[author]Tian Yanmei, Xu

[content]

Influences on Court Decisions - The Mediating Effect of Party Resources and Litigation Capacity

Tian Yanmei

Associate Professor, School of Economics and Trade, Shandong Management College

Xu Kaiyue

Postdoctoral Fellow, Department of Political Science, School of Social Sciences, Tsinghua University

Wei Jian

Professor, Zhongtai Securities and Finance Research Institute, Shandong University

Abstract：Using the data information of 3016 copyright infringement judgments in four provinces and cities of Beijing, Shanghai, Chongqing, and Guangdong from 2015 to 2018, the impact of parties' resources and litigation ability on court judgments was investigated based on the mediated effect model. It is found that judges do not make judgments based on the identity and wealth of the parties, but based on the litigation ability of the parties. The resources of the parties do not directly affect the outcome of the judgment, but have an indirect effect on the court's decision. This effect is realized through the litigation capacity, there is a significant intermediary effect. That is to say, the more litigation resources invested by the parties, the stronger the litigation capacity, the greater the impact on the court's judgment. There are differences in the litigation resources invested by different types of parties, which translates into differences in litigation ability and leads to differences in court decisions. This finding better explains the mechanism by which the parties influence the court's judgment, and helps to explore how to improve the fairness of the court's judgment.

1. Introduction

What factors influence court decisions is a big question about justice. M. Galanter (Galanter) found that, although the United States trial system has to prevent the privilege of private rights, to ensure fairness and equality of institutional arrangements, but has the advantage of resources, “the rich” still have the upper hand in the litigation, can get a higher rate of success. Thus, he put forward the theory of litigants' resource advantage, emphasizing that the level of resources of the litigants determines the level of success. Subsequent empirical studies in the United States, the United Kingdom, Canada, Australia and other countries have also reached similar conclusions. However, the judgment that the rich have more resources and thus win lawsuits belies an in-depth inquiry into the inner mechanism of litigation decisions. Is it possible that judges make judgments based on extrajudicial factors such as the identity and social status of the parties, and that the rich can win directly by virtue of their superior resources? This is neither in line with the spirit of the rule of law nor obviously in line with the judicial reality.  

We will take copyright infringement litigation cases as an example to test the above theory. The reason why we choose copyright infringement litigation is because it is easier to find infringement in copyright litigation, and the plaintiff has a high rate of winning. We take 3016 copyright infringement cases in Beijing, Shanghai, Guangdong and Chongqing as samples for statistics and find that 96.6% of the plaintiffs will win their cases. The calculation of infringement losses in copyright litigation as well as determining the amount of damages is where the difficulty lies. This leads to statutory damages being the preferred option in the determination of damages. Wu Handong found that 78.5% of copyright infringement cases from 2008-2012 utilized statutory damages. Beijing court data on copyright infringement cases from 2002-2013 also showed that the proportion of statutory compensation accounted for 98.2% of the total number of cases. Using a sample of 3,016 copyright infringement cases from 2015-2018 in Beijing, Shanghai, Guangdong, and Chongqing, we similarly found that 96.9% of the cases were adjudicated using statutory damages. However, statutory damages are the last in line for determining damages under Article 49 of the Copyright Law (amended in 2010).  

Statutory damages give more discretionary power to judges, who basically rely on experience to make discretionary decisions. This provides a good perspective to observe the influence of parties on judges in litigation. We collected and organized 3016 first-instance copyright infringement judgments made public by courts at all levels in four provinces and municipalities, namely Beijing, Shanghai, Guangdong, and Chongqing, from 2015 to 2018 to start our study. Beijing, Shanghai, Guangdong, and Chongqing are the models of China's reform and development, and the three provinces and municipalities of Beijing, Shanghai, and Guangdong took the lead in setting up intellectual property courts, carrying out specialized trials of intellectual property rights at an early stage, with more open and transparent justice, and with more professional personnel quality, which, to a certain extent, represent the highest level of China's courts in the field of intellectual property rights. Therefore, we take the copyright infringement judgments in Beijing, Shanghai, Guangdong and Chongqing as samples to study the influence of parties on court decisions.

