The Threat of Evidence Destruction: Strategies to Safeguard and Accelerate Proof of Patent Infringement in the U.S. and China

Part Two of a Two-Part Article

Judicial Evidentiary Protections During and Before Litigation

In China, patentees can vindicate rights against alleged infringers by judicial or administrative means. This section focuses on judicial litigation and, in particular, mechanisms to protect evidence during, and even before, judicial litigation. If there is a likelihood that evidence will be lost or difficult to acquire, litigants can request from the court measures to preserve evidence. If the court finds sufficient support for the request, it will order evidence preservation. Evidence preservation has become a powerful tool in Chinese patent litigation.

Protection of Evidence During Litigation. U.S.-style discovery does not exist in Chinese litigation. Patentees must themselves timely gather and submit evidence to carry their burden of proof regarding infringement and damages. An understanding of mechanisms to acquire and preserve evidence provided under Chinese law therefore can be critical.

Time Limitations. The Rules of Supreme Court on Evidence in Civil Litigation (“Civil Evidence Rules”) impose time limitations for the submission of evidence, ending a former practice whereby the production of evidence was not restricted in time. Under Article 34 of the Civil Evidence Rules, a failure to timely submit evidence is a waiver of the right to provide such evidence. In general, the time period within which to submit evidence to the court will be negotiated by the parties and approved by the court. If the time period is unreasonable, the court will order the parties to agree on a new time period. If the parties cannot reach agreement, the court will order a reasonable time period, which will usually not be less than 30 days. The time period begins the day after delivery of the summons and notice regarding burden of proof. In special circumstances when a party cannot timely submit evidence, the time period can be extended. The relatively short time period in which to submit evidence underscores the need for the patentee to complete the collection of evidence proactively and as early as possible.

Mechanisms to Preserve Evidence. Under Article 65 of the Civil Procedure Law, a court is authorized to obtain evidence from relevant sources. Such sources may not refuse to provide information requested by the court. While empowered to do so, courts seldom collect evidence in this way. While the China Patent Law does not specifically address evidence protection, Article 74 of the Civil Procedure Law does provide a mechanism for parties to protect evidence. Under Article 74, a party may apply ex parte for a court order to preserve evidence when the evidence may be destroyed, lost, or hard to obtain later. Before such an order will issue, most courts will require the applicant to make a preliminary showing of ongoing or imminent infringement. Under Article 23 of the Civil Evidence Rules, such an application must be made no later than seven days prior to the end of the time period for the submission of evidence. If the application is rejected, the applicant can request reconsideration.

The court may require that the applicant for evidence preservation post a bond. Under the copyright law and trademark law, the court must order the party requesting protection of evidence to provide a bond. The patent law, however, is silent, and judicial opinions have not resolved this issue.

An evidence preservation order is normally carried out by the court itself. The party subject to the preservation order generally will not receive advance notice. In executing such an order, a judge may proceed in various ways depending on the circumstances. For example, the judge may question the respondent, order production of documents, take samples of infringing materials, or inspect premises. Measures to effect evidence preservation include sealing, imaging, verifying, inspecting, or preparing records. The court may ask for the presence of the party subject to the order, or its agent, during collection of the evidence. Evidence obtained from the execution of a preservation order should be admissible in the litigation.

Evidence Protection Before Litigation. Currently, there is no authority that requires an alleged patent infringer, without mandate by the court, to automatically preserve evidence based upon a pre-suit allegation of patent infringement. Article 23 of the Civil Evidence Rules provides that if other legal authority allows for measures concerning pre-litigation preservation of evidence, that legal authority shall govern. Like the Chinese trademark law and copyright law, the patent law allows for pre-suit evidentiary preservation measures upon application to the court.

Prior to suit, a patentee can request evidence protection along with preliminary injunctive relief under Article 61 of the Patent Law. Before grant of preliminary injunctive relief, Chinese courts consider whether there is patent infringement and whether the patentee will be irreparably harmed. If all procedural requirements are met, the court must issue a decision within 48 hours of the application for a preliminary injunction. If it has not already done so, the patentee must initiate an infringement suit within 15 days of the issuance of the preliminary injunction or else the injunction will be lifted. Under Article 16 of the Several Provisions of the Supreme People's Court for the Application of Law to Pre-Trial Cessation of Infringement of Patent Right, courts are specifically empowered to order upon application by a party, simultaneously with preliminary injunctive relief, evidence protection under Article 74 of the Civil Procedure Law. Such measures allow for the protection of evidence prior to the start of litigation.

Adverse Inference. Like in the United States, there is recourse in China for patentees when the alleged infringer refuses to provide evidence in its possession. If a first party can prove a second party possesses evidence but without legitimate grounds refuses to provide that evidence, and if the first party can establish that the contents of the withheld evidence are disadvantageous to the second party, then the contents of the withheld evidence should be presumed to be established. In this regard, courts in Beijing already have started to implement such evidentiary presumptions and adverse inferences. One notable exception to this measure is when the evidence in question relates to a trade secret.

