A spokesperson for Danone said today that the company was “shocked” by the arbitration decision and that it would appeal.
Danone and Wahaha set up five joint venture companies in 1996 to sell a range of drinks including bottled water and fruit juices. Danone took a 51% stake in the operations and says all Wahaha trade marks should have been transferred to the joint venture companies.
Danone had been using the disputed trade mark on products produced by a company set up as part of the joint venture. The joint venture turned sour in April this year when Danone accused its business partner of selling products that competed with those made by the joint venture company and which were illegally branded with the Wahaha mark.
Whether or not the Wahaha trade mark was ever transferred from Wahaha Group to the joint venture company has emerged as a key element of the dispute.
China’s Trade Mark Law says a trade mark assignment has to be recognized by China’s Trade Mark office (CTMO) to be valid.
A Danone spokesperson told MIP Week in June this year that "a transfer of trade mark agreement" was signed by Wahaha Group and the joint venture in 1996 and that in 1999 both parties signed "the licence agreement of trade mark" which specified that the joint venture had exclusive right to the trade mark "until the transfer process is completed".
Danone claims that it paid Wahaha for the transfer. However, the Wahaha Group claims that the trade mark transfer was rejected by the CTMO.
Hangzhou Wahaha Foods, one of the joint venture companies set up by Wahaha and Danone, sued the China Trade Mark Office in September this year for not following the correct procedure when rejecting the assignment. It was then reported to have dropped the lawsuit in November.
A case in a Los Angeles court and another arbitration in Stockholm dealing with the fallout from the breakdown in the business relationship between the parties have yet to be resolved.
The news focus in the July/August edition of Managing IP took an in-depth look at the Danone-Wahaha dispute and considered ways that IP owners can protect their rights in joint ventures in China.
