Distribution of Burden of Proof for Process Patent Infringement Litigation

By Liu Hongbing, Lu Shan,[Patent]

Key Point
The particularity of process patent infringement litigation determines the difference between its distribution principles of the burden of proof from that of product patent infringement litigation. For the process involving the manufacture of a new product, the Patent Law has stipulated an inversion principle for determining the burden of proof implemented under certain circumstances. For the process involving the manufacture of existing products, the rule that “the burden of proof lies upon he who claims” will still prevail when there are no special provisions provided by law. However, for cases involving preliminary evidence or a trail of evidence, the court may adopt evidence preservation measures to make up the deficiency of the plaintiff’s capacity of providing evidence.

Case Overview
No.1 Plaintiff: Mr. Zhu
No.2 Plaintiff: Mr. Gu
No.3 Plaintiff: Haimen Jiangbin No.2 Chemical Industry Factory
Defendant: Changshu Goldyushan Dyestuffs Co., Ltd.
The three plaintiffs filed an invention patent application for the “produce-method of 2.5 – bi (1' – amido – 2' - anthryl) – 1, 3, 4 - oxadiazoles vat red” with the State Intellectual Property Office (SIPO) on Jan. 3 of 2000, and obtained the patent, number ZL00111410, on July 24 2002. In late 2001, the plaintiffs detected the defendant’s public sale of vat red F3B with the above patented process, and brought litigation requesting the court to order the defendant to immediately cease its infringement, and sought compensation in the sum 200,000 yuan for its economic loss.

Besides these requests, the plaintiffs appealed to the court to take evidence preservation measures for the process involving the manufacture of vat red F3B. After examining the preliminary evidence offered by the plaintiffs, the court decided to inspect the defendant’s workshop where vat red F3B was produced, but found it was shutdown for renovation. Thereafter the judicial authorities required the principal from the defendant’s company to provide the operating records of its manufacture, but still failed to obtain the records because the custodian of the records was away on a business trip. Later, the defendant submitted the operating procedure for the manufacture of vat red F3B performed by Changshu No.2 Dyestuff Factory before the trial as required by the judicial authorities. According to the Manual of Chemical Engineering Products edited by the Scientific and Technological Information Center of Dyestuff Industry of Ministry of Chemical Industry in 1985, manufacturers of vat red F3B included Shanghai Research Institute of Dyestuff (for trial production), Shanghai No.10 Dyestuff Factory and Jilin Dyestuff Factory.   
    During the hearing, the defendant argued that vat red F3B was not a new product, and that the manufacturing process provided by Changshu No.2 Dyestuff Factory was different from the patented process owned by the plaintiffs. 
   

Judgment
After the court session was commenced, the parties reached a conciliatory agreement that required the defendant Changshu Goldyushan Dyestuffs Co., Ltd.: 1. to respect the process patent right for the manufacture of vat red F3B owned by the plaintiffs Mr. Gu, Mr. Zhu and Haimen Jiangbin No.2 Chemical Industry Factory; 2. to never use the patented process owned by the plaintiffs to produce vat red F3B; 3. to compensate the plaintiffs 20,000 yuan; and 4. required the three plaintiffs and the defendant to respectively assume half of the incurred litigation fees in the case.  
Analysis of the Judgment
The distribution of the burden of proof for process patent infringement litigation remains a problematic area in judicial practice. Although the Patent Law has implemented the inversion rule for determining the burden of proof for the manufacture process involving a new product, disputes arise in the judicial practice concerning the applicable conditions, the appraisal of new products and the effective protection of the process patent right for existing products. This article will examine these issues as reflected by this case.   
I. Particularity of Infringement Litigation
Pursuant to Article 64 (1) of Civil Procedure Law, “litigants are obliged to present evidence for their assertions”. Article 2 of the Several Provisions of the Supreme People’s Court on Evidence in Civil Procedures stipulates that “the litigants are obliged to present evidence to prove the facts upon  which they rely to make their litigious claims or to rebut the other party’s claims. When there is no evidence or the evidence is insufficient to prove the litigant’s claims, the party responsible for offering proof shall assume all adverse effects.” Since patent infringement litigation is a type of civil infringement litigation, the Court shall apply the general rules involved in civil infringement litigation. Guided by the rule that “the burden of proof lies upon he who claims”, the patent right owner or the interested person raising the accusation shall first bear the burden of proof, and offer proof of the facts as follows: (1) whether the plaintiff has the patent right and its current legal status; (2) what the alleged infringer has done, and the circumstances of the infringement (3) whether the technical content of the alleged infringing act is covered by the protective range defined by the patent right-claiming document; (4) what is the purpose of the alleged infringer’s actions in its production operations.     
The invention patent consists of a product patent and a process patent. Therefore, patent infringement litigation may be divided into product patent infringement litigation and process patent infringement litigation. It is not difficult for the owner of a product patent to assume the burden of proof for the aforesaid essential conditions, especially with respect to the infringing act of the defendant, because all patented products are created by people, and their technical programs are embodied by the machinery, equipment, parts, instruments, devices, appliances, materials, their composition and compounds. In order to seek profits, the alleged infringing products must be marketed and sold to the public, and therefore, as long as the right owner acquires the products made by the defendant through legal means, he satisfies the burden of proof. If the product to be acquired does not contain the manufacturer’s name, the consumer may require the seller to provide its legal source. Should the seller fail to do so, it may be understood by the consumer that the seller is the manufacturer, and as such, the seller shall be liable for any compensation.      

