Wahaha gets latest laugh in trademark case ruling

Groupe Danone SA has lost another round in a trademark battle with its estranged Chinese partner, a key ruling that may further diminish the French company's position in the year-long legal fight.

Shan Qining, spokesman for Hangzhou Wahaha Group Co Ltd, said yesterday that the Hangzhou Intermediate People's Court has agreed with an earlier arbitration ruling and rejected Danone's claim to the Wahaha brand name. The ruling held that Wahaha, a famous trademark for bottled water and drinks, will be retained by China's biggest producer of food and beverages.

Danone responded that the Hangzhou Court rendered its ruling based on a procedural review only and said it will appeal to higher judicial authorities.

The ownership of the Wahaha brand has been a key issue in a string of legal battles that began in June last year between Paris-based Danone and its Chinese partner.

Danone sued Wahaha and its chairman, Zong Qinghou, for allegedly using the Wahaha brand and selling competitive drinks outside the two firms' 39 joint ventures that were formed since a partnership began in 1996. The French company said these actions caused it to lose US$25 million a month.

But Wahaha said it still owns the brand after a trademark transfer was halted by the state trademark office. Danone said that decision ran counter to the cooperation contract it had with Wahaha.

Since the dispute became public, Danone and Wahaha have filed at least 25 lawsuits and arbitration proceedings in five countries. Wahaha has won most of the lawsuits so far. The firms agreed in December to suspend lawsuits and begin talks.

French media have reported that Danone wants to end its joint ventures with Wahaha but that the negotiations have stalled over price.

Danone set an asking price for its 51 percent stake in the companies' joint ventures at between 17.6 billion yuan (US$2.6 billion) and 20.9 billion yuan, according to Bloomberg News, citing Yang Yongjun, legal assistant to Wahaha's general manager. Wahaha set its valuation at 2.33 billion yuan to 3.27 billion yuan.

Michael Chu of Ogilvy PR Worldwide, Danone's spokesman for the case, acknowledged the two parties have agreed to have their financial advisers discuss valuations for the joint ventures.

"The agreement on the value could set the benchmark for negotiations," he told Shanghai Daily yesterday. "There are three options available, including Danone selling or adding stakes in the joint venture or both sides unified for future cooperation."