Judgment Gist
In a civil intellectual property lawsuit, if the applicant applies to the court to order the other party to produce documentary evidence, it should clarify the factum probandum in its claims. When evaluating the necessity of a “documentary evidence order”, the court may consider the following factors: 1. whether the applicant has submitted prima facie evidence to prove the existence of the factum probandum; 2. whether the documentary evidence belongs to the evidence that the applicant cannot collect on its own due to objective reasons; 3. whether the documentary evidence is aimed at the factum probandum; 4. whether the documentary evidence has an important impact on the ascertainment of the factum probandum; and 5. whether the factum probandum have a substantial impact on the outcome of the adjudication.
Case information
Case summary
The plaintiff, MTG Co., Ltd. (hereinafter referred to as MTG), is the owner of the design patent with the name “Facial Muscle Exerciser” and patent number ZL201330142273.6. MTG found that the accused infringing products began to appear in large numbers on Alibaba, Taobao and other e-commerce platforms in the second half of 2017 at the latest, and there was no manufacturer’s name and address on the product and packaging, but the outer packaging was marked with the logo “EMAYO”, and the webpage also used “EMAYO” as the brand. Upon search, the defendant 1 Pingyang Xiangzheng Daily Necessities Co., Ltd. (hereinafter referred to as “Xiangzheng Company”) and its legal representative registered the trademark “依美悦EMAYO” and the trademark “EMAYO”, and no information of others applying for and registering the trademark “EMAYO” or trademarks including “EMAYO” was found. In addition to being sold in the Alibaba store operated by the defendant 1 Xiangzheng Company, the accused infringing products were also sold in a number of Taobao and Alibaba stores, including the one operated by Shenzhen Xinmeichen Technology Co., Ltd. (hereinafter referred to as “Xinmeichen Company”). MTG has started filing infringement complaints with Alibaba’s intellectual property protection platform since the beginning of 2018. When the relevant infringing sales links of the defendants were deleted, the two defendants continued to sell the accused infringing products by posting new sales links immediately. In response to the complaints, the two defendants continued to sell the accused infringing products by deliberately not displaying the product photos.
In order to completely stop the infringement, MTG filed a lawsuit with the Shenzhen Intermediate People’s Court, and applied in writing to the court to obtain the sales records of the EMAYO facial exerciser on the e-commerce platform Alibaba from Alibaba (China) Network Technology Co., Ltd., and order the defendants to provide all electronic data recording the online sales of the accused infringing products, the genuine account books recording the offline sales of the accused infringing products, as well as the sales contracts, delivery notes, invoices, and the genuine account books recording the cost and sales profit of the accused infringing products, as well as the mold and raw material purchase contracts, invoices, etc.
After hearing, the court concluded that the focuses of the dispute in this case were: 1. whether the design of the accused infringing product fell within the scope of protection of the subject patent in the case; 2. whether the two defendants committed the infringing act accused by MTG; and 3. if infringement is constituted, how should the two defendants bear civil liability.
Regarding the above focus 1 of the dispute, the court held that the accused infringing design is similar to the subject design patent in the overall shape and components, and the differences between the two are partial subtle differences, and there is no substantial difference in the overall visual effect between the two based on the knowledge level and cognitive ability of average consumers and thus they constitute similar designs. The accused infringing design fell within the scope of protection of the subject patent right.
Regarding the above focus 2 of the dispute, the court found that the act of offering for sale and selling of the accused infringing products by Xinmeichen Company had a factual basis. With regard to Xiangzheng Company, the court held that the accused infringing products were marked with the trademark “EMAYO” applied for registration by Xiangzheng Company, and in the absence of evidence to the contrary, Xiangzheng Company should be deemed to be the manufacturer and seller of the accused infringing products. Xiangzheng Company did not provide any proof for its claims that the products it sold were different from the accused infringing products and that the accused infringing products were manufactured by a party not involved in this case. Based on the evidence in the case, the court held that MTG’s claim that Xiangzheng Company had committed the act of manufacturing, selling and offering to sell the accused infringing products had a factual basis and was supported by the court.
Regarding the above focus 3 of the dispute, on May 26, 2021, the court issued a “Letter on Assistance in Collecting Evidence” to Hangzhou Alibaba Advertising Co., Ltd. (hereinafter referred to as Alibaba Company) and Zhejiang Taobao Network Co., Ltd., to collect the posting time, sales data, product pictures, etc. of the accused infringing products sold by the two defendants in their Alibaba stores. Alibaba Company provided the complaint information and the sales data of Xiangzheng Company’s Alibaba stores over the past three years.
