Overview of SPC’s Provisions on Evidence in IP Civil Litigation

JIAO Hongbin, LIU Yuxin, CAI Chaojing Intellectual Property King & Wood Mallesons 

On November 16, 2020, the Supreme People’s Court (“SPC”) released Several Provisions of Supreme People’s Court on Evidence in Intellectual Property Civil Litigation (“Provisions”). The Provision consists of 33 Articles and has gone into effect on November 18, 2020. On the whole, the Provision is a summary of intellectual property judicial practice, perfecting regulations in relation to evidence submission and obstruction, evidence preservation and forensic appraisal, evidence cross-examination and recognition, damage compensation, etc., so as to appropriately reduce the burden of proof by right holders and effectively resolve problems of “difficulty in adducing evidence” and “high enforcement cost” encountered by intellectual property rights holders in civil litigations. Thus, it is of positive significance to strengthen judicial protection for intellectual property rights. The main contents of the Provision are analyzed as follows.

I. Evidence Submission and Obstruction

1. Clarify the burden of proof of the party who possesses the evidence

On the basis of the principle that “the party who asserts shall present evidence”, Article 2 of the Provision further stipulates that the court may require the parties to provide evidence in consideration of the parties’ claims and facts to be proved, their possession of evidence, and their ability to present evidence. This provision aims to further clarify the burden of proof of the party who has the evidence, urge all parties to actively adduce evidence, and ensure that the people’s court can accurately ascertain the facts of the case.

2. Alleviate the burden of proof of rights holders of patented manufacturing methods for non-new products.

Article 61 of the current Patent Law of the People’s Republic of China only stipulates that the burden of proof in civil litigation for invention patents involving new product manufacturing methods is reversed. The accused infringer shall provide proof that the manufacturing method of its product is different from the patented method. For non-new product manufacturing method patents, however, there is also the difficulty in evidence adduction. In this regard, Article 3 of the Provision regulates that after the rights holder completing its initial burden of proof (products at issue are the same, high possibility of infringement, reasonable efforts are made), the court may require the defendant to provide evidence to prove the manufacturing method of the alleged infringing product is different from the patented method, which reduces the burden of proof of the patentee to a certain extent.

3. Raise the threshold of proof for legitimate source defense

In intellectual property civil litigation, “legitimate source defense” is frequently used. To avoid abuse of such defense, Article 4 of the Provision further clarifies the requirements for proof of legitimate source defense. That is, objectively it is necessary to provide evidence such as lawful purchase channels, reasonable prices and direct suppliers to prove the fact that it has legally obtained the alleged infringing products and/or their duplicates. Subjectively, the alleged infringer needs to reach a level equivalent to its reasonable duty of care (business scale, professional level, market trading practice, etc.), so as to avoid using “legitimate source defense” as an easy excuse to exempt liability for damages, which would weaken the deterrent effect of law.

4. Acknowledge the effectiveness of silent evidence collection and opportunity-provided trap evidence collection to facilitate rights holders’ enforcement

In intellectual property civil litigations, due to the concealment of the infringement and the vigilance of the alleged infringer, the right holders often choose to collect evidence anonymously or using some traps. However, whether the evidence obtained through the aforementioned methods should be admitted was once controversial. In this regard, the first paragraph of Article 7 of the Provision specifically recognizes that the objects, bills, etc. obtained by the rights holder themselves or by entrusting others in the name of ordinary customers can be used as evidence for bringing lawsuit against the alleged infringer for infringement. That is, silent evidence collection is acknowledged. At the same time, the second paragraph of this article distinguishes trap evidence collection in different situations, i.e., evidence formed due to the alleged infringer’s infringement of intellectual property rights based on the actions of others can be used as evidence for the rights holder to bring a lawsuit. However, if the alleged infringer only infringes on the rights holder’s intellectual property rights due to the rights holder’s evidence collection action, then the evidence formed thereof shall not be considered.

