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
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 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
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.