Hangzhou, Aug. 25 - The "Wahaha" trademark ownership belongs to Wahaha Group, according to the final judgment of Hangzhou Intermediate People's Court, released Wahaha Group Co. Ltd.
Prior to that, Hangzhou Wahaha Food Co. Ltd. ("the JV"), a JV co-founded by French Danone Group and Wahaha Group, signed the "Trademark Transfer Agreement" with Wahaha Group, which ordered Wahaha Group to transfer the "Wahaha" trademark to Hangzhou Wahaha Food Co. Ltd. However, the trademark office rejected the transfer application several times. Due to force majeure, this agreement did not come into execution. Through negotiation, the two parties signed a "Trademark License Agreement" in 1999 to replace the previous "Trademark Transfer Agreement." The new agreement
allowed the JV to use the "Wahaha" trademark.
When the dispute took place, Danone claimed that the "Trademark Transfer Agreement" signed in 1996 had not yet been terminated, and requested to continue the transfer. To solve the conflict, the two sides decided to submit an arbitration settlement requirement to the Hangzhou Arbitration Committee. The Hangzhou Arbitration Committee made the judgment in December 2007 stating that the "Trademark Transfer Agreement" had been terminated in December 1999.
Afterwards, Danone launched a lawsuit in Hangzhou Intermediate People's Court in the name of Hangzhou Wahaha Food Co. Ltd., requiring the revocation of the ruling. In the appeal, it claimed that the arbitrators of Hangzhou Arbitration Committee made a fundamental error, and misinterpreted and misapplied the laws of the People's Republic of China, and went beyond their jurisdiction.
In the lawsuit, Danone argued that Hangzhou Arbitration Committee had made an "unlawful ruling" with "obvious and unusual errors, apparently confounding right and wrong, misunderstanding the law and even deliberately misinterpreting the applicable law." For this Danone required the Court to revoke the arbitration ruling. Wahaha Group believed that the arbitration ruling made by Hangzhou Arbitration Committee was fair and lawful, and not an "unlawful ruling, beyond the jurisdiction of the arbitration case." In accordance with the Arbitration Law, the People's Court was only able to check the arbitration procedure, whether the procedure violated the law, whether evidence was forged or concealed, and whether the arbitrator practiced favoritism. Danone suggested rechecking the opinions regarding the original requests in the case, which exceeded the scope of the People's Court. Furthermore, the Hangzhou Arbitration Committee had opened four sessions to allow the two sides plenty of opportunities to give their full statements and exchange views. Danone could not prove the "unlawful ruling" of the Hangzhou Arbitration Committee, therefore its appeal was rejected.
On July 30, 2008, after holding two hearings for both parties to give their statements, the Hangzhou Intermediate People's Court made the decision to reject Danone's appeal. According to Chinese Law, this court ruling will be the final decision and cannot be appealed. Thus, the ownership of "Wahaha" trademark has been cemented. Wahaha Group Co. Ltd.
won the trial as well as the trademark.
This court ruling confirmed the ownership of this famous beverage brand in China. Wahaha Group is now one step closer to the victory of this business dispute. The well-known food and beverage giant Danone lost its recent seven lawsuits in mainland and overseas jurisdictions.
Having taken part in the Chinese market for years, Danone has taken over several well-known Chinese brands and has stakes in several others, including: Wahaha Group, Robust, Bright Dairy, Mengniu Dairy, Huiyuan Fruitjuice, Shanghai Zhengguanghe, and Shenzhen Yili. Danone's efforts on market expansion have long been criticized. Last April, Wahaha Group filed a formal complaint to the Ministry of Commerce, accusing Danone of business monopoly and illegal competition that has interfered with the development of Wahaha. On August 1, 2008 China's Anti-monopoly Law was put into practice.
Background Information
In 1996, France's Groupe Danone SA, Hong Kong investment bank Peregrine and Hangzhou Wahaha Group Co., Ltd. paired up to sign an agreement to form 5 joint venture companies. Danone controlled 41% of the shares, Peregrine held 10%. After the Asian financial crisis, Peregrine went bankrupt and Danone bought out its 10% share. As Danone accounted for a 51% stake of the joint ventures, it gained the controlling right. At the beginning when the
joint ventures were founded, Wahaha Group also set up 5 non-joint ventures that produced beverage products other than bottled water, milk and mixed congee.
In April 2007, Danone SG requested to buy out 51% share of Wahaha non-joint ventures for an under priced payment of 4 billion. The proposal was firmly rejection by Wahaha Group. Although many third parties tried to help resolve the conflict, the differences between the sides were too great and the negotiations made no progress. After the negotiations failed,
Danone filed more than 30 lawsuits under jurisdictions in several countries such as Italy, France, the United States and China, suing Wahaha Group with "breach of contract" and "illegal use of the Wahaha trademark." However, Danone failed in all lawsuits that have issued court rulings.