Author：Youfu Zhou

Yibin Changyi Pulp Dregs Co., Ltd. v. Weifang Henglian Pulp Paper Co., Ltd. (Civil Ruling (2013) Min Shen Zi No. 309 by the Supreme People’s Court on July 17, 2013)

New evidence should be determined according to Article 10 of Interpretation of the Supreme People’s Court on Several Issues Concerning Application of the Trial Supervision Procedure of the Civil Procedure Law of the People’s Republic of China. Regarding allocation of burden of proof in litigation over infringement of patent process for making non-new products, it may be determined according to the principle of fairness and that of honesty and good faith, taking into consideration such factors as the ability to provide evidence.  If the patentee can prove that the product in question is the same as that made by the patent process, and that it has made reasonable effort to prove that the manufacturing process of the product in question falls within the scope of protection of the patent process, using this as a basis and considering the known facts and common experience, it can be presumed that it is very likely that the alleged infringer has used the same process, therefore imposing on the alleged infringer the burden of proof to show that its manufacturing process is different from the patent process. 

Yibin Changyi Pulp Dregs Co., Ltd. (hereinafter “Changyi”) is the owner of the invention patent No. CN200610021387.4, titled “Wood Pulp Dregs Denaturation Manufacturing Process”.  The patent relates to a method of manufacturing wood pulp dregs, where manufacturing steps and process parameters involved are described.  Changyi bought, from Chengdu Xinruixin Plastic Co., Ltd. (hereinafter “Xinruixin”) and for evidence use, viscose wood pulp dregs product made by Weifang Henglian Pulp Paper Co., Ltd. (“Henglian” hereinafter), and then sued Henglian and Xinruixin for infringement of its patent right.

First-Instance Trial

Changyi claimed that Henglian had sold the product in dispute, providing a series of evidences, such as “Exit Permit of Henglian for Cotton Pulp Dregs” and “Quality Inspection Report for Henglian’s Pulp Dregs”, and further proved by ways of product inspection that the product in question was the same as viscose wood pulp made by the patent process.  Changyi had also produced a captured video of Henglian’s workshop, where related equipments and machines and the scene of raw material being fed in manufacturing wood pulp board are shown.  Henglian, admitting that the video images are of its production site, argued that what are produced are viscose cotton pulp dregs (merely ~5% wood pulp board is added) rather than viscose wood pulp dregs.

Changyi had also applied for evidence preservation in the first-instance trial.  When the first-instance court twice went to Henglian to try to preserve the evidence, Henglian refused each time to cooperate, causing preservation of evidence fail to be effected.

By considering the efforts by and resulted proof from the two parties, distances of their locations from the place of  evidence as well as other factors, the first-instance court allocated the burden of proof relating to the manufacturing process of the involved product to Henglian. Henglian refused to provide evidence accordingly without any justifiable reasons.  Thus, the first-instance court ruled that the method used by Henglian in manufacturing the disputed viscose wood pulp dregs product t fell within the scope of protection of the involved patent right, therefore infringing Changyi’s patent right.

Second-Instance Trial

Unsatisfied with the first-instance decision, Henglian appealed to the second-instance court.  After a trial, the second-instance court maintained the first-instance decision.

Review

Disagree to the second-instance decision, Henglian turned to the Supreme People’s Court for review.  During the review, Henglian submitted a series of evidences, using them as new elements to show that its manufacturing process is different from that of the involved patent.  The new evidences included a copy of  Technology Development Agreement signed by Henglian with Shandong Light Industry College on February 28, 2011, a copy of Technology Development Contract signed on March 1, 2011, a copy of Novelty Search Report on Technology prepared by Weifang Science & Technology Information Institute out of the project of “Optimization of Denaturation Pulp Process” on March 9, 2012, a copy of Notification of Acceptance issued by the State Intellectual Property Office of China on April 5, 2012 indicating Henglian as the applicant, etc.

The Supreme People’s Court found that the evidences provided by Henglian during review were actually available before the second-instance trial, which could be provided any time requested, but were not submitted in the first- and second-instance trial, therefore determining that the evidences submitted by Henglian were not “new evidences” and could not be accepted.  Regarding the allocation of burden of proof in the case of patent process for making non-new products, the Court was of the opinion that this requires comprehensive consideration according to the principle of fairness and that of honesty and good faith as set out in Article 7 of Some Provisions of the Supreme People’s Court on Evidence in Civil Procedures.  The Supreme People’s Court ruled that Changyi had proved that the product in question was same as that made by the patent process, and reasonable effort had been made by Changyi to prove that the manufacturing process of the product in question falls within the scope of protection of the patent process. And since Henglian failed to provide convincing evidences on its non-infringement claim and refused to cooperate with the court in preservation of evidence, high likelihood existed that Henglian had infringed Changyi’s patent right.  Based on the above, it was found that the decisions by the first- and second-instance courts were correct, and the request for review was rejected.

