(Yicai Global) July 2 -- China's highest court has nixed a CNY1.44 billion (USD210 million) judgment against Chinese iced tea beverage maker Jiaduobao a lower court entered in favor of Guangzhou Pharmaceutical Holdings for infringement of its Wang Lo Kat brand trademark.

The evidence admitted in the case suffered from severe defects of both form and content, the Supreme People's Court said in its decision, and could not be used as a basis for ascertaining the facts of the case. It vacated the judgment and remanded it to the Higher People's Court of Guangdong Province for a new trial. 

Guangzhou Pharmaceuticals Corp. sued six firms under Dongguan, Guangdong province-based Jiaduobao in 2014 for infringing its Wang Lo Kat trademark and demanded Jiaduobao compensate it CNY1 billion for damages, boosting this to CNY2.9 billion in 2015.

Guangdong Higher People's Court ordered Jiaduobao's six units to pay Guangzhou Pharmaceuticals CNY1.4 billion in damages last July. Jiaduobao, however, rejected the judgment and appealed to the Supreme People's Court.

The Guangdong court also ordered Jiaduobao to cease using packaging similar to Wang Lo Kat.

Wong Lo Kat is the Cantonese version of the drink's name, which is Wanglaoji in Mandarin. Dr. Wong Chat Bong invented it in 1828 in Guangdong province. The recipe afterwards passed down generation to generation.

A mainland company received the right to the trademark in 1949.

Can of Worms

The current holder is Guangzhou Pharmaceutical Holdings. It authorized Hong Kong Hung To Group to use the brand. It marketed Wong Lo Kat in red cans, while Guangzhou Pharmaceutical sold it in green containers.

Guangzhou Pharmaceutical and Hung To penned a trademark license agreement in 1997 which gave the first firm and its Jiaduobao beverage unit the right to use the brand until 2000. This was extended to 2020. Jiaduobao used the red can in the mainland under the Cantonese Romanized name Wong Lo Kat.

Jiaduobao's sales of the red can version rose more quickly to over CNY1 billion in 2004, whereas the green can's sold CNY80 million. Red cans also ruled in 2007, 2008 and 2009.

Guangzhou Pharmaceutical's general manager was convicted of fraud in 2005 for taking HKD3 million (USD384,000)from Hung To, which said it deemed this a proper fee for the license extension. These funds, never received by Guangzhou Pharmaceutical, were officially ruled a bribe.

Guangzhou Pharmaceutical arbitrated the trademark issue in April 2011. In May 2012, the arbitrators ruled the two extension contracts invalid, found the trademark agreement expired on 2 May 2010, and thus Hung To Group and JDB had no right to use it after then.

Jiaduobao has been making its red can products since 2011 and has only used the name Jiaduobao since 2012. Guangzhou Pharmaceutical started to produce their own red can beverage a few days after the arbitration.

Editor: Ben Armour