In contrast to Grant's theory of party resource superiority, we emphasize the impact of a party's litigation capacity on the outcome of litigation. The so-called “litigation capacity” refers to the ability of the parties to utilize their own resources to make reasonable claims in litigation. Generally speaking, the parties will make full use of the endowment of resources into litigation capacity, but may also be overconfidence, neglect and other reasons for the endowment of resources did not form the result of litigation capacity. When the resources do not form litigation capacity, the party's litigation request will deviate from the reasonable range, so even if the party's resources are rich is difficult to get the judge's support. In turn, regardless of the party's resourcefulness, as long as a strong litigation capacity is formed in the litigation will be able to get a more favorable judgment. Because the discretionary judge is certainly not ruling arbitrarily, but rather making professional judgment based on experience, it is unlikely that the party's identity background and other resource advantages will directly influence the judge's decision.  

Our research shows that: the more the parties' litigation resources are invested and the stronger their litigation ability is, the greater the impact on the court's copyright judgment. Party resources influence court copyright decisions through litigation ability, and there is a significant fully mediated effect. There are differences in the resource inputs of different types of parties, and there are differences in the litigation capacity thus translated. Parties to the regulatory bodies of copyright professional organizations have more litigation resource inputs and state-owned entities have fewer litigation resource inputs, and thus parties to the regulatory bodies of copyright professional organizations are able to obtain more compensation, while parties to state-owned entities do not differ from the average party.  

Our marginal contribution is mainly reflected in the fact that we have enriched and supplemented the research on copyright infringement judgment decision-making from the perspective of parties' litigation capacity. In the existing studies, few scholars have included the litigation capacity factor in the analysis, we push the influence of party resources on court judgment decision-making further from the perspective of litigation capacity, empirically analyze the judgment decision-making mechanism in depth using the mediated effect model, advance the theory of party resources, and put forward the theory of litigation capacity, which improves the explanatory power of the theory.

2. party resources, litigation capacity and court judgment: literature review and theoretical mechanism

After Grant proposed the theory of party resource superiority, more studies have explored the impact of extrajudicial factors such as party identity on judgment on the one hand, and the judgment decision-making mechanism and its influencing factors on the other hand, in-depth exploration.  

2.1 Party Identity and Court Judgment Decision Making  

Grant (1974, 2005) by comparing the resources and power of business organizations, government agencies, natural persons, found that business organizations, government agencies have more wealth resources, more experience in legal proceedings, is a repeated player in litigation cases, in the litigation is in an advantageous position, while the individual has relatively fewer resources, lower status, and is in a disadvantageous position. Some scholars conducted an empirical analysis of 2724 judgments of Shanghai courts to test Grant's theory of party resources, and found that: government departments or enterprises associated with the government are the biggest winners with the strongest advantages, while farmers are the most disadvantaged among the disadvantaged, and companies and individuals are in between. Whereas small companies are the main litigants in copyright cases, the likelihood of a defendant's victory drops by more than 70 percent when the plaintiff party is a business, and the defendant's chances of winning increase six-fold when the plaintiff party is an individual. Domestic studies have found that the type of ownership of an enterprise affects the court's decision, with state-owned enterprises (SOEs) having the highest rate of winning when they are the plaintiffs, but both SOEs and private enterprises have lower rates of winning when they are the defendants, while the government has a higher rate of winning when it is the defendant. Long Xiaoning and Wang Jun found that the first instance intellectual property case plaintiff and the location of the court has a significant positive impact on whether it can get a favorable decision, that is, intellectual property rights judgment of the existence of local protectionism. Yu Yongcheng and Wei Jian's study also found that in litigation, parties within the system have a higher rate of winning than parties outside the system, and local parties have a higher rate of winning than outsiders.  

These studies, based on the judicial contexts of different countries, all collectively found a relationship between party status and judgment. However, how does client status affect or even shape judgments? Numerous studies have emphasized the role of lawyers.  

