross-examine the witness testimony. Where the court notifies relevant unit and individuals to testify before court, and the unit or individual refuses to testify, the testimony of such witnesses shall not be used as the basis for fact-finding of the case. These provisions echo with the Evidence Rules for Civil Proceedings. Article 68 of the Evidence Rules for Civil Proceedings prescribes that the people’s court shall request the witness to testify and accept inquiries from the judges and the parties; where agreed by the parties and permitted by court, a witness may testify in ways other than appearing in court; the written testimony of a witness who refuses to testify before court without good cause shall not be used as the basis for fact-finding of the case. The Evidence Rules for Civil Proceedings first explicitly stipulates that a witness shall testify before court, and further specifies detailed conditions for a witness not testifying before court, i.e., the agreement of the parties to allow the witness to testify in other ways and the permission by court. The Draft stipulates that even if a witness is permitted not to testify before court, its testimony has to be cross-examined before admitted by the court for fact-finding.
(4) Provisions on Expert Assistants (Articles 38-42)
These articles relate to the appearance of person with expertise, and prescribes the identification and qualification, the procedure for appearance, the assumption of fees, etc. of person with expertise. A person with expertise is the so-called expert assistant, an expert designated by a party to assist the party to express professional opinions on technical issues before court; the opinion of the expert assistant shall be deemed as the statement of the party. Article 84 of the Evidence Rules for Civil Proceedings stipulates that the judges may inquire the person with expertise, while permitted by court, the parties may inquire the person with expertise, and that the persons with expertise from the two parties may debate on the relevant issues, and shall not participate in trial proceedings other than cross-examining the appraisal opinion and expressing opinions on specialized technical issues. The appearance of an expert assistant is often seen in cases involving complicated technical issues such as patent disputes in the technical sector of tele-communications and bio-pharmaceuticals. Since a person with expertise is designated by one party, its expert opinion will inevitably incline towards one side. However, the system of the person with expertise is of positive value in judicial practice in view of its flexibility and its function in helping the judge in fact-finding relating to technical issues by collaborating with the technical investigators and appraisers.
4. Evidence Examination and Verification
(1) Electronic Evidence (Articles 44-46)
For electronic evidence, in addition to be consistent with the rules specified in the Evidence Rules in Civil Proceedings, it further clarifies that the emails sent to unspecified multi-parties via public email box can be verified by the court. It further defines the court should not deny the evidence only on the ground that the evidence was produced in a manner violating administrative regulations. This has made the evidence collected from YouTube, Google, etc., which is only accessible by means of violating network administrative regulations, can be produced in Mainland China, which used to be produced via local notarization in Hong Kong or Taiwan.
(2) Notarized Evidence (Articles 47 and 48)
For notarized evidence, the Draft clarifies that the court should not deny the notarized evidence only on the ground that the applicant for notarization is not the interested party, the notary office does not have jurisdiction; and it also rules that the notary office should do some clarification in certain cases per the requirement of the court.
(3) Judicial Appraisal (Articles 49 and 50)
For judicial appraisal, the court should make a comprehensive examination on eligibility of the report, considering qualification and capability of the appraisal center, the method adopted and the logic of its reasoning, the material submitted, the identity of appraisal experts etc.
5. Relation with the Civil Procedure Law and Relevant Interpretations (Article 51)
The Draft also specifies its relationship with the Evidence Rules in Civil Proceedings and those Provisions issued before this Draft. Only for those not specified in this Draft, the Evidence Rules in Civil Proceedings will apply, and for those inconsistent rules in other judicial interpretations issued before the Draft, the Draft will prevail.
APPENDIX – Translation of the Draft
I. Evidence Production by Litigants
Litigants in civil disputes over intellectual property shall abide by the principle of good faith and shall actively, comprehensively, correctly and honestly provide evidence within the time limit for evidence production, in accordance with the relevant laws and judicial interpretations.
In accordance with the principles of fairness and good faith, the People’s Court may request litigants in civil disputes over intellectual property to submit evidence related to the dispute, by taking into account the factors such as possession of evidence, capability of producing evidence, and possibility of the claimed facts.
Where a patent infringement dispute involving an invention patent for a manufacturing process for a product that is not a new product, the patent owner shall prove the following facts:
- The products manufactured by the accused party belong to the same products as those manufactured by the patented process;
- The possibility that the alleged party uses the patented process to manufacture the infringing product is relatively high;
- The patent owner has made reasonable efforts to prove that the infringed party has used the patented process.
