Shanghai Baoshan Baokang MedicaI Electronic Instrument Factory (plaintiff) v. Shanghai Baokang Science and Technology Company and Shen Dan defendants)

Civil Case Judgment
The Second Intermediate
People's Court of Shanghai
People's Court of Shanghai
1998-Hu-Er-Zhong-Zhi-Chu-69

 

Shanghai Baoshan Baokang Medical Electronic Instrument Factory

Address: 7048 Hutai Road, Baoshan District, Shanghai

Legal Representative: Tao Fumin, manager of Shanghai Baoshan Baokang Medical Electronic Instrument Factory

Authorized Attorney: Zhu Miaochun, attorney-at-law of Shanghai Tianhong Law Firm

Authorized Attorney: Fan Zhengyuan, male, employee of Shanghai Baoshan Baokang Medical Electronic Instrument Factory

Shanghai Baokang Science and Technology Company

Address: Apt. 706, No. 12 l Lane 320, Meiling Nan Road, Shanghai

Legal Representative: Li Yumin, general manager of Shanghai Baokang Science and Technology Company

Authorized Attorney: Zhang Duwei, attorney-at-law of Shanghai Li Guoji Law Firm

Authorized Attorney: Shen Yi, employee of Shanghai Baokang Science and Technology Company

Shen Dan, male, born on Oct. 13, 1964, of Han nationality, employee of Shanghai Baokang Science and Technology Company

Address: No. 3, Lane 236, Bailianjing Road, Pudong New Area, Shanghai

Authorized Attorney: Li Guoji, attorney-at-1aw of Shanghai Li Guoji Law Firm

Authorized Attorney: Zhang Duwei, attorney-at-law of Shanghai Li Guoji Law Firm

 

This court, after filing on September 14, 1998 the case Shanghai Baoshan Baokang Medical Electronic Instrument Factory (plaintiff) v. Shanghai Baokang Science and Technology Company (hereinafter referred to as "Baokang") and Shen Dan (defendants) for unfair competition, duly formed a collegiate panel and had two open sessions of trial on January 19, 1999 and February 24, 1999. Appearing at the court for debate were plaintiff's legal representative Tao Fuming and authorized attorneys Zhu Miaochun and Fan Zhengyuan, Defendant Baokang's authorized attorney Shen Yi, defendant Shen Dan's authorized attorney Li Guoji, and the authorized attorney for both defendants Zhang Du' In the course of the trial, upon the petition of the parties and by the approval of the collegiate panel, Zhang Lihua, Gu Jufen, Zhang Susu and Zhang Huikang came to court to testify as witnesses. The adjudication of the case has now come to a close.