2.2 Lawyers and court decision-making  

The participation of lawyers has a positive impact on the parties' fight for their interests, which in turn affects the outcome of the court's judgement. Experienced lawyers provide evidentiary information that is easily accepted by the court through their professional knowledge, which better meets the court's information needs and makes their evidence more appealing, thus influencing the judge's decision-making and increasing the probability of the client's winning the case, and related studies have found that the litigation experience of lawyers and the size of the litigation team have a statistically significant positive correlation with Supreme Court decision-making, and this positive correlation still exists even after controlling for the case area and judicial This positive correlation persists even after controlling for case field and judicial policy preferences; and fair use copyright litigation is examined by categorising clients into individuals and firms and empirically analysing the quality assigned to clients' defence lawyers. The reasons for interest groups' success in litigation are, on the one hand, the fact that interest groups are repeat litigants and, on the other hand, the fact that lawyers have strong expertise in litigation.  

The involvement of lawyers is, on the one hand, the ability to compete with the opposing party's lawyers and, more importantly, the fact that the lawyers' expertise can contribute to the development of a high level of litigation competence that can help the parties to obtain favourable judgments. This shows that it is crucial to invest resources in litigation to form litigation capability. Using Chinese foreign-related online copyright cases as a sample, Xu Jian found that foreign legal persons would obtain a higher success rate and compensation amount compared to domestic legal persons and natural persons, but the economic and time costs invested are also higher than those of domestic plaintiffs. Obviously, compared with the ‘poor’ with limited resources, the ‘rich’ with abundant resources are more likely to be able to hire high-level lawyers. This is an important reason why the ‘rich’ are more likely to obtain favourable judgements.  

But there are also factors that diminish the advantage of the ‘rich’. While individuals with lower levels of resources have a lower probability of winning in the Supreme Court, the intervention of interest groups can increase the probability of success for those with lower levels of resources. And the law, courts, judges, litigants and their attorneys' characteristics will affect the U.S. Supreme Court's decision-making, the results of the judgement is not necessarily completely tilted to the strong, and sometimes will be biased in favour of the weak. Some scholars on the Philippines, Israel court judgement study came to the same conclusion: for political reasons, in order to more peaceful and stable society, the court judgement more inclined to the disadvantaged groups.  

2.3 Litigation Capacity and Court Decision Making: Theoretical Mechanisms  

‘Litigation capacity’ refers to the ability of the parties to use their own resources to provide evidence, demand compensation, and refute the other party's claims in the litigation in accordance with the law, and ultimately to form a litigation claim that is easily recognised by the judge, and to a certain extent, it can also be called litigation pricing ability. High level of evidence, reasonable and lawful compensation claims, effective proof of the other side of the unreliability of the evidence and the claim is not lawful, improve the judge to accept their own evidence, the probability of recognition of their own claims, and then get the level of judgement in favour of their own side. The higher the litigation capacity is more likely to be accepted by the judge, the more able to influence the judge's decision-making. The formation of litigation capacity, can be generated directly by the parties, but more mainly through the formation of lawyers.  

2.3.1 Party resources and litigation capacity  

Resourceful parties in the initiation of litigation, can make full use of its resources for professional legal analysis, effective evidence collection, the formation of strong evidence, in the process of litigation, full debate, effective defence and attack, their own resource advantages can be fully transformed into their own litigation ability. Resourceful parties generally have rich litigation experience, professional legal knowledge, and can be familiar with the legal regulations and procedures, and even to a certain extent, affect the design of the legal system, the formation of their own more favourable rules and regulations. And resourceful parties are often also repeat litigants, and repeat litigation, on the one hand, can increase the litigation experience of the parties, so that the parties are more familiar with the litigation rules and procedures, on the other hand, in the process of litigation the parties and the legal system departments to establish a good relationship. Especially as a repeat participant, the resourceful parties will repeatedly appear in front of the judge, so they will be more objective to present the evidence facts and materials to increase the judge's trust and influence the judge's judgement results. Therefore, in general resourceful parties also have high litigation capacity and thus a higher probability of obtaining a favourable judgement.