After the patent owner has produced the evidence mentioned in the preceding paragraph, the People’s Court may request the accused party to prove that the manufacturing process of its product is different from the patented process.
Where the accused party raises the defense of legitimate source under Article 70 of the PRC Patent Law, Article 64.2 of the PRC Trademark Law or Article 53 of the PRC Copyright Law, the accused party shall prove the following facts:
- It has no knowledge that the infringing products or articles infringed upon the asserted intellectual property rights
- The infringing products or articles have legitimate sources.
The court may conclude that the accused party completes its evidence production mentioned in Items 1 and 2 if its evidence of the source of the infringing products or articles is proportional to its reasonable degree of care. Evidence demonstrating the accused party’s scale of business, degree of professionalism, trade customs and other relevant factors can be admitted to determine its reasonable degree of care.
The following evidence may be used to determine the amount of damages arising out of intellectual property infringement: financial books, accounting vouchers, annual reports of listed companies, company websites, brochures, industry profits, evaluation reports, intellectual property licensing contracts and records of administration of industry and commerce, tax bureau and financial regulators.
The provisions on self-admission of Article 92 of the Interpretation of the Civil Procedure Law shall not apply to ownership and status of rights in intellectual property disputes and comparison of the technical features in patent infringement disputes.
For the basic facts that have not been challenged by administrative court appeals within the statutory period or have been affirmed by effective judgments, the party does not need to provide proof in the civil action of intellectual property, unless there is evidence to the contrary sufficient to overturn it.
Infringing products, instruments and other evidence obtained from the accused party by the IP right owner or its agent under a name of a normal purchaser for discovering or proving the accused IP infringement can be used as evidence to sue the accused party for infringement.
Evidence formed under the circumstance where an accused party raises infringement intent based on behaviors of a third party and committed the alleged infringement can be used for the plaintiff to sue the accused party for joint infringement, except that the accused party’s infringement intent was generated from the IP right owner’s evidence collection only.
People’s Court shall reject the objection of a party in an intellectual property dispute to admission of evidence formed outside the territory of the People’s Republic of China solely on the ground that the evidence is not legalized under the following circumstances:
- The party expressly acknowledges authenticity of the evidence;
- The producing party provides testimony that confirms authenticity of the evidence, and the witness expressly indicates that he or she is willing to be punished for perjury;
People’s Court may impose judicial sanctions on the witness who committed perjury as mentioned in the section 2 above according to Article 111 of the Civil Procedure Law.
For the following evidence formed outside the territory of the People’s Republic of China, the people’s court shall not support any objection made by the other party involved in civil actions over intellectual property only on the grounds that the evidence has not been notarized or legalized:
- It has been confirmed by an effective judgment of People’s Court or an effective award of an arbitration tribunal;
- It belongs to public publications and patent search documents that can be obtained from official or public sources;
- There are other ways to verify the authenticity.
Where a power of attorney formed outside the territory of the People’s Republic of China does not clearly define the litigation proceedings in which an attorney in civil action of intellectual property is authorized to participate, a People’s Court may determine that the litigant authorizes the attorney to participate in all trial and enforcement proceedings on its behalf. Albeit the power of attorney does not clearly define the litigation proceedings that the attorney is authorized to participate, and the litigant does not designate any attorney in the subsequent proceedings, which will affect normal operation of the litigation proceedings, the People’s Court may assume that the litigant has authorized the attorney to receive notices of acceptance or response in the subsequent proceeding.
If, in the first-instance proceeding, a power of attorney has been notarized, legalized or otherwise authenticated in accordance with Articles 59 and 264 of the Civil Procedure Law, the People’s Court may no longer request notarization, legalization or other authentication procedures for the power of attorney in the subsequent proceedings.
2. Evidence Investigation, Collection and Preservation
The People’s Court shall examine in connection with the following factors in respect to the application for preservation of evidence filed by a litigant or a person of interest:
- Whether the evidence could be preserved by a notary public;
- The likelihood of evidence being missing or difficult to obtain later;
- The impact of the evidence being missing or difficult to obtain later on the fact to be proved;
- The impact of the preservation measures that are possibly taken on the party possessing the evidence.
The People’s Court shall make a ruling when the reasons for application stand, and the content of the ruling shall be limited to the scope of application by the applicant; and shall notify the applicant and state the reasoning when the reasons for application do not stand. When the notification is made orally, a transcript thereof shall be made.
