Articles

United States Law and Practice May Assist Parties to an IP Dispute in China

Managing Intellectual Property, Chinese Edition
September 2010

Article

A party to a judicial or administrative proceeding in China, particularly with respect to intellectual property, should give serious consideration as to whether U.S. law might enable the party to uncover factual information in the United States that would be helpful to the Chinese proceeding.  Our firm has assisted companies outside the United States successfully obtain valuable evidence for use in nullity, invalidity and enforcement proceedings outside the United States.  These situations may arise when a Chinese inventor, scientist or researcher relocates to the United States, or when a trademark is licensed or assigned to a company in the United States.  In these situations, valuable information may go with the individual or be transferred to the company, and thus be outside the jurisdiction of the judicial or administrative tribunal in China.  This article explores a valuable alternative for recapturing that lost information.

By way of background, in judicial proceedings in federal courts in the United States relating to patents, trademarks and copyrights, the parties to a dispute are entitled to take “discovery” in order to obtain relevant information about the issues in dispute.  Discovery includes (1) answering written questions, known as interrogatories; (2) production of relevant documents, as well as things such as product samples; (3) responding to requests that a party admit specific facts; and (4) providing a witness to testify under oath at a deposition where the witness is required to answer questions propounded by the other party.  The purpose of discovery is to uncover relevant facts about the claims at issue with the objective of narrowing the issues before the court.

Courts and administrative tribunals in many countries do not provide litigants with the opportunity to take discovery.  Even in countries where some form of discovery is permissible, it is unlikely that courts outside the United States can exercise jurisdiction over individuals or companies residing in the United States.  Significantly, under certain circumstances, it is possible to obtain an order from a United States court authorizing discovery in the United States to seek information related to issues in a proceeding outside the United States.  Moreover, it is permissible to seek an order for such discovery even if the proceeding is not pending.

The statutory support for this extraordinary remedy is set forth in 28 U.S.C. § 1782.  This statute authorizes a federal court to permit persons (or companies) involved in legal proceedings outside the United States to obtain discovery from persons (or companies) in the United States for use in those foreign proceedings.  The statute provides the following:

a) The district court of the district in which a person resides or is found may order him to give his testimony or statement or to produce a document or other thing for use in a proceeding in a foreign or international tribunal, including criminal investigations conducted before formal accusation.  The order may be made pursuant to a letter rogatory issues, or request made, by a foreign or international tribunal or upon the application of any interested person and may direct that the testimony or statement be given, or the document or other thing be produced, before a person appointed by the court.  By virtue of this appointment, the person appointed has power to administer any necessary oath and take the testimony or statement.  The order may prescribe the practice and procedure, which may be in whole or part the practice and procedure of the foreign country or the international tribunal, for taking the testimony or statement or producing the document or other thing.  To the extent that the order does not prescribe otherwise, the testimony or statement shall be taken, and the document or other thing produced, in accordance with the Federal Rules of Civil Procedure.

A person may not be compelled to give his testimony or statement or to produce a document or other thing in violation of any legally applicable privilege.

The Court thus has the authority to grant discovery under § 1782(a) if the following requirements are met:

1. [T]he request must be made “by foreign or international tribunal” or by “any interested person”;

2. the request must seek evidence, whether it be the “testimony or statement” of a person or the product of “a document or other thing”;

3. evidence must be for use in a proceeding in “a foreign or international tribunal”; and

4. the person from whom the discovery is sought must reside or be found in the district of the district court ruling on the application for assistance.

In re Clerici, 481 F.3d 1324, 1331-32 (11th Cir. 2007). 

Furthermore, the U.S. Supreme Court in Intel emphasized that the foreign proceeding need not be pending.  It only needs to be “in reasonable contemplation.”  Intel at 247. 

The Supreme Court and various courts of appeal have identified the following four factors that “bear consideration” in deciding whether to permit discovery under § 1782(a), each of which is also satisfied here.

1. [W]hether “the person from whom discovery is sought is a participant in the foreign proceeding” because “the need for § 1782(a) aid generally is not as apparent as it ordinarily is when evidence is sought from a nonparticipant”;

2. “the nature of the foreign tribunal, the character of the proceedings underway abroad, and the receptivity of foreign government or the court or agency abroad to U.S. federal-court judicial assistance”;

3. “whether the § 1782(a) request conceals an attempt to circumvent foreign proof-gather restrictions or other policies of a foreign country or the United States”; and

4. whether the request is otherwise “unduly intrusive or burdensome.”

Intel Corp., 542 U.S. at 264-65; In re Clerici, 481 F.3d at 1334.

If the applicant satisfies the statutory requirements of § 1782(a), and the above factors weigh in the applicant’s favor, courts in the United States commonly permit discovery under § 1782(a).  See, e.g., Lopes v. Lopes, 180 Fed. Appx. 874 (11th Cir. 2006); In re Xavier, 2006 U.S. App. LEXIS 8132 (11th Cir. 2006); In re Roz Trading Ltd., 469 F. Supp. 2d 1221 (N.D. Ga. 2006); Weber v. Finker, 2007 WL 4285362 (M.D. Fla. Nov. 30, 2007); In re Letter Request from the District Court Stara Lubovna, 2009 WL 3711924 (M.D. Fla. Nov. 5, 2009).

The purpose of § 1782 is not to replace Chinese law or evidentiary requirements; rather, it is merely intended to enable a Chinese litigant to obtain information that is directly relevant to issues in the Chinese proceeding.  It also is not an attempt to circumvent foreign proof-gathering restrictions.  Indeed, it is well recognized that it is up to the Chinese tribunal to determine admissibility of any information obtained under § 1782.

It has been our experience that effective use of § 1782 is a valuable addition to the arsenal a Chinese intellectual property owner should consider in the event persons or companies, who may have information relevant to a Chinese dispute, presently reside in the United States.

Copyright © Finnegan, Henderson, Farabow, Garrett & Dunner, LLP. This article is for informational purposes, is not intended to constitute legal advice, and may be considered advertising under applicable state laws.  This article is only the opinion of the authors and is not attributable to Finnegan, Henderson, Farabow, Garrett & Dunner, LLP, or the firm's clients.