However, not all resourceful people are able to turn their advantages into litigation capabilities. On the one hand, because litigation is not the usual routine business, and professional, belong to the small probability of events, even if the party has the advantage of resources, but in the litigation may not have the advantage; On the other hand, is different parties litigation purpose is different, and therefore initiated litigation when the investment of resources is not the same. In reality, there are a large number of strategic litigation, the parties to initiate litigation itself is the purpose, is to achieve through litigation to create impact, create obstacles to the other party's role, as for the outcome of the litigation does not care. Especially in copyright litigation, many plaintiffs sue just to maintain their own reputation, to eliminate the nuisance of infringement, compensation is the second demand. In other words, those who do not aim to win the lawsuit, the amount of compensation for the purpose of the lawsuit, even if the parties have the advantage of resources, may not be invested into the ability to litigation. What's more, in litigation, the resource-advantaged person also suffers from overconfidence as well as neglect, which may also lead to insufficient investment of resources.  

For the resource disadvantaged, the initiation of litigation and the amount of damages are likely to be a matter of life and limb, so the resource disadvantaged tend to invest fully in it, and instead develop a higher litigation capacity to win. For example, in our sample, we found that the proportion of lawyers hired by the general parties (private enterprises and individuals) was 85.5% respectively, much higher than that of state-owned entities (67.1%), and that the proportion of lawyers hired by the governing bodies of copyright professional organisations was as high as 100%. This suggests that the purpose of litigation is different for the three organisations, leading to a different investment of resources. The state-owned organisations, on the other hand, are not willing to accept mediation because they want a clear result regardless of whether they win or lose the lawsuit. On the other hand, professional copyright management organisations are professional institutions to protect the rights and interests of copyright holders, to centralise the management of copyright works, to arbitrate on behalf of copyright holders or to initiate litigation, and to maximise the protection of the rights and interests of copyright holders is their fundamental mission, therefore, they should not only ensure the success of the lawsuits in litigation, but also try their best to strive for more benefits for the copyright holders.  

2.3.2 Lawyers and Litigation Capabilities  

Although the resourceful parties have the potential to transform their resources into litigation capacity, litigation is, after all, a professional field of law. In particular, copyright litigation cases are different from other civil cases, involving stronger professionalism, requiring professionals to establish a platform for dialogue between the judge and the parties to ensure the normal conduct of litigation activities. Therefore, professional lawyers are needed to play a role in litigation. Lawyers are able to complete a large amount of professional work, help to carry out effective proof, and improve the probative power of evidence.  

As mentioned earlier, the literature has shown that the participation of lawyers to improve the possibility of obtaining an advantage in the litigation, the key reason is that the lawyer is an expert in a particular field of litigation, more familiar with the trial procedures, more understanding of the judge's concerns about the case, can correctly estimate the loss of compensation, guidance to the parties to put forward a reasonable litigation request, and according to the litigation request to prepare all the evidence, in the court trial, can be the evidence on the In the trial, the other side of the evidence to refute, challenge, and reasonably persuade the judge and let the judge trust their statements and evidence, effective prediction of the litigation process problems, and take the corresponding programme to actively respond. In other words, lawyers are more professional litigation ability formers, is a higher level of litigation ability.  

Hiring lawyers, especially high-level lawyers, requires considerable remuneration, so those with superior resources have a higher probability of hiring lawyers and high-level lawyers than those with weaker resources. The study also found that government departments and large corporations hire a higher average level of lawyers than other sectors. These professional litigation teams can carry out effective division of labour, reasonably and professionally measure damages, provide evidential materials that are admissible by judges, reduce unnecessary and ineffective evidential materials, and improve the probative power of the evidence of the parties concerned. This actually strengthens and improves the litigation ability of the resource-advantaged party, and also gives the resource-advantaged person a higher probability of obtaining a favourable litigation outcome. That is to say, the resource-advantaged party has two channels to form litigation ability, one is to use their own advantages directly, and the other is through the hiring of lawyers.  