Unlike a product patent, the process patent deals with the processing procedure, manufacturing technology, testing method or the method of product usage. Due to the fact that the application process takes place during the manufacture of the product, it is almost impossible for the right owner to investigate the production field and collect evidence on the alleged infringer’s use of the patented process. In particular, for some products, the manufacturing technology always involves the business secrets of the enterprise, and as a result is classified as confidential. Even if the right owner obtains a product from the seller that may be a direct result of the patented process, he shall not conclude that the defendant makes the product with the patented process, because theoretically, there are various processes, which can be used to obtain the same result. It is too harsh a requirement to demand the right owner furnish the proof, and it is not beneficial for the protection of the process patent. Consequently, it is necessary to rationally distribute the burden of proof for the right owners of a process patent, which favors the safeguarding of their interests and the lessening of the burden of proof. Furthermore, attention shall also be paid to prevent interference to the public’s legal production and operating activities.  
The process for an invention protected by The Patent Law may involve the process for the manufacture of either a patented product, or a product that is available in foreign countries but never appears in the Chinese market, or is a product already marketed in China. Generally speaking, the patented product and its manufacturing process belong to the same category of invention, and may be included in one application. For a process patent, it may be concluded that there are no means for others to make the patented products without referring to the patented process. When someone else makes the patented product but denies use of the patented process, he shall prove, by furnishing evidence, that the process used is very reasonable. For products not available in the Chinese market, the product’s manufacturing process shall be considered unknown, even if known in the foreign markets. In case someone else in China makes the same product but denies using the patented process, it is reasonable to require them to furnish evidence that the process used is not the patented process. However, if a product is known in China, it naturally involves the corresponding process for its manufacture. It sounds unreasonable to require people owning the patented product to first assume the burden of proof when disputes arise simply because someone else invents a new process.            
II. Legal Provisions on Burden of Proof for Process Patent
The legal provisions concerning the burden of proof for process patents reaches maturity after the following three stages:
 (I) Strictly-implemented inversion principle for the burden of proof
Pursuant to Article 60 (2) of China’s first Patent Law promulgated in 1984, “[w]hen any infringement dispute arises, if the invention patent is for the manufacturing process for a product, any entity or individual manufacturing the identical product shall furnish proof of the process used in the manufacture of its or his product.” Article 74 of the Opinions of the Supreme People’s Court on Some Issues Concerning the Application of Civil Procedure Law stipulates that it is the duty of a party to an action to furnish evidence in support of its allegations. But if the defendant denies the infringing acts alleged by the plaintiff, the defendant shall assume the burden of proof in the following kinds of infringement litigation: (1) patent infringement litigation concerning the invention patent for a manufacturing process for a product…” It can be seen here that the stipulation did not differentiate the new product from the already existing one, but that the patent for a manufacturing process strictly implements the inversion principle for the burden of proof, and the defendant shall assume the complete burden of proof for the manufacturing process of his product.      
 (II) Differentiated inversion principle of burden of proof
The Agreement on Trade Related Aspects of Intellectual Property Rights (hereinafter referred to as TRIPS Agreement) was preliminarily reached in late 1991, and contains a special stipulation in Article 34 concerning the burden of proof for process patents. In patent infringement litigation, if the subject matter of a patent is a process for obtaining a product, the judicial authorities shall have the authority to order the defendant to prove that the process to obtain an identical product is different from the patented process. Therefore, Members shall provide, in at least one of the following circumstances, that any identical product when produced without the consent of the patent owner shall, in the absence of proof to the contrary, be deemed to have been obtained by the patented process: (a) if the product obtained by the patented process is new; (b) if there is a substantial likelihood that the identical product was made by the process and the owner of the patent has been unable through reasonable efforts to determine the process actually used. The Patent Law firstly amended in 1992 adopted scheme (a) in the TRIPS Agreement, which was detailed in Article 60 (2) that "[w]hen any infringement dispute arises, if the invention patent involves a process for the manufacture of a new product, any entity or individual manufacturing the identical product shall furnish proof of the process used in the manufacture of its or his product." Compared to the 1984 Patent Law version, the word “new” is added which shows that only the manufacture of new products will implement the inversion principle for the burden of proof, so that the burden of proof for the manufacturing process of an already existing product is still governed by the general principle that “the burden of proof lies upon he who affirms”.
 (III) Limited inversion principle of burden of proof
