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07-22 2024

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HomeHome > Cases > Others

Shanghai Centrifugal Machines Research Institute (plaintiff) v. Shanghai Baolong Bio-Tech Company et al (defendant) For Infringement on Commercial Sec

Post time：09-14 2007 Author：
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563
Plaintiff:
Shanghai Centrifugal Machines Research Institute
Address: 1590 Longwu Road, Shanghai
Legal Representative: Chen Guoliang, director
Authorized Attorney: Fu Minrong, attorney-at-law of Shanghai Zhongxin Law Firm
Authorized Attorney: Zhu Xidong, male j employee of Shanghai Centrifugal Machines Research Institute
 
Defendant:
Shanghai Baolong Bio-Tech Equipment Company
Address: 64 Datong Road, Shanghai
Legal Representative: Zhao Ligui, board chairman
Authorized Attorney: Pan Feng, attorney-at-law of Shanghai Jingjian Law Firm
Authorized Attorney: Wang Yu, attorney-at-law of Shanghai Yiping Law Firm
Defendant:
Chen Wuzhao, male, born on Oct. 21, 1941, of Han nationality
Address: Apt. 2-501, 641 Kangding Road, Shanghai
Authorized Attorney: Pan Feng, attorney-at-law of Shanghai Jingiian Law Firm
Authorized Attorney: Wang Huixiang, attorney-at-law of Shanghai Yiping Law Firm
Defendant:
Jiang Zuofa, male, borned on May 25, 1933, of Han nationality
Address: Apt. 406, No. 102, Lane 87, Xinchang Road, Shanghai.
Defendant:
Zhao Minglong, male, born on May 14, 1942, of Han nationality, employee of Hainan Chenchen Pharmaceutical Company
Address: Apt. 402, 934 Zhongshan Xi Road, Shanghai
Authorized Attorney (for both Jiang Zuofa and Zhao Minglong):
Wang Yu and Wang Huixiang, attorneys-at-law of Shanghai Yiping Law Firm
Defendant:
Fan Weikang, male, born on March 13, 1960, of Han nationality
Address: Apt. 407, 292 Caoyang Ercun, Shanghai
Authorized Attorney: Wang Huixiang, attorney-at-law of Shanghai Yiping Law Firm
Authorized Attorney: Jiang Xin, attorney-at-law of Shanghai Jingjian Law Firm
 
This case of infringement on commercial secrets is brought to this court by plaintiff Shanghai Centrifugal Machines Research Institute ("Centrifugal Institute") against defendants Shanghai Baolong Bio-Tech Equipment Company ("Baolong"), Shanghai Xier E1ectromechanical Technology Development Company ("Xier"), Chen Wuzhao and Jiang Zuofa. This court, after filing the case, duly formed a collegiate panel for adjudication. On May 26, 1998, upon plaintiff's petition, this court added Zhao Minglong and Fan Weikang as defendants to this case' On July 2, 1998, the plaintiff withdrew its complaint against Xier when the latter went out of business. In August 1996 and January 1999, this court entrusted Shanghai Science and Technology Commission and the Intellectual Property Center under the State Administration of Science and Technology with the task of appraising the relevant technical questions in the case' On September 22, 1997, June 18, 1998, September 29, 1999 and October 11, 1999, this court formed three collegiate panels to try this case. Plaintiff's attorneys Fu Minrong and Zhu Xidong, Defendants' attorneys Wang Yu, Wang Huixiang and Pan Feng, representing BaOlong, Chen Wuzhao, Jiang Zuofa, Zhao Minglong and Fan Weikang, came to the trial for debate. The hearing of the case has now come to a close.