5. Simplify the legal formality requirements for evidence sourced outside China

Articles 8-10 of the “Provisions” simplify the formality requirements for the notarization and legalization of extraterritorial evidence under certain circumstances, as follows:

1. Evidence that does not require notarization and legalization (Article 8): evidence confirmed by effective judgments of the people’s court and effective arbitration award, public publications, patent documents, etc. that can be obtained from official or public channels, and evidence that could prove its authenticity by other evidence;
2. Evidence that does not require legalization (Article 9): where the parties recognize the authenticity, or the other party provides witness testimony to confirm the authenticity of the evidence, and the witness clearly indicates that he is willing to accept punishment if he commits perjury;
3. Procedural documents can no longer be notarized and legalized repeatedly (Article 10): if the notarization, legalization or other certification procedures of the power of attorney have been completed in the first-instance proceeding, the people’s court(s) in the subsequent proceeding(s) may no longer require the power of attorney with the above-mentioned requirements.

The above regulations may to a certain degree facilitate foreign parties and reduce their litigation costs. However, it is worth noting that, compared with Article 16 of the Several Provisions of the Supreme People’s Court on Evidence in Civil Litigation published in 2019 (the “Civil Evidence Provisions”), Article 9 of the Provision seems to have increased the burden of legalization for foreign parties. Article 16 of the Civil Evidence Provisions only requires the legalization of evidence related to identity relationships formed outside the territory, while Article 9 of the Provision only excludes evidence legalization requirements under specific circumstances. In the case of conflict between the above two clauses, according to Article 33 of the Provisions, it seems that Article 9 of the Provisions may prevail.

6. Impose sanctions on evidence obstruction so as to safeguard the implementation of relevant provisions

In order to ensure the smooth implementation of relevant provisions, the Provisions regulate evidence obstruction in a number of articles, including Article 9 (witness perjury), Article 13 (Refusal to cooperate or obstruct evidence preservation), Article 14 (Unauthorized disassembly, tampering with evidence materials, or other acts of obstruction), and Article 25 (Not submitting or submitting false evidence, destroying evidence, or performing other acts). If the parties commit the above acts, the people’s court may determine that they shall bear the adverse consequences and impose sanctions in accordance with the Civil Procedure Law to ensure the implementation of relevant provisions to the greatest extent.

7. Expand the scope of application of order-to-submit for documentary evidence and relieve the difficulty of evidence adduction

To solve the problem that evidence related to infringement in intellectual property infringement litigation is often held by the alleged infringer and is difficult for the right holder to obtain directly, Article 112 of the Interpretation of the Supreme People’s Court on the Application of the Civil Procedure Law of the People’s Republic of China and Articles 45-48 of the Civil Evidence Provisions stipulate the rules of order-to-submit for documentary evidence. That is, the parties can apply to the court to order the opposing party who controls the documentary evidence to submit the corresponding documentary evidence. If the opposing party refuses to submit the evidence without proper causes, the people’s court may presume the petition party’s arguments to be established. On the basis of the original rule, Article 24 of the Provisions breaks through the limitation of the types of “documentary evidence” and extends the scope of such “documentary evidence” to all types of evidence, including but not limited to other types of evidence such as physical evidence, electronic data, and audiovisual materials. These new types of evidence are quite common in intellectual property civil litigation and may sometimes even become key evidence. Thus, the Provisions has taken a step further to solve the problem of “difficulty in adducing evidence” by rights holders.

II. Evidence Preservation and Forensic Appraisal

1. Clarify the factors to be considered for evidence preservation

Evidence preservation is of great significance to intellectual property litigation, especially for evidence such as source codes that are easily tampered with or destroyed. The success of evidence preservation may even determine the final outcome of the case. In this regard, Article 11 of the Provisions clarifies the review factors of evidence preservation, including (1) whether the applicant has provided preliminary evidence for its claim; (2) whether the evidence can be collected by the applicant; (3) risk of evidence lost or that it would be difficult to obtain evidence in the future and its impact on the facts to be proved; and (4) the impact of possible preservation measures on the evidence holder. At the same time, Article 12 also stipulates that evidence preservation should be limited to valid fixed evidence and minimize the damage caused to the value of the object being preserved and the impact on the normal production and business operation of the evidence holder, in order to achieve a balance of interests between both parties. In addition, the Provisions do not require the applicant to present sufficient evidence to prove the possibility of infringement.

