Smart Bodybuilder-Related Design Patent Infringement

Civil Case

Design patent  

–Evidence Discovery

[Headnotes]

In the event that the alleged infringer is probably determined as having infringed upon the right of the right owner and it owns or controls the main evidence for calculation of the profits from infringement, if the right owner has tried one's best to produce evidence and request the court to order the alleged infringer to disclose the evidence concerned, the court may, after examination, rule to order the alleged infringer to submit the evidence concerned. If the alleged infringer refuses to submit the evidence concerned without due cause thus hindering the proof submitting process, the court may accept the claim of the right owner in connection with the calculation of the profits from infringement by evaluating the existing evidence comprehensively. Except for any other evidence to the contrary, the quantity of the alleged infringing products that are sold on the e-business platform concerned may be used as the infringing sales quantity, and the room for price reduction of the alleged infringing product may be used to reflect on the reasonable profit margin of a single alleged infringing product.

[Synopsis]

First Instance: No. (2017) Yue 03 MinChu No. 410

Second Instance: No. (2018) YueMinZhong No. 682

Appellant (plaintiff in original trial): MTG Co., Ltd. (MTG)

Appellee (defendant in original trial): Shenzhen Hengjianda Technology Co., Ltd (Hengjianda)

MTG alleged that Hengjianda had manufactured, sold and offered to sell the alleged infringing products, thereby infringing upon the design patent of its Smart Bodybuilder. It claimed 2.2 million Yuan as damages, and submitted to the court the related notary documents. The notary documents indicated the quantities of successful sells and comments of buyers of the alleged infringing products at Taobao.com, Tmall.com and JD.com. MTG argued that the quantities sold on these e-business platforms could be used as the total amount of alleged infringing products sold and that the range of price reduction could be used to estimate the reasonable profit that Hengjianda had gained from the infringement. The court of first instance decided that no infringement had occurred, and all claims of MTG were dismissed. MTG filed an appeal.

During the second instance, MTG requested that the related evidence should be disclosed by the Appellee. After examination, the court believed that the original judgment could be amended and the infringement could have occurred. In addition, the evidence discovery request of MTG was reasonable in part. Therefore, it ruled that Hengjianda should produce all electronic data on the online selling of the alleged infringing products, and the authentic books and records of their cost and sales profit, within a given time limit. Hengjianda refused to produce any data on the pretext that the URLs of the alleged infringing products could no longer be found.

The court held that it was reasonable for MTG to claim that the quantity of the alleged infringing products sold by Hengjianda on Taobao.com, Tmall.com and JD.com could be used to determine that 69,568 alleged infringing products had been sold, and that the difference of prices between the earlier and later evidence collection processes could be used to infer that the profit margin should be more than 50 Yuan. As MTG had tried its best to produce the preliminary evidence on the profits from infringement, Hengjianda's refusing to produce the related evidence without giving a reason acceptable to the court had hindered the evidence production process and should undertake the unfavorable consequence therefrom in law. It was estimated that Hengjianda had profited around 3.45 million Yuan from infringement, which was well over the amount of damages claimed by MTG. Therefore, the court of second instance changed the original judgment and supported the full amount of damages claimed by MTG.

[Typical Significance]

Currently, in most IP infringement cases, the amount of damages is decided by the court who uses its discretion within the scope prescribed in law. It has been rare that the parties to a case ever produce evidence on the quantity of the alleged infringing products sold. As a result, the amount of damages awarded has been low in general. The evidence discovery and the hindrance to evidence production are undoubtedly useful tools to solve this issue in the existing legal framework. However, there has been no unified opinion on how to start these processes and what standards to use.

In the case, the train of thought of the second-instance court provides valuable references. First, in principle, the evidence discovery process may only be invoked when the party who has the burden of proof raises the request in writing, but should not be started by the court ex officio. Second, the court should examine the request comprehensively to consider the probability of infringement and whether the requesting party has fully fulfilled his obligation to produce preliminary evidence, so that the reasonable part of the request can be supported (and a hearing of both parties may be held if necessary). Third, generally to apply the evidence discovery rule, the court should make a ruling (or order the party concerned to produce the related evidence and take it into the court record). In addition, it must explicitly specify the scope of evidence to be disclosed and any consequences if the party concerned refuses to obey it. Fourth, The court should examine the reason provided by the party concerned who fails to disclose the related evidence within the given time limit, so as to determine if the act of the party concerned has hindered the evidence production process.

(Translated by Ren Qingtao)