The plaintiff alleges that it started to develop the GQ series tubu1ar centrifuges in 1986, and has been mass producing such centrifuges since December 1989 when the machines passed the test administered by experts' This type of centrifuges inc1udeS principally four models, GQ142G/H, GQ124, GQ105, and GQ76, which contain the technical secrets the plaintiff owns. From 199O to 1995, the GQ series tubular centrifuges won on different occasions a Third Class Award for Shanghai's Good and New Products, a Silver Award at Shanghai's Science and Technology Fair, etc. Jiang Zuofa was the former director of the p1aintiff' He was responsible for the general financial management and sales, and was in Possession of the GQ series tubular centrifuges customers list. During his term as director of the plaintiff, Jiang Zuofa also participated in the technical appraisal of the GQ142G tubular centrifuges as a member of the appraisal team, and came into possession of the technical secrets of the said centrifuges. In March l994, without informing the plaintiff, Jiang Zuofa planned with Zhao Ligui for the establishment of Baolong. After setting up Baolong, Jiang Zuofa became its general manager, and disclosed the technical secrets and the customers list of the GQ142G tubular centrifuges to Baolong. Chen Wuzhao was the former deputy general engineer of the plaintiff as well as the director of its second department. As the project manager and general designer of the GQ series tubular centrifuges, he was in possession of a complete set of technical materials concerning the GQ series tubular centrifuges. In June 1994, Chen Wuzhoa resigned from his position at the Plaintiff. Before his resignation, he contacted Baolong and provided it with technical secrets concerning the GQ series tubular centrifuges. Chen Wuzhao became the deputy general manager and the general engineer of Baolong after the latter's establishment, and disclosed to Baolong plaintiff's 1ist of customers. Fan Weikang was an engineer of plaintiff's second department. He was a member of the research team for the GQ142G tubu1ar centrifuge research project. He a1so worked for some time in the sales department of the plaintiff, and knew well plaintiff's commercial secrets regarding the GQ142G tubular centrifuges and list of customers. In June 1996, Fan Weikang resigned from his position with some excuse, became an engineer in Baolong, and disclosed plaintiff's commercial secrets and customers 1ist. Zhao Minglong was a researcher of the plaintiff, After he left the plaintiff and began working in the Shanghai Bio-Products Research Institute; he participated in the research and development of plaintiff's GQ124 tubular centrifuge. He was also a member of the expert team responsible for the appraisal of the GQ series tubular centrifuges, and as such he came into Possession of plaintiff's technical secrets. However, breaching his duty under the confidentiality agreement, Zhao Minglong acted as technical advisor to Baolong and provided technical support for the latter's production of similar products. From June 1994 on, Baolong produced and sold GQ tubular centrifuges that are structurally similar to plaintiff's centrifuges. Baolong obtained all the technology in connection with the production of its tubular centrifuges from the above four defendants.
As to the technical secrets concerning plaintiff's GQ tubular centrifuges, the plaintiff in its complaint states that there are nine key technologies in the system, including the cooling system for the centrifuge, the base, the liquid container, etc. Thereafter, the plaintiff split the nine technologies further and enumerated 28 techniques, which include the basic principles for centrifuge designing, basic structure, and testing of the whole set, etc. most recently, the plaintiff described the key technical points of the GQ tubular centrifuges as the structures of the centrifuges and the parameter series consisting of thousands of parameters in the drawings concerning the shapes, nominal measures, tolerance & fit, precision, etc. of the various components. In addition, the plaintiff changed the four models of centrifuges for which it claims protection into two: GQl42G and GQ105' The customers involved in plaintiff's claim for protection include the Centra1 Blood Bank of Xian, Harbin Shiheng Bio-Tech Pharmaceutical Company, The Blood Supply Center of the Navy's Logistics Department, Qingdao Haier Pharmaceutical Company, Shenzhen Taitai Pharmaceutical Company and Xinjiang Haoseda Bio-Products Company.
The plaintiff holds that Baolong procured from the four defendants the technical secrets of plaintiff's GQ142 G and GQ105 centrifuges by an unscrupulous method, and exploited such technical secrets, thus infringing upon plaintiff's GQ142 G and GQ105 centrifuges by an unscrupulous method, and exploited such technical secrets, thus infringing upon plaintiff's right thereto. Chen Wuzhao unlawfully disclosed the technical secrets of plaintiff's GQ142 G and plaintiff's GQ142 G and GQ105 centrifuges as well as the customers list in connection therewith, infringing upon plaintiff's right to its technica1 secrets and management secrets. Jiang Zuofa and Fan Weikang unlawfully disclosed the technical secrets of p1alntltt's GQ142G centrifuge as well as the customer's list in connection therewith, infringing upon plaintiff's right to its technical secrets and management secrets. Zhao Minglong un1awfully disclosed the technical secrets of plaintiff's GQ142G centrifuge, infringing upon Plaintiff's right to its technical secrets. Due to the infringing acts of the five d6fendants, the plaintiff suffered great losses. Therefore, the p1aintiff seeks a judgment 1) enjoining defendant Baolong from using the above commercial secrets in producing and selling tubular centrifuges from the day the judgment takes effect till the termination of Plaintiff's right to the technical secrets of the GQ142G and GQ105 centrifuges as well as to the management secrets with respect to the customers list, and imposing on bong as well as on the other four defendants the duty not to disclose such secrets without approval; 2) enjoining defendants Baolong, Chen Wuzhao, Jiang Zuofa, Fan Weikang and Zhao Minglong to make public apologies to the plaintiff on Science and Technology Daily, and Xinmin Evening News; 3) enjoining defendant8 Baolong, Chen Wuzhao, Jiang Zuofa, Fan Weikang and Zhao Ming1ong to pay to the plaintiff damages in the amount of RMB1,500,000,500,000,500,000, and 500,000, jointly and severally.
 
Defendant Baolong contends that plaintiff's GQ142 G and GQ105 centrifuges are imitations of the Z101 tubular centrifuge made in West Germany and the GQ105 domestic and foreign centrifuges. The technical secrets claimed by the plaintiff are available in foreign and Chinese textbooks as well as relevant books of sample product8. In addition, the plaintiff never took any effective measures to protect the so-cal1ed technical information and customers list. Consequently, such technical and management information does not constitute commercial secrets in the legal sense. Baolong made its GQ142G and GQ105 centrifuges by copying the same Z101 tubular centrifuge made in West Germany and the GQ105 centrifuge made by Liaoyang Medical Equipment Factory. Though Baolong's centrifuges and those of the plaintiff bear some resemblances, such resemblances result from copying the same machines, and therefore Baolong has not infringed on plaintiff's right to its technical secrets.
