China: Burden Of Proof In An Infringement Litigation Over A Patent For A Process Of Manufacture In China

Last Updated: 18 February 2016
Article by Xiaojun Guo

I. Introduction

Article 64(1) of the China's Civil Procedure Law (in effect Jan. 1, 2013) stipulates that, A party shall have the responsibility to provide evidence in support of its own propositions.

Article 2 of the Some Provisions of the Supreme People's Court on Evidence in Civil Procedures (in effect April 1, 2002) reads,

The parties concerned shall be responsible for producing evidence to prove the facts on which their own allegations are based or the facts on which the allegations of the other party are refuted.

Where any party cannot produce evidence or the evidence produced cannot support the facts on which the allegations are based, the party concerned that bears the burden of proof shall undertake unfavorable consequences.

The above provisions establish the general rule for allocation of burden of proof in China for civil procedures, that is, the rule of "he who asserts must prove".

Against any patent infringing act as stipulated in Article 11 of the Chinese Patent Law (in effect Oct. 1, 2009),1 the patent owner or a person in privity may take either administrative procedures before a local Intellectual Property Office or civil procedures before an eligible court2 , and collect generally three kinds of evidence in support of his claim against the accused infringer:

  1. Evidence that he has the standing to sue and that the patent is valid to date;
  2. Evidence that the product produced or the process used by the accused infringer falls within the scope of at least one of the claims of the patent concerned;
  3. Evidence of damages.

In practice, the plaintiff may obtain from the market an accused product under the supervision of a notary public3, which will be presented as physical evidence before the court for cross-examination. This is usually not too difficult.

Different form the scenario of a product patent, for a process patent, since there is no discovery procedure for civil proceedings in China, it is much difficult for the plaintiff to learn exactly and preserve the infringing process of manufacture without investigation on the scene, if the plagiarist doesn't present the process to public and keeps his process of manufacture underground.

The Chinese Patent Law therefore stipulates different burden of proof for a patent for a process of manufacture as an exception to the general rule of burden of proof, i.e. "he who asserts must prove" rule, which is applied to a product patent. That is, in certain conditions, the burden of proof may be shifted to the accused infringer of the asserted patent for a process of manufacture so that the accused infringer has to prove to the court that his process of manufacture is different from the claimed one. Article 61(1) of the current Chinese Patent Law reads,

Where any infringement dispute relates to a patent for invention for a process for the manufacture of a new product, any entity or individual manufacturing the identical product shall furnish proof to show that the process used in the manufacture of its or his product is different from the patented process.

See also Article 4 (1) of the Some Provisions of the Supreme People's Court on Evidence in Civil Procedures,

The burden of proof in tort actions shall be assumed according to the following rules:

(1) In a patent infringement action resulting from an invention patent for a process of manufacturing a new product, the entity or individual that manufactures the identical product shall bear the burden to prove that the process used is different from the patented process.

The above provisions stipulate so-called reversal of burden of proof for an invention patent for a process of manufacturing a new product.

II. Evolution of the burden of proof in an infringement litigation over a patent for a process of manufacturing a new product

"Reversal of burden of proof means that, for his own allegation of facts or rights, the plaintiff need not submit evidence of all aspects, instead, the defendant bears the burden to prove that the plaintiff's allegation doesn't stand, otherwise, the defendant has to bear the aftereffect of not submitting evidence."4 The requirements on the burden of proof in a patent infringement litigation in relation to a patent for a process of manufacturing a new product changed several times in the development of the Chinese Patent Law.

A. Absolute reversal of burden of proof

When the Chinese Patent Law was enacted in 1985, Article 60(2)of the Law reads, When any infringement dispute arises, if the patent for invention is a process for the manufacture of a product, any entity or individual manufacturing the identical product shall furnish proof of the process used in the manufacture of its or his product.

This means that, in a patent infringement litigation involving an invention patent for a process of manufacturing a product, whether the product is new or not, the defendant had the burden to offer details of his process of manufacture in order to clear the infringement claim.

This practice of absolute reversal of burden of proof to the defendant surely was favorable to patent owners. A patent owner of a process patent might abuse his patent right so as to, by frivolous litigation, preclude competition in the market or even learn competitors' trade secrets.

B. Differentiated reversal of burden of proof

In 1992, the Chinese Patent Law was amended for the first time, Article 60(2)reads, When any infringement dispute arises, if the patent for invention is a process for the manufacture of a new product, any entity or individual manufacturing the identical product shall furnish proof of the process used in the manufacture of its or his product.

That is, only when the patent concerned relates to a process for the manufacture of a new product, can the burden of proof be shifted to the accused infringer. However, this provision did not make it clear whether the accused infringer had the responsibility to prove that the process used in the manufacture of his product is different from the patented process.

