The court session for dispute over the trademark “WANG LAO JI in Chinese” was opened. It is predicted that the arbitration will be revealed within 2-6 months.
With the central issue of whether the 10-years renewed leasing contract between Guangzhou Pharmaceutical Limited and Jia Duo Bao (China) Beverages Co., Ltd concerning the trademark “WANG LAO JI in Chinese” is valid, the dispute over the trademark “WANG LAO JI in Chinese”, as “the most influential trademark case in China”, was heard by China International Economic and Trade Arbitration Commission on 29th. After 5 hours’ hearing, the case was not concluded yet. It is predicted that the arbitration will be revealed within 2-6 months.
The plaintiff and defendant in this case used to be close cooperative partners. “WANG LAO JI in Chinese” is a trademark owned by Guangzhou Pharmaceutical Limited. In 1997, a licensing contract was concluded by Guangzhou Pharmaceutical Limited and the parent company of Jia Duo Bao (China) Beverages Co., Ltd , i.e. Hong Kong Hong Dao Group, for the first time. Three years later, another contract was signed by the interested parties, extending the contract’s expiration date to 2010.
During the valid period of the contract, the vice-general manager of Guangzhou Pharmaceutical Limited, i.e. Li Yimin, took briberies of 1,000,000 HK$ from the president of Hong Kong Hong Dao Group, i.e. Chen Hongdao, for three times. And then, these 2 companies signed supplementary terms twice, prolonging the leasing term to 2020. And in the end, their illegal actions were revealed and Li Yimin was convicted. After being bailed, Chen Hong fled and is still at large.
Hence, the most important issue in the court hearing lies in whether the contract that was signed by the former vice-general manager of Guangzhou Pharmaceutical Limited, i.e. Li Yimin, after he took briberies, is valid or not. Guangzhou Pharmaceutical Limited held that in conformity with the supplementary contract signed by Li Yimin, the trademark royalty in this year will rise up to 5,060,000 from 4,500,000 Yuan in 2000 and increase by 8%-9% in the following years, meaning that the trademark royalty of “WANG LAO JI in Chinese” will be only several millions in 2020. Nevertheless, the trademark “WANG LAO JI in Chinese”, as the asset of State-owned Assets Supervision and Administration Commission of Guangzhou Municipal Government, has been in existence for 185 years. And Guangzhou Pharmaceutical Limited is the very owner of the said trademark. The huge economic loss resulting from leasing the trademark at such a low price has constituted severe drain of stated-owned assets and thus higher trademark royalty shall be charged. Hong Kong Hong Dao Group maintained that the contract is valid.
Some in the industry believed that it is very likely that a conciliation will be reached, for it is owing to Jia Duo Bao (China) Beverages Co., Ltd’s dedication that “WANG LAO JI in Chinese” has become a brand familiar to also every household in China. Jia Duo Bao (China) Beverages Co., Ltd can not afford the failure in this case as the trademark “WANG LAO JI in Chinese” is of utmost importance for it. Last year, the sales volume of “Wang Lao Ji Herbal Tea in Red Can” is over 16 billion Yuan. If a profit rate of 20% is assumed, the whole profit will be up to 3.2 billion Yuan. Therefore, a few millions of trademark royalty will be acceptable for Jia Duo Bao (China) Beverages Co., Ltd.
