The litigation saga between French beverage maker Groupe Danone and Hangzhou-based Wahaha, controlled by flamboyant entrepreneur Zong Qinghou, has moved from the Chinese mainland into Europe and, now, the United States.

A superior court of the State of California in Los Angeles has begun hearing of the writ filed by Danone in June 2007 against Ever Maple Trading, the parent company of Wahaha.

In a statement, Danone alleged that Wahaha was "selling products which are the same as those sold by Wahaha Joint Ventures (partly owned by Danone) and is making use of the Joint Ventures' distributors and suppliers. Groupe Danone has filed the US complaint to put a stop to the defendants' collective scheme to interfere with its customer relationships and business prospects."

"This hearing is dealing with procedural issues, so does not address the merits of Danone's claims against the defendants," a spokesman of Danone told China Daily. A Wahaha spokesman declined to comment.

"The key issue is whether the cooperation agreement between Danone and Wahaha should be considered to be effective and enforceable," said Zhao Zhongcheng, a partner of the international trademark department of Unitalen law firm.

It appears the trademark assignment deed between the two is yet to be ratified by the Chinese Trademark Office. For that reason, "in accordance with the Chinese law and practice, the trademark assignment deed failed to take effect," said Zhao.

"I think Danone also has its own problem. It did not fully foresee the legal risk and trademark dispute existing in the cooperation agreement between the two parties. The assessment on the trademark issues and other legal issues in China appears to be insufficient," said Zhao.

(China Daily February 11, 2009)