Defendants Chen Wuzhao, Jiang Zuofa, Fan Weikang, Zhao Minglong have made the same defense as Baolong against plaintiff's claim to its commercial secrets. In addition, defendant Chen Wuzhao contends that in November 1995, Jiseda Toys Company employed him, which was under the management of Zhao Ligui. He was assigned by the company to work in Baolong, and was never the deputy general manager nor the general engineer of Baolong. Before he went to work there, Baolong had produced the GQ142 G and GQ105 centrifuges. Therefore, Baolong's production of the centrifuges has nothing to do with him. Before the establishment of Baolong, the Centrifugal Institute entrusted several enterprises which are under the charge of Zhao Ligui with processing spare and component parts of centrifuges, and never requested these enterprises to keep related technologies as secrets' Besides, the designing and processing of many of the spare and component parts were completed by Zhao Ligui. For these reasons, Chen Wuzhao holds that the p1aintiff does not own the right to the technica1 secrets of the centrifuges at issue, and there is no legal basis to charge the defendants with unlawful disclosure. Defendant Chen Wuzhao requests that the court dismiss plaintiff's complaint.
Defendant Jiang Zuofa contends that, during his term as director of the plaintiff, his principal responsibility was administrative and not technical. He did participate in the appraisal meeting for the GQ142G centrifuge, but he did so in his capacity as director of the research institute. Consequently, he did not have access to the technical information of GQ142G. Besides, as director of the research institute, he was never in charge of the sales department, and never had access to the customers list' After retirement in April 1994, he had some contacts with Bao1ong on account of Xier, but he was never Baolong's general manager. Therefore, defendant Jiang Zuofa says that he never disclosed any of plaintiff's information to Baolong, and requests the court to dismiss plaintiff's complaint.
Defendant Fan Weikang contends that Baolong had produced the Defendant Fan Weikang contends that Baolong had produced the centrifuges in question by the end of 1994, and he resigned and left the plaintiff in November 1996. Therefore, Baolong's production of the centrifuges in question does not have anything to do with him. Besides, he never went to work in Baolong, nor disclosed to it plaintiff's customers list. He had some contacts with Baolong during the second half of 1997 for other business purposes, and worked in an office borrowed from Baolong. For these reasons, defendant Fan Weikang requests the court to dismiss the complaint of the plaintiff.
Defendant Zhao Minglong contends that though he participated in the appraisal of the GQ142G centrifuge, such appraisal did not involve plaintiff's technical information. Nor is it possible for him to obtain a complete set of plaintiff's technical data. The centrifugal technology he possesses does not come from the plaintiff. It comes from his work experience. As technical adviser to Baolong, he provided his own technical knowledge and skill. He requests that the court dismiss plaintiff's complaint.
To support its assertions, the plaintiff has submitted evidence that can be grouped into three types. The first 'consists of 16 documents, which prove that the parameter series of GQ142G and GQ105 centrifuges are plaintiff's technical secrets' These 16 evidentiary documents can be divided into two sets. One includes the research and development reports of GQ142G and GQ105 centrifuges, technical appraisal certificates of the Municipal Science and Technology Commission, and awards the plaintiff won on account of the centrifuges in question. The other set is evidence proving that the plaintiff did take some measures to keep its technical information confidential. It consists of, among others, 7 documents and testimony by witnesses, including the rules of the Centrifugal Institute for the implementation of provisions relating to confidentiality made by the First Machines & E1ectronic Appliances Bureau of Shanghai. The second type of evidence proves that the five defendants committed acts infringing upon the Centrifugal Institute's right to its technical as well as managerial secrets' The 14 documents of this type can also be divided into two sets. The first set is evidence proving that the four individual defendants were either employees of the plaintiff or members of the appraisal team, and therefore they have know1edge of plaintiff's technical and managerial secrets. The other set is evidence proving that the four individual defendants worked in Baolong and Baolong used plaintiff's technical information in producing GQ142G and GQ105 centrifuges. The third type of evidence provides the basis for plaintiff's claim of damages. It Consists mainly of evidence regarding the number of centrifuges produced by Baolong, Plaintiff's average profit for each of the centrifuge it produced, and expenses that the plaintiff incurred in connection with this investigation.
To support their contentions, the five defendants have also submitted evidence, which fall into five types. The first type of evidence consists of 30 documents' They are primarily intended to prove that the technical information for which the plaintiff seeks protection is technica1 information that has been publicized. The second type contains 11 documents intended to prove that Baolong developed its own centrifuges by copying a sample machine made in West Germany. The third type is intended to prove that the plaintiff failed to take reasonable and effective measures to protect the secrecy of the technical information for which it is seeking Protection. The fourth type contains 7 documents by which the defendants try to prove that the four individual defendants did not commit any infringing acts' The fifth type of evidence, 10 documents in all, is intended to prove that the customers list, for which the plaintiff is seeking protection, is accessible public knowledge.
