It can sometimes be difficult or even impossible for a rights holder to obtain qualified evidence of infringement or the amount of damages that it has incurred. However, under Chinese law, rights holders can apply to preserve official evidence.
A pioneering spinning and weaving company owned three patents for its computer-aided manufacture (CAM) textile machines. The company's Chinese subsidiary manufactured and marketed the patented machines in China and business had been reasonably good until 2011, when sales started to decline quickly. In 2012 the company found that a factory located in Taizhou (Zhejiang Province) was manufacturing and marketing CAM textile machines, exploiting the company's patents. As the company did not wish to disadvantage end users, its only option was to take action directly against the Taizhou supplier. However, the company was unable to obtain a sample machine directly from the Taizhou factory as evidence of the infringement, as the supplier installed the machines via production lines and sold them only in large batches.
The company collected preliminary evidence, including:
- the factory's catalogue, which contained details of the machines; and
- details from the factory's website, which suggested that the infringing machines could constitute a replacement of the company's machines at a competitive price.
The company filed a lawsuit with the Taizhou Intermediate Court, asking that it go to the defendant's factory and seal a sample machine for infringement analysis. The court granted the application and the judge went to the factory to identify and seal a sample machine on site. In the ensuing hearing, both parties went to the defendant's factory to examine the sample machine and conduct an infringement analysis under the judge's supervision.
After filing the lawsuit, the company made further online searches and noticed that in 2012 the defendant had applied to the local government for a technology advancement award based on the infringing machines. The company provided this information to the court and asked that it obtain the defendant's application materials from the local government. The judge obtained an official copy of the materials from the government archive, from which the company discovered that the defendant had disclosed its production scale and the profits that it had derived from the infringing machines since 2010. The company used this evidence to calculate damages.
In 2015 the Taizhou Intermediate Court found the defendant liable for patent infringement and ordered that it:
- stop the infringement; and
- pay Rmb880,000 in damages, plus a proportion of the litigation fees.
In December 2015 the Zhejiang High Court upheld the first-instance decision.
Article 81 of the Civil Procedure Law provides that, where evidence is likely to be destroyed or difficult to obtain in future, the party concerned can apply to the court to preserve evidence during the trial. In an emergency, the party concerned can apply for the evidence to be preserved before filing the lawsuit.
Although it is difficult to obtain an official evidence preservation ruling in some regions, it is possible. Under Article 5 of Judicial Interpretation 2015/4, there may be multiple jurisdictions over a patent dispute – namely, the court of the defendant's domicile and the court of the place of infringement (ie, where the alleged infringing product is sold or manufactured or the alleged infringing process is conducted). Before launching legal action, patentees can research which court is more IP friendly and likely to grant an official evidence preservation ruling.
For further information on this topic please contact Shuhua Zhang at Wan Hui Da Law Firm & Intellectual Property Agency by telephone (+86 10 6892 1000) or email ([email protected]). The Wan Hu Da Law Firm & Intellectual Property Agency website can be accessed at www.wanhuida.com.