2. Make it clear that the scope of forensic appraisal is limited to “specialized issues of facts to be verified” so as to improve the objectivity of appraisal.

Forensic appraisal is one of the important ways to ascertain technical facts in intellectual property cases. However, intellectual property appraisal does not belong to the four traditional types of appraisal (forensic medicine, physical evidence, audiovisual materials, and environment). Therefore, its scope has always been controversial due to unclear boundaries. In this regard, Article 19 of the Provisions clarifies that the scope of intellectual property appraisal is limited to “specialized issues of facts to be verified”, and does not involve issues concerning the application of law, such as whether it constitutes equivalent patent infringement, and in civil cases of copyright infringement, whether it is deemed to be substantively similar, etc. Forensic appraisal is a measure to find out facts and should not make judgments on legal issues. The above-mentioned provisions will undoubtedly further enhance the scientificity, neutrality, and objectivity of forensic appraisal, and give full play to the role of forensic appraisal in identifying technical facts in intellectual property cases.

III. Evidence Cross-examination and Recognition

Trade secrets are confidential and civil litigations involving trade secrets are always time-consuming with a large number of participants. The exchange of evidence, cross-examination, and court sessions in the litigation will increase the risk of a second leak of the trade secret during the litigation proceeding. In this regard, Article 26 of the Provisions stipulates that the court shall take protective measures for confidential evidence, such as requiring litigation participants to sign a confidentiality agreement and make a confidentiality commitment, ordering not to disclose, use, or allow others to use it for purposes other than the case. Subject to the application of the parties, the court may also limit the scope of persons who have access to the evidence. The above-mentioned provisions are in line with the existing legal regulations and judicial practices, and are conducive to reducing the risk of second leaks of secret-related evidence, and thus protecting the right holders of trade secrets from winning the case but losing their rights.

Compared with the draft version of the Provisions that was published for comments (“Draft”), a large proportion of the articles were deleted, including the admission of evidence regarding existing technology, existing design, and prior use defense in the retrial proceeding (Article 30 of the Draft); the qualifications of the expert assistant, the procedures for their appearance in court and borne of expenses (Articles 39-42 of the Draft); determination of the legality of electronic data, in particular, the authenticity of evidence should not be denied simply because the means of obtaining it violates administrative regulatory provisions (Articles 44-46 of the Draft) ); the authenticity of notarized evidence should not be denied simply because the applicant for notarization is not an interested party, or the jurisdiction of the notarization is flawed (Article 47 of the Draft). The exclusion of the above provisions puts the relevant issues in a situation where the law is again ambiguous. For example, evidence obtained through VPNs in China due to policy restrictions may still be difficult to be admitted by the court.

1. Compensation for Damages

In judicial practice, the proof of damages caused by infringement of intellectual property rights is quite a challenge, and a unified determination standard has not yet been formed. In response to this, Article 31 of the Provisions lists a number of admissible evidence regarding the proof of damages on the basis of judicial practices, including records of financial account books, accounting vouchers, sales contracts, purchase and delivery documents, annual reports of listed companies, and prospectuses , website or brochures, transaction data stored in the equipment system, commodity circulation data counted by third-party platforms, evaluation reports, intellectual property licensing contracts, and records of market regulation, taxation, and financial departments. In the meanwhile, for evidence regarding license fees, Article 32 of the Provisions also enumerates, including whether the fee is paid and the method of payment, whether the license contract is recorded, the content, nature, scope, and time limit of the license, whether the licensee and the licensor are interested parties, the general standards for industry licensing, etc.

In summary, on the basis of judicial practice, the Provisions provides clear guidance on the issue of evidence in intellectual property civil litigation from multiple aspects. The implementation of the Provisions could reduce the burden and cost of the rights holders for intellectual property rights protection to a certain extent, and actively guide the parties to provide evidence actively, comprehensively, correctly, and honestly in intellectual property civil litigation. However, compared with the Draft, the final version of the Provisions has deleted a total of 20 provisions. It can be seen that controversies still exist in large numbers in the evidence rules of civil litigation of intellectual property rights, which still needs to be further clarified by future legislation and judicial practice.