From the allegations and contentions of the plaintiff and the defendants, the issues of this case can be summed up as follows: Is the technical information concerning GQ142G and GQ105 centrifuges, for which the plaintiff seeks protection, public knowledge? Is the techno1ogy Baolong uses in Producing its GQ142G and GQ105 centrifuges similar to that of the plaintiff?
To resolve the above issues, this court duly entrusted the Inte1lectual Property Center of the State Commission of Science and Technology with an appraisal of relevant technologies. Thereafter, the Intellectual Property Center under the State Commission of Science and Technology organized a team of experts for the appraisal work. After separate on-spot surveys of GQ142G and GQ105 centrifuges produced by Baolong and by the plaintiff, the experts came up with their technical appraisal report. Regarding the publicness of the Centrifugal Institute's technology, the report states that the basic principles of design, the basic structures, and the testing methods of GQ142G and GQ105 tubular centrifuges have been publicized in relevant technical Publications. However, the parameter series consisting of thousands of parameters recorded in the construction drawings of the Centrifugal Institute concerning the centrifuges' shapes, nominal measures, to1erance& fit, and precision, have not been publicized, and these parameter series represent the main technical contents of GQ142G and GQ105tubular centrifuges. Besides, the method of using the rubber supports for the overhanging main axle is not publicized in relevant technical materials. After a comparison between the technica1 parameters of Centrifugal Institute's centrifuges with those of Baolong's, the report holds that the centrifuges produced by the two of them are similar in the principal structures and shapes of the main components, the main nominal measures, and in the expression of most of the drawings. Some of the drawings even have the same errors. Though there are differences in some components with respect to shapes, nominal measures, tolerance & fit, or precision, such differences are immaterial. Therefore, the two products are similar in the parameters series consisting of thousands of parameters reflecting the shapes, nominal measures, tolerance & fit, and precision of the various components.
The plaintiff does not challenge the above appraisa1 report, while the five defendants, though they do not challenge the appraisal procedure, has raised some objections to its conclusion. These objections boil down to the following: 1) Some of the data quoted from the Baolong drawings are not correct; 2) The shapes, nominal measures and the structure of the overhanging main ax1e of most of the component parts may be copied from the sample machine made in West Germany as well as from product explanations from abroad. Therefore, the conclusion of the appraisal that the parameter series and the centrifuge's over-hanging main axle are not yet disclosed does not Square with the facts; 3) The centrifuges produced by Baolong and by the Centrifugal Institute differ considerably and materially; 4) The Centrifugal Institute entrusted Zhao Ligui with the job of processing the upper, middle and lower bushes of GQ142G centrifuge, and therefore the design and processing of such bushes should belong to Zhao Ligu. To support their objections 2 and 4, defendants produced the testimony of Tang Wensheng, Zhang Xian and others, a copy of Baolong's survey drawing, and the Centrifugal Institute's relevant invoices for processing jobs done by external cooperators, as well as the application forms signed by the Centrifugal Institute's relevant officers for such processing jobs. This court holds that 1) There are indeed some errors in the cited data of the appraisal report, but such errors have been corrected by the appraisers during trial and examination of evidence, and they do not affect the overall correctness of the conclusions in the appraisal report; 2) As to the contention that both the Baolong centrifuges and those of the Centrifuga1 Institute are copies of the same sample machine made in West Germany, though the defendants have provided some testimony and a survey drawing, which is not dated nor in compliance with accepted standards, such evidence is insufficient for the purpose of proving that Baolong copied the foreign made machine in producing its centrifuges. Besides, the fact that the Centrifuga1 Institutes copied a foreign made machine in producing its centrifuges can not prove that the technology acquired through copying is public knowledge; 3) As to the ownership rights regarding the technology of bushes, though the defendants produced as evidence invoices by the Centrifugal Institute for the processing jobs done by external cooperators, such invoices can only prove that the Centrifugal Institute entrusted others with the job of processing some of the component parts. They are incapable of disproving the rights of the Centrifugal Institute to the technology contained in the complete set of drawings it provided. Judging from the evidence provided by the defendant, we are quite certain that in 1989,1992 and 1993, the Centrifugal Institute entrusted the job of processing the liquid container, case and lining, and cylinder of GQ142G centrifuges as well as the cylinder of GQ105 centrifuges to Qingpu Xujing Electric Machine Die Accessories Factory and Qingpu Jiali Mechanical and Electric Appliances Factory, which are under the charge of Zhao Ligui; 4. Defendants contend that there exist material differences between the centrifuges produced by Baolong and those produced by the Centrifugal Institute. First, the appraisal report is affirmative that there are differences in the tolerance, shapes and measures of some of the component parts' of the two centrifuges. However, because we have asked the experts to give their opinion on the similarities of the, two, there is no need for them to dwell on differences. Second, the appraisal report concludes explicitly that the differences between the centrifuges produced by the two manufacturers are nonmaterial. For these reasons, the contention of the defendant on this Point is without merit, and this court refuses to admit it into evidence. In conclusion, we find it admissible as evidence the conclusion in the appraisal report that the parameter series of the centrifuges produced by the Centrifugal Institute, and the method of using the rubber supports for the over-hanging main axle, have not yet been publicized.
