The strategy of collecting evidence in Chinese IP infringement cases
Xiaodong Ren and Xiaojun Liu of Beijing Kangrui Law Firm explain the techniques that legal teams can take during the evidence collection stages of IP disputes
Some time ago, a much-seen scenario would regularly appear in hit television shows – where a lawyer would speak with righteous indignation to express his representation in a court hearing, and would easily win the case. However, dramas are vastly different from real life.
In the eyes of many people, the lawyer in such shows would be the ideal lawyer for them. In fact, whether a lawyer can win the case or not heavily depends on the evidence collected. The French lawyer, Georges Izard, once said, "The court is by no means a lecture hall. No matter how touching a lawyer's defense is, facts and evidence reveal everything in the end".
This is especially true in IP infringement cases, where obtaining crucial evidence is the most difficult and painful point. In this article, the evidence collection process of one particular case, De Nora v Taizhou Zoca Water Treatment Equipment Co Ltd, is explained in order to analyse the strategies and techniques that are used for evidence collection in IP cases.
In early 2016, De Nora found that Taizhou Zoca Water Treatment Equipment Co Ltd (hereinafter refer to as Zoca) produced and sold products suspected of infringing De Nora's No.ZL200680052832.1 patent right. De Nora subsequently entrusted Kangxin Partners to investigate and collect evidence. After the investigation and evidence collection stages, the law firm filed a tort lawsuit before Luoyang Intermediate People's Court in October 2017.
In October 2018, Zoca was ordered in the first instance of this case to immediately stop the infringement of patent rights, and compensate a total of RMB 600,000 (approximately $92,180), including the economic losses and reasonable expenses for stopping Zoca's infringing behaviour. Zoca filed an appeal, and the Henan Higher People's Court upheld the original judgment.
“Since there could be more than one calculation method, the most favourable calculation method for the client should be chosen.”
It eventually took three years to close the case. Although the final result was in favour of De Nora, the process throughout was extremely difficult. Obtaining infringement and compensation evidence became very difficult for this case for the following reasons.
Firstly, the infringing product – filter bricks – are part of water pollution treatment equipment that are not sold to ultimate consumers. Thus, it was difficult to obtain sales evidence.
Second, the infringing products were installed as a whole by the construction team, and were laid underground and buried with a sand layer. Once the infringing products were put into use, they would effectively be buried underground. Therefore, no useful evidence could be obtained.
Finally, since the water pollution treatment projects are all constructed through project contracting, there was no separate price for the infringing products alone. It subsequently became difficult to calculate the price of the infringing products involved in the case, and harder to calculate the potential damages to be paid.
Evidence needed for filing the IP infringement litigation
As in the majority of infringement cases, the plaintiff has the burden of proof and needs to provide the following three types of evidence:
Evidence of right – which proves that the plaintiff is the right owner or its interested party, such as trademark certificates, patent certificates, etc;
Evidence of infringement – which proves that the defendant carried out the use, sale, promise to sell, manufacture and other specific acts of infringement, such as publicity materials, suspected infringement samples, audio-visual materials, etc; and
Evidence of compensation – which proves that the defendant should give the corresponding amount of compensation to the plaintiff. If the plaintiff claims compensation from the defendant, he or she must submit the calculation method of the amount of compensation. Since there could be more than one calculation method, the most favourable calculation method for the client should be chosen.
Strategies and techniques for evidence collection
In the case of IP rights infringement, the common methods for obtaining evidence include:
The right owners obtain evidence by themselves;
The right owners entrust lawyers or investigation agencies to collect evidence;
The above parties apply for evidence preservation before notary organisations;
The above parties apply for evidence preservation and retrieval before the court; and
The above parties file AMR actions before local market supervision administrations. Considering the above, in the case of Zoca – it should be considered how these methods were used to obtain evidence in order to achieve the most beneficial result.
Acquisition of evidence for promise to sell
In actual business, Zoca publicised the infringing products through its network, exhibitions, sample rooms, brochures and other forms, which constituted a promise to sell. In practice, one should pay attention to collect evidence for promise to sell, not only because promise to sell is one kind of tort actions, but also to eliminate the risk of 'induced trap evidence collection' to obtain evidence not to be adopted.
In the case of Zoca's patent infringement, Zoca's official website including the infringing products displayed on its website for evidence preservation purposes, was first notarised. Subsequently, photos were taken of the infringing products displayed in the sample rooms of Zoca – especially the important parts suspected for patent infringement, which fixed the preliminary evidence that Zoca promised to sell the infringing products.
