Danone loses Wahaha dispute

Forbes has just reported that China's Hangzhou Arbitration Commission has ruled in favour of Wahaha Group in its highly-publicised trade mark dispute with Groupe Danone (see brief note by the IPKat here). Apparently Danone failed on a technicality, having failed to meet a filing deadline. As a result, the 'Wahaha' brand was ruled to belong to Danone's Chinese joint venture partner. A Danone spokesman has told the local press that it has yet to receive the ruling.

This is not the end of the story. Danone and Wahaha are also involved in proceedings with the International Arbitration Commission in Sweden; the case will be heard in mid-December. Danone has claimed that Wahaha was undermining the joint venture by producing items identical to the JV's products and then selling them outside the agreed channels. Wahaha has itself complained that Danone was trying to seize control of the Wahaha brand.

The IPKat feels that there are issues here in terms of JV negotiation and management. The parties obviously have quite different expectations as to what their cooperation was expected to achieve; IP lawyers can't remove those differences, but it is their duty to reflect as accurately as possible the intentions of the JV partners and explain to them, in advance of the agreement, what it will bind them to. Merpel adds, am I alone in finding it uncomfortable to contemplate a JV that is subject to arbitration before two different bodies, on different continents, at the same time? Or is there something missing in the news report but which explains why this should be either possible or necessary?
Danone loses Wahaha dispute Danone loses Wahaha dispute Reviewed by Jeremy on Monday, December 10, 2007 Rating: 5


  1. Danone ran into a similar dispute in India regarding the 'Tiger' trademark for biscuits which was being owned by its JV partner-Britannia.
    For more please see:http://spicyipindia.blogspot.com/2007/09/tiger-of-britannia.html

  2. JVs are very popular at present. There are two reasons. First: “joint venture” is easy to say and sounds good. It has, to commercial minds, connotations associated with “partnering” and “we are in this together”. However, as anyone who advises on JVs knows, easy to say is not the same as easy to do. Secondly: Perhaps I am being cynical but the legal fees associated with establishing a JV via a separate vehicle are a multiple of those associated with an alternative structure (e.g. licence agreements).

    The IPKat has commented previously about the ownership of rights arising under JVs. The difficulty is often that the scope of the JV (and the associated rights and obligations) derive from a contractual construct. It is often difficult to prescribe at birth what the JV is supposed to be doing in its teens. Lawyer says “there may be limitations in what you can and can not predict and prescribe for at the outset and this requires careful analysis. We need to sit down and try to identify these issues and cover them in the agreements”. To paraphrase a famous Larson cartoon, client hears “blah, blah, blah, blah agreements”. This is because most clients do not see why “we will deal with that when we come to it” is not a risk free, legally certain and efficient method of drafting for rights arising under a JV, because it seems to work in so many other areas. Clients also do not want to focus on the potentially negative side of the deal. Perhaps I am revealing my limitations as a lawyer, but I find this one of the most difficult areas of my practice.


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