By Wang Zhenghua (China Daily)
Updated: 2007-09-01 11:04

The legal wrangle between Danone and Wahaha has spread beyond the two companies to the nation's trademark authority.

Hangzhou Wahaha Foods Co, one of five joint ventures set up by the two firms, has sued the Beijing-based State Trademark Bureau over what it claims was "improper administrative behavior" in 1996 and 1997.

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H angzhou Wahaha Foods is 51 percent-owned by French food giant Danone Groupe SA, with the rest controlled by China's largest drinks producer Wahaha Group.

The Beijing No 1 Intermediate People's Court told China Daily on Friday that Wahaha Foods has demanded the trademark bureau rescind its rejection of applications to transfer the Wahaha brand from the Chinese company to the joint ventures because it did not issue a written notice or give a reason for its decisions at the time. The court has accepted the case.

A spokesman with the trademark bureau said on Friday that it has yet to be notified of the legal action by the court. Danone declined to comment on the matter.

Danone, the world's largest yogurt maker, signed an agreement with Wahaha in 1996 that required the transfer of the Wahaha brand from the Chinese company to the joint ventures.

Under the contract, the Chinese company was barred from making products that compete with those produced by the joint ventures, or from using the Wahaha brand without Danone's consent.

But the two parties are divided on the validity of the agreement after Wahaha Group opposed an acquisition proposal from Danone to take 51 percent of non-joint ventures set up by the Chinese side.

Zong Qinghou, founder of Wahaha Group, claims the transfer was not properly approved by the authorities, citing a reply from the State Trademark Bureau, which twice rejected applications for the transfer of the Wahaha brand in 1996 and 1997.

Wahaha claims Danone was aware of the situation and that the two sides had joined forces to get around the rules.

Danone initially said Wahaha had not applied properly for the transfer of the brand, for which Danone paid Wahaha Group 100 million yuan (US$13.25 million).