China: Intellectual Property Litigation In China: Evidence Preservation Measures

In recent years, China has significantly strengthened the judicial protection of intellectual property rights. In particular, some courts have significantly increased the amount of compensation in the judgment of intellectual property infringement cases. For example, the Beijing Intellectual Property Court made a first instance verdict in December 2016 that the defendant Hengbao Company shall pay RMB 50 million (about US$7.5 million) to compensate the loss of the plaintiff Watchdata Company, and the Quanzhou Intermediate People's Court made a verdict in April 2017 that the defendant Samsung Company shall compensate the plaintiff RMB 80 million (about US$12 million) for its losses.

In intellectual property litigation, the collection and presentation of evidence is one of the core issues. In cases where litigants cannot obtain relevant evidence, or the evidence may be extinguished orhard to obtain at a later time due to objective reasons, apply to the court for evidence preservation can be an effective measure. Based on the practical experiences of the Beijing Sinda Law Offices, we would like to give a brief introduction of the application of evidence preservation in the protection of intellectual property rights.

Article 81 of the Civil Procedure Law of the People's Republic of China stipulates that

where any evidence may be extinguished or hard to obtain at a later time, a party may apply to the people's court for evidence preservation in the course of litigation, or the people's court may also take preservation measures on its own initiative ("evidence preservation in the course of litigation"). Where any evidence may be extinguished or hard to obtain at a later time due to urgent conditions, an interested party may initiate legal proceedings or apply evidence preservation to people's court in which the evidence is located or the applicant is located or which has jurisdiction over the case before the party applying for arbitration.(Pre-litigation evidence preservation).

In addition, the Trademark Law of the People's Republic of China, the Patent Law of the People's Republic of China and the Copyright Law of the People's Republic of China, stipulate that in order to stop the infringement, where any evidence may be extinguished or hard to obtain at a later time, the IP right owner (e.g. trademark registrant, copyright owner, or patentee) or the interested party may apply to the people's court for evidence preservation prior to litigation.

Beijing Sinda Law Offices has helped its clients develop evidence preservation strategies and assisted the court to take preservative measures several times. For example, in January 2017, Beijing Sinda Law Offices helped a client to develop a pre-litigation evidence preservation strategy, and specifically applied to the Beijing Intellectual Property Court for simultaneous taking pre-litigation evidence preservation measures on two companies located in Beijing and Xi'an respectively, by copying and making a seizure of the design drawings, technical documents, operating systems, source programs, contracts, account books and other relevant materials relating to the suspected instance of infringement by the two respondents. With evidences gathered through the above measures as well as other evidences at hand, the applicant later filed with the court a number of litigations on the basis of the plaintiff's patent rights, software copyrights and trade secrets.

In another patent infringement litigation, the Beijing Sinda Law Offices helped a client to develop an evidence preservation strategy in the course of litigation, and applied to the Zhengzhou City Intermediate People's Court for taking evidence preservation measures at a manufacturing facility of the defendant in Luohe City, Henan Province, investigated and took pictures of the on-site equipment and gathered the relevant software source programs.

By means of evidence preservation measures, the difficulties in collecting evidences by IP owners can be solved on the hand, and lay a solid foundations for confirming the facts of infringement and claiming infringement damages is laid with evidence collected and fixed by the measures on the other hand.

Compared with evidence preservation in the course of litigation, the court is usually more cautious and stringent in examining the applicant's request for pre-litigation evidence preservation. According to the Civil Procedural Law and experiences summarized by lawyers of the Beijing Sinda Law Offices, the court will usually examines the following aspects when receiving a request for pre-litigation evidence preservation:

(A) The applicant must be qualified. In general, the applicant should be an IP right holder or an interested party.

(B) The applicant should have submitted preliminary evidences showing that his or her IP rights exist and are being infringed by the respondent.

(C) The burden of proofing the evidence that is requested by the perseveration measure should be on the applicant's side.

(D) The situation must be urgent, and the evidences may be extinguished or hard to obtain at a later time.

(E) Evidence requested for preservation must be related to the facts such as the existence, status, scale of the asserted infringing activities and the degree of damage caused to the IP right.

(F) Guarantee must be provided. The amount of guarantee is generally determined by the court on the merits of the case.

It should be noted that different courts may have different focuses when examining the request for pre-litigation evidence preservation. In this regard, several exemplary court decisions with respect to pre-litigation evidence preservation for intellectual property published by the Supreme People's Court can provide meaningful guidance.

In summary, where evidence of infringement is difficult to obtain due to the infringer's control and the infringer is likely to undermine the evidence of infringement when he or she is aware of the enforcement activities of the intellectual property right holder, in order to overcome the difficulties in collecting evidences, the intellectual property right holder may apply to the court for evidence preservation prior to or in the course of litigation, so as to obtain evidence of infringement, thereby stopping the infringement, obtaining compensations, or forcing the infringer to participate in solicit settlement.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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