The plaintiff alleges that it is a manufacturer of electronic medical instruments. Its main products are the DM low frequency pulse therapeutic instruments, among which the DM-II products won the 1996 Award of New Products of Shanghai, a God Award for good invention at the Exhibition of Shanghai's Achievements in the past decade, and a Gold Award at the Fourth Scientific and Technological Achievements Fair of Shanghai. Defendant Baokang manufactures similar products. From May 1997, Baokang used various means of false publicity to mislead consumers in its sale of the DM-IIIB microelectronic cerebrum low frequency pulse therapeutic instrument. Defendant's acts of false publicity include 1) Using Chinese patent no. 97306598. 2 on the data plate of the baseboard of its DM-IIIB products. This Chinese patent number is the number assigned to the application filed with the State Patent Bureau by Shen Yi, a non-party in the present case for an industrial design which remains unpatented till this day. After the patent authority found out this act of patent counterfeiting and dealt with it, Baokang continued to sell products with the patent number. 2) Putting the names, functions and prices of Baokang's DM-IIIB products and plaintiff's DM-II products in the same advertisement, distributing such advertisements at the various sales agencies of Baokang, and stating in these advertisements that "This department also does trade-in business. You can replace the o1d with the new". Baokang's sales people spread falsehood among customers by saying that the above two products are made by the same manufacturer, and that the DM-II products are being phased out, and the DM-IIIB products are new products of the third generation hi-technology. 3) Baokang used plaintiff's advertisement number "Hu Yi Xie Guan Shen Wen 970018" without p1aintiff's approval to advertise Baokang's products. 4) After the termination of the sales agency relationship between: the plaintiff and Baokang, Baokang continued to display the empty boxes of DM-II products and its DM-IIIB products side by side, in an attempt to enhance the reputation of Baokang's products' The above acts of false propaganda have misled the consumers into thinking that DM-II products have become out-dated, thus disparaging the reputation of the plaintiff and enhancing that of Baokang. On the other hand, they have also misled the consumers into thinking that the two products are made by the same manufacturer, and confused the two manufacturers of the two products' Besides, defendant Shen Dan was a sales agent of the plaintiff' He had access to plaintiff's sales channels, and grabbed such channels from the plaintiff in collaboration with Baokang, causing the plaintiff to lose its sales outlets. The acts of Baokang's patent counter-Feiting and false and misleading propaganda are acts of unfair competition. The collaboration of the two defendants in grabbing the sales channels from the plaintiff are also acts of unfair competition infringing upon plaintiff's right to its commercial secrets' For these reasons, the plaintiff seeks a judgment enjoining the two defendants to stop its infringing acts, make public apologies to the plaintiff and eliminate the undesirable consequences of ' their acts. The plaintiff also seeks damages in the amount of RMB800,000 from defendant Baokang for its acts of unfair competition in making false sales talk, and damages in the amount of RMB200,000 from the two defendants jointly and severally for their acts of unfair competition in infringing upon plaintiff's right to its commercial secrets.

Defendant Baokang contends that because of its ignorance about patents, it did use on its DM-IIIB products a filing number of an industrial design application as a Chinese patent number. However, this act of patent counterfeiting has been investigated and dea1t with by the Shanghai Patent Office, which decided not to impose disciplinary sanction on Ju1y 8, 1997 after Baokang took measures to rectify its behavior. Since Baokang's patent counterfeiting act has been dealt with and has not infringed upon plaintiff's patent, it should not be held liable for infringement. As to Baokang's advertising the DM-II and DM-IIIB products in the same advertisement and using plaintiff's advertisement number, Baokang argues that both have been approved by the plaintiff, and Baokang paid fees for the use of the advertisement number. The phrase "replace the old with the new" in the advertisement does not specifically refer to plaintiff's DM-II products. Instead, it refers to any product of the same type. The sales people of Baokang did not say that plaintiff's products were being phased-out. Therefore, Baokang should not be held liable for false advertising. Plaintiff's allegation that Baokang continued to display the empty boxes of the DM-II products side by side with its DM-IIIB products after the termination of their sales agency relationship is not true, because the time of termination alleged by the plaintiff is an error, and that what was displayed side by side with defendant's products was not empty boxes, but rea1 products. Baokang was plaintiff's sales agent for plaintiff's DM-II products, therefore, to display the two products side by side was not an infringement. As to plaintiff's allegation of infringement on commercial secrets, Baokang was plaintiff's sales agent, all the sales channels were established by Baokang, and they are not plaintiff's commercial secrets.

Defendant Shen Dan contends that his relationship with Baokang is a contractual agency relationship for the sale of products, and not an employment relationship. The sales channels were established by Shen Dan, and are not plaintiff's commercial secrets. Therefore, Shen Dan should not be held liable for infringements.

On the basis of plaintiff's complaint and defendants' answers, we found that the following facts are not disputed:

Both the plaintiff and the defendant are manufacturers of DM low frequency pulse therapeutic instruments. Plaintiff's DM-II products have won the 1996 Award of New Products of Shanghai, a Gold Award for Good Invention at the Exhibition of Shanghai's Achievements in the Past Decade, and a Gold Award at the Fourth Scientific and Technological Achievements Fair of Shanghai' Shen Dan entered into a sales agency contract with the plaintiff in February 1993 for the sale of DM low frequency pulse therapeutic instruments. In August 1993, after the establishment of Baokang, Shen Dan went to work for Baokang, and Baokang began to sell plaintiff's DM therapeutic instruments. In May 1997, while selling the DM-II products, Baokang began to sell the DM-IIIB microelectronic cerebrum low frequency pulse therapeutic instruments manufactured by itself and used Chinese patent no. 97306598.2 on the data plate of the baseboard of its DM-IIIB products and on the cases thereof. On July 8, 1997, the Shanghai Patent Office investigated and dealt with the matter, and decided not to impose any disciplinary sanction for this wrongful action. In selling the two types of therapeutic instruments, Baokang printed and distributed advertisements bearing the advertisement number "Hu Yi Xie Guang Shen Wen 970018". This advertisement sets forth the prices, Functions and after sale services of the DM-II and DM-IIIB therapeutic instruments, and carries words such as "This series of products is of reliable quality" and "This department also does trade-in business' You can replace the old with the DM-IIIB low frequency pulse therapeutic instruments." The name of the advertisers was given as Shanghai Baokang Science and Technology Company. The above mentioned advertisement number was procured by the plaintiff after application to the Shanghai Administration of Medicine and Medical Institutions.

From the pleadings of the parties, we can see that the facts at is sue between the parties are as follows: 1) After Baokang's patent counterfeiting has been investigated and dealt with by the patent office, did Baokang continue to sell products which had the Chinese patent number? 2) Did Baokang have plaintiff's approval for using plaintiff's advertisement number, and printing and distributing advertisements about therapeutic instruments produced by the two different manufacturers? 3) Did Baokang's sales people disparage plaintiff's products in the course of their sales? 4) Did Baokang display the empty cases of plaintiff's products side by side with its own products after termination of the sales agency relationship between Baokang and the plaintiff? 5) Does the plaintiff own sales channels which have the essential elements of commercial secrets? After presentation of evidence by both parties and after examination of the evidence, this court, in adjudicating this case, has made the following factual findings regarding the above issues:

1. To prove its allegation that Baokang continued to sell products Which had the Chinese Patent number after Baokang's patent counterfeiting has been investigated and dealt with, the plaintiff produced three exhibits: 1) A DM-IIIB therapeutic instrument. On its data plate were printed the words "Chinese patent number 97306598.2" and "Hu Yao Qi Jian 97 299004 (For Trial)". On its obverse side is the registered trademark. 2) The purchase invoice provided by Shanghai Laochenhuangmiao Tonghanchun Chinese Medicine Company on July 4, 1998 in which the name of the product is given as DM, and the price RMB260; 3) The testimony of Zhang Lihua, who was Baokang's sales woman and is now plaintiff's sales woman. With respect to these exhibits, Baokang contends that it changed the cases and data plates of all its products after its patent counterfeiting has been investigated and dealt with by the patent office, and that the invoice provided by the plaintiff cannot prove that the DM product on the invoice was Baokang's therapeutic instrument bearing the patent number. Besides, In February 1998, the DM-IIIB product acquired the registration certificate marked "Approved Products", so it is impossible for Baokang to sell products bearing the mark "For Trial" in July. As to Zhang Lihua's testimony that this therapeutic instrument was sold by her, Baokang contends that because Zhang Lihua is now plaintiff's employee, she is an interested person, and her testimony is inadmissible. This court holds that the objection raised by Baokang is meritorious, and we will sustain such objection. On the basis of the evidence provided by the plaintiff, we cannot make a finding that defendant Baokang was still selling products bearing the Chinese patent number in July 1998. However, Baokang fai1ed to provide evidence to prove its contention that it took corrective measures after the patent office investigated and dealt with its patent counterfeiting acts. Therefore, this court refuses to admit such contention as evidence. Judging from the exterior of the DM-IIIB therapeutic instrument provided by the plaintiff, which bears the registered trademark and the Chinese patent number, we can conclude that Baokang was still selling the DM-IIIB therapeutic instrument as late as December 14, 1997, because Baokang obtained its registration approval on December 14, 1997. Besides, because the registration certificate on the product has the mark "For Trial", and Baokang has provided us with documents such as the "Hu Yao Qi Jian 98 226032 dated February 25, 1998, by which the municipal Administration Bureau for Medicine and Medical Institution approved the use of the DM-IlIB products, we can also find that Baokang no longer sold the said products after February 25, 1998.

