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A case study on burden of proof in China

Issue: November 2009

Keywords (click to search): IP burden of proof dispute resolution evidence Wenling Shoe Factory

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Rouse
Mai Lin
mai@iprights.com

At the end of 2008 the Hangzhou Intermediate People's Court ruled against a famous US footwear and apparel maker in a trade mark infringement action it brought against a Chinese shoe factory located in Wenling, a small coastal city 300 kilometres south of Shanghai.

The US shoemaker registered its logo in mainland China in 1993. Last year, it learned that Chinese supermarket chain Hangzhou Wu-mart was selling sports shoes bearing the logo.

The US company alleged that Wenling Shoe Factory produced the counterfeit product. It submitted proof of its trade mark rights, a receipt with a Hangzhou Wu-Mart stamp, and a certificate from a Chinese notary public who witnessed the purchase and attested to the purchase of the shoe from Wu-Mart. To prove that Wenling Shoe Factory was the counterfeiter, the US company relied on the label attached to the shoe naming the shoe factory as the manufacturer. This turned out not to be enough.

Without introducing any evidence, Wenling Shoe Factory successfully argued that it did not produce the sneakers and that the evidence submitted by the plaintiff in no way proved that the shoe factory was indeed the manufacturer. The court held that the logo on the shoe was very similar to that of the plaintiff, but the evidence did not show that the defendant produced or sold the infringing product. The US shoemaker's claims were rejected.

Evidentiary burden of proof in China

Given that China's evidence rules were scattered across various laws, the Supreme People's Court of China adopted the Several Provisions on Evidence in Civil Proceedings (最高人民法院关於民事诉讼证据的若干规定) (Civil Evidence Rules) in 2002 to provide guidance. The Civil Evidence Rules set out parties' burden of proof under the following basic principle: 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 unfavourable consequences." This general principle applies in civil IP infringement cases.

Taking the side of the defendant

The burden of proof was on the plaintiff to prove the cause of action and convince the judge of its entitlement to the relief sought. Here, the plaintiff convinced the judge that it had the exclusive right to the trade mark in question and that the shoe sold in Wu-Mart bore a mark substantially similar to that of its logo - in other words, there was indeed an infringement. However, the question left unproven was who was the infringer? The defendant essentially (and successfully) argued that it was not the manufacturer of the infringing product. The plaintiff failed to provide sufficient evidence to convince the judge of the essential link to Wenling Shoe Factory. The only link to the shoe factory was the appearance of its name on the warranty label. There was, however, no evidence offered to show that the defendant supplied the shoes to Wu-Mart or that it even had any business relationship with Wu-Mart. Without additional evidence, the court ruled in favour of the defendant.

Developing the evidence - lessons learnt

The Court did not see a sufficient link between the infringing act and the defendant. Additional measures the plaintiff could have taken before resting its case include requesting a notary to witness the purchase of a sample directly from a particular seller. This could be followed by a formal notarial certificate attesting to the facts - a common practice in Chinese litigation - as well as sealing up the sample as evidence to present to the court. In the absence of other evidence, the strongest evidence was arguably a notarised purchase directly from the party against whom damages were sought (i.e. Wenling Shoe Factory). This was complete with invoices clearly indicating the defendant's name and a sealed sample of the product purchased. This is nothing new to any practitioner in China but is a reminder to rights owners of the importance of corroborating evidence.

Alternatively, if a direct purchase from the defendant is not feasible, then supporting evidence to show the actual source of the infringing product sold by the retailer should be submitted. As this information may be difficult to obtain, the plaintiff may request the court to conduct its own investigation to collect evidence. This is where the court considers such information necessary to adjudicate the case and where the requesting party cannot obtain such evidence by reasonable means.

Other supporting evidence to be considered includes evidence that the defendant promotes the infringing product for sale i.e. marketing activities on a website or advertising leaflets. Although such evidence may not be conclusive, when submitted together with other evidence it may convince a judge that the burden of proof has been met.


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