Acquisition of evidence for sales and use
In the Zoca case, the infringing products could not be purchased separately and were buried underground in actual use. It was found that a sewage treatment plant in Luoning was undergoing technical transformation and commissioned a construction unit to use the sewage treatment equipment produced by Zoca, including the infringing products.
In this regard, the legal team immediately adjusted its plan and tried to collect evidence from the users of the infringing products. When the sewage treatment plant installed the infringing products, the notarised evidence was preserved in the process of installing and testing the infringing products. Finally, the evidence that the sewage treatment plant used the infringing products was successfully obtained, and it indirectly proved the fact that Zoca had sold the infringing products.
Acquisition of evidence for the infringing products
In judicial practice, due to the difficulties in obtaining evidence, high investment, lack of effort and other reasons, the parties in many cases are relatively passive in obtaining evidence, and hope to obtain evidence in the court's evidence preservation. In fact, this is also a cause of the low support rate of evidence preservation requests in IP litigation cases in China.
In the case of Zoca, the legal team provided evidence of infringement and sales volume of the defendant through various ways, proactively in its request for evidence preservation before the court. This was supported by the court based on the evidence collected, and the legal team managed to successfully and timely preserve the actual goods of infringing products.
Acquisition of evidence for compensation
In accordance with Article 65 of the Patent Law of the People's Republic of China, the amount of compensation for the infringement of a patent right shall be determined according to the actual loss suffered by the plaintiff as a result of the infringement. If the actual loss is difficult to determine, the amount of compensation for the infringement of a patent right shall be the interests gained by the infringer as a result of the infringement. If the losses of the plaintiff and the interests of the infringer is hard to determine, it shall be reasonably determined with reference to the multiple of the patent license fee.
“The ways of evidence collection may vary from case to case, which is also one of the charms of such litigation.”
The amount of compensation shall also include the reasonable expenses paid by the plaintiff to stop the infringement. If the loss of the plaintiff, the benefit obtained by the infringer and the patent license fee are all hard to determine, the court may determine the damages between RMB 10,000 and RMB 1 million, according to the type of patent right, the nature and circumstances of the infringement.
In this case, there is a focus on the illegal income of the infringer in collecting evidence. Due to the special way of filter brick products sale, the quotation of filter bricks is included in the whole project. Therefore, a project to make an inquiry to the infringer was created and required the infringer to separately quote for the filter bricks.
At the same time, the infringer was also required to provide other relevant cases and amounts of filter bricks needed for one project by e-mail, and notarise the relative email correspondence with the infringer. Based on the quotation of filter bricks and other relevant cases of using filter bricks in actual projects, the benefits of filter bricks in all cases are calculated. Finally, the exact amount of the infringer's illegal income is put forward, and a request is made to the infringer to compensate the victim based on their illegal income.
In this case, although the court did not directly adopt our damages calculation method, the evidence for compensation obtained still became an important reference factor for the judge to decide statutory damages.
It is hoped that this article can bring inspiration to readers through the tactics for evidence collection in the Zoca infringement case. The evidence collection of IP infringement cases is a complex and skilful task. The ways of evidence collection may vary from case to case, which is also one of the charms of such litigation.
In the process of handling such cases, the parties should cooperate with lawyers or investigation agencies, formulate corresponding evidence collection strategies in combination with litigation strategies, and actively provide evidence for infringement and damages calculation before the court. They can use various evidence collection skills, so as to form a complete evidence chain, use the value of evidence, and finally obtain the judgment results in favour of the clients.
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Beijing Kangrui Law Firm
T: +86 10 5657 1588
Xiaodong Ren is a lawyer at Beijing Kangrui Law Firm. He has vast experience in IP protection, including patent, trademark, copyright, unfair competition and other related areas.
Based on his deep understanding and long experience in the practice of Chinese Law and the judicial environment in China, Xiaodong is highly capable of developing and implementing strategic IP protection policy for many different clients. Furthermore, he is very skilled in handling the transfer and licensing of IP rights in cases of disputes. He has serviced hundreds of clients, many of which are multinational enterprises and Fortune 500 enterprises worldwide.
Xiaodong obtained his bachelor's degree in foreign-related economic law from the PLA National Defence University.
Beijing Kangrui Law Firm
T: +86 10 5657 1588
Xiaojun Liu is a lawyer at Beijing Kangrui Law Firm, and joind the firm as a trademark attorney in 2019. She became certified as a practising lawyer in 2020.
Xiaojun has provided IP consultation services for several notable overseas companies. She is experienced in administrative and civil litigation over IP matters through three years of practice.
Xiaojun obtained her bachelor's degree in law from China Foreign Affairs University, and her master's degree from Boston University.