2.To prove that Baokang used without p1aintiff's consent plaintiff's advertisement number and printed and distributed advertisements about the two different products, the plaintiff provides as evidence the advertisement numbered Hu Yi Jie Guang Shen Wen 970018. Baokang does not object to the allegation that it used plaintiff's advertisement number and printed and distributed said advertisements, but a1leges that such acts were approved by the plaintiff and it had paid the license fee, which was included in its payment of the purchase Price of the transformers. Besides, the plaintiff paid to the Printing Factory some money for printing an advertisement which had a different advertisement number but the same content. In addition, the plaintiff also provided to Baokang the original approval of the Municipal Administration Bureau for Medicine and Medical Institutions for plaintiff's use of the advertisement number when Baokang entrusted an advertising agency with completing the formalities for advertisement approval. To support such contention, Baokang produced the following exhibits: 1) eight VAT invoices proving that Baokang entrusted the plaintiff with the job of processing the transformers of the DM-IIIB therapeutic instrument. In two of the invoices the price for processing one transformer is RMB1.28. In another five invoices the price was RMBl5.8, and in still another the price was RMBl4.5; 2) Testimony of Yang Weizhong, manager of Jiang Zhuang Printing Factory in Pudong New Area (the" Printing Factory"); 3) Statement by the Printing Factory about the period of time and payment for printing the advertisements numbered Hu Yi Jie Guang Shen Wen 960200 and Hu Yi Jie Guang Shen Wen 9700l8, as well as the number of copies printed. The plaintiff asserted that it never knew nor approved such acts. The VAT invoices provided by Baokang could not prove that the difference in the price of tran8formers was the payment by the defendant of the license fee for defendant's me of the advertisement number. The testimony of Yang WeizhOng could only prove that plaintiff's employee Zhu Haiming once contacted the Printing Factory and requested in a telephone call that the DM-III products be added to the advertisements. It falls short of proving that Zhu Haiming approved the contents of the advertisements. Besides, 'Yang Weizhong's testimony is inadmissible, because the Printing Factory, of which Yang Weizhong is the manager, had business relations with Baokang. As to the statement of the Printing Factory, though it proves that the plaintiff paid an amount for printing the advertisement Hu Yi Jie Guang Shen Wen 960200, it cannot prove that the plaintiff approves the contents of the advertisement. The plaintiff paid this amount because the plaintiff and Baokang are in a sales agency relationship. Baokang is responsible for a1l arrangements in connection with printing the advertisements, and the plaintiff has only to pay the money for printing. To find out the facts in connection with this issue, this court questioned plaintiff's employee Zhu Haiming, who denied that he ever approved Baokang's use of plaintiff's advertisement number and the placing of the products made by the two manufacturers in the same advertisement. This court holds that plaintiff's objection to Baokang's first exhibit is meritorious. And its objections to the second and third exhibits are substantially sound. Even if plaintiff's employee Zhu Haiming approved Baokang's printing the said advertisements, he was not plaintiff's legal representative, nor had he been authorized by the plaintiff. His acts should not be deemed as acts of the plaintiff. Hence, we cannot hold that the plaintiff approved the contents Of Baokang's advertisements solely on this ground. As to plaintiff's payment of the printing fee, because plaintiff and Baokang had a 1ong,term relationship of sales agency, and Baokang has been responsible for making arrangements for the printing of the DM--II therapeutic instrument advertisements, and the printed advertisements were delivered to Baokang, we hold that plaintiff's assertion that it paid the printing fee without knowledge of relevant facts is admissible as evidence. In order to find out the period of time for printing the Hu Yi Xie Guang Shen Wen 970018 advertisement, this court requested that Baokang provide relevant evidence. Baokang produced the document by Shanghai Administration Bureau for Medicine and Medical Institutions dated March 13, 1998, approving its use of the Hu Yi Xie Guang Shen Wen 980001 advertisement number and the Temporary Advertisement Permit by the Shanghai Administration of Industry and Commerce dated April 8, 1998, approving its printing and distributing advertisements. These are intended to prove that Baokang procured its own advertisement number by the end of March 1998, and stopped printing and distributing advertisements bearing plaintiff's advertisement number. This court holds that by taking into consideration the Printing Factory's statement with respect to the period of time for printing Hu Yi Xie Guallg Shen Wen 980001 advertisement and the above exhibits provided by Baokang, we can find that by April 7, 1998, Baokang no longer printed nor distributed advertisements carrying plaintiff's advertisement number and displaying the two different products side by side. Based on the above facts and evidence, this court holds that from May 1997 to April 7, 1998, Baokang printed and distributed the Hu Yi Xie Guang Shen Wen 970018 advertisement.

