McDermott Will & Emery has a strategic alliance with MWE China Law Offices, a separate law firm based in Shanghai. This China Law Alert was authored by MWE China Law Offices lawyers Ken Huang and Jessie Liu.
One of the top intellectual property cases in China relates to a wine industry dispute over the transliterated name for Cabernet, “解百纳” or, phonetically, “Xie Bai Na”. The plaintiffs in the case include Great Wall, Dynasty, COFCO and Weilong, all of which are well-known wine companies in China. The defendant is Changyu Winery Group. Recently, the Beijing High People’s Court handed down its final judgment, affirming that the Xie Bai Na trade mark was registered properly and dismissing the plaintiffs’ appeal requesting that the first judgment be overturned. A timeline of the Xie Bai Na case is as follows:
Chronology of Xie Bai Na
- Changyu established the Xie Bai Na trade mark in 1931 and applied for the trade mark registration in 1936. In 1937 the trade mark of Xie Bai Na was ratified with the registration number 33477.
- Changyu again applied for the trade mark of Xie Bai Na in 1959, 1985 and 1992, respectively. The applications were put on the record but with no confirmed ratification.
- In 2001 Changyu filed an application with the People’s Republic of China (PRC) Trademark Office. The Xie Bai Na trade mark was ratified for registration in April 2002.
- The registration of the Xie Bai Na trade mark was opposed strongly by a host of wine industry peers. In July 2002 Great Wall, Dynasty and Weilong filed to cancel Xie Bai Na trade mark, arguing that Xie Bai Na is the name of a grape variety (hence a generic name and not a brand name) and was therefore registered improperly.
- In May 2008 the PRC Trademark Review and Adjustment Bureau (TRAB) ruled to maintain the validity of Xie Bai Na trade mark.
- Also in 2008, the plaintiffs initiated administrative proceedings on grounds similar to their previous argument.
- In December 2009 the Beijing No. 1 Intermediate People’s Court made a judgment of the first instance of which the plaintiffs were not satisfied. The plaintiffs then appealed to the Beijing High People’s Court for a hearing of the second instance.
- On 17 June 2010, the Beijing High People’s Court made the final judgment of the second instance, as noted above.
Distinctiveness of Xie Bai Na
The focus of the dispute was whether or not Xie Bai Na could be used as a trade mark of a particular company. Some argue that when the Chinese character of Xie Bai Na was first created in 1931 by Mr. Xu Wangzhi (the general manager of Changyu) and others, these individuals were aware that the English term Cabernet represented the grape variety that corresponds to wine products.
The plaintiffs claimed that Changyu’s wine labels, which used Xie Bai Na as a brand name without registration, made it appear as if it were a generic name. (As a generic name, it must explicitly refer to one product name and reflect the essential characters of such product.) Afterward, when other wine companies began labeling their products as Xie Bai Na, Changyu was slow to take action against them. As a result, Xie Bai Na became better known as a general product name rather than as a brand name, which eventually weakened Changyu’s brand equity.
In response to the lawsuit, Changyu insisted that the name Xie Bai Na, meaning “absorbing the world” in Chinese, is not a transliteration of Cabernet, and that the popularity of this name in the market in no means causes it to be a generic name. Moreover, Changyu, on the basis of 61 pieces of new evidence submitted in the hearing of first instance, provided 42 pieces of new evidence in the hearing of second instance to prove the exclusive use by Changyu of the Xie Bai Na trade mark for more than 70 years. The evidence included the market sales of Xie Bai Na-branded products and a consumer awareness survey.
According to industry insiders, the dispute over the ownership of the Xie Bai Na trade mark has increased consumer awareness of Xie Bai Na as Changyu’s trade mark. They believe that this is a natural result of Changyu’s ceaseless efforts in building this indigenous brand for more than 70 years.
Monopoly Position of Xie Bai Na Products
The plaintiffs also complained that Changyu attempted to monopolize this name by using it as a trade mark, which will bring a negative impact to the Chinese wine industry’s international image and eventually weaken its competitiveness in the global market.
In response to this allegation, Changyu provided market survey data in which the total sale of all wines bearing the word Xie Bai Na (including Changyu and other manufacturers) accounts for less than 4 per cent of total wine sales across the country. Therefore, even if Xie Bai Na is taken entirely by a single brand, its sales are not enough to constitute an industry-wide monopoly. Thus, the accusation that Xie Bai Na will monopolize the market lacks minimum factual basis.
Future of Changyu’s Brand Protection Remains Uncertain
It is predicted by industry insiders and legal professionals that once TRAB reissues its decision and maintains the registration of Changyu’s Xie Bai Na trademark, other wine enterprises may not use Xie Bai Na on their wine labels as a brand name nor will they be allowed to explain it as the raw material of wine without being liable for trade mark infringement to Changyu. However, Changyu has not revealed its next steps or any action plans in terms of enforcing the recent judgment. We should therefore keep an eye on future developments in the Changyu Xie Bai Na case, to see how Changyu plans to enforce its brand protection.