2.4 Theoretical Assumptions  

Copyright infringement litigation cases using partyism litigation mode, the court adopts the attitude of ‘do not sue,’ that is, a party initiated the lawsuit to put forward the litigation requirements, only in the scope of the claims put forward by the parties to the trial, even if some of the damages can be supported by the court, but in the lawsuit did not mention, the court will not take the initiative to add initiate a trial. Therefore, the reasonableness of the claims made by the parties, the adequacy of the evidence collected before the trial based on the claims, and the effectiveness of the proofs made in the litigation are all very crucial.  

At the same time, copyright infringement litigation cases are highly professional, the transmission of case information between the parties and the court requires a certain procedural mechanism as a safeguard, the dispute resolution mechanism is relatively complex, and the litigation process is full of cross-examination, evidence and debates, etc., which requires the parties to have professional knowledge of the law and the ability to argue and present evidence in court. What's more, copyright is intangible, the infringement loss is difficult to calculate, determine the amount of damages is a difficult point. At this point, the litigation ability of the parties is crucial to their ability to win a favourable judgement. As a result, parties with different resource endowments have different litigation capabilities due to different resource inputs, which in turn have different impacts on judges.  

Judges make judgement decisions ‘on the basis of facts and in accordance with the law’. Judge according to the evidence provided by the parties to the discretion, if the evidence does not have the power to prove or the power to prove small, then can not be used as or can not be used alone as the basis for determining the facts of the case, if the evidence is strong, then can be used as the basis for determining the facts of the case. Different litigation capacity to form a different chain of evidence, which leads to different judgement results.  

Based on the above analysis, the following research hypotheses are proposed:  

(1) party resources have a significant positive impact on the court copyright judgement, the court judgement win rate increases with the increase of party litigation resources investment.  

(2) Litigation capacity increases with the increase of the parties‘ litigation resources, but based on the heterogeneity of the parties’ litigation purposes, there are differences in different parties' resource inputs, which translates into differences in litigation capacity.  

(3) The litigation capacity of the parties has a significant positive impact on the court copyright judgement, and the rate of court judgement victory increases with the increase of the litigation capacity of the parties.

3. Research Design

3.1 Sample Selection and Data Source  

We randomly selected and manually collected and collated a total of 3016 first-instance judgements of copyright infringement made public by courts at all levels in four provinces and cities, namely Beijing, Shanghai, Guangdong and Chongqing, from 2015 to 2018 through the website of Jufa Cases. Relevant variable information was extracted from the judgements, including: the amount of the court's judgement, the amount of the plaintiff's claim, whether the plaintiff and the defendant hired a lawyer, the type of plaintiff's identity, whether the plaintiff was local, the characteristics of the trial court (including the form of the trial, whether there was a people's jury, and the number of legal articles on which the judgement was based), and the type of the infringing work. Information on the type of plaintiff's company was also collected and organised through the website of SkyEye.  

3.2 Explanation of Variables  

3.2.1 Explained Variables  

Amount of court judgement (lnjudgment). The amount of court judgement adopts the total amount of compensation for damages, moral compensation, and compensation for reasonable expenses finally awarded by the court in the judgement as a measure. A smaller amount of court judgement indicates that the judge ruled leniently and the plaintiff received less compensation; a larger amount of court judgement indicates that the judge ruled heavily and the plaintiff received more compensation. The copyright law provides for statutory damages of up to 500,000 RMB, but there are cases of discretionary damages that result in damages greater than 500,000 RMB.  

3.2.2 Key Explanatory Variables  

Party resources (lawyer1). Whether or not the plaintiff hires a lawyer is used as a measure of party resources. Professional lawyers play an important role in copyright infringement litigation, which is a more specific reflection of the resources invested by the parties in litigation. Set the dummy variable, if the party hires a lawyer assigned a value of 1, if the party does not hire a lawyer assigned a value of 0.  

