Danone to appeal Wahaha brand ruling

French food giant Groupe Danone said it would seek to overturn a ruling that grants the well-known Wahaha brand to its estranged partner, claiming that the decision by the mainland arbitration office has disgraced Chinese laws.

The dispute between Danone and its mainland partner Wahaha Group took a startling turn on Monday as the Hangzhou Arbitration Commission asked the French firm to scrap an agreement to transfer the Wahaha trademark to their venture, effectively handing the brand back to the mainland beverage group.

'The decision by the arbitrators is wrong based on the fundamental facts of the matter,' Tao Wuping, Danone's lawyer with Shenda Partners, told reporters in Shanghai yesterday. 'As a Chinese lawyer, I felt regretful and deeply hurt.'

Danone set up the venture with Wahaha in 1996 with the French firm taking a 51 per cent stake and the partners agreeing on the brand.

However, the venture failed to win government approval for the move, and a new pact allowed the venture to use the brand without the ownership. Earlier this year Danone accused Wahaha's group chairman Zong Qinghou of illegally using the brand for his own companies.

'We have reasons to suspect that regional protectionism was involved in the ruling,' Mr Tao said. 'But we can only cast doubts [without proof].'

To overturn the arbitrators' decision, Danone must file an appeal to Hangzhou's intermediate court within six months.