On July 30 The Hangzhou Intermediate People's Court turned down Danone's appeal against an
arbitration ruling
in December last year, which said that the Wahaha trade mark belongs to Hangzhou Wahaha Group, Danone's joint venture partner.
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 after the deal was signed.
Problems with the joint venture became public in April last 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 Hangzhou Wahaha Group to the joint venture company has emerged as a key element of the dispute.
On Tuesday Danone issued a strongly worded statement confirming that it planned to appeal the decision to "the appropriate superior judicial authorities". Danone said the December decision by the Hangzhou Arbitration Commission "intentionally and maliciously misinterpreted and misapplied the laws of the People's Republic of China, and was an award that completely ignored the facts and law".
The company said that the Hangzhou Court had only conducted a procedural review and had "failed to conduct a substantive review of the accuracy and legality of the determination of facts and application of law".
Danone claims that the Hangzhou Wahaha Group did not make a proper attempt to transfer the trade marks to the joint venture after the 1996 agreement. The French company also stated that the licensing of the Wahaha trade mark cannot be done without the permission of the joint venture board, according to a 1999 agreement.
The Hangzhou case is only one of a series of worldwide disputes between the two companies. A lawsuit in an LA County Court is proceeding, while Danone spokesman Michael Chu confirmed that an arbitration in Stockholm has its next hearing scheduled for January 2009.
Chu confirmed that the two parties are in talks to try and settle the dispute, and they are "still in discussion about the value of the JV".