The amendment of the burden of proof for process patents in the 1992 Patent Law distinguishes between new products and the already existing products. However, its application still finds some imperfections. The first problem is that by requiring only that the defendant furnish “the evidence on the manufacturing process” the similarities and differences between the process used by the defendant and the patented process can not be clearly demonstrated, which does not facilitate the court or patent administration authorities in judging the infringement, and goes against the purpose of legislation containing the inversion principle of the burden of proof. The second problem is that according to Article 34 (3) of TRIPS Agreement, “In the adduction of proof to the contrary, the legitimate interests of defendants in protecting their manufacturing and business secrets shall be taken into account.” The defendant’s manufacturing process always involves business secrets. When the defendant is requested to furnish “the evidence on the manufacturing process” without any limitations, business secrets will be unavoidably disclosed. In fact, the defendant fulfills the burden of proof simply by proving that a particular technological process or a single component of the compound is neither identical nor similar to a certain necessary technical feature of the patented process. It is essential to guard against the utilization of the inversion principal of burden of proof by the patent owner to necessitate the disclosure of the defendant’s proper business or technical secrets. Therefore, the evidence on the manufacturing process to be furnished by the defendant shall be limited in a certain range, with the necessary qualification that the dissimilarity between it and the patented process can be fully proven, instead of requiring the provision of the complete process. In view of this, the Patent Law amended in 2001 stipulates in Article 57 (2) that “where any infringement dispute relates to a patent for invention involving a process for the manufacture of a new product, any entity or individual manufacturing the identical product shall furnish proof to show that the process used in the manufacture of its or his product is different from the patented process…” The first item in Article 4 (1) of the Several Provisions of the Supreme People’s Court on Evidence in Civil Procedures stipulates that “for any patent infringement litigation arising from the invention patent for the manufacturing process of a new product, any entity or individual manufacturing the identical product shall assume the burden of proof to show that the process used in the manufacture of its or his product is different from the patented process.” 
III. Standards of “New Products” and the Resultant Burden of Proof
 Although being an important condition for determining the inversion burden of proof for a process patent, the term “New product”, is not stipulated in the TRIPS Agreement, the Patent Law and its rules, or the Judicial Interpretation. As a result, disputes arise in the judicial practice concerning how to define a “new product” and which party is responsible for its burden of proof. As for the definition of “new product”, the dominant idea sets the standard as being one of “appearance”; that is, a product never appearing in the domestic markets before the date of the patent application is deemed a “new product”1. In Article 117 of the Exposure Draft of the Several Issues of the Supreme People’s Court on the Judgment of Patent Infringement Cases dated July 2003, two standards are provided: the aforesaid “appearance” standard and the “manufacture” standard’, that is, a product never produced in the country before the date of the patent application is deemed a “new product”. The Draft referred to the National Working Conference for Patent Trial in October 2003 only uses the “appearance” standard. Article 63 (1) of the Draft stipulates “ ‘a new product’ as defined in Article 57 (2) of the Patent Law refers to the product never appearing in the domestic markets before the date of patent application. It is markedly different from similar products already existing before the date of patent application in respect to its constitution, structure, quality, performance or function.” In the author’s point of view, to interpret “new product” as a novelty conforming to the regulations of the Patent Law is almost to put an equal mark between the “new product” and the patented product. Thus, it becomes meaningless to set the inversion principle of the burden of proof for a process patent, and will exert an excessive burden on the court’s judicial review. Compared to the “manufacture” standard, the “appearance” standard is more objective and open, and more rational as it benefits one party in furnishing the evidence.
Although Article 57(2) of the Patent Law prescribes that in patent infringement cases an invention patent for a manufacture process of a new product shall implement the inversion principle for the burden of proof, it does not mean to shift all of the burden of proof off the plaintiff. Besides the attestation of his own rights, the plaintiff shall firstly prove that the product manufactured by the defendant is identical to his own product and directly obtained from the patented process, and then prove that that product directly obtained from the patented process is a new product. Nevertheless, it is still very difficult for the plaintiff to prove that the product directly obtained from the patented process has never appeared in the domestic markets, because the required evidence may never be sufficient to prove this fact, and the defendant can rebut this evidence by one contrary fact, which will undermine the plaintiff’s argument. Therefore, the burden of proof for a “new product” shall not only persist in the rule that “the plaintiff assumes the burden”, but also flexibly apply the rule of “facts proven” to settle the problems encountered. To put it more specifically, the plaintiff’s burden of proof for the “new product” is only limited to a thorough explanation, so that the judge is fully convinced that the product directly obtained from the patented process has never appeared in the domestic markets. Then the judge may form a preliminary judgment and presumption that the plaintiff’s allegation of a “new product” is established, and permit and require the defendant to furnish proof to the contrary. Where the defendant is able to prove that the plaintiff’s product is not a new product, the burden of proof for the manufacture process of the defendant’s product shall still be on the plaintiff’s shoulders. Should the defendant fail to furnish proof, the facts are deemed established and the defendant shall assume the burden of proof for the manufacture process of the product.   

