China: New Rules of Evidence Established for Intellectual Property Cases in China

Historically, China has never had a comprehensive set of rules governing the admissibility of evidence in civil cases. The only relevant statutory provisions were to be found in the Civil Procedures Laws. In anticipation that separate and specific legislation would be introduced, the Civil Procedures Law did not attempt to provide a full set of guidelines on the admissibility of evidence or the burden of proof. Effectively, China has been operating in a partial legal vacuum for many years and while the People’s Courts have generally tended to take a pragmatic and logical approach to the issue, some legal commentators have complained that such an approach has tended to promote inconsistency, and consequently uncertainty. This lack of certainty has discouraged foreign owners of intellectual property rights from taking enforcement action through the People’s Courts.

It is useful at this point to provide some background on the way in which intellectual property rights are enforced in China. Since modern intellectual property laws were introduced to China approximately 20 years ago, China has established a parallel enforcement system under which intellectual property rights can be enforced either by petitioning one of several administrative authorities to take administrative enforcement action (which generally takes the form of a raid) or by filing a lawsuit in the People’s Court.

Lawsuits have numerous advantages, such as the possibility of obtaining significantly higher monetary penalties and even criminal sanctions (for privately instituted criminal cases) as well as providing possibilities for taking action in complex or borderline cases which the administrative authorities routinely refuse to handle. However, administrative actions have until very recently comprised some 95% of all of the intellectual property enforcement actions taken in China, with legal actions through the People’s Court comprising only 5% of the total. Only with the 2001 amendments to China’s Patent Law was a sufficient level of certainty established to encourage foreign patentees to initiate legal actions. This is understandable, because the administrative enforcement route had largely proved unsatisfactory for patents, although it had been spectacularly successful in the field of trade mark infringement, where determinations of infringement are much easier for the administrative officials to make.

The move towards litigating intellectual property cases before the People’s Court undoubtedly created fresh impetus for the introduction of specific legislative provisions concerning evidence. In addition, in a speech in July 2001 Mr. Xiao Yang, the Chief Justice of the Supreme People’s Court emphasized that China must focus on the improvement of the evidence system. Mr. Xiao Yang’s comments were made in anticipation of the production of a draft of a specific Evidence Law which has since been circulated for comment. It is not yet known when this new substantive law will come into force.

On 21 December 2001, in a further move towards the development of a satisfactory framework to establish clear rules of evidence, the Supreme People’s Court promulgated the "Supreme People’s Court - Several Provisions regarding Evidence in Civil Cases" (the Provisions). The Provisions became effective on 1 April 2002 but they will only apply in the case of legal actions commenced after that date. They constitute a significant step forward in the establishment of a modern and above all, predictable, Court system in China.

The Provisions comprise 6 sections which cover :-

1. Evidence produced by the parties;
2. Evidence collected by the People’s Court itself;
3. Time limitations on production and exchange of evidence;
4. Evidence examination;
5. Certification and admission of evidence;
6. General and miscellaneous provisions, including the relative weight of judicial decisions.

The terms "evidence examination" and "certification and admission of evidence" merit explanation. Under Chinese court procedures, evidence examination includes several formal steps, including presentation of the evidence and cross-examination of the party producing the evidence. During this process the plaintiff’s attorneys are obliged to make formal submissions on the format and the acceptability of the evidence and also as to the veracity and substance of the evidence concerning the facts at issue. Certification and admission of evidence on the other hand is a procedure led by the Judge during which the court determines the probative value of the evidence which has been presented and consequently determines whether the fact situation alleged by the plaintiff is substantiated.

Section 1 of the Provisions sets out the rules regarding the burden of proof. Article 4 of Section 1 is of most interest from an intellectual property perspective. Specifically, Article 4 (a) provides that where the subject matter of the lawsuit concerns a patented method of production, the burden of proof shall be on the party (whether an entity or a natural person), who produces the allegedly infringing products to prove that the product is made with the different method. This is a slightly unusual requirement, although it is eminently logical for the burden of proof on this particular issue to fall on the defendant, as the only party with actual knowledge of the means of production of the infringing product. The premise is that if the defendant cannot satisfy the court that he is not only aware of, but is also applying, an alternative production method, it may be assumed that the patented method of production is being employed. Practically speaking, if a defendant cannot describe in some detail a non-infringing method of production, it may reasonably be assumed by the Court that the actual production is taking place using the patented method.

The Provisions do not establish any guidelines for determining the balance between the likely value and the potential danger of admitting the evidence. Therefore, they do not provide legal practitioners with adequate tools to attack questionable evidence unless such evidence falls within one of the specified categories. Article 69 of the Provisions does, however, state that the following evidence by itself cannot be used to establish a particular point of fact:-

1. Testimony provided by a person who is not an adult which is inconsistent with the person’s age and ability;
2. Testimony provided by a person who is related to one of the parties or one of the parties’ attorneys;
3. Questionable audio and visual material;
4. Copies in duplicate which cannot be verified as to origin;
5. Testimony provided by a person who refuses to attend court and fails to provide a sound reason for doing so.

Section 2 of the Provisions relates to the collection of evidence by the People’s Court. The Provisions permit judges to take the initiative in collecting evidence if the parties cannot collect the evidence themselves and (a) the facts which are to be proved relate to private interests of a third party, state interests or the interest of the public at large; or (b) the purpose of the collection of evidence is solely to make decisions on pure procedural issues.

Either party may request the Court to collect evidence if they are not able to obtain the evidence for reasons which are accepted as being objective. If a party wishes to request the Court to collect evidence on its behalf, it must make a specific request in writing at least 7 days before the expiration of the specified period for presenting evidence. An appeal is available if the request for the Court to gather evidence is rejected. Similarly, any request for preservation of evidence is required to be filed at least 7 days before expiration of the deadline for presenting evidence.

Section 3 of the Provisions specifies timeframes for presentation and exchange of evidence. Under the Provisions, the Court may fix deadlines for presenting evidence. A period of at least 30 days must be allowed, subject to any other arrangement which may be fixed by mutual consent of the parties. Any evidence which is filed after the expiration of the time limit will normally not be considered. If genuine reasons exist which prevent either party from meeting the court-imposed deadline, that party may apply for a further extension.

Section 4 of the Provisions provides for the examination of evidence by means of cross-examination. Any evidence which is not subjected to this process will not be accepted by the Court. It is open for either party to call witnesses and any request for personal appearance of a witness must be filed at least 10 days before the expiration of the period allowed for presentation of evidence. The witness’ costs will be born by the losing party. Once a witness is summoned, they may be questioned by either party, as well as the Judge presiding over the case. Provisions is also made for calling expert witnesses to clarify particularly difficult issues. Again, the expert may be questioned by either of the litigating parties or the Judge presiding over the case.

ection 5 of the Provisions sets out the method of verification of the evidence which has been presented. During this process, the Judge will determine whether a particular item of evidence is acceptable and make a determination as to its probative value. The Judge is required to provide a reason for each determination which is made regarding the acceptability of items of evidence.

Since the new Procedures provide a systematic method of determining the admissibility of evidence, they will undoubtedly bring significant improvements to the predictability and consistency of court proceedings regarding intellectual property matters in China. As such, the new Procedures are to be welcomed and owners of intellectual property rights in China may also look forward to the apparently imminent introduction of the substantive Evidence Law.