EvidenceobtainedbyTrapPurchase

14 December 2002

Audrey Shum

Under Chinese law the burden of proof is generally on the party who asserts the relevant fact. As a result, except where specifically provided otherwise in a particular law, an intellectual property owner suing for infringement usually bears the burden of proving the defendant’s alleged infringing acts.

“Trap Purchasing” has to date generally been considered an acceptable method of obtaining evidence in China. In order to ensure that minimal challenge is made by the other party and the Court regarding the weight of the evidence obtained through a trap purchase, it is desirable that the whole trap purchase process be witnessed by two authorized Chinese notaries .

In the recent case Beida Fanzheng Corp & Others v Gaoshu Technology Co & Others 15 July 2002 the Higher People’s Court of Beijing was called upon to consider the propriety of the trap purchase method and the admissibility of evidence obtained in that way.

The plaintiffs owned the copyright in several pieces of software. The plaintiffs’ software was sold as bundled software with laser phototypesetters that they sold. In order to collect evidence of suspected infringement, the plaintiffs caused several of their employees to approach the defendants disguised as ordinary purchasers. The defendants initially offered to sell their phototypesetter to the plaintiffs bundled with lawful software. However, at the plaintiffs’ employees’ request the defendants agreed to supply an unlicensed copy of the plaintiffs’ software.

At first instance the Intermediate People’s Court of Beijing held that trap purchasing is not prohibited by law and the evidence collected by this method is therefore admissible.

The Intermediate People’s Court awarded damages of RMB1,000,000 calculated on the basis of expenses incurred by the plaintiffs in developing their software, the market price of the plaintiffs’ software and the seriousness of the defendants’ infringing acts.

On appeal the Higher People’s Court of Beijing noted that the defendants did not deny the evidence submitted by the plaintiffs in respect of the installation of one set of infringing software and that such evidence was certified by a notary public and upheld the finding that the defendants had infringed the plaintiffs’ copyright.

However, the appeal court also held that “in the circumstance of the case” trap purchasing “was not the only method” that had been available to the plaintiffs to obtain the evidence they needed and the way the evidence had been obtained was contrary to the principle of fairness. Having said that, the Higher People’s Court did not rule out the admissibility of evidence obtained by trap purchases completely. The Court reduced the amount of damages significantly to RMB130,000 which represented the market value of the set of the plaintiffs’ software supplied by the defendants to the plaintiffs in the course of the trap purchase.

One has to be careful in interpreting this case as introducing a general prohibition on trap purchasing as an evidence collection method in view of the special circumstances.

First, the Higher People’s Court found that there was a pre-existing relationship between the plaintiffs and the defendants. One of the defendants was an agent of the plaintiffs for the distribution of their phototypesetters. Disputes had arisen between the parties and the defendants had started to source the phototypesetters directly from the supplier. The parties had therefore become direct competitors in the sale of phototypesetters.

Second, the defendants initially offered to sell the phototypesetters with lawful software. It was the plaintiffs who specifically requested the defendants to install the infringing software.

Third, the Court found there was no evidence to show that the defendants had intended to sell the infringing software to anyone else if the plaintiffs had not enticed them to sell it to the plaintiffs in the first place. It was on this premise that the Higher People’s Court held that in the circumstances the trap purchase method was contrary to the principle of fairness.

When the Court held that the trap purchase method was unfair, it expressly qualified its finding to “the circumstances” of the case. It seems therefore, that the Court was not ruling out the use of the trap purchase method to obtain admissible evidence in other situations.

It appears that plaintiffs in intellectual property cases may continue to obtain useful evidence by using trap purchase methods but they must be careful and be able to demonstrate that they have not gone too far towards entrapment in using an elaborate trap purchase scheme that might be found by the Court to be unfair.