The total amount of damages claimed in this case is CNY 3.2 million. According to the monthly sales volume shown by the petitioner’s complaint records in 2018, it can be estimated that Xiangzheng Company’s profit made from the infringement exceeded CNY 3 million. However, according to the sales records provided by Alibaba Company over the past three years, the total sum of the orders received by Xiangzheng Company was about CNY 450,000, and the total sum of the orders received by Xinmeichen Company was CNY 4,889, which was far from the aforementioned estimated amount. The documentary evidence involved in the case is aimed at the factum-probandum of the profits obtained by the two defendants from infringement, which had an important impact on the calculation of the amount of compensation in this case. Since Alibaba Company was unable to provide sales data three years ago, and the accused infringing products were sold in multiple stores and platforms, the true sales volume and sales profits were in the hands of Xiangzheng Company. If Xiangzheng Company does not provide documentary evidence involved in the case, it would be difficult to find out the sales volume of the accused infringing products and the profits made from them, and it would be difficult to determine whether the profits made from the infringement exceed the statutory limit of compensation. Therefore, the documentary evidence involved in the case is important to prove the factum-probandum and the result of the adjudication. Therefore, the court ordered Xiangzheng Company to submit the following evidence to the court by September 13, 2021: 1. Genuine account books, contracts, delivery notes, invoices, etc. that record the sales quantity and the profits of the accused infringing products; and 2. Electronic data recording the sales volume and the profits of the accused infringing products. If the respondent refuses to submit the above evidence without justified reasons, it may be presumed that the petitioner’s claim on the matters to be proved by the evidence is established. Xiangzheng Company did not submit the relevant documentary evidence within the time limit specified by the court.
Comprehensively taking account of the factors that MTG’s actual losses should exceed the maximum statutory compensation, Xiangzheng Company’s profits made from the infringement may exceed CNY 3 million, Xinmeichen Company’s profits made from the infringement may exceed CNY 200,000, and the two defendants continued to infringe for several years after MTG’s repeated complaints, constituting repeated infringement and malicious infringement, and Xiangzheng Company refused to submit relevant documentary evidence without justified reasons after receiving the court’s order to produce documentary evidence, the court held that MTG’s claim to order Xiangzheng Company to compensate it for economic losses and reasonable expenses totaling CNY 3 million, and Xinmeichen Company to compensate it for economic losses and reasonable expenses totaling CNY 200,000 had factual and legal basis, and is supported in full.
The judgment of the first instance in this case has not yet taken effect and this case is currently in the second instance.
Attorney’s interpretation
This case was selected by the Shenzhen Intermediate People’s Court as a typical intellectual property civil and administrative case in Shenzhen courts in 2021. As the plaintiff’s attorney, on top of the usual notarized purchase, and notarization and preservation of the sales records displayed by the e-commerce platform, we applied to the court to obtain data from the e-commerce platform and order the defendants to disclose documentary evidence in order to confirm the defendant’s profits made from the infringement so as to obtain damages that fully protect the plaintiff’s interests. These two measures can effectively reduce the burden of producing evidence on the right holders, but in practice corresponding applicable conditions have to be satisfied in order to take these two measures.
In this case, the court, in view of the clear facts of the infringement after the first-instance hearing, was able to determine that the infringement was established, and in order to determine the amount of compensation, the court supported our application to request data from the e-commerce platform, and sent a letter of assistance to the e-commerce platform to obtain relevant backend data. Based on the backend data collected, we calculated the defendants’ profits made from the infringement during the corresponding infringement period. However, since the data collected only covered a period of three years and did not reflect all the sales of the accused infringing product, we again applied to the court to order the defendants to provide the corresponding account books.
The court held that in a civil intellectual property lawsuit, if the petitioner applies to the court to order the other party to produce documentary evidence, it should clarify the factum probandum in its claim. When evaluating the necessity of a “documentary evidence order”, the court may consider the following factors: 1. whether the applicant has submitted prima facie evidence to prove the existence of the factum probandum; 2. whether the documentary evidence belongs to the evidence that the applicant cannot collect on its own due to objective reasons; 3. whether the documentary evidence is aimed at the factum probandum; 4. whether the documentary evidence has an important impact on the ascertainment of the factum probandum; and 5. whether the factum probandum have a substantial impact on the outcome of the adjudication.
In this case, it was objectively difficult for the plaintiff to obtain the corresponding sales volume after the links of the accused infringing products were deleted. The documentary evidence requested by the petitioner (the plaintiff) is account books, original accounting vouchers and electronic data recording the sales quantity, cost and sales profit of the accused infringing products, which are the evidence that the plaintiff cannot collect on its own due to objective reasons and which have an important impact on the ascertainment of the factum probandum (the sales volume of the accused infringing products and the profits made from them, whether the profits made from the infringement exceed the statutory limit of damages), and the factum probandum have a substantial impact on the outcome of the adjudication. Moreover, the documentary evidence involved is in the hands of the respondents (the defendants). It is within the scope of the subject matter of documentary evidence that complies with the law. Therefore, the court issued a civil ruling ordering the defendants to submit documentary evidence within a specified time limit.
Since Xiangzheng Company refused to submit the relevant documentary evidence without justified reasons, the court presumed that MTG’s claim on the matters to be proved by the evidence was established. And eventually, based on the defendants’ infringement malice and egregious infringement circumstances, our claim for compensation was supported in full by the court.
This is a case for which the Shenzhen court for the first time has issued an “order for documentary evidence” in an intellectual property lawsuit, and is also a typical case in which Shenzhen explored and improved the rules of intellectual property evidence. The Shenzhen court has effectively curbed malicious infringement and act of evading sanctions through the “documentary evidence order”, and equally protected the legitimate rights of Chinese and foreign parties, demonstrating China’s good image in judicial protection of intellectual property rights.
It should be noted that the infringement accused in this case occurred before the implementation of the Civil Code and the revision of the Patent Law, that is, the punitive damages system had not yet been introduced in patent infringement cases. If this case occurred after the introduction of the punitive damages system into the field of patent infringement, it is very likely that the court would support the claim for punitive damages since the defendants’ infringement is obviously malicious and the infringement is egregious.