Upon investigation, this court has found that the Centrifugal Institute is a special research institute for centrifuges. Since l986, it has developed the four series tubular centrifuges GQ142G/H, GQ124, GQ105, GQ76. From 1991 to 1995, it won the Silver Award of Shanghai Science and Technology Fair, the Shanghai New Product Award and the National New Product Award for its GQ142G and GQ105 centrifuges. In December 1989, after an appraisal by experts invited by the Municipal Science 'and Technology Commission, GQ142G centrifuge was considered to represent the state of the art in the country, and was even superior to Z101 centrifuge produced by Bodenburg Company of West Germany in terms of vibration and noise. The damping structure on the upper part of the centrifuge and the cooling case has been improved. As a result, vibration is reduced, the heat transfer surface is 'greater, and assembly and disassembly become easier. The development of GQ142G centrifuge is successful, and the products represent the state of the art of the early 80's in the world. The parameter series consisting of thousands of parameters recorded in the drawings concerning the shapes, nominal measures, tolerance & fit, precision, etc. of the various components represent the main technical contents of GQ142G and GQ105 tubu1ar centrifuges, and such parameter series have' never been publicized' On June 5, 1982, in order to implement the rules of confidentia1ity made by the First Machines & E1ectronic Appliances Bureau, the Centrifugal Institute formulated the imp1ementing rules, Rule 4 of which defines the scope of confidentiality as "scientific research, plan for development of new products and technologies, major achievements in research, and inventions and discoveries, patents and data, and information about key technologies". Ru1e 8 provides that "employees of this institute shall not carry with them confidential documents, drawings, and materials when trave1ing on business". Ru1e 19 provides that they "sha1l not disclose information about the production, construction, research, development, design, and processes, nor shal1 they provide drawings and other articles to other entities through personal ties".
Baolong is an enterprise established in April 1994. It produces primarily GQ142G and GQ105 tubular centrifuges as the Centrifugal Institute does. Zhao Ligui, the board director of Baolong, was the person in charge of Qingpu Jiali Mechanical and Electric App1iances Factory and Qingpu Xujing Electric Machine Die Accessories Factory. Before the establishment of Baolong, the Centrifugal Institute provided drawings for the above two factories to process some of the components of GQ142G and GQ105 tubular centrifuges (cases and lining, cylinders and liquid containers). However, there was no agreement of confidentiality between them. Baolong started to produce and sell GQ142G andGQ105 tubular centrifuges at the end of 1994' A comparison of the centrifuges produced by the two manufacturers shows that they aresimi1ar in overa1l structures, shapes of main components, main nominal measures, and the expression of most of the drawings. Though there are differences in the shapes, nominal measures and tolerance & fit of some of the components, these differences are immaterial. Therefore, the centrifuges produced by the two manufacturers are similar in their parameter series, which consist of thousands of parameters regarding the different shapes, nominal measures, tolerance & fit, and precision of processing of the components, etc.
Chen Whzhao was the former deputy genera1 engineer of the Centrifugal Institute as well as director of its No. 2 Research office. He was the organizer of the GQ142G tubular centrifuges project. As the person responsible for the technica1 aspect of the project, he did the designing and theoretical analysis. As the deputy general engineer of the Centrifuga1 Institute, he also approved the GQ142G tubular centrifuge project and the plan for its implementation. When he was with the Centrifugal Institute, he came to know all the major technologies involved in GQ142G and GQ105 tubu1ar centrifuges. In January 1994,Chen Wuzhao verbally asked for a change of his job. On June 6, he tendered his formal resignation, which was subsequently approved by the Centrifugal Institute. In March of the same year, for the planning and establishment of Baolong, Zhao LiRui leased two rooms as office from the guesthouse of the cadres' school of the Shanghai Textile Bureau in the name of Shanghai Jiseda Toys Company. The record of the guest house states that Chen Wuzhao, Jiang Zuofa and others are office clerks. In June 1995, Chen Wuzhao participated in the Chengdu Seminar on Blood Products in his capacity as deputy general manager and general engineer of Baolong.
Jiang Zuofa was the director of the Centrifuga1 Institute and was responsible for the overall work of the institute till his retirement in April 1994. During his term as director of the institute, Jiang Zuofa participated in the appraisal of GQ142G tubular centrifuge as a member of the appraisal team. In June 1995, he also participated in the Chengdu Seminar on Blood Products as general manager of Baolong.