Administrative Protection of Evidence

Public notarization, a special Chinese evidentiary mechanism, is an extra-judicial option to protect evidence of patent infringement. Upon an applicant's request, if evidence may be destroyed or later difficult to establish, the notarial office follows legal procedures to preserve evidence and to certify the authenticity and legality of an act, fact, or document. After investigating the evidence and confirming that the evidence is genuine, legal, and adequate, the notarial office must issue a notarial certificate to the applicant within 15 working days. The notarized civil legal act, fact, and document of legal significance shall serve as the basis for determining a fact except when contrary evidence is sufficient to invalidate the notarial certificate. By employing notarization, a litigant can not only safeguard patent infringement evidence but also optimize the probative value of that evidence for later use in litigation. Notarization is a low-cost but high-value measure to collect and protect evidence of patent infringement and, as such, should be considered when appropriate.

Conclusion

Measures to prevent the destruction of vital infringement evidence in the United States and China vary. In the United States, a patentee can strategically dispatch a cease and desist letter to an alleged infringer as soon as the infringement suspicion arises. Immediately following launch of suit, a patentee can seek a preservation order from the court to prevent evidence spoliation. In addition, prior to commencement of routine discovery, a U.S. patentee can petition the court for expedited discovery upon a showing of the risk that evidence will be destroyed. In China, although cease and desist demands are often counterproductive to the cause of evidence preservation, judicial mechanisms for strategic evidence protection are available. Although not expressly addressed in the China Patent Law, other statutory provisions allow a patentee to pursue evidence protection not only during litigation but also before initiation of suit. Chinese law also uniquely provides the use of government notarization procedures to preserve evidence. Accordingly, patentees should selectively employ the various mechanisms to safeguard the survival of critical infringement evidence against alleged infringers in both American and Chinese litigation.

James W. Soong is a shareholder in the Silicon Valley office of the international law firm Greenberg Traurig, LLP. His practice focuses on patent litigation and strategic intellectual property counseling. Y.T. Chen is an attorney in the Taipei, Taiwan office of the law firm Lee and Li, Attorneys-At-Law. Her practice focuses on patent infringement litigation and corporate investment. This article reflects the current views of the authors and not necessarily those of their law firms or clients.

Part Two of a Two-Part Article

Judicial Evidentiary Protections During and Before Litigation

In China, patentees can vindicate rights against alleged infringers by judicial or administrative means. This section focuses on judicial litigation and, in particular, mechanisms to protect evidence during, and even before, judicial litigation. If there is a likelihood that evidence will be lost or difficult to acquire, litigants can request from the court measures to preserve evidence. If the court finds sufficient support for the request, it will order evidence preservation. Evidence preservation has become a powerful tool in Chinese patent litigation.

Protection of Evidence During Litigation. U.S.-style discovery does not exist in Chinese litigation. Patentees must themselves timely gather and submit evidence to carry their burden of proof regarding infringement and damages. An understanding of mechanisms to acquire and preserve evidence provided under Chinese law therefore can be critical.

Time Limitations. The Rules of Supreme Court on Evidence in Civil Litigation (“Civil Evidence Rules”) impose time limitations for the submission of evidence, ending a former practice whereby the production of evidence was not restricted in time. Under Article 34 of the Civil Evidence Rules, a failure to timely submit evidence is a waiver of the right to provide such evidence. In general, the time period within which to submit evidence to the court will be negotiated by the parties and approved by the court. If the time period is unreasonable, the court will order the parties to agree on a new time period. If the parties cannot reach agreement, the court will order a reasonable time period, which will usually not be less than 30 days. The time period begins the day after delivery of the summons and notice regarding burden of proof. In special circumstances when a party cannot timely submit evidence, the time period can be extended. The relatively short time period in which to submit evidence underscores the need for the patentee to complete the collection of evidence proactively and as early as possible.

Mechanisms to Preserve Evidence. Under Article 65 of the Civil Procedure Law, a court is authorized to obtain evidence from relevant sources. Such sources may not refuse to provide information requested by the court. While empowered to do so, courts seldom collect evidence in this way. While the China Patent Law does not specifically address evidence protection, Article 74 of the Civil Procedure Law does provide a mechanism for parties to protect evidence. Under Article 74, a party may apply ex parte for a court order to preserve evidence when the evidence may be destroyed, lost, or hard to obtain later. Before such an order will issue, most courts will require the applicant to make a preliminary showing of ongoing or imminent infringement. Under Article 23 of the Civil Evidence Rules, such an application must be made no later than seven days prior to the end of the time period for the submission of evidence. If the application is rejected, the applicant can request reconsideration.

