Ordered to pay almost 34m yuan in infringement

After a four-year battle, a Chinese company recently prevailed over a noted French vintner to win the largest trademark lawsuit in the wine industry to date.

The Higher People's Court in Zhejiang ruled that Castel Freres SAS must pay 33.73 million yuan ($5.5 million) to distributor Panati Wine (Shanghai) Co for using its Chinese trademark without authorization.

In addition, it is also required to issue a public apology in the newspaper China Industry & Commerce News.

The saga dates back to when Wenzhou-born Spanish-Chinese entrepreneur Li Daozhi started Panati Wine in 1997 to bring Spanish wines to the Chinese market as one of the nation's first wine importers.

The company applied for the trademark Cavesmaitre in 1998 for its imported wine, which was approved in 2000. The corresponding Chinese name is Kasite.

Panati then founded a subsidiary called Cavesmaitre Wine Co in 2008, also in Shanghai, mainly importing French wines.

Cavesmaitre was granted the status of well-known trademark in China last year, the fifth liquor-related brand to receive the title following Chivas, Remy Martin, Martell and Hennessey, according to a report on the website of the 21st Century Business Herald.

The company also has purchased three chateaus in France, all in Bordeaux.

For its part, Castel started bottling wine in China in 1999. There have been many versions of its name translated into Chinese, with Kasite among the most popular.

In 2005, Castel filed an application with the national trademark administration to revoke Panati's Kasite trademark, claiming that it had not been used for three years.

The Chinese company failed to receive the notice from the administration because it moved to a new location, so the cancellation succeeded. But Panati won the trademark back just a few months later.

Li filed lawsuit against Castel in 2009 asking for 40 million yuan in compensation. The Intermediate People's Court in Wenzhou ruled in his favor, asking Castel to pay 33.73 million yuan. But both the plaintiff and the defendant filed appeals.

On July 16, the higher court upheld the Wenzhou court's verdict.

Although Castel has decided to abandon the Kasite name and launch the new Chinese trademark Kasidaile, its president for the Chinese market Yin Kai said the French winemaker was wronged.

He told Guangzhou's Yangcheng Evening News that his company "actually never used Kasite as an official trademark", saying that it only appeared as part of the Chinese translation of the company name.

He also questioned the amount of compensation, noting that Cavesmaitre "has seldom used the Kasite trademark" but the court attributed all of Castel's profit to infringement.

Beijing Business Today quoted Li as saying "Cavesmaitre will continue employing legal methods to fight overseas infringement while cooperating with domestic law enforcement to clear up the market and retailers".

Wang Hua, dean of the College of Enology at Northwest A&F University, said "Castel will have to pay a high price for a mistake it made when it entered the Chinese market".

"It is a historical regret for Castel to not obtain the Kasite trademark," he said.

But a report in the Yangcheng Evening News noted that Castel actually once had a chance.

It said that Li was willing to transfer the trademark to Castel in 2003 for 1 million yuan. But the two sides failed to reach an agreement because the price was raised to 1 million euros ($1.3 million) in later negotiations.