Fan Weikang was an engineer of the Centrifugal Institute. He was involved in the research and development of GQ142G tubular centrifuge. When he was with the Centrifugal Institute, he also worked in the sales department for the sale of the centrifuges. In June 1996, he tendered his resignation, which was approved by the Centrifugal Institute. According to the agreement in the resignation, Fan Weikang shall keep the confidentiality of the Centrifugal Institute's technical and commercial secrets, such as its research achievements and technical information of its products. In May 1998, Fan Weikang participated in the 1998 National Spring Fair of Pharmaceutical Machines as a representative of Baolong.
Zhao Minglong was a researcher of the Centrifugal Institute. In September 1983 he was transferred to Shanghai <Bio-Products Institute. In December 1989, Zhao Minglong participated in the experts' appraisal meeting for the GQ142G tubu1ar centrifuge as a customer representative. In April 1991, he participated in the appraisal of the GQ142G high-speed tubular centrifuge as an expert invited to appraise the Torch Light Project. From the beginning of 1994, Zhao Minglong was the technical advisor of Baolong.
The above facts are supported by the research and development report of GQ142G and GQ105 tubular centrifuges submitted by the plaintiff, the technical achievement appraisal certificate provided by the Shanghai Commission of Science and Technology for GQ142G andGQ105 tubular centrifuges, the rules formulated by the plaintiff for the implementation of the confidentiality rules made by the First Machines & Electronic Appliances Bureau, Chen Wuzhao's approval of the GQ142G tubular centrifuge project and the plan for its implementation, the card he used when he was the deputy general manager and general engineer of Baolong, statement made by Chen Wuzhao on March 17, 1999 at the Jing-an District Commission for Discip1ine Inspection, Records of the guest house of Cadres' School of the Shanghai Textile Bureau, testimony of Jiang Dongling of the Xian Central Blood Bank, the card of Jiang Zuofa when he was general manager of Baolong, testimony by Liu Jinghua and Gao Yunfang of the Cadres' School of the Shanghai Textile Bureau, the card used by Fan Weikang at the1998 National Spring Fair of Pharmeceutica1 Machines, list of experts who participated in the appraisal of the GQ142G high-speed tubular centrifuge as one of the Torch Light Projects, the 1995 Hu Er Zhong Jing Zong 1146 civil judgment, Zhao Minglong's May 1997 statement of facts, and the appraisal report of the Intellectual Property Center of the State Science and Technology Commission.
This court holds that
1. Commercial secrets are technical and management information of practical value, which is not public knowledge and which may bring economic benefits to the owner, and which the owner has taken measures to protect against disclosure. The plaintiff researched and developed independant1y GQ142G and GQ105 tubular centrifuges, and is the owner of the information concerning the major technologies of such centrifuges. Though the basic principles, basic structures and the method of whole-set testing of GQ142G and GQ105 tubu1ar centrifuges have been publicized in relevant' technical materials, the parameter series consisting of thousands of parameters representing the actual shapes, nominal measures, tolerance & fit, precision of processing, which represents the major technical contents of the centrifuges, have not been disclosed to the pub1ic. Therefore, the parameter series of the two types of centrifuges are not public know1edge, and are "novel". The p1aintiff had gained some profits from marketing these two types of centrifuges. For this reason, these centrifuges also have practical and economic value. To protect the technical information it owned, the p1aintiff formulated ru1es to implement the Confidentiality Rules made by the First Machines & Electronic Appliances Bureau. These implementing rules are reasonable measures for keeping the confidentiality of p1aintiff's technical information. For these reasons, we can conclude that the parameter series of GQ142G and GQ105 tubu1arcentrifuges are plaintiff's technical secrets.
The defendants contend that plaintiff's centrifuges are copies of sample machines made in West Germany, and the parameter series claimed by the p1aintiff as its commercia1 secrets are contained in such foreign made machines. Besides, the defendants assert, the main parameters of centrifuges are recorded in domestic and foreign publications. Therefore, plaintiff's technical information is neither novel nor confidential. In addition, before the establishment of Baolong, the Centrifugal Institute entrusted a number of factories, which were under the charge of Zhao Ligui with the job of processing some of the component parts of GQ142G and GQ105 tubular centrifuges. There was no agreement of confidentiality between the plaintiff and the processing factories. Therefore, the technical information in the two types of centrifuges produced by the plaintiff does not constitute technical secrets. With respect to these contentions of the defendants, this court holds that copying foreign made machines not only costs much time and exertion, but also requires considerable skill. Some component parts have to undergo repeated tests before their designs are finalized. For this reason, the fact that the Centrifugal Institute's technology is gained by copying doe not constitute a valid defense against breach of confidential technical information on the part of the defendants, though the part of the defendants, though the plaintiff entrusted the lega1 representative of Baolong with the processing of some of the component parts without taking any measures against disclosure of confidential information. Besides, though there are reports about the technologies of centrifuges in domestic and fdreignpub1ications, such reports do not disc1ose p1aintiff's technical secrets, which in Code parameter series consisting of thousands of parameters. Therefore, the defendants have fai1ed to provide legal1y valid defenses, and this court refuses to support their contentions.
