HAIWEN IP Memo

Indirect Evidence to Prove Patent Infringement
In product patent infringement litigation, the plaintiff should provide evidence to prove that the infringer makes, sells, offers for sale or imports the patented product without the plaintiff's consent. The ideal evidence would be a sample of the product obtained through ordinary course of commerce, along with documents such as invoices, contracts, orders, or packaging to prove that the product was indeed made and sold by the infringer. Such evidence is known as "direct evidence."
However, in some cases, plaintiffs are unable to obtain direct evidence, either because the product at issue is not readily available on the market as it is for industrial use only, or because the infringer intentionally conceals the source of the product in order to avoid being sued. In such circumstances, plaintiffs have to resort to indirect evidence and consider how facts of patent infringement can be established if they are lucky enough to get indirect evidence.
The following is a summary of a case that we handled in 2015 and grappled with evidentiary problem. Hopefully, it will shed some light on similar cases in the future where no direct evidence is available to prove infringement.
The infringement case concerned patented integrated circuits (ICs). Several years ago, several individuals, through a semiconductor company, infringed upon certain IC patents owned by other companies. After the semiconductor company was ordered by the court to stop its infringing activities, the individuals founded two other companies (i.e. the two defendants in our case) and continued copying and selling patented ICs under the guise of genuine IC designing and manufacturing. They copied in entirety the IC designs of certain star products of our client, manufactured the patented products via an OEM manufacturer, and sold them via multilevel distributors. To collect evidence, we purchased some sample products on the market and obtained a brochure alongside. The IC model number and the English expression corresponding to the trade name of the two defendants were indicated on the surface of the IC chips. The brochure contained detailed specifications of various IC chips and a web address. Neither the defendants' full names nor their addresses were indicated on the IC chips or the brochure.
We then notarized the website and found that it was registered under the name of a shareholder of the two defendants. Further, upon our application, certain products and pertinent documents from one of the two defendants were preserved as evidence by the court.
In this case, one of the major difficulties is the lack of direct evidence to show that the sample products were in fact manufactured and sold by the defendants. But we successfully proffered a concordant chain of evidence and demonstrated that the only reasonable inference which could have been drawn from the evidence is that the two defendants manufactured and sold the IC chips. And as expected, the court agreed with us and ruled against the defendants.
Despite the website was carefully designed for the purpose of allowing the defendants to disassociate themselves from it, we were able to prove that the website could be linked to the two defendants. The website, when we notarized it, was registered under the name of a shareholder of the two defendants, although the registration was transferred to another person during the process of the litigation showing guilty conscience. The specifications, model numbers and the English expression of trade name of the IC chips advertised on the website were identical to those purchased by us. The website also indicated the addresses of the two defendants and a fake company name which was similar to the names of the two defendants. Importantly, we discovered that certain photographs in the "News Report" section of the website clearly indicated the names of the two defendants.
The defendants denied that the website was owned or operated by them. They even called the registrant as a factual witness before the court to deny their connection to the website. The registrant testified that the website was registered and controlled by him, the defendants had no knowledge of the website, he alone was responsible for the website and he has never consulted with the defendants regarding such matters. The defendants also denied manufacturing the products at issue, claiming that their company names were not shown on the products, the packaging or any pertinent documents related thereto. However, the defendants' denial was in vain. We won this case using indirect evidence. Furthermore, in a separate IC layout protection case between the same parties, a different intermediate court also reached the same conclusion as to the defendants' activities of manufacturing and selling of the products infringing patent rights based on same evidence.
On a related note, if only indirect evidence is available to prove a case, the plaintiff is expected to satisfy the following evidentiary requirements in order to establish the intended predication:
Authenticity: First and foremost, any indirect evidence must be verified as truthful.
Relevance: Indirect evidence should be probative of a fact that is material to the determination of the issues of the case.
Completeness: Pieces of indirect evidence must be consistent with each other and should together form a complete chain of evidence, ruling out any reasonable doubt or other possible explanation and pinpointing a sole conclusion.
Last but not least, as a reminder, in Chinese patent infringement litigation proceedings, plaintiffs should always be well prepared with evidence and duly note that most discovery or disclosure devices used in Western jurisdictions are not available to them. Prior to initiating the litigation, plaintiffs should collect either direct evidence of infringement or a chain of persuasive indirect evidence to establish the existence of infringement as illustrated in the above case.
March 22, 2016