Interpretation and Analysis

Key Points of the Case

(1) Determination of “New Evidence”

The definition of “new evidence” is given in Article 10 of Interpretation of the Supreme People’s Court on Several Issues Concerning the Application of the Trial Supervision Procedure of the Civil Procedure Law of the People’s Republic of China:

“Article 10 – Where a retrial petitioner submits any of the following evidence, a people’s court may determine it as the “new evidence” as mentioned in Item 1, Paragraph 1, Article 179 of the Civil Procedure Law:

(1) Evidence existing before the end of the original trial but discovered thereafter;

(2) Evidence discovered before the end of the original trial but unacquirable due to objective reasons or unavailable within the prescribed time; or

(3) Evidence based on which the person who made the original conclusion of expert evaluation or transcript of on-site investigation overthrows the original conclusion upon reevaluation or reinvestigation after the end of the original trial.

Substantive evidence provided by the party concerned in the original trial which was not cross-examined or attested in the original trial but is conducive enough to reverse the original judgment or ruling shall be deemed as new evidence.”

Since the evidences submitted by Henglian during review were present and found before the second-instance trial, pertaining to none of the circumstances as stipulated above, they were not accepted as “new evidences”.

As can be seen, the requirements for “new evidence” are very strict during review in the Supreme People’s Court, and it seems that only evidences complying with conditions stipulated in Article 10 of Interpretation of the Supreme People’s Court on Several Issues Concerning the Application of the Trial Supervision Procedure of the Civil Procedure Law of the People’s Republic of China can be accepted  as “new evidences”.  As a party of infringement litigation or its agent, if you intend to argue against the other side with “new evidence”, you have to check first whether the evidence to be used pertains to any one of the circumstances as stipulated above.  If not, it would be hard for it to be accepted as “new evidence”.

(2) Allocation of Burden of Proof in Infringement Litigation of Patent Process for Making Non-new Products

In civil procedure, the burden of proof generally follows the principle of “who claims, who proves”, as is provided for in Article 64 of the Civil Procedure Law.

Comparing with a product, to proof on a process for making a product is more difficult, because the process actually used is controlled by the alleged infringer and is inaccessible for the patentee.  In view of this, if the principle of “who claims, who proves” is applied strictly, it will be difficult for a process to be protected.

In order to better protect process patent, some rules have been made in related laws and regulations.  For instance, it is stipulated in both Chinese Patent Law (Article 61, Paragraph 1) and Some Provisions of the Supreme People’s Court on Evidence in Civil Procedures (Article 4, Paragraph 1, Item (1)) that in the case of a process for making a new product, the alleged infringer shall take the burden of proof, making the rule of reversing burden of proof applicable here.  This is mainly because that a new product is generally not well known at the time of filing an application for a process patent, and therefore it is more likely that the product is manufactured by the process for which a patent is sought.

Regarding the process for making a non-new product, there are currently no explicit stipulations as far as burden of proof is concerned.  Comparing with a new product, the non-new product is present before filing date of the process patent, and thus the possibility of its being made by the process patent is not as high as a new product.  If the rule of reversing burden of proof applies, the patentee might abuse this advantage to extract trade secrets from the alleged infringer.

As stipulated by Article 7 of Some Provisions of the Supreme People’s Court on Evidence in Civil Procedures: “Where there are no explicit statutory provisions and it is not possible to define who shall be responsible for producing evidences according to the present Provisions or other judicial interpretations, the People’s court may determine the burden of proof according to the principle of fairness and the principle of honesty and credit and taking such elements as the ability to produce evidences into consideration.”  In the case of process for making a non-new product, in find out exact facts of relevance, not only the legitimate rights and interests of the patentee should be protected, but also the trade secrets of the alleged infringer should be respected. It seems appropriate to make a trade-off between allocating the burden of proof to the patentee and to the alleged infringer, which conforms to the principle of fairness and the principle of honesty and good faith.  That is, the burden of proof should be borne by both the patentee and the alleged infringer, or it should only be partially shifted to the alleged infringer.  It then should be further clarified as how to properly allocate the burden of proof between the patentee and the alleged infringer, as this is critical for a court decision and for protection of legitimate rights and interests of all involved.