2. Commercial secrets include technical secrets and management secrets. For management secrets to be legally protected secrets, they must have the essential elements of commercial secrets. The plaintiff asserts that the Harbin Shiheng Bio-Tech Pharmaceutical Company, Qingdao Haier Pharmaceutical Company, Shenzhen Taitai Pharmaceutical Company, the Blood Supply Center of the Navy's Logistics Department, and Xinjiang Haoseda Bio-Products Company are its customers. However, the plaintiff has fai1ed to provide evidence to prove that such a 1ist of customers is "nove1", nor has it provided evidence to prove that such customer list is a specific list of customers acquired through labor and effort. Besides, during the period when Chen Wuzhao and Jiang Zuofa worked for the plaintiff, the plaintiff did not treat such list as confidential information nor did it take reasonable measures to protect the confidentiality of the said list. On the basis of evidence available to us, it is difficult for us to say that the customer's list asserted by the p1aintiff is its management secret. This court therefore does not sustain plaintiff's request that the three individual defendants stop infringing upon its right to the customers list.
3. As to the question whether the major technologies of GQ142Gand GQ105 tubu1ar centrifuges produced by Baolong and the Centrifugal Institute are identical or similar, the appraisa1 report of the Intellectual Property Center of the State Science and Technology Commission holds that they are similar in the parameter series consisting of thousands of Parameters describing the shapes, nominal measures, tolerance & fit, and precision of processing of the components. The defendant holds that some of the similarities in the parameter series are due to the fact that both Baolong and the Centrifugal Institute copied from the same Zl01 centrifuge made in West Germany. The defendants also contends that Baolong improved on the model in their copying, and that the parameters representing such improvements are different from those of the plaintiff's. This court holds that novelty and confidentiality of commercial secrets are relative concepts. The law does not require the owner to prove that it has exclusive rights to such secrets. It is perfectly lawful for persons other than the owner to obtain similar commercial secrets by independent research and development, or by reverse engineering. As long as such commercial secrets are not disclosed to the public, all owners of similar commercial secrets may treat such as their secrets, take measures to protect them, and prohibit others from stealing and exploiting such secrets. In this case, the defendants insist that Baolong's technical information does not come from the plaintiff, rather, it comes, as p1aintiff's information does, from the centrifuge made in West Germany. The defendants produced the testimony of Zhao Minglong and others as well as an undated designer's drawing to prove that Baolong's centrifuge is independently developed through copying. However, this court holds that the above evidence is insufficient to prove that Bao1ong acquired the centrifuge technologies through reverse engineering' Since the defendants have failed to provide a complete set of technical materials proving that Baolong copied West Germany's centrifuges, this court wil1 not support the defendants' position on the issue.
4. Chen Wuzhao was the deputy general engineer of the plaintiff, and had knowledge of the major technologies of GQ142G and GQ105tubular centrifuges. As the deputy genera1 engineer of the plaintiff, Chen Wuzhao was responsib1e for keeping plaintiff's technical secrets confidential. Before his resignation, Chen Wuzhao had contacts withZhao Ligui, the 1egal representative of Baolong. After Baolong's establishment, Chen Wuzhao became its deputy general manager and general engineer. In view of the fact that Baolong has failed to submit evidence to prove that it acquired the centrifuge technology through reverse engineering, and the fact that Baolong produced centrifuges that have parameters similar to those of the Centrifugal Institute after Chen Wuzhao's contact with Baolong, we may infer that Chen Wuzhao un-Lawfully disclosed and permitted others to use the major technologies of GQ142G and GQ105 centrifuges which were within his knowledge.
5. Jiang Zuofa was the director of the plaintiff and the member of the appraisal team for the GQ142G centrifuge. He had access to the detailed information about the GQ142G centrifuge. Therefore we may infer that Jiang Zuofa had knowledge of the major technologies of GQ142G centrifuges. According to the rules of confidentiality formulated by the plaintiff, Jiang Zuofa has the obligation to keep confidential the technical information he knew. However, Jiang Zuofa had contacts with Baolong's legal representative Zhao Ligui and others, and became Baolong's genera1 manager after its establishment. Judging from the fact that Baolong produced centrifuges that have a parameter series similar to that of the Centrifuga1 Institute's centrifuge, we may infer that Jiang Zuofa unlawfully disclosed and permitted others to use the major technologies of GQ142G centrifuges which were within his knowledge.
6. Zhao Minglong was a member of the appraisal team for plaintiff's GQ series centrifuges in April 1994, though he was transferred to Shanghai Bio-Products Research Institute in 1983. According to re1evant rules, Zhao Minglong had the obligation to keep confidential re1evant technologies, which were disclosed, to him in the course of the appraisa1. However, judging from evidence availab1e to us, it is difficult to find that Zhao Minglong learned of the thousands of parameters of the GQ142G centrifuge from the appraisal meeting, and this court has no reason to sustain plaintiff's request that Zhao Minglong stop his infringing acts.