The plaintiffs in this case, seeking an upper hand in the litigation, alleged that the vat red F3B directly obtained from the patented process was a new product, supported by the appraisal report on the technological achievements involved in the case issued by the administrative departments of science and technology. But the defendant did not agree to the conclusion in the report that “vat red F3B is a new product”, and furnished proof to the contrary: the Manual of Chemical Engineering Products edited by the Scientific and Technological Information Center of Dyestuff Industry of Ministry of Chemical Industry in 1985, which recorded three manufacturers of vat red F3B at that time. Thus the preliminary evidence offered by the plaintiffs was rebutted, and their allegations that vat red F3B was a new product was dismissed. In accordance with the general rule of the distribution of burden of proof, the plaintiff should assume the burden of proof for the allegation that the defendant manufactured identical products by using plaintiff’s patented process.
IV. The Effective Protection of Process Patent Rights for Existing Products
As has been stated before, process patent infringement litigation for existing products applies the general rule that “the burden of proof lies upon the party who claims”, and since the implementation of the manufacturing process is controlled by the defendant, it severely frustrates the practical protection of process patent rights for existing products. 
There are opinions that the “Theory of the Danger Field” advocated by a Germany scholar named Prolss fills this gap. This Theory deems that the party concerned shall assume the burden of proof for the facts within the “danger field” controllable by him; that is, within the “danger field” controllable by the wrongdoer, the injured party will assume no burden of proof for the objective or subjective essentials causing the injury, but the wrongdoer shall furnish the evidence of the non-existence of the objective or subjective essentials2. For this reason, in patent invention infringement litigation for a manufacturing process, the defendant’s burden of proof may be aggravated on the precondition that his business secret is not harmed, because either from the aspect of provability or from the authentication of the evidence, the defendant manufacturing the identical product obviously enjoys more favorable conditions than the plaintiff, and the equity principle requires the defendant to disprove the plaintiff’s accusation effectively, otherwise he may lose the action. However, this view lacks a foundation in the current laws.     