In 2000, the Chinese Patent Law was amended further, Article 57(2) of this law reads, Where any infringement dispute relates to a patent for invention for a process for the manufacture of a new product, any entity or individual manufacturing the identical product shall furnish proof to show that the process used in the manufacture of its or his product is different from the patented process.

The amendment clarified that the accused infringer had the burden to prove that the process used in the manufacture of his product is different from the patented process, when the claimed invention is a process for manufacturing a new product. In the current Chinese Patent Law (in effect Oct 1, 2009), Article 61(1) corresponds to Article 57(2) of the Patent Law of 2000, and no substantial change was made.

III. Conditions for reversal of burden of proof in a patent infringement litigation over a process of manufacturing a new Product

In addition to submitting evidence to show that, he who instituted the patent infringement litigation has the standing to sue, the patent concerned is valid and not expired at the time, under the current Chinese Patent Law, three conditions shall generally be met before the burden of proof be shifted to the accused infringer in a patent infringement litigation regarding a patent for a process of manufacturing a new product.

A. What is claimed is a process of manufacture

It is clear from Article 61(1) of the Chinese Patent Law that only when the patented subject matter is related to a process of manufacture, can reversal of burden of proof be made. Said process of manufacture is different from, for example, a process of transportation, measurement, communication, or a process of a new use, which later will not trigger the reversal of burden of proof.

B. The product directly obtained from the patented process of manufacture is new

Further, the product obtained directly from the patented process shall be a new product according to Article 61(1) of the Chinese Patent Law. The underlying rationale for reversal of burden of proof when the manufactured product is new is, since the manufactured product is a new product, it is supposed that the patented process of manufacturing the new product is unique at the time, it establishes a presumption that whoever manufactures the identical product has a great possibility of having used the identical process of manufacture.

In Beijing Huaxin Biotechnology Research Institution v. Beijing Biaopuluo Pharmacy Co., Ltd., the court found that, well before the filing date of the asserted patent, products which were not obviously different from the product made by the patented process in their compositions, properties, functions had been imported into and sold in China. The court held that the product obtained from the patented process is not new and that the burden is still on the plaintiff's side to prove that the defendant used the patented process.

The court articulated that,

The "new product" of the Patent Law means, the product [obtained from the patented process] is different from the products sold in the country before the filing date of the patent, that is, the product [obtained from the patented process] is obviously different form known products of the same category in their compositions, structures, quality, properties and functions.5

Article 17 of the Interpretation of the Supreme People's Court on Several Issues Concerning Adjudicating Patent Infringement Disputes reads,

If a product or the technical solution for producing the product is known to the domestic or overseas public before the filing date of the patent, the People's Court shall deem that the product does not fall within the "new product" under Article 61(1) of the Patent Law.6

This provision requires a comparison between the patented technical solution with prior arts known in the country or abroad, and takes the "known to the public" test, which is stricter than the test previously taken in Huaxin case.

In ZHANG Xitian vs. CSCP Ouyi Pharmaceutical et al., the Supreme Court, applying Article 57(2) of the Patent Law of 2000, held that,

"Assessment of whether a patented process is a process of manufacturing a new product shall be based on the product directly obtained from the patented process. So called 'product directly obtained from the patented process' means, the original product made from the patented process, excluding any product obtained by subsequent processing of the original product."7

In this case, the product obtained by the patented process is a "DMSO-d6-solvate of D-tartrate salt of (S)-(-)-amlodipine" or a "DMSO-d6-solvate of L-tartrate salt of (R)-(+)-amlodipine", this is the intermediate product for producing "(S)-Amlodipine" or "(R)-Amlodipine". Since said intermediate product was not known in the country or abroad, the court held that the product manufactured by the patented process is a new product.

C. Said product made by the accused infringing process is identical with the new product obtained directly from the patented process

Also in ZHANG Xitian vs. CSCP Ouyi Pharmaceutical et al., the Supreme Court held that the plaintiff, Zhang Xitian, has the burden to prove that the accused infringer produced the identical product by the accused process as that directly obtained from the patented process,

In such patent infringement dispute cases, a prerequisite for the accused infringer to bear the burden of proof that his process of manufacture is different from the patented process, is that the patent owner can prove that the product made according to the patented process is new, and that the product manufactured by the accused infringer is identical with that made according to the patented process...

The evidence submitted by Zhang Xitian is not enough to prove that the products made by Ouyi et al. are identical with the product obtained directly from the patented process. In this case, Huasheng and Ouyi don't bear the burden of proof that the process of manufacturing their products is different from the patented process.8

In this case, although the product made by the patented process is a new product, the patent owner failed to meet one of the prerequisites for reversal of burden of proof for a process patent, that is, the product made by the accused process is identical with that obtained directly from the patent process.

