China: Allocation Of The Burden Of Proof Manfred A. A. Lupke v. Weifang Zhongyun Machine Co., Ltd. Et. Al. (Article No. 11 From "China Patent Case Review 2014" By Beijing East IP Ltd.)

Corrugated Pipe Manufacturing Equipment

Manfred A. A. Lupke v. Weifang Zhongyun Machine Co.,Ltd. et. al. - Allocation of the Burden of Proof (Civil Ruling (2012) Min Shen Zi No. 39 by the Supreme People's Court on December 18, 2012)

Article 64 of the Civil Procedure Law of the People's Republic of China provides that it is the duty of a party to an action to provide evidence in support of his allegations, namely the doctrine of "burden of proof on claimant." According to Article 2.2 of Some Provisions of the Supreme People's Court on Evidence in Civil Procedures, in the event that there is no evidence or the evidence cannot sufficiently support allegations of a party concerned, the party having the burden of proof shall bear the ensuing adverse consequences. The doctrine of "burden of proof on claimant" is the general rule on the allocation of burden of proof. However, according to Article 75 of Some Provisions of the Supreme People's Court on Evidence in Civil Procedures, where there is evidence proving that a party concerned refuses to provide without any justifiable reasons the evidence that he actually has, and the opposite party alleges that contents of such evidence are disadvantageous to the evidence holder, such allegation can be construed as justifiable. The controversial focus of the case is on the allocation of burden of proof.

The patentee Manfred A. A. Lupke (hereinafter referred to as "Lupke") owning an invention patent No. ZL95192937.2 brought a lawsuit before the Tianjin Intermediate People's Court against Weifang Zhongyun Machine Co.,Ltd. (hereinafter referred to as "Zhongyun Machine") as the producer of a corrugated pipe manufacturing equipment, and Tianjin Shengxiang Plastic Pipe Industry Co., Ltd. (hereinafter referred to as "Shengxiang Industry") as the user of the equipments, alleging that the corrugated pipe manufacturing equipment produced by Zhongyun Machine has infringed the patent. The alleged infringer Zhongyun Machine was not satisfied with the judgment of the second instance rendered by the Tianjin High Court, requested the Supreme People's Court for retrial.

In this case, one of the arguments that Zhongyun Machine presented for retrial can be outlined as follows: the technical drawings of the alleged equipment had been provided to Shengxiang Industry, and the equipment had not been produced for many years. Zhongyun Machine did not archive the drawings, so it became impossible to offer the drawings. Therefore, Zhongyun Machine should not bear the ensuing adverse consequences of infringement just because of Shengxiang Industry's refusal to cooperate in the appraisal. As a result, the judgment of the second instance erred in the allocation of burden of proof.

Regarding the controversial focus on the allocation of burden of proof in the judgment of second instance, the Supreme People's Court's opinions are outlined below:

The alleged equipment at issue is of high value and large volume, and actually under the control of Shengxiang Industry, so it is indeed difficult for Lupke to collect evidence by himself. To prove the producer and user's infringement of patent right, Lupke has presented the relevant notarial deed, the photos taken by the court for evidence preservation, the technical experts' evaluation opinions on patent infringement and so on as evidence to the court of the first instance, and has exhausted all possible legal methods to collect evidence, hence fulfilled the duty to provide evidence to a reasonable extent. In order to further find out more facts of the case, Lupke applied for technical appraisal to the court of the first instance. After the court of the first instance entrusted technical experts, the user of the equipment responded that the alleged equipment had been out of operation, no longer in use, and disagreed to disassemble the equipment for the reason that the equipment is too large to disassemble and the down time of the equipment is too long. After Lupke agreed to provide guarantee for the losses caused by cease of production, the Shengxiang Industry still refused to accept expert evaluation without justifiable reasons. Also, in view of the high value of the alleged equipment, it is obviously contrary to common sense that the producer cannot provide the drawings on the grounds that the equipment was produced years ago. In the event that the patentee had fully fulfilled the burden of proof to the extent of its capacity and the existing evidence sufficed to prove the prima facie case of the infringement, without justifiable reasons, the producer and the user, on the one hand, refused to either provide the drawings of the alleged equipment or to cooperate in the appraisal, causing the appraisal impossible to normally proceed, and on the other hand, failed to provide any other evidence to prove that the alleged equipment differs from the patent at issue and hence does not fall into the extent of protection of the patent. Therefore, the infringers shall bear the ensuing adverse consequences of infringement. It is justifiable for the court of the second instance to presume the establishment of the patentee's allegation according to the provisions of Article 75 of Some Provisions of the Supreme People's Court on Evidence in Civil Procedures. Zhongyun Machine's argument for retrial that the court of the second instance erred in allocate the burden of proof and therefore it should not bear the ensuing adverse consequences is not tenable.