When a litigant applies for preservation of evidence with a People’s Court in an IP civil litigation, the People’s Court docketing the case could engage the People’s Court where the evidence is located to conduct preservation of evidence.
The People’s Court shall carry the preservation of evidence merely for purpose of efficiently fixing evidence and holding the probative power of the evidence, and shall mitigate damage to the value of the subject matter being preserved and undue impact on normal production and operation of the party possessing the evidence. The measures of making onsite inspection transcripts, drawing, photographing, audiotaping, videotaping and reproduction of design and production drawings, shall be taken when the preservation of evidence involves technical solutions.
The ruling for preservation of evidence could be served to the party possessing the evidence on the spot in the course of preservation. The People’s Court could issue a punishment according to Articles 111 and 114 of the Civil Procedure Law provided that the party possessing the party declines to cooperate or hinders preservation of evidence.
With respect to the evidence already subject to measures of preservation of evidence, if the litigant of an IP civil lawsuit dissembles the evidence or replaces or alters evidence materials without any authorization, resulting in destroy of the original appearance of the evidence being preserved and substantial impact on finding of facts in the case, the People’s Court could presume the claims of the other party in relation to the evidentiary items of the evidence destroyed stand, and issue a punishment according to Article 111 of the Civil Procedure Law.
The People’s Court could ask the litigants or their attorneys to be present when carrying out preservation of evidence. In IP cases involving high professionalism, the People’s Court could ask a person with special expertise to be present either according to the litigant’s application or ex officio, or order a technical investigator to participate in preservation of evidence.
When the evidence is not possessed by the party that is supposed to possess the evidence, the People’s Court could directly preserve the evidence against the party who actually possesses the evidence.
The People’s Court, when conducting preservation of evidence, shall make a transcript and a list of evidence being preserved, and also make a record of preservation time and location, persons carrying out preservation of evidence, attendees, course of preservation and status of subject matter being preserved, for which the transcript and record shall be signed by the persons carrying out preservation of evidence and attendees. The effect of preservation of evidence will not be influenced if the party possessing the evidence declines to execute the transcript, and the People’s Court could make a note on the transcript or make a record of the whole process of preservation by photographing or videotaping.
When the respondent makes an opposition in terms of scope, measures and necessity of preservation of evidence and provides pertinent evidence, the People’s Court could alter, terminate or remove preservation of evidence in case it finds the opposition stands upon examination.
When the respondent alleges the evidence claimed to be preserved involves trade secrets, the People’s Court shall ask other litigants not be present on the spot of preservation. However, the People’s Court could allow attorneys, patent agents or other persons with special expertise of the litigants to be present at the preservation of evidence, and ask them to execute a non-disclosure commitment.
When the applicant of preservation of evidence does not file a lawsuit or an arbitration and brings about losses to the respondent, the respondent could file a lawsuit petitioning the applicant to compensate its losses with the People’s Court taking measures of preservation. When the preservation of evidence is incorrectly applied for and casts losses on the respondent, the respondent could petition with the People’s Court carrying out measures of preservation or docketing the lawsuit involving preservation of evidence, to order the applicant to compensate its losses.
When the applicant abandons uses of the evidence being preserved, the People’s Court could make a decision on the probative power of the evidence being preserved ex officio.
The litigants could apply for appraisal with the People’s Court in respect to special issues for finding of facts in IP civil cases, and the People’s Court could decide whether to approve upon examination.
The People’s Court could indicate to the litigants and designate a time window for application of appraisal when it opines a special issue for finding of facts has to be appraised. And the application will deemed to be abandoned in case the litigant does not file an application or refuses to prepay the appraisal cost.
The special issues for finding of facts as listed below could be subject to appraisal:
- Identicalness or difference of corresponding elements of the accused infringing solution, patented technical solution and prior art solution, in terms of way, function and result;
- Identicalness or difference of the accused infringing works and the works sought to be protected;
- Identicalness or difference of the alleged trade secret of the litigant, and that of the accused infringing technical information and the alleged trade secret;
- If the technology at issue involves any drawbacks;
- Authenticity and completeness of electronic data; and
- Other special issues.
The appraisal person of an IP lawsuit, upon approval of the People’s Court, could engage other test institutes to do test on a portion of the items subject to appraisal, and issues an appraisal opinion based on the test result.
Where a uniform registration and management system has not been in place for appraisal persons and appraisal institutes in a particular appraisal business sector, a professional institute or person with a corresponding technical level could be determined according to Article 32 of the Evidence Rules in Civil Proceedings. The professional institute and person shall have a relatively high level of knowledge and skills in the pertinent technical field, and necessary appraisal equipment and conditions.