7. Fan Weikang was a key researcher for the GQ142G centrifuge. He had full knowledge of the major technologies for such centrifuge, and the obligation to keep them confidential. The plaintiff alleges that Fan Weikang unlawfully disclosed the technologies of the GQ142G centrifuge, because Fan Weikang resigned and left the plaintiff in June 1996 and worked for Baolong thereafter. However, Balong produced the GQ142G centrifuges by the end of 1994, and plaintiff has not produced evidence to prove that Fan Weikang had contacts with Baolong before Baolong's production and sale of the GQ142G centrifuges. For this reason, this court has no reason to find that Fan Weikang disclosed the technologies of the GQ142G centrifuge, and therefore does not sustain plaintiff's allegation that Fan Weikang infringed upon its right to the technical secrets.
8. According to 1, 3, 4 and 5 of the above, this court holds that Baolong gave Chen Wuzhao and Jiang Zuofa important positions in the company with knowledge that they knew technical secrets of plaintiff's GQ142G and GQ105 centrifuges, and its purpose in doing so is obvious. After unlawfully acquiring relevant technical secrets, Baolong used such secrets to manufacture similar centrifuges. Such acts on the part of Baolong are infringements by means of unfair competition for the purpose of acquiring and exploiting the technical secrets of others. Defendants Chen Wuzhao and Jiang Zuofa, in breaching the confidentiality agreement and in disclosing and permitting others to exploit the technical secrets in their possession, also committed acts of unfair competition. The acts of the three defendants have resulted in injury to the plaintiff, and therefore they shou1d be enjoined from further infringements, and should bear civil liability for damages and for elimination of undesirable consequences. As to the actual amount of damages each of the three defendants should pay, we will decide separately by taking into consideration the actual circumstances of their infringements, and the gains each obtained from such infringements. The p1aintiff has produced evidence to prove that from June 1994 to June 1997, Baolong entrusted Pengpu Machines Factory with processing 59 sets of GQ142G and GQ105 tubular centrifuges and 60 cases therefore. Plaintiff has also produced evidence of plaintiff's unit profit for its GQ142Gand of GQ105 tubu1ar centrifuges as well as certificates for expenses it incurred in connection with investigating the case. On the basis of the evidence provided, the plaintiff seeks damages in the amount of RMB 3,000,000. This court holds that the number of cases processed by the order of Baolong and the unaudited unit profit made by the plaintiff should not be the so1e bases for computation of damages, although they are factors to be taken into consideration in the exercise of our discretionary power. Besides, we also hold that the defendantsshou1d Day the plaintiff reasonable expenses it incurred in litigating this pay the plaintiff reasonable expenses it incurred in litigating this case. On these grounds, in accordance with Articles 118, 134(1) (i), (vii) and (ix), Articles 10(1)(i), (ii), (iii), (3), and 20(1) of the Law Of the People's Republic of China against Unfair Competition, Article 3(1) (iv) of Rules
Prohibiting Infringements Upon Commercial Secrets formulated by the State Administration of Industry and Commerce, we hereby decide as follows:
1) Defendant Shanghai Baolong Bio-Tech Equipment Company is hereby enjoined from using plaintiff's technical secrets to produce and sell GQ142G and GQ105 tubular centrifuges, and defendants Chen Vuzhao and Jiang Zuofa are hereby enjoined from disclosing the said technical secrets, from the date this judgment becomes final to the expiration of plaintiff's right to such technical secrets;
2) Defendant Shanghai Baolong Bio-Tech Equipment Company, Chen Wuzhao and Jiang Zuofa shall pay to the plaintiff damages in the amount of RMB 1,600,000, RMB6,000 and RMB6,000 respectively;
3) Defendant Shanghai Baolong Bio-Tech Equipment Company, Chen Wuzhao and Jiang Zuofa shall publish statements in the Science and Technology Daily and the Xinmin Evening News to eliminate the consequences of their infringements, and the contents of such statements shall be examined and verified by this court;
4) This court does not sustain plaintiff's other claims.
Part 2 of the decisions shall be executed within ten days after this judgment becomes final, part 3 shall be executed within thirty days after this judgment becomes final.
The cost of this lawsuit is RMB 25,010, of which the plaintiff shall pay RMB6,252, defendant Shanghai Bao1ong Bio-Tech Equipment Company, Chen Wuzhao and Jiang Zuofa shall pay RMB18,758. The cost of technical appraisal in the amount of RMB 58,000 shall be borne by the three defendants.
Any party that refuses to accept this judgment as final may appeal to the Higher People's Court of Shanghai by submitting its appeal petition to this court within fifteen days after the service of this judgment. A sufficient number of copies of the appeal petition should also be submitted for each opposing party to have one copy.
 
Qian Xiqing Presiding Judge
Lu Weimin Acting Judge
Kan Min Member of the Collegiate Panel
December 30, 1999D6cember 30, 1999
Ren Wenfeng Clerk
 
None of the Parties appealed from the decision of the trial court.
 
(The author of this opinion is Lu Weimin, who, for writing this opinion, received a first class award in the 1999 Judgment Writing Contest sponsored by the Second Intermediate People's Court of Shanghai.)
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