Remarks

This case relates to the issue of reasonable allocation of the burden of proof in a patent infringement lawsuit. Among the general rules on evidence, the doctrine of "burden of proof on claimant" is the general rule on allocation of the burden of proof. According to the provisions of Article 75 of Some Provisions of the Supreme People's Court on Evidence in Civil Procedures provides, where there is evidence proving that a party concerned refuses to provide without any justifiable reasons the evidence that he actually has, and the other party alleges that contents of such evidence are disadvantageous to the evidence holder, such allegation can be construed as justifiable, namely, "inversion of burden of proof.".

In this case, the Supreme People's Court has considered the application of the above-indicated provisions from the following two aspects:

First, whether the patentee has fulfilled the burden of proof to a reasonable extent. Under the preconditions that the alleged equipment is of high value and large volume, and actually under the control of the user, the Supreme People's Court holds that the patentee has fulfilled the burden of proof to a reasonable extent by presenting the relevant notarial deed, the photos taken by the court for evidence preservation, the technical experts' evaluation opinions on patent infringement and so on as evidence to the court of the first instance, which cover basically all the possible legal methods to collect evidence.

Second, whether the alleged infringer refuses to provide without any justifiable reasons the evidence that it actually holds has been considered. The deposition for evidence preservation for the alleged equipment in the first instance court shows that Shengxiang Industry admitted that the alleged equipment was purchased from Zhongyun Machine. In the court hearing of the first instance, Zhongyun Machine also acknowledged that the alleged equipment was made by the company. The aforesaid facts show that the alleged infringers Zhongyun Company and Shengxiang Industry held the key evidence of the case. However, the reason for refusal to disassemble the equipment given by Shengxiang Industry is not convincing. Even after the patentee agreed to provide guarantee for the losses caused by cease of production to Shengxiang Industry, Shengxiang Industry still refused expert evaluation. Zhongyun Machine's argument that the drawings could not be offered as the equipment had been produced years ago was also considered as obviously contrary to common sense.

The patentee had fully fulfilled the burden of proof to the extent of its capacity, and the existing evidence sufficed to prove the prima facie case of the infringement; meanwhile the alleged infringer refused, without justifiable reasons, to provide evidence, causing the appraisal impossible to normally proceed, let alone proving that the alleged infringing equipment is different from the patent at issue. In view of these facts, the second instance court's retrial was correctly held applying Article 75 of Some Provisions of the Supreme People's Court on Evidence in Civil Procedures.

This case provides a valuable precedent on how to enforce patent right under the circumstances where it is difficult for a patentee to collect evidence on patent infringement. It also reflects the court's thought process on application of the "inversion of burden of proof" rule under the specific circumstances in the patent infringement proceedings. From the perspective of justifying the application of the inversion of burden of proof, a patentee, as a claimant in a patent infringement lawsuit, shall fulfill the duty to provide evidence to a reasonable extent by exhausting all legal methods to collect evidence, such as providing relevant notarial deed, applying for preservation of evidence, applying for technical appraisal, and providing technical experts' evaluation opinions on patent infringement. The inversion of burden of proof greatly reduces the patentee's risk of failure on burden of proof, and may reverse the patentee's unfavorable situation in enforcing patent right.

Corrugated Pipe Manufacturing Equipment Case - PowerPoint Presentation (Chinese Version)

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