3. To prove its assertion that Baokang's sales people disparaged the DM-II products in an effort to enhance the reputation of the DM-I-IIB products, and proclaimed that the two products were manufactured by the same enterprise, the plaintiff provides the following evidence: 1) Testimony by Gu Jufen, who was a sales woman of Baokang and now is plaintiff's sales woman; 2) Testimony of Zhang Susu, who was a shop assistant with the First Medicine and Medical Appliances Store of Shanghai and is now a sales woman of the plaintiff; 3) Testimony of Mr. Xia Shenxian, who bought a DM-II therapeutic instrument. All the above witnesses testified that they have either said or have been told by Baokang's sales people that DM-II products had been phased out, and had been superseded by DM-IIIB products that are superior to DM-II in quality, and that the two products were produced by the same manufacturer, etc. Baokang contends that witnesses Gu Jufeng and Zhang Susu are now sales people of the plaintiff, and therefore they are not disinterested witnesses and their testimony is inadmissible. The testimony of Xia Shenxian was obtained by plaintiff's attorney through deposing, and the deposition taken does not contain the sex, age, address and employer of the witness, and as a piece of evidence it lacks some of the essential formal elements and is therefore inadmissible. This court holds that the objections raised by Baokang to the above pieces of evidence are sustainable. P1aintiff's assertion with respect to this issue is not supported by sufficient evidence, and we cannot make a finding in its favor.

4. To support its assertion that Baokang displayed the empty cases of DM-II products side by side with its DM-IIIB products to enhance the reputation of Baokang's products after termination of its sales agency relationship with the plaintiff at the end of 1997, the plaintiff produced five photos notarized by the Shanghai Jing-An Public Notary. These photos prove that on August 27, 1998, in the show case of the Shanghai Store of New Processed Chinese Medicine were displayed, side by side, the packing cases of the DM-II and DM-IIIB products. Baokang contends that the photos provided by the plaintiff cannot prove that it placed the empty cases of the DM-II products side by side with the DM-IIIB products. Besides, at the end of l997 the agency relationship between the plaintiff and the defendant was not terminated. On the contrary, on January 14 and 23, l998, on two occasions, the plaintiff sent its DM-II therapeutic instruments to Baokang. On July 28, the plaintiff and Baokang reconciled their accounts with respect to the acceptance, delivery and storage of the DM-II therapeutic instruments. Therefore, the photos provided by the p1aintiff can only prove that Baokang was still sel1ing plaintiff's products as late as Aug. 27, 1998. To support the above contention, Baokang submitted to the court the two delivery sheets dated January 14 and 23, 1998, and the statement of account between the plaintiff and Baokang dated July 28, 1998. The plaintiff does not challenge the authenticity of the above pieces of evidence. This court holds that the delivery sheets and the statement of accounts provided by Baokang prove that plaintiff's sales agency re1ationship with Baokang was not terminated by the end of 1997. Baokang still had 7217 sets of plaintiff's therapeutic instruments by then. Since the plaintiff has failed to prove that it took back from Baokang these therapeutic instruments after the statement of account, this court cannot sustain its allegation that Baokang used plaintiff's products to enhance its own reputation after termination of the agency relationship between the two.