The People’s Court shall listen to opinions from each litigant and determines the scope of appraisal in connection with the evidence submitted by the litigants. When a litigant applies to alter the scope of appraisal in the course of appraisal, the People’s Court could approve such an alteration provided the other litigant(s) does not have dissenting opinions or the court opines the necessity of the alteration does exist.
With respect to an opinion against a special issue for finding of facts as issued by a pertinent institute or person retained by a litigant ex parte, the People’s Court shall examine the materials submitted for appraisal based on which the opinion is given, the appraisal method and the qualification of the issuing party, to determine the evidentiary capacity and probative power of the opinion.
A litigant of an IP civil litigation could apply with the People’s Court to engage a professional institute or person to issue an evaluation report, economic analysis report or a market survey report in respect to a special issue of the case. Upon consent from the People’s Court, the litigants could negotiate to decide the professional institute or person, and if no consensus could be reached out of negotiation, the People’s Court could appoint an institute or person ex officio.
When the evidence of an IP civil litigation is controlled by a litigant, the Peoples’ Court could order the said litigant to submit the evidence upon application of the opposing litigant or ex officio. If the litigant possessing the evidence refuses to submit the evidence or submits fake evidence without any due reason, the People’s Court could presume the claim of the opposing litigant in relation to the proving purpose of the said evidence, and issues a punishment against the litigant providing fake evidence according to Article 111 of the Civil Procedure Law.
3. Exchange of Evidence and Cross-Examination
Where the alleged infringer fails to raise a practicing the prior art/design defense and/or prior user rights defense in the first instance proceeding and the second instance proceeding, in the application for the re-trial proceeding, the alleged infringer presents evidence relevant to such defenses, the People’s Court generally shall not admit such evidence.
Where the evidence of exchange and cross-examination involves trade secrets, the parties shall not inspect, extract, copy, or take photos of, such evidence, but the attorneys, patent agents, and persons with expertise who are approved by the people’s court may inspect the evidence.
The People’s Court, in accordance with the application of the parties or ex officio, may issue a protective order to preserve confidentiality, order the person who has access to the evidence to sign a confidentiality commitment, or organize the parties of this action to sign a confidentiality agreement.
Where a party applies to the People’s Court for a protective order, the application shall contain the name of the evidence involving trade secrets, the parties of this action shall be bound by the protective order, the confidentiality period, and relevant causes.
Where the causes are established, the People’s Court shall issue the order. The parties of this action bound by the protective order shall not disclose and/or use the trade secrets accessed in this action for any purpose not relevant to this action. Anyone who violates the protective order may be punished by the People’s Court in accordance with Article 111 of the Civil Procedure Law; where the circumstance is material and constitutes a crime, criminal liability shall be investigated according to law.
The parties of this action who have signed confidentiality commitments shall not disclose and/or use the trade secrets accessed in this action for any purpose not relevant to this action. Anyone who breaches the confidentiality commitment may be punished by the people’s court in accordance with Article 111 of the Civil Procedure Law.
Where each party of this action agrees not to exchange and cross-examine the evidence involving trade secrets, the People’s Court may not organize the exchange and cross-examination of such evidence. The parties shall not revoke such agreement.
Where a party objects to whether the evidence involves trade secrets, it shall present rebuttal evidence. The People’s Court may organize the parties to exchange and cross-examine the rebuttal evidence in advance. Where the objection is established, the evidence provided by the party subject to objection shall be exchanged and cross-examined as evidence not involving trade secrets.
Where the matter to be testified by a witness before the court is related to the facts to be proved, and it is indeed necessary for the witness to testify before the court, the People’s Court shall grant the application for the witness to testify before the court.
Where, permitted by the court, a witness testifies by ways of written testimony and so on, the People’s Court shall organize the parties to cross-examine the witness testimony.
Where a relevant unit or individual refuses to testify before the court upon notification of the People’s Court, the testimony of such witness shall not be used as the basis for determination of the facts of this action. The People’s Court may punish the relevant unit in accordance with Article 114 of the Civil Procedure Law.
A party may apply for a person with expertise to appear in court to offer an opinion regarding a specialized issue. The People’s Court may notify a person with expertise to appear in court ex officio according to the circumstances of the trial of this case.