The above standpoint is a restatement of the court's opinion in Eli Lilly and Company vs. Jiangsu Haosen, in which the court held,

According to the Patent Law, one prerequisite for reversal of burden of proof to the accused infringer over a patented process of manufacturing a new product is, the patent owner establishes that the product manufactured by the accused process is identical with the product made by the patented process.9

IV. What if the product directly obtained from the patented process is not new

Generally speaking, for a patent for a process of manufacturing a known product, the basic rule of burden of proof still applies in an infringement litigation, that is, the plaintiff has the burden to submit evidence to establish that the accused infringer has used the patented process. Since the accused process of manufacture is under the control of the defendant and is in many times kept out of access by a third party, this makes it quite hard to learn what the process is concretely. Either for the purpose of protecting his trade secret or know how, or for the purpose of shifting or concealing the infringing act, the accused infringer will exclude any others from going to the site for investigation.

According to Article 64(2) of the Civil Procedure Law, the court can conduct investigation at its discretion in certain cases10, however, because of backlog of cases before the courts, generally judges don't have sufficient capability to make investigation upon the request of a plaintiff. Meanwhile, too much for the courts to get involved in a dispute by conducting investigation upon the request of one party might strike the judges' neutrality.

To overcome this dilemma, the Supreme Court had issued judicial opinions that,

While the product manufactured by the patented process is not new, the patent owner can prove that the accused infringer made the identical product, and that he has taken sound efforts but still could not prove that the accused infringer did take use of the patented process, according to the particular circumstances and in combination with known facts and experience in daily life, where it is affirmative that the probability that the accused identical product was manufactured by the patented process is great, the court may ... not require the patent owner to submit further evidence, instead, may require the accused infringer to submit evidence that his process of manufacture is different from the patented process.11

The case Yibing Changyi Pulp Ltd. v. Weifang Henglian Pule and Paper Ltd. and Chengdu Xinruixin Plastic Ltd., is a judicial practice of the above Opinions.

In this case, the plaintiff, Yibing Changyi, is the patent owner of invention patent "wood pulp modification production process", the product obtained by said process is not new. The patent owner had submitted evidence, such as, the gate pass for bringing cotton pulp out of the factory of the defendant, quality check list of the pulp of the defendant to show that the defendant had made and sold the accused product, and had proved by product inspection etc. that the accused products are identical with that obtained directly from the patented process; further, the plaintiff submitted videos reproducing the workshop, the relevant apparatuses of the defendant and the process of dropping raw wood pulpused by the defendant.

In addition, the court of the first instance took evidence preservation according the request of the plaintiff two times at the site of the defendant: the first evidence preservation was held back by the defendant, at the second time, the staff of the defendant took the judges of the court to the site for producing cotton pulp instead of the production site as shown on the video. The court finally didn't obtain any evidence regarding the accused process of manufacture.

Based on the above facts, the Supreme Court held that, the first and second instance courts did not err, in consideration of the evidence submitted by both sides, accessibility to the evidence, in assigning the burden of proof in relation to the accused process of manufacture to the defendant. The later shall and can fully submit evidence to show that the accused process of manufacture is different from the patented process. The defendant refused to submit evidence in relation to its process of manufacture after being ordered by the courts, it is right for the courts to therefor hold that the accused process of manufacture falls within the protection scope of the patent.

In particular, the Supreme People's Court articulated that,

Generally speaking, application of a patented process is embodied in the manufacturing process of the product. Steps and parameters taken in manufacturing the product including the particular workflow and data can only be accessed on the scene or by examining the processing records. Normally, a patent owner can not get access to the production site or processing records so as to obtain complete evidence of the [accused] process of manufacture. Where the materials relating to the accused process of manufacture are in the hands of the accused infringer, it goes against finding of facts and the principle of fairness by simply applying the rule of "who asserts must prove" and requiring the patent owner to submit evidence in relation to the process taken by the accused infringer for manufacturing the identical products, without taking into consideration the details of the case such as the probability of prevailing over the accused infringement and the ability to present evidence ... Whoever possessing the evidence has the obligation to submit said evidence for finding the fact, the allocation of burden of proof shall be based on fairness, equity and good faith, in order to find facts to the extreme extent ... For the purpose of finding facts and at the same time to ensure that the accused infringer will not be revealed of its trade secrets, so as to get a balance between the patent owner and the accused infringer, the court, based on the judicial practice, is of the opinion that, in the case that the patent owner can prove that the accused infringer has made the identical product, and that he had made reasonable efforts but still could not prove that the accused infringer did really take use of the patented process, in accordance with the particular circumstances and in combination with the known facts and experience in daily life, it is found that the probability that said identical product was made by the patented process is great, the court may ... assign the burden of proof to the accused infringer, and not require the patent owner to submit further evidence, instead require the accused infringer to submit evidence that his process of manufacture is different from the patented process.12

