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China Court Rejects Danone Appeal in Wahaha Dispute

Reuters
Tuesday, 5 Aug 2008 | 3:43 AM ET

A Chinese court has rejected an appeal by France's Groupe Danone in a legal battle with estranged partner Hangzhou Wahaha Group over ownership of the "Wahaha" trademark, China's best-known soft-drink brand, the companies said on Tuesday.

A visitor walks past at Wahaha products displayed Monday July 2, 2007 in Hangzhou, China. After 11 years in a showcase joint venture, China's biggest beverage makers, Wahaha and French food conglomerate Group Danone SA are feuding over the use of the Chinese company's brand name and other issues.(AP Photo/Eugene Hoshiko)
Eugene Hoshiko
A visitor walks past at Wahaha products displayed Monday July 2, 2007 in Hangzhou, China. After 11 years in a showcase joint venture, China's biggest beverage makers, Wahaha and French food conglomerate Group Danone SA are feuding over the use of the Chinese company's brand name and other issues.(AP Photo/Eugene Hoshiko)

Wahaha said the ruling affirmed its rights to the trademark, but Danone charged that the court had failed to conduct a substantive review of the case and vowed to take the matter to the relevant superior judicial authorities in China.

"Danone will continue to pursue all legal options to protect its contractual rights and financial interests," the French company said.

Wahaha said in an e-mailed statement that the ruling was a major step forward for the company in its legal proceedings.

"After a year-long dispute, the 'Wahaha' trademark has finally ended up in Wahaha's hands under the law," it said.

The dispute between the two firms emerged in April 2007, when Danone publicly accused Wahaha of setting up parallel businesses outside their joint ventures that illegally sell competing Wahaha-branded products.

Since then, the two companies have been trading accusations and lawsuits, with legal battles waged in China, the United States, Sweden and the British Virgin Islands.

In the latest ruling, the Hangzhou Intermediate People's Court rejected Danone's appeal against a Hangzhou Arbitration Commission decision in favour of Wahaha last December.

Although most Chinese courts have so far issued rulings favourable to Wahaha, lawyers on both sides have said arbitration proceedings in Stockholm, which are expected to render a final decision early next year, will be the crucial legal battle to seal the joint ventures' fate.

Danone said on Tuesday that, regardless of decisions by the Chinese courts, the joint venture and trademark license agreements between Danone and Wahaha gave their ventures, 51 percent owned by Danone, exclusive and irrevocable rights to use all Wahaha trademarks.

Danone also reiterated its charge, now under consideration at the Arbitration Institute of the Stockholm Chamber of Commerce, that Wahaha breached those agreements.