(By Luo Yanjie) In a civil lawsuit, the collecting of evidence for the purpose of notarization is quite common. However, during the process of collecting evidence that concerns the selling of infringing goods, the rights holders or their attorneys typically utilize a system of collection in which they set up a “customer” to purchase the infringing product as evidence of infringement. So the question is, should evidence collected in this manner be considered legally effective for the purposes of a lawsuit for infringement or unfair trade practice? For our understanding on the issue, and our experience in this decidedly complicated process, we would like to share with our readers today’s post concerning our opinions on the issue:
Beijing Founder Company and the Hong Long Research Institute are the joint copyright holders in the software Founder RIP (the “RIP”), Founder PostScript Chinese Character Stock (the “Stock”) and Founder Wenhe V 1.1 (the “Wenhe”). RIP and Stock are sold jointly under the name RIP software.
On the basis of Founder Company’s applications on the 16th, 20th, 23rd July, and the 22nd August 2001, officials from the Beijing Guo Xin Notary Office made anotarization for the Beijing Hou Lang Printing Technology Co., Ltd. over the purchase by employees of Founder Company’s KATANA FT-5055A Laser Photo Setter and the Founder computer used by the seller Gao Shu Tian Li Company, which was installed with a pirated copy of the RIP software suite. The notarization was made in five copies. Founder Company paid a fee of RMB 10,000 Yuan for the notarization.
On September 3 2001, Founder Company and Hong Lou Institute filed a lawsuit in the Beijing No.1 Intermediate People’s Court, accusing Gao Shu Tian Li Company and Gao Shu Company with illegally copying, installing and selling pirated software, which infringed its copyright over the software.
The Court in the first instance believed: 1. Founder had invested a great deal of money in collecting evidence related to Gao Shu Tian Li and Gao Shu’s infringement, among which the purchase of the Laser Photo-setting machine and renting of a house is included among them. Such collection of evidence was made under the “trap evidence collection,” which is not prohibited under the law, and therefore it is admissible. Also, the written notarization fully recorded the process of the pirated software installment and subsequent use by the accused party. In addition, the computer with the software installed as well as the pirated software had been notarized. All of these were confirmed by the Court. To that end, neither Gao Shu Company nor the Gao Shu Tian Li Company submitted any evidence denying these accusations. 2. Gao Shu Tian Li and Gao Shu Company, as sellers of pirated software, owed an obligation of due care regarding the copyright belonging of others’ software, and has a statutory obligation to reject the adoption of pirated software. Otherwise, it shall assume all related legal liability. Based on these grounds, the court found the establishment of infringement liability on Gao Shu and Gao Shu Tian Li’s part.
Dissatisfied with the Court’s judgment, Gao Shu Company and Gao Shu Tian Li Company appealed to the Beijing High People’s Court. The Court in the Second Instance found the following: in regard to the written notarization made by the Beijing Guo Xin Notary Office, neither Gao Shu Tian Li nor Gao Shu failed submitted any evidence denying the content recorded in the notarization; therefore, the written notarization is legal and effective as evidence according to civil procedure. Therefore, the judges accepted the content of the evidence. And yet with the consideration of other evidence presented in the case, for the process of the machine purchased by the Founder Company, which was one month in duration, it was also recorded in the notarization, but no coherent or comprehensive record could be found. The Court also found that Founder’s evidence collection methods were not the only way to collect evidence, and its methods damaged principles of fairness. If such methods were accepted as an example or model to follow, it would damage the order of the market. For this reason, the court refused to accept the evidence. However, taking into consideration the fact that Gao Shu and Gao Shu Tian Li had not denied its using pirated software, that particular fact could be determined. Regardless, the court in the second instance reduced the compensation ordered in the first instance.
Dissatisfied with the decision made in the second instance, Founder Company and Hong Lou Institute applied for review, objecting over the decision made in the 2nd instance and the rehearing. The Supreme Court, in hearing the case, thought that considering the universality and complexity of the social relationship, unless otherwise regulated in the regulation, the law cannot possibly cover all situations to be regulated, and therefore it could find more space to evaluate the situation. As to those acts that have not been clearly regulated in the law, they could be judged based on substantial justice. As for the case, Founder had evidence of the infringement done by Gao Shu Tian Li Company through notarization; it also submitted evidence or clues concerning its sale to other clients carrying out the same kind infringement. Therefore, no improper purpose could be found, and its act had not damaged the interests of society or the individual. In further consideration, computer software copyright infringement is not easily found; especially so with regard to the collection of evidence. Therefore, the Court stated, collection of evidence in this manner may actually prove to solve the issue, and shock those involved in infringement or prevent the occurrence of similar cases. This is in accord with the rule of law and the protection of IPR. In conclusion, according to the Supreme Court’s decision, the Plaintiff’s compensation was again increased.
The reason why the court in the second instance reduced the Plaintiff’s compensation was mainly with the consideration that “the party involved as well as the notary office collected the evidence in a way that violates principles of fairness; and once this is considered as an example, order in the market would be disturbed.” Based on these considerations, the court declined accepting the evidence as to partial losses and unfair costs involved in notarization. In contrast, the Supreme Court fully supported the evidence collected from the “trap.” Now we would like to put forward our comments on the role of notarization in the lawsuit and its relation with the lawsuit:
I. Does the court has the power to withdraw the written notarization
The notarization made by the notary office is a statutory power granted by the state. As for the lawsuit, a notarization is only evidence with a strong degree of proof, and the court can examine its capacity as evidence for the decision as to whether it shall be taken as proof of the facts. On that note, we have found no rules in the law for the court to withdraw a notarization properly made by the notary. According to Article 39 of the Notarization Law of the PRC:
“When the parties or the interested parties of the issues to notarized think the notarized content may have mistakes, they may apply for a review with the office making the notarization. When the content of the notarization is against the law or not in accordance with the facts, the notary office shall withdraw the written notarization, and the notarization shall be invalid from the very beginning.”
According to the rules above, if the parties or the interested parties involved in the notarization thinks there are mistakes in the notarization they may apply for a review. According to the Measures on the Notary Complaint, the interested parties can also file a complaint with the local managing authority of notarization and the notary association itself. No matter the result is, the court shall not revoke the effectiveness of a notarization.
II. Can the court question methods of evidence collection?
According to Article 68 of the Several Regulations concerning Civil Procedure:
“Those evidences collected as damaging to others’ interests or violating the prohibitive regulation in the laws shall not be taken as evidence of the case facts”.
Therefore, it can be determined that in the Civil Procedure, those evidence not collected in illegal ways or against principles of fairness may be admissible in court. In this case, although the court in the second instance thought that once the way adopted by the notary officer and the staff of Founder were taken as an example, the market order would be negatively affected. But at the same time, it also confirms the effectiveness of the notarization, while only denying the effectiveness of fair expenses. In theory, it has the right to question the reasonableness and necessity of the notarization.
III. The Reasonableness of Collecting Evidence through “Traps”
IPR infringement is quite common in China; especially in the realm of copyright infringement concerning computers and computer software. Similar to what the Supreme Court has stated, infringement is not easily found, and the collection of evidence is difficult. Provided it is used as a last resort, a right holder would not deliberately design such a method for the collection of evidence. Therefore, since protecting one’s rights is not easy, if a judicial organ holds a negative attitude towards this type of evidence collection, it would undoubtedly damage and limit one’s ability to enforce its IPR rights. Therefore, the Supreme Court’s take on this particular case in far more in line with the current reality of IPR protection in China.