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21 Nov 2020

China Issues Provisions on Evidence in Intellectual Property Civil Litigation

On 16 November 2020, the Supreme People’s Court of the People’s Republic of China issued the Provisions on Evidence in Civil Litigation of Intellectual Property Rights (“Provisions”), which came into effect on 18 November 2020.[1] Consisting of 33 articles, the Provisions concern, inter alia, evidence preservation, burdens and technicalities in submitting evidence (including from abroad), use of technical experts by courts (so-called “judicial appraisal”) and by parties, and the protection of trade secrets in litigation. While some of the Provisions are unlikely to have noticeable impact, either because they are too generic or because they do not significantly change existing law or at least practice, others are clearly geared to advancing the rights and interests of parties in disputes over intellectual property – in favor of plaintiffs in some ways and in favor of defendants in others. This Newsletter summarizes the most noteworthy aspects of the Provisions.

Evidence Preservation

The Provisions include a litany of articles aimed apparently at reducing the situations in which evidence that was available at a relevant time ends up destroyed or otherwise unavailable by the time of trial. First, the Provisions clarify the factors that courts will take into account when considering applications for evidence preservation:

  1. whether the applicant has provided preliminary evidence for its claim;
  2. whether the evidence can be collected by the applicant;
  3. the possibility of the loss of evidence or the later difficulty of obtaining it, and its impact on the facts to be proved; and
  4. the impact of possible preservation measures on the holder of the evidence.

Then, the Provisions add teeth to evidence preservation measures (that are granted): if a relevant party refuses to cooperate or obstructs the preservation of evidence without justification, or tampers or destroys evidence under preservation, resulting in evidence becoming unusable, the party may bear adverse consequences, e.g., the court accepting as proved the facts that were to be proved by the preserved evidence.

On the other hand, the Provisions require courts to limit the evidence preservation to minimize the damage to the value of the preserved evidence and the impact on the normal operations of the holder of the evidence. Further, courts can review and change, terminate, or cancel preservation measures upon a reasonable objection, by a concerned party, to the scope, necessity, etc. of the measures.

Burdens and Technicalities in Submitting Evidence (including from Abroad)

The Provisions, as many other rules issued in the recent past, have introduced a burden-shifting mechanism: where a product manufactured by a patented method is not a new product, if a plaintiff provides evidence showing the below three facts, the defendant will bear the burden to provide evidence to prove that the product’s manufacturing method differs from the patented method:

  1. the product manufactured by the defendant is the same product as the product manufactured using the patented method;
  2. the product manufactured by the defendant is likely to be manufactured through the patented method; and
  3. the plaintiff made reasonable efforts to prove that the defendant used the patented method.

The above is an expansion of existing law, which already includes such a burden-shifting mechanism for new products. 

The Provisions also make two clarifications about threshold evidence required from plaintiffs. First, if a defendant’s only alleged infringement comes from the very selling or otherwise giving of the allegedly infringing product to the plaintiff, a court should dismiss the claim. Second, evidence of the following three facts is required in order to file a declaratory judgment lawsuit confirming non-infringement of intellectual property rights: 

  1. the defendant issued an infringement warning to the plaintiff or filed an infringement complaint against the plaintiff;
  2. the plaintiff served a notice on the defendant for the latter to exercise its rights against the alleged infringement; and
  3. the defendant did not file a lawsuit within a reasonable time limit.

The Provisions shave down a stumbling block that has long beleaguered cases involving evidence from abroad. Whereas parties are required to go through numerous, time-consuming procedures to “authenticate” evidence from abroad before it can be submitted and recognized in Chinese courts, the Provisions indirectly offer some exceptions to the requirements. The Provisions require courts to reject evidentiary objections based on the evidence not being “notarized” (公证) or “certified” (认证) if:

  1. the evidence has been confirmed by a legally effective Chinese court judgment or ruling;
  2. the evidence has been confirmed by the effective award of the arbitration institution;
  3. the evidence consists of public publications, patent documents, etc. from official or public channels; or
  4. there is other (suitable) evidence to prove its authenticity.

Moreover, if the only deficiency in the evidence is a lack of certification (认证), the bar is even lower: courts will reject evidentiary objections if, in addition to the above reasons, either the party who raised the objection has clearly recognized the authenticity of the evidence (essentially, estoppel) or the opposing party provides witness testimony to confirm the authenticity of the evidence, and the witness clearly indicates that s/he is willing to accept punishment if s/he commits perjury.

Protection of Trade Secrets in Litigation

The Provisions enhance protections against undermining of trade secrets in the litigation process. First, when evidence relates to trade secrets or “business information that needs to be kept secret”, courts are mandated (1) to require participants to sign a confidentiality agreement or otherwise make commitments to confidentiality, or (2) to issue a legal document to ensure the participants in the litigation do not disclose, use, or allow others to use the secret information that they come into contact with during the proceedings for any purpose other than the litigation.[2] Second, the Provisions allow for parties themselves to apply to the court to restrict who can access evidence that relates to the secret information.

Takeaways

China has been beefing up its intellectual property framework, especially the dispute resolution side, particularly intensively in recent years, each time showing more care and sophistication. While some of the Provisions do not appear to add much, if anything, to the existing framework, several not only make significant contributions to intellectual rights and interests but also reflect a sensitivity and balance to issues faced on both sides of disputes. Some of the provisions ease and strengthen plaintiffs’ positions, e.g., evidence preservation and burden-shifting, and some of the provisions protect defendants from frivolous or similar litigation, e.g., evidentiary thresholds for filing an infringement case. Other parts of the Provisions further reflect China’s advancing sophistication in intellectual property matters, e.g., more extensive and detailed rules concerning the use of experts by courts and by parties. Parties involved in intellectual property disputes, or considering strategies to create and protect intellectual property in China, would do well to stay abreast of the rapid advances in this area, make full use of them, and expect more soon.



[1] 最高人民法院关于知识产权民事诉讼证据的若干规定.

[2] In the Chinese of this provision, the grammatical clause “to ensure the participants in the litigation do not disclose, use, or allow others to use the secret information […]” appears to apply only to “issue a legal document”, so it is not clear whether the same detailed objective would apply to the confidentiality agreement or other confidentiality commitment that the court could require parties to undertake.

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