5. To support its assertion that it owns the right to the sales channels as commercial secrets, the plaintiff submitted the following exhibits to prove that its sales person Shen Dan collaborated with Baokang to grab the sales channels from it: 1) The sales contract between Shen Dan and the plaintiff in February l993; 2) A list of plaintiff's sales outlets and networks that were adversely affected by Baokang's infringing acts. Baokang contends that the plaintiff does not have any rights to the sales channels as commercia1 secrets, since all the sales outlets and networks claimed by the plaintiff were built by Baokang. Defendant Shen Dan Points out that he contracted for the sale of plaintiff's products and is not plaintiff's employee. He is not in possession of nor has disclosed plaintiff's commercial secrets. The sales channels claimed by the plaintiff are estab1ished by him in selling the products, and have nothing to do with the plaintiff. This court holds that to be a commercial secret, a piece of information must have 'a number of essential elements, among which is that it must not be within the knowledge of the related sector of the general public. The sales channels c1aimed by the plaintiff are not only familiar to people of the same industry, but also to the consumers. Therefore, they do not constitute commercial secrets.

In our adjudication of the case, the plaintiff also submitted materials to support its claim for damages. These include: 1) the auditing report provided by Shanghai Fuxing Accounting Firm showing the production cost, sales cost and gross sales profit of the DM-II therapeutic instruments; 2) The VAT invoice for Baokang's purchase of 25, 282 packing cases of its DM-IIIB therapeutic instruments; 3) certificates of plaintiff's expenses in connection with litigating this case for the RMB1,600 auditing fee, RMB20,000 attorney fee, RMB2,000 for notarization, and RMB5,000 as advance payment of attorney's traveling expenses. Baokang contends that the auditing report is made by an auditing firm engaged by the plaintiff, and there are discrepancies in the report. The number of packing cases ordered does not necessarily reflect the number of products actually produced and sold. The auditing and notarization have nothing to do with this case and fees resulting there from are not reasonable expenses. The attorney fee and the traveling expenses are too high, and proof of such payments should not be used as evidence for damages. In the course of our adjudication, the plaintiff agreed to use Baokang's production and sales profit as the basis for computation of damages, and did not object to Baokang's statement that the production and sales profit for one DM-IIIB therapeutic instrument is RMB13.5, and the total number of DM-IIIB products sold between May 1997 and April 6, 1998 is 16,671.

This court holds that,

1. Business operators should adhere to the principle of good faith and the generally accepted commercial standards in market activities. In doing business, Baokang should endeavor to gain a competitive edge through continuously improving the quality of its products. However, Baokang attempted to gain competitiveness by using the patent application number of another person as its own on its DM-IIIB therapeutic instruments, thus misleading consumers into thinking that its products are patented and reliable. Such acts on the part of Baokang not only infringe upon the legitimate rights and interests of consumers who purchase its products, but also cause damage to other business operators who produce similar products. They are acts of unfair competition in that they use counterfeited patent to make misleading and false representations about the quality of products. As a manufacturer and seller of the same type of products, the plaintiff has the right to request that Baokang stop its infringing acts and pay damages.

2. As plaintiff's sales agent, Baokang should protect the reputation of plaintiff's products and the interest of the plaintiff in selling the DM-II therapeutic instruments. However, without approval from the plaintiff, Baokang placed the products produced by the plaintiff and those of its own side by side in the same advertisement, and thus making "advertisement by comparison" in a disguised form. The statements in the advertisement such as "this patented product is of reliable quality", "Our head office also does trade-in business. You can replace the old with the new DM-IIIB microelectronic cerebrum low frequency pulse therapeutic instrument", are in effect sufficiently misleading to make consumers think that the DM-II and DM-IIIB are in the same series produced by the same manufacturer, and that DM-IIIB is a new product superior to DM-II' Besides, the phrase "rep1ace the old with the new" is also sufficiently misleading to make consumers think that DM-IIIB is a new product while DM-Il is an old product, thus disparaging the reputation of the latter which is produced by the plaintiff. For these reasons, Baokang's advertising activities are acts of unfair competition by which it spread misleading and false information with regard to the quality and manufacturer of its products. For such acts Baokang should be held liab1e. However, plaintiff's claim that the sales people of Baokang disparaged the reputation of plaintiff's products is not supported by sufficient evidence, and this court will not sustain such claim.

