Court imposes hefty fine on defendant for submitting forged evidence

China

In December 2014 the Shanghai High People’s Court released two punishment decisions, stemming from two civil suits for design patent infringement, against a defendant that had submitted falsified evidence to the court. According to the Shanghai High People’s Court, this was the first time that forged evidence had been submitted to the High People’s Court's IP Chamber in the court’s 21-year history.

Although the facts of the cases refer to design patent infringement, as two of the first reported cases on forged evidence submitted in an IP dispute in China, and in light of the manner in which they were handled by the court, the cases deserve to be noted by trademark owners.

In two cases between plaintiff Mu’en Industrial Corporation and defendant Xinbang Organic Glass Limited Company (Cases No (2014) hu gao min san (zhi) zhong zi di 67 and 68), the plaintiff claimed that the defendant had infringed a design patent for a bath cream bottle (Patent No ZL200930385988.8) and a toilet brush (Patent No ZL200930385987.3).

At the first instance hearing before the Shanghai Intermediate People’s Court, Xinbang claimed that its products were merely copies of earlier designs and that the earlier designs were in the public domain (prior art defence). In support of the argument that the designs at issue were in the public domain, Xinbang provided a copy of a journal from the Seventh Chinese International Sales Exhibition of Daily Necessities, which contained an advertisement showing products that appeared to be identical to the patented designs.

The journal was accepted and relied upon as key evidence by the first instance court and, consequently, in both cases the defendant was found not to be liable for design patent infringement.

Dissatisfied with the findings of the First Instance Court, Mu’en appealed to the Shanghai High People’s Court and challenged the authenticity of the journal submitted by Xinbang. To determine the authenticity of the journal, the judges from the Shanghai High People’s Court conducted their own investigation and obtained copies of the journal from the organisers of the Chinese International Sales Exhibition of Daily Necessities, and from the design and printing companies that had produced the journal.

After confirming that the original journal did not contain any advertisement that showed the designs at issue, the Shanghai High People’s Court determined that the evidence submitted by Xinbang was a forgery and, therefore, rescinded the original judgments issued by the Shanghai Intermediate People’s Court. The Shanghai High People’s Court found that the defendant was liable for design patent infringement and should compensate the plaintiff in the amount of Rmb157,000 for infringing both of the plaintiff’s design patents; the court also ordered the defendant to pay Rmb46,000 in additional compensation for the reasonable fees incurred by the plaintiff to bring an end to the infringement of its design patents.

More importantly for IP owners, the Shanghai High People’s Court sanctioned Xinbang and its legal representative Wu Shaowu, who had refused to assist the court’s investigation, issuing fines totalling Rmb200,000 against Xinbang and Rmb100,000 against Wu Shaowu for submitting falsified evidence and refusing to cooperate with the court’s investigation.

It is noteworthy that the punishment decisions issued by the Shanghai High People’s Court's IP Chamber represent, to date, the two largest monetary sanctions issued by the IP Chamber. In addition, the fine imposed in this respect exceeds the compensation awarded by the court for design patent infringement.

It thus seems that the court took into consideration not only the increased costs incurred by the patent owner and the waste of valuable judicial resources, but also the fact that submitting forged evidence taints the authority and credibility of China’s legal system. 

While the issue of forged evidence is not a common occurrence, the fact that Chinese courts are willing to impose heavy punitive sanctions to protect the standing and reputation of China’s IP judiciary, as well as the fairness and credibility of China’s legal system, will benefit trademark owners. Thus, in cases where a trademark owner believes that the evidence on which the counterparty relies is forged, the trademark owner should not only bring this to the court’s attention, but also insist that the court should issue hefty punitive sanctions to deter parties from submitting falsified evidence to China’s IP courts and to protect the integrity of China’s legal system.

George Chan and Sophie Zhao, Simmons & Simmons LLP, Beijing

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