By Ding Qi (chinadaily.com.cn)
Updated: 2007-11-06 17:32

The legal wrangle between French food giant Groupe Danone SA and the Hangzhou-based Wahaha has seemingly turned against Danone. Sources told Beijing Morning Post yesterday that Danone had to withdraw its lawsuit against the Trademark Office under the State administration for Industry and Commerce (CTMO).

In August, Danone filed a lawsuit with the Beijing No.1 Intermediate People's Court against the CTMO because it rejected its application to transfer Wahaha brand ownership from the Chinese company to the joint ventures.

The lawsuit was a response to Wahaha Group's request several months ago for arbitration in Hangzhou seeking termination of a 1996 trademark transfer agreement it signed with joint venture partner Danone. Wahaha alleged the agreement failed to get approval from CTMO.

The court later held separate talks with Danone, CTMO and Wahaha for the details of the case. Its said afterwards that Danone cannot sue the CTMO for its decision 11 years ago because the time limit for legal action has expired.

Furthermore, Danone cannot sue the CTMO over its reply to the Administration Bureau for Industry and Commerce of Zhejiang, which had confirmed the rejection of the trademark transfer in June. This is because the document is legally inadmissible as an official letter between government agencies.

Danone was left with no choice but to withdraw the lawsuit.

The withdrawal epitomizes Danone's awkward situation in China recently. Since August, Danone has suffered several setbacks in the legal dispute against Wahaha. However, Danone faces more headaches in yet another Chinese city.

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