Actually, Article 15 of the Supreme People’s Court Opinions on Several Issues Concerning Giving Full Play to IP Judicial Judgement Function to Drive the Vigorous Development and Prosperity of the Socialist Culture and to Promote Autonomous and Harmonious Development of Economy (“the Opinions” hereinafter) gives a guideline for trial of the infringement case relating to a process for making a non-new product: “ If the product made by the patent process is not a new product, the patentee can prove that the alleged infringer has manufactured the same product, and it has made reasonable effort to but failed to prove that the alleged infringer uses the patent process indeed, but based on the specific conditions of the case and in combination with known facts and daily experience, it can be determined that it is very much likely for the same product to be manufactured by the patent process, in which case, according to relevant stipulations of judicial interpretations on civil procedure evidence, the patentee is not required to provide further evidence, and the alleged infringer should then provide evidence to show any difference between its manufacturing process and the patent process.  In view of the difficulty of proof for a process patent, preservation of evidence could be performed legally to lighten the burden of proof of the patentee of the process patent.”

The Opinions has clarified on the allocation of burden of proof in infringement litigation of a process for making a non-new product.  In particular, the burden of proof of the patentee includes:

1) The product made by the patent process is not a new product, and the alleged infringer has manufactured the same product;

2) The patentee has made reasonable effort to prove that the alleged infringer uses its patent process.

The burden of proof of the alleged infringer includes: providing evidence to show any difference between its manufacturing process and the patent process.

In a real trial, comparing with a product in respect of which evidence for its being a new one is required, a non-new product would not entail such evidence.  Thus, for item 1), only the evidences to prove that the alleged infringer has manufactured the same product as that made by the patent process are needed.  Regarding the extent of proof, the Opinions provides for a criterion for determining the level of being reasonable of an effort: if, based on the specific conditions of the case and taking into account of the known facts and common experience, it can be determined that it is very likely that the product of the alleged infringer is manufactured by the patent process.  Although the criterion is still quite subjective, it gives a direction to the patentee as how to make efforts to provide effective evidence.  The Opinions also mentions the preservation of evidence, which can be taken as part of the reasonable effort.

It should be noted that for burden of proof of the alleged infringer, the Opinions merely gives the definition of  “providing evidence to show any difference between its manufacturing process and the patent process” without any detailed explanation.  It, however, can be understood clearer by referring to the principle of full coverage in Article 7 of Interpretations of the Supreme People’s Court on Several Issues Concerning the Application of Law in the Trial of Patent Infringement Dispute Cases. That is, its manufacturing process can be deemed as differing from the patent process if at least one of the technical features of the process patent is not present in its manufacturing process, or at least one of the technical features therein is neither same as nor equivalent to a feature in the process patent.  It is therefore unnecessary to provide evidences for the whole manufacturing process.

In the case of discussion, Changyi provided evidences and proved that the product manufactured by Henglian was the same as that made by the patent process, i.e., viscose wood pulp dregs, which is not a new product.  Regarding the manufacturing process of the involved product, Changyi had also made efforts to capture some related video images, and applied for evidence preservation in the first-instance trial.  As can be seen, Changyi had fully complied with the duties of both items 1) and 2).  Henglian, by contrast, refused to cooperate with the court on preservation of evidence, and failed to provide convincing evidence to show the difference between its manufacturing process and the patent process.  Based on the above, it is fairly clear that Henglian’s manufacturing process has infringed the right in the patent process.  This is exactly the situation as described in Article 15 of the Opinions, where it is appropriate for a part of the burden of proof to be taken by Henglian in order to find out the facts.

In an infringement litigation in which a process for making a non-new product is involved, if the patentee cannot produce such evidence that can prove infringement by the alleged infringer, it can try to complete the duties of both items 1) and 2) to the degree that it can be substantially established that combined with known facts and daily experience the alleged infringer has actually used the process patent, so as to shift the other part of the burden of proof to the alleged infringer, thus reducing the difficulty of proof; while the alleged infringer should cooperate in preservation of evidence as applied for by the patentee, and actively shares part of the manufacturing steps and process parameters of its manufacturing process to prove that at least one of the technical features of the process patent is not present in its manufacturing process, or at least one of the technical features therein is neither same as nor equivalent to a feature in the process patent, so as to prove that its manufacturing process is different from the patent process.