The court may require that the applicant for evidence preservation post a bond. Under the copyright law and trademark law, the court must order the party requesting protection of evidence to provide a bond. The patent law, however, is silent, and judicial opinions have not resolved this issue.

An evidence preservation order is normally carried out by the court itself. The party subject to the preservation order generally will not receive advance notice. In executing such an order, a judge may proceed in various ways depending on the circumstances. For example, the judge may question the respondent, order production of documents, take samples of infringing materials, or inspect premises. Measures to effect evidence preservation include sealing, imaging, verifying, inspecting, or preparing records. The court may ask for the presence of the party subject to the order, or its agent, during collection of the evidence. Evidence obtained from the execution of a preservation order should be admissible in the litigation.

Evidence Protection Before Litigation. Currently, there is no authority that requires an alleged patent infringer, without mandate by the court, to automatically preserve evidence based upon a pre-suit allegation of patent infringement. Article 23 of the Civil Evidence Rules provides that if other legal authority allows for measures concerning pre-litigation preservation of evidence, that legal authority shall govern. Like the Chinese trademark law and copyright law, the patent law allows for pre-suit evidentiary preservation measures upon application to the court.

Prior to suit, a patentee can request evidence protection along with preliminary injunctive relief under Article 61 of the Patent Law. Before grant of preliminary injunctive relief, Chinese courts consider whether there is patent infringement and whether the patentee will be irreparably harmed. If all procedural requirements are met, the court must issue a decision within 48 hours of the application for a preliminary injunction. If it has not already done so, the patentee must initiate an infringement suit within 15 days of the issuance of the preliminary injunction or else the injunction will be lifted. Under Article 16 of the Several Provisions of the Supreme People's Court for the Application of Law to Pre-Trial Cessation of Infringement of Patent Right, courts are specifically empowered to order upon application by a party, simultaneously with preliminary injunctive relief, evidence protection under Article 74 of the Civil Procedure Law. Such measures allow for the protection of evidence prior to the start of litigation.

Adverse Inference. Like in the United States, there is recourse in China for patentees when the alleged infringer refuses to provide evidence in its possession. If a first party can prove a second party possesses evidence but without legitimate grounds refuses to provide that evidence, and if the first party can establish that the contents of the withheld evidence are disadvantageous to the second party, then the contents of the withheld evidence should be presumed to be established. In this regard, courts in Beijing already have started to implement such evidentiary presumptions and adverse inferences. One notable exception to this measure is when the evidence in question relates to a trade secret.

Administrative Protection of Evidence

Public notarization, a special Chinese evidentiary mechanism, is an extra-judicial option to protect evidence of patent infringement. Upon an applicant's request, if evidence may be destroyed or later difficult to establish, the notarial office follows legal procedures to preserve evidence and to certify the authenticity and legality of an act, fact, or document. After investigating the evidence and confirming that the evidence is genuine, legal, and adequate, the notarial office must issue a notarial certificate to the applicant within 15 working days. The notarized civil legal act, fact, and document of legal significance shall serve as the basis for determining a fact except when contrary evidence is sufficient to invalidate the notarial certificate. By employing notarization, a litigant can not only safeguard patent infringement evidence but also optimize the probative value of that evidence for later use in litigation. Notarization is a low-cost but high-value measure to collect and protect evidence of patent infringement and, as such, should be considered when appropriate.

Conclusion

Measures to prevent the destruction of vital infringement evidence in the United States and China vary. In the United States, a patentee can strategically dispatch a cease and desist letter to an alleged infringer as soon as the infringement suspicion arises. Immediately following launch of suit, a patentee can seek a preservation order from the court to prevent evidence spoliation. In addition, prior to commencement of routine discovery, a U.S. patentee can petition the court for expedited discovery upon a showing of the risk that evidence will be destroyed. In China, although cease and desist demands are often counterproductive to the cause of evidence preservation, judicial mechanisms for strategic evidence protection are available. Although not expressly addressed in the China Patent Law, other statutory provisions allow a patentee to pursue evidence protection not only during litigation but also before initiation of suit. Chinese law also uniquely provides the use of government notarization procedures to preserve evidence. Accordingly, patentees should selectively employ the various mechanisms to safeguard the survival of critical infringement evidence against alleged infringers in both American and Chinese litigation.

James W. Soong is a shareholder in the Silicon Valley office of the international law firm Greenberg Traurig, LLP. His practice focuses on patent litigation and strategic intellectual property counseling. Y.T. Chen is an attorney in the Taipei, Taiwan office of the law firm Lee and Li, Attorneys-At-Law. Her practice focuses on patent infringement litigation and corporate investment. This article reflects the current views of the authors and not necessarily those of their law firms or clients.