3.2.3 Intermediary variables  

Litigation ability (rate). The litigation capacity of the parties refers to the ability of the parties to initiate litigation in court, to provide effective evidence, and to make reasonable claims. The plaintiff filed a claim after the court within the scope of their claims for trial, if the claim is low, the judgement to obtain less benefits, if the claim is more outrageous, the court will not support their claims, so it is very critical to make a reasonable claim. The closer a party's claim is to the outcome of the court's judgement the more litigious it is. Therefore, the court judgement ratio (amount of court judgement/amount of plaintiff's claim) is used as an indicator of litigation capacity. The higher the court judgement ratio is, the closer the court judgement is to the plaintiff's claim amount, the more the plaintiff's expected claim can be achieved, and the stronger the plaintiff's litigation ability is; the lower the court judgement ratio is, the larger the difference between the court judgement amount and the plaintiff's claim amount is, the less the plaintiff's claim is realised, and the weaker the litigation ability is. The maximum value of the court judgement ratio in the sample is 1, and the minimum value is 0.

3.2.4 Control variables  

(1) Type of parties. We classify the parties into parties of copyright professional organisations‘ regulatory bodies and parties of non-professional organisations’ regulatory bodies. Further, in order to examine the effect of state-owned unit parties on court copyright judgements, we divided the parties of non-professional organisations into state-owned unit parties, general parties (private units and individuals), and set two dummy variables with general parties as the control group, assigning a value of 1 if it is a copyright professional organisation's management body and 0 otherwise, and assigning a value of 1 if it is a state-owned unit party, and 0 otherwise. This is to examine the impact of the type of party on the court's judgement.  

(2) Whether the plaintiff party is local. Copyright infringement cases generally take ‘the plaintiff on the defendant’ principle, that is, the plaintiff to the defendant's seat in the court, so we only examine whether the plaintiff is consistent with the location of the court. If the plaintiff and the location of the court is consistent with the value of 1, if the plaintiff and the location of the court is not consistent, the value of 0.  

(3) Trial court characteristics. Including the form of court proceedings, the number of judgements based on the law, with or without a people's jury. If the court hearing form of collegiality is assigned to 1, using a single system is assigned to 0. The number of judgements based on the law refers to the number of substantive law based on the ‘Copyright Law of the People's Republic of China’ and other laws and regulations, including procedural laws and regulations are not included. There are people's jurors assigned to 1, otherwise assigned to 0.  

(4) The type of infringing works. Different types of infringing works will have an impact on the judgement results, and the types of infringing works are divided into six categories: computer software, images, written works, musical works, film and television works, and other works.  

3.3 Model Setting and Control Variables  

Drawing on the mediated effect analysis method of Wen Zhonglin and Ye Baojuan (2014) to construct a mediated effect model, the parties‘ litigation ability is used as a mediating variable to analyse the impact of the parties’ resources on the court's decision. The model is designed as follows:

Where lnjudgment denotes the court judgement, lawyer1 is the key explanatory variable party resources, and rate is the mediating variable party litigation ability. ε, δ, and μ denote the random error terms, and X denotes other control variables, which mainly include: the amount of the plaintiff's claim (lnclaim), the subjective characteristics of the two parties to the lawsuit including the type of the plaintiff's party, whether the plaintiff is local ( plocal), whether the defendant has a lawyer (lawyer2); characteristics of the trial court, including the form of trial organisation of the court (coll ), the number of legal articles on which the decision is based (article), and whether there are people's assessors (assessor).

Equation (1) α1 measures the effect of parties‘ resources on the amount of court judgements, and equation (2) tests the effect of parties’ resources on their ability to litigate to determine whether there is a mediating effect. Equation (3) decomposes the direct and mediating effects of the impact of party resources on court judgments by taking party resources as the explanatory variable, taking the amount of court judgments as the explanatory variable, and introducing the indicator of party litigation capacity as the explanatory variable, where: η1 denotes the direct effect, i.e., the direct effect of the party's resources on court judgments, and η2*β1 denotes the mediating effect, i.e., the party's resources affecting the amount of court judgments by influencing its litigation capacity on the amount of court judgement.