3. Baokang used, without plaintiff's approval, plaintiff's advertisement number Hu Yi Jie Guang Shen Wen 9700l8 on the advertisements for its own products. This act on the part of Baokang violates the provision in the Advertising Law Of the People's Republic of China, which provides that the release of advertisements for medical equipment shall be subject to examination by relevant administrative authorities. However, this act is not an act of unfair competition regulated by the Law of the People's Republic of China against Unfair Competition. This court does not sustain plaintiff's claim that such acts on the part of Baokang constitute acts of unfair competition.

4. This court does not sustain plaintiff's claim that Baokang, in collaboration with Shen Dan, grabbed the sales channels from it and thus infringed upon its right to such channels as commercial secrets, because the sales channels claimed by the plaintiff are not commercial secrets.

5. In view of our finding that the acts of Baokang mentioned in paragraphs 1 and 2 above constitute acts of unfair competition against the plaintiff, Baokang must stop such acts, make apologies, and pay damages. This court deems it appropriate to support plaintiff's Position that the damages should be Baokang's unlawful gains. The plaintiff docs not challenge, and this court affirms, Baokang's statement that its profit from producing and selling the DM-IIIB therapeutic instruments during the period from May 1997 to April 6, 1998 was RMB225,058.5. However, not all such profit is unlawful gains from its infringements. Baokang lawfully gains part of the profit by producing and selling DM-IIIB therapeutic instruments. Therefore, we think the damages in this case should be determined within the limit of such profits by taking into consideration the degree of fault on the part of Baokang in committing the infringing acts and the harm such infringing acts have brought to the plaintiff. Plaintiff's RMB800,000 damage claim against the defendant for the latter's acts of unfair competition is not supported by sufficient evidence, and this court does not support such claim. Nor does this court support plaintiff's request that Baokang indemnify it for the RMB28, 600 it paid as attorney fee, auditing and notarization fee and traveling expenses in connection with litigating this case, because plaintiff fails to produce valid certification for the traveling expenses, and the auditing and notarization fees are not within reasonable expenses. The compassable part of its attorney fee should be determined in light of the particu1ar circumstances. To conclude, in accordance with Articles 5(4), 9, 20(1) of the Law of the People's Republic of China against Unfair Competition, and Articles 10(2), 26(1) of the Rules of Shanghai Municipality against Unfair Competition, we hereby decide as follows:

1) Defendant Shanghai Baokang science and Technology Company is hereby enjoined to stop such acts of unfair competition as counterfeiting patent' marks, using advertisements to make misleading and false propaganda about the quality and manufacturer of products;

2) Defendant Shanghai Baokang Science and Technology Company is hereby enjoined to apologize in writing to plaintiff Shanghai Baoshan Baokang Medical E1ectronic Instrument Factory;

3) Defendant Shanghai Baokang Science and Techno1ogy Company is hereby enjoined to pay to plaintiff Shanghai Baoshan Baokang Medical Electronic Instrument Factory damages in the amount of RMBl20,000;

Decisions 1 to 3 above shall be executed within ten days after this judgment become final.

4) This court does not support other claims of the plaintiff. The cost of this case is RMB15, 010. The cost of executing the attachment order is RMB5520. Of the RMB20, 530 total, the plaintiff shall pay RMB7, 186 and defendant Shanghai Baokang Science and Technology Company shall pay RMB13, 344.

Either 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.

Xie Chen Presiding Judge

Xue Chunrong Judge

Lu Weimin Acting Judge

March 31, 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 third class award in the 1999 Judgment Writing Contest sponsored by the Higher People's Court of Shanghai, and a third class award in the Judgment Writing Contest sponsored by the Second Intermediate People's Court of Shanghai.)