Blockchain evidence accepted by Chinese Court

Will this become the norm?

The Hangzhou Internet Court has supported a claimant’s use of a blockchain service as the method of fixing online evidence of copyright infringement. The first instance decision was handed down on 28th June 2018 and posted online here.

This is the first case in which we’ve seen a Chinese Court accept blockchain evidence, and the decision has implications for the legitimacy of blockchain-verified evidence in Court proceedings in China and around the world.

Facts

The Claimant is a Hangzhou media company known as Huatai. The defendant is a Shenzhen technology company called Daotong. Huatai alleged that Daotong used their copyright (including a photograph and a text article) without permission on a website. Huatai had secured the infringing webpage of Daotong through a third-party blockchain platform called Baoquan (www.baoquan.com). 

The technology

Baoquan is one of several digital file deposition services that have sprung up in the last 1-2 years, and has been touted as a potential evidence fixing service to use in legal proceedings. The service works by simulating web browser requests, downloading the resulting website files (including images and source code) and packing them into an archive. The archive file is then digitally signed and ‘hashed’ (algorithm is applied, resulting in a unique code) and the hash code is timestamped and distributed onto the Factom and bitcoin blockchains. You can confirm that the archive file has not been modified by comparing its hash code with that on the blockchain. Even a miniscule change to the archive file would result in a completely different hash code.

The Court’s ruling - can electronic data fixed by blockchain be used as evidence?

Huatai successfully managed to convince the Court that the digital archive of the website had not been tampered with, and therefore the digital archive evidenced that Daotong had disseminated its copyright material.

The Judge emphasised that while blockchain evidence can be used, a case by case approach is necessary: “we should maintain an open and neutral stance on using blockchain to analyse individual cases. We cannot exclude it just because it is a complex technology. Neither can we lower the standard just because it is tamper-proof and traceable”.

The Court based its ruling on China’s Electronic Signature Law, holding that there are various factors to be taken into consideration. These can be summarised into three requirements:

1.    reliability of the input (i.e. the website in the archive is that as was accessible on the Internet at the date claimed);

2.    reliability of keeping integrity of the input (i.e the contents of the digital archive could not have been modified since);

3.    efficient expression of the recorded content (i.e. it is accessible for checking as needed by the Court).

The Court held that the evidence storage platform was legal and neutral, and thus qualified. The technology used for collecting the evidence was reliable. Finally, that the electronic data was complete and the Court was satisfied that it was unmodified.

The Judge held that “In this case, the usage of a third-party blockchain platform that is reliable and without conflict of interests provides the legal ground for proving the intellectual property infringement.” 

Comment

There are compelling use cases for blockchain technology in the legal and IP industries.

In China, civil court proceedings have very limited disclosure, leaving the litigants to do their own investigation and preserve their own evidence. Evidence presented in Court is often challenged as false until proven true. Litigants usually rely upon notorisation to verify their evidence as genuine and unmodified. This is a time consuming and a disproportionately costly procedure in cases where the amount of damages claimed are small. The damages awarded in this case were RMB 4,000 (around GBP 450), whereas notarisation of the website evidence by Notary Public could have cost the Claimant around the same amount. By comparison, a simple blockchain deposition service would cost as little as RMB 1 (11 pence) per webpage.

Blockchain technology solves the issue of verifying the integrity of digital evidence – that the file has not been modified since the ‘fixing’ date. Where it can’t help is in validating whether the evidence has been tampered with prior to ‘fixing’. Together with enough evidence that the digital evidence is genuine and unmodified, it can reduce the need for notorisation of such evidence in the future. 

It is encouraging that the Judge in this case is willing to take an open stance towards the technology. This is a sign of the progress made by the Hangzhou Internet Court in cutting down the barriers to litigation and not being bound by tradition. This Court uses video conferencing for hearings, electronic submission of evidence and other modern, innovative and cost saving mechanisms to provide a low-cost solution for Internet-related disputes. Its jurisdiction is currently limited to Internet-related disputes including ownership of copyright, online shopping, personal rights, product liability, domain names. Two more Internet Courts have been recently announced as due to open in Beijing and Guangzhou.

This case is not the only area in which Chinese authorities are being progressive in relation to the use of blockchain tech. According to news released in May 2018, China's Ministry of Public Security has filed for a patent for a blockchain system that securely stores evidence collected during police investigations. They hope that a blockchain-based system will result in a more transparent and tamper-proof evidence deposition procedure.

Rouse has been active in exploring blockchain technology as a method of preserving evidence of online infringement, trialling various services including the one used in this case. A cost-effective, reliable, scalable solution to evidence preservation would go a long way towards resolving one of the key challenges in litigating against online infringers. 

If you are interested in hearing more about ‘e-litigation’, or just want to talk about blockchain and IP, please get in touch or comment below.