V. Conclusion

As discussed above, for a process patent, when the patent owner submits evidence showing that 1) he is the qualified patent owner or a person in privity having standing to sue, 2) his patent is valid, 3) his patent is related to a process of manufacture, 4) the product obtained directly from the patented process is a new product, 5) the accused infringer manufactured the identical product, the burden of proof will be shifted to the accused infringer to rebut the infringement allegation. The accused infringer shall bear the adverse consequences and may lose the case if he fails to meet the above reversed burden of proof.

To prove that the process used by the accused infringer is different from the patented process normally means that the defendant has to reveal his process of manufacture. So, it is always necessary for the defendant to rebut the "new product" and "identical product" allegations of the plaintiff. Once it becomes unavoidable for the defendant to reveal his process of manufacture to the court, it shall be kept in mind that it is not necessary for the accused infringer to reveal all steps of his process in order to rebut the infringement allegation. Instead, the defendant may reveal certain steps or conditions of his process, as long as this is sufficient to prove that he is using a different process from the patented process.

For a process of manufacturing a known product, the patent owner shall endeavor to investigate and collect evidence so that the burden of proof might be shifted to the accused infringer.

The courts carefully balance the interests of the patent owner and other competitors and endeavor to provide effective protection for process patents of manufacture, and simultaneously avoiding impeding the normal business activity of an accused infringer. It seems that the courts would rather take a more flexible approach in assigning burden of proof so that the basic principle of fairness, equity and good-faith can be met.

Footnotes

[1] Article 11(1) of the Chinese Patent Law reads, after the grant of the patent right for an invention or utility model, except where otherwise provided for in this Law, no entity or individual may, without the authorization of the patentee, exploit the patent, that is, make, use, offer to sell, sell or import the patented product, or use the patented process, and use, offer to sell, sell or import the product directly obtained by the patented process, for production or business purposes.

[2] When taking administrative procedures, the patent owner may request a local Intellectual Property Office of China to make a decision as to infringing act of the accused infringer. If the patent owner or the accused infringer is not satisfied with the decision, he may appeal the decision with the intermediate people's court. The court will then try the case according to administrative litigation procedures, wherein the Intellectual Property Office is always the defendant and shall bear the burden of proof in showing that it did not err in making the decision. The Third party, normally the party winning the case before the local Intellectual Property Office may submit evidence with the court to support the accused decision.

[3] The plaintiff may alternatively request for evidence preservation when the accused product is very big or very expensive or difficult to obtain for certain reasons.

[4] CHENG Yongshun, "Judge's Comments on Patent Dispute Cases", January 2003, page 41.

[5]Cheng Yongshun, Judge's Commentaries on Patent dispute Cases, January 2003, page 38.

[6] Judicial Interpretation No. 21 [2009] of the Supreme People's Court, in effective 1 January 2010.

[7] ZHANG Xitian vs. CSCP Ouyi Pharmaceutical Co., Ltd. et al., the Supreme People's Court, (2009) Min Ti Zi No. 84.

[8] ZHANG Xitian vs. CSCP Ouyi Pharmaceutical Co., Ltd. et al., the Supreme People's Court, (2009) Min Ti Zi No. 84.

[9] Eli Lilly (US) & Co. v. Jiangsu Province Haosen Pharmaceutical Co., Ltd., Supreme People's Court (2009) Min San Zhong Zi No. 6.

[10] Article 64(2) of the Civil Procedure Law (in effect Jan. 1, 2013) reads, For the evidence that cannot be obtained by any parties or their litigation representatives because of some realistic reasons or for the evidence the people's court considers necessary for adjudicating the case, the people's court shall investigate and collect such evidence.

[11]See item 15 of the Opinions of the Supreme People's Court on Giving Full Play to the Functional Role of Intellectual Property Trials in Advancing the Great Development and Prosperity of Socialist Culture and Promoting Independent and Coordinated Economic Development (Supreme People's Court, Fa Fa [2011] No. 18), enacted as of Dec. 16, 2011 .

[12] Yibing Changyi Pulp Co., Ltd. v. Weifang Henglian Pule and Paper Co., Ltd. and Chengdu Xinruixin Plastic Co., Ltd, the Supreme People's Court (2013) Min Shen Zi No. 309.

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