French dairy maker Group Danone SA said yesterday it would appeal to higher authorities after a local court ruled that its estranged Chinese joint venture partner owns the popular Wahaha (娃哈哈) trademark.
Danone’s statement followed the rejection by the Hangzhou Intermediate People’s Court of its appeal against a Chinese arbitration commission’s decision to back Hangzhou Wahaha Group’s right to use the disputed brand name outside the 39 joint ventures the two operate together.
“As you can see, reported everywhere, we own the trademark forever,” Wahaha spokesman Shan Qining (單啟寧) said.
The trouble between the longtime joint venture partners arose with complaints by Danone that Hangzhou-based Wahaha was running separate businesses selling Wahaha-branded drinks, competing directly with their joint ventures.
Danone, which owns a 51 percent stake in the joint ventures, says that the partnership’s agreements required the Chinese side to contribute rights to its well-known trademark, while the French partner provided capital, expertise and technology.
Danone had appealed the earlier ruling in Wahaha’s favor, saying it “distorted the facts of the case, intentionally and maliciously misinterpreted and misapplied the laws ... and was an award that completely ignored the facts and the law,” the firm said in a statement yesterday.
It protested that the court conducted only a procedural review without fully investigating the accuracy and legality of the earlier ruling and reiterated its call for Wahaha to transfer the trademark.
“Danone will report to the appropriate superior judicial authorities,” it said, adding that it would “continue to pursue all legal options to protect its contractual rights and financial interests.”
The feud between partners in what originally was a showcase joint venture highlights the tensions that can arise as Chinese joint venture partners gain confidence and marketing prowess.
Zong Qinghou (宗慶后), multimillionaire founder of Wahaha, has portrayed his firm’s quest to control its brand name as a patriotic cause: Wahaha, a name meant to sound like a child’s laughter, is now one of China’s best-known brands for bottled water and other beverages.
Danone, meanwhile, has vigorously protested what it contends is a serious breach of its joint venture contract with Wahaha.
Seeking outside leverage, Danone filed a lawsuit against Zong in a Los Angeles court seeking more than US$100 million in damages. It also filed for arbitration in Stockholm to help resolve the dispute.
Meanwhile, Zong, who set up Wahaha in the late 1980s, is facing an investigation by US tax authorities into allegations that as a green card holder he underpaid US taxes in 2001.
“Zong’s green card was invalidated many years ago, and we can say nothing until the tax bureau makes a judgment,” Wahaha spokesman Shan said.
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