The People’s Court shall review the identity, academic qualifications, technical titles, professional experiences, professional ethics, etc., of a person with expertise. Under any of the following circumstances, an individual shall not appear in court as a person with expertise:
- Where the issue to be explained by the person with expertise solely involves the interpretation and application of law;
- Where the person with expertise is an appraiser of the judicial appraisal agency of this case, or other experts from the same judicial appraisal agency; and,
- Other circumstances where the appearance of a person with expertise is not appropriate.
Where a person with expertise appears in court, he shall participate in the trial proceeding in accordance with Article 84 of the Evidence Rules in Civil Proceedings.
For the opinion presented by a person with expertise before the court on a specialized issue, where the party applying for the appearance of the person with expertise does not raise an objection in the trial, the opinion shall be deemed as the statement of such party; where the party raises an objection, the reasons for the objection shall be specified in detail.
The necessary expenses such as fees for transportation, accommodation, meals, etc. incurred by the court appearance of a person with expertise shall be borne by the losing party. Where a party applies for a person with expertise to appear in court, the party shall advance the payment; where the people’s court notifies a person with expertise to appear in court ex officio, the people’s court shall advance the payment.
Where the People’s Court assigns a technical investigator to participate in the pre-trial meeting and the trial proceeding, the technical investigator may inquire the parties, litigation representatives, persons with expertise, witnesses, appraisers, viewers, etc. in terms of specialized technical issues.
The technical investigator belongs to the trial supporting personnel, and his inquiry in court on specialized technical issues is deemed as the inquiry of the trial judges.
4. Evidence Examination and Verification
The People’s Court shall comprehensively consider factors such as the formation process, the collection method, etc., of electronic data, to determine the legality of electronic data.
When the other party in the intellectual property civil action only claims that the evidence does not have probative value on the ground that the collection method of the evidence violates the administrative regulatory provision, the People’s Court shall not uphold such claim.
People’s Court shall determine the authenticity of electronic data in accordance with Articles 93 and 94 of the Evidence Rules in Civil Proceedings.
People’s Court may confirm the authenticity of official electronic data, electronic data notarized by a notary institution, electronic data provided or confirmed by a neutral third-party evidence-preserving platform, and e-mails sent to an unspecified number of people through public mailboxes, unless there is any contrary evidence sufficient to rebut.
For the notarization and preservation of electronic data under information network environment, if the notary has not checked the cleanliness and network access status of the evidence collection equipment, and there is no other evidence to prove the authenticity of the electronic data, such notarized evidence cannot be used as the basis for determining facts.
When the party claims the notarized content is inauthentic on the grounds that the notarization applicant not having an interest in notarized matters, the notary institution conducting cross-regional notarization, and other procedural flaws, but does not provide any contrary evidence sufficient to rebut, the People’s Court shall confirm the authenticity of the notarized evidence.
When the party’ objection to the notarized evidence is established, the People’s Court may require the notary institution to issue a statement or correct the notary deed. If the notary institution refuses to issue or make corrections without justified reasons, such notarized evidence cannot be used as the basis for determining facts.
The People’s Court shall make a comprehensive judgment on the probative force of the appraisal opinions in combination with the cross-examination opinions of the parties and the following factors:
- Whether the appraiser has qualifications in accordance with the law;
- Whether the appraiser has the necessary knowledge, experience and skills to solve the relevant specialized problems;
- Whether the appraisal methods and operating procedures are standardized and whether the technical means are reliable;
- Whether the materials submitted for appraisal have been cross-examined by the parties and meet the qualification requirements;
- Whether the argument in the appraisal report is sufficient and rigorous;
- Whether the appraiser has statutory reasons for abstention;
- Whether the appraiser has committed favoritism or other acts that may affect a fair appraisal in the process of appraisal.
If the amount of compensation is determined by a reasonable multiple of licensing fee of the intellectual property, the People’s Court shall comprehensively consider the following factors to exam and verify the licensing fee evidence:
- Whether the licensee and the licensor have an interest relationship;
- Whether the license fee has been paid and the actual payment method, and whether the licensing contract is actually performed and filed;
- The licensing rights, scope, methods, period and regions.
If there is no provision on evidence for intellectual property civil actions in these provisions, the relevant provisions of the Civil Procedure Law and its judicial interpretation, and the Evidence Rules in Civil Proceedings shall apply.
If the judicial interpretation previously issued by the SPC is inconsistent with these provisions, these provisions shall prevail.
This Provisions shall come into force as of …
 This note is co-authored by Jing Xu (Part I), Ben Ni (Part II), Xinyue Song (Part III) and Xiaoxia Zhang (Parts IV and V).