(Xinhua)
Updated: 2007-12-12 07:03

HANGZHOU -- French food group Danone Tuesday voiced displeasure and vowed to appeal after losing its battle with Chinese beverage giant Wahaha Group in a trademark dispute.

Danone said in Shanghai that it was "shocked" by the verdict handed down by the Hangzhou Arbitration Commission the previous day and would appeal according to the legal procedures.

The panel ruled that the popular Wahaha trademark belonged to Wahaha Group, Danone's Chinese joint venture partner.

Danone had contended that the Wahaha trademark belonged to the joint venture. However, the panel ruled that a Trademark Transfer Agreement, jointly signed by the two groups in 1996, which indicated that the trademark should be transferred to the joint venture, had expired in 1999.

The move was the latest in the dispute between the Chinese drink group and the French giant that emerged in April and has become highly public.

Wahaha Group said Tuesday that they welcomed and felt "gratified" for the verdict.

Shan Qining, spokesman of Wahaha Group, said "the verdict shows that we have a legal basis in all of our accusations against Danone."

He declined to further comment on Danone's reaction after the verdict.

Danone was dealt a another setback on Monday, when the Guilin Intermediate People's Court agreed with a complaint by Wahaha and ruled that Francois Caquelin, a Danone executive, had breached the company law and "caused turmoil and chaos" in production and sales.

Danone expressed regret at the court's ruling and also said they would appeal to the Higher People's Court of Guangxi Zhuang Autonomous Region.

Wahaha Group chairman Zong Qinghou said, "Danone would not achieve its goal of merging with Wahaha whether it wins or loses legal action, and it is not getting the upper hand at present."  

Danone, which owns a 51-percent stake in the 39 Danone-Wahaha joint ventures, has accused Wahaha of setting up independent companies and selling products identical to those sold by the joint ventures. Danone had demanded a 51-percent stake in the non-joint venture companies, which Wahaha rejected.

Since mid-year, the two companies have filed numerous complaints and lawsuits against each other in various Chinese and foreign jurisdictions.

Danone filed its first lawsuit against Wahaha on May 9 in Stockholm, and on June 4, Danone filed another lawsuit, in Los Angeles, against two Wahaha-related companies and two individuals.

Also in June, Wahaha filed a request with the arbitration commission in the eastern Chinese city of Hangzhou over the disputed trademark transfer.

It also lodged suits in Shenyang and Jilin against Danone executives Emmanuel Faber, who replaced Zong Qinghou as chief of Danone and Wahaha's 39 joint ventures, Qin Peng, China director for Danone Asia, and Francois Caquelin, a financial director, claiming they had breached company law or damaged the interests of the Danone-Wahaha joint venture.

ln July, Danone filed a counterclaim against Wahaha, alleging that Wahaha had failed to transfer trademarks to their joint venture under an agreement reached in 1996 when their cooperation started

Danone and Wahaha have negotiated for another round before French President Nicolas Sarkozy visited China late last month. However, the talks ended fruitless.

Zong Qinghou said before leaving for Beijing for the talks that Wahaha would not reconcile until Danone withdraws all the accusations against it and makes an apology.

Zong said he agreed to sell Wahaha's shares in 39 joint ventures of Danone and Wahaha, but would not sell shares in non-joint-venture companies.

However, Danone insisted that it owns the Wahaha trademark and demanded controlling stakes in the non-joint-venture companies.