Caixin
Dec 22, 2014 05:08 PM
BUSINESS & TECH

Herbal Tea Maker Ordered to Pay 150 Mln Yuan over Trademark Row

(Beijing) – A court has ordered herbal tea maker JDB Group to pay 150 million yuan to Guangzhou Pharmaceutical Group over a trademark dispute involving a popular drink.

The ruling by the Guangdong High People's Court is the latest step in one of most high-profile legal battles over a patented design in China. The case has dragged on for two and half years.

JDB said in a statement on December 19 that the decision showed "gross disregard of facts and the fair play principle as well as the integrity of the judicial system."

JDB, a wholly owned subsidiary of Hong Kong-based Hung To Group, vowed to appeal against the verdict, and said it would ignore the decision for the time being.

JDB was licensed by Guangzhou Pharmaceutical, previously known as the Yangcheng Tonic Factory, in 1995 to produce and market Wanglaoji, a popular brand of herbal tea known also as Wong Lo Kat.

JDB later repackaged the product in a shiny red can, while Guangzhou Pharmaceutical continued using the green packaging.

JDB's sales surged from 100 million yuan in 2000 to 17 billion yuan in 2010, pushing its share of the soft drink market in the country to nearly 7 percent.

Guangzhou Pharmaceutical later complained that it was not getting a fair share of JDB's profits from sales of herbal tea in the popular red can package.

In 2011, Guangzhou Pharmaceutical asked the China International Economic and Trade Arbitration Commission to terminate JDB's use of the Wanglaoji trademark.

This prompted JDB to change the brand name of its drink to JDB, keeping the red can design.

Guangzhou Pharmaceutical continued selling two products under the Wanglaoji brand, one in a green package and another one in a red can.

In July 2012, Guangzhou Pharmaceutical filed a lawsuit in Guangzhou and JDB filed another in Beijing. With both companies challenging each other's ownership claim for the red can design. The Supreme People's Court later ordered the two cases merged and heard in Guangdong.

The court said the Wanglaoji brand is protected under two government schemes – the China Time-honored Brand and Guangdong Famous Brand – and JDB was able to market the Wanglaoji products in red cans only because it was licensed to do so.

Guangzhou Pharmaceutical still owns the brand, even though JDB has made great contributions, the court said.

The court said that Hung To Group should have known that when Guangzhou Pharmaceutical decided to take back the Wanglaoji brand in 2011, JDB had to return it along with the rights to the red can.

JDB argued that it secured the patent right in 1997 and spent millions to promote the products. "Without JDB, there would no red canned herbal tea," JDB said in its statement.

(Rewritten by Li Rongde)

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