In our opinion, the full and effective use of evidence in an investigation system under the current legal framework will make up for the difficulty of proof for the patent right owner of existing products. Article 64 (2) of the Civil Procedure Law stipulates “if, for objective reasons, a party and his agent are unable to collect the evidence by themselves or if the people's court considers the evidence necessary for the trial of the case, the people's court shall investigate and collect it.” In accordance with Article 73 of the Opinions of the Supreme People’s Court on Some Issues Concerning the Application of Civil Procedure Law, and Article 15 and 17 of the Several Provisions of the Supreme People’s Court on Evidence in Civil Procedures, “the people’s court may consider it necessary for the trial of the case and investigate and collect the following evidence as permitted by its functions and powers (1) those involving facts that may damage the interests of the state, the public and the others; (2) those involving procedural matters irrelevant to the substantial dispute, such as the addition of parties, discontinuation of an action, termination of review or withdrawal, etc.; (3) those deemed necessary for the identification and examination by the people’s court; (4) those furnished by the parties concerned which is contradictory and can not be determined; and (5) other evidence that the people’s court considers necessary to collect by itself. The parties concerned and their agents may apply for the people’s court to investigate and collect the following evidence: (1) documentary materials kept by the national departments concerned and requiring the people’s court to investigate and collect as permitted by its functions and powers; (2) materials involving national secrets, business secrets or individual privacy; (3) other materials that the parties concerned and their agents are unable to collect by themselves for objective reasons.” These provisions show that although the current laws strictly limit the range of investigation and evidence collected by the court, it may still investigate and collect evidence if the parties concerned and their agents are unable to collect the evidence by themselves for objective reasons.        
In the process patent infringement litigation involving existing products, the court shall first examine the application filed by the plaintiff on the investigation of the defendant’s manufacture process, and analyze whether the plaintiff establishes preliminary proof that the defendant is suspected of an infringement, such as the witness’ testimony and the possibility of the defendants using the plaintiff’s patented process. It is prohibited for the court to investigate only relying upon the plaintiff’s groundless allegations. The court may investigate the manufacturing field, and may require the defendant to conduct a field demonstration, and record, photograph or videotape the situation. The court may also require the defendant to submit recorded data reflecting his production process. These kinds of evidence obtained from the investigation belong to the plaintiff, and it is up to the plaintiff to use it or not. In case the defendant refuses to submit the process data for its business secrets, the court may investigate and collect corresponding technological processes not involving business secrets. Should the defendant, without any justified reason, refuse or attempt to hinder the court from carrying out the investigation, the defendant is presumed to have used the patented process where the evidence available for the plaintiff is predominant. If the plaintiff’s evidence is not predominant, the plaintiff shall be responsible for the consequences of its failure of proof. In conclusion, during process patent infringement litigation involving existing products, the proper use of the presumption rule and the evidence investigation system may legally improve the probative ability of the patent right owner, avoid litigation deadlock, and achieve a balance between the maintenance of the interests of the patent right owner and that of the public.
In this case, although the plaintiffs proved that the defendant had produced vat red F3B, they should still assume the burden of proving that the defendant used the patented process, because vat red F3B was not a new product. With the fact that an employee from the plaintiff’s company went to work for the defendant’s company, the court adopted the plaintiff’s application for an evidentiary investigation. Although the defendant did not submit the production record as required by the court, it furnished the technological process recorded in the operating procedure for the manufacture of vat red F3B by Changshu No.2 Dyestuff Factory that was proved to be identical to the plaintiffs’ patented process except for a few differences in temperature, concentration, acidity and material feeding time. Since the defendant could not provide a reasonable explanation for his failure in submitting the original production and operation record, and during the investigation his management staff had admitted that they had the record, the defendant’s action of refusing to submit the production and operation record without justified reasons constituted obstruction of proof.    
Article 75 of the Several Provisions of the Supreme People’s Court on Evidence in Civil Procedures stipulates that, “Where it is proven by evidence that certain evidence being in possession of one party, but without justified reason that party refuses to submit the said evidence, presumption can be made that the evidence is against the possessor if the opposite party so alleges.” Hereby presumption can be made that the defendant has used the plaintiffs’ patented process. Of course, the presumption for obstruction of proof is a refutable legal presumption3. The judge, when applying this presumption rule, shall cross-examine the plaintiff and the defendant to infer the relationship between the basic facts and the presumption, and shall explain it to the defendant in control of the evidence. Should the evidence furnished by the defendant be sufficient to prove the dissimilarity between the processes it used and the patented process owned by the plaintiffs, this presumption is held to be inadmissible?    


Both Liu Hongbing and Lu Shan are judges at Nanjing Intermediate People’s Court.

(Translated by Hu Xiaoying)

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