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30 October 2013Trademarks

Castel takes Chinese trademark case to Supreme Court

French winemaker Castel, which was on the receiving end of a $5 million fine for trademark infringement in China, has had its request for a hearing at the country’s Supreme Court accepted.

The wine producer has been locked in a seven-month dispute with Chinese businessman and fellow winemaker Li Dao Zhi over the use of the words Ka Si Te, a transliteration of Castel.

In April this year, Castel was ordered to pay Li, and his company Shanghai Banti Wine, $5 million over the use of the trademark.

The fine, thought to be one of the largest damages rulings seen in an IP case in China, was issued at the Wenzhou Intermediate Court.

Castel appealed but the Zhejiang Provincial High Court upheld the fine in July.

Convinced the courts were wrong, Castel pursued an appeal at the Supreme People’s Court in Beijing, which was accepted this week.

“The damage award in this case has attracted a lot of attention because it is well above what Chinese courts usually grant in trademark infringement cases,” said Joshua Mandell, senior associate at the Beijing office of Rouse LLP.

“While we often hear about lawsuits against trademark counterfeiters and makers of look-alike products, foreign companies are often the most vulnerable to large damage awards in Chinese courts. This is because of their large scale and accounting practices that generate evidence of profits that can be used against them.

“Castel is clearly quite committed to this case and the Ka Si Te Chinese brand, and an appeal is the only way they might avoid having to pay damages.”

Castel, which was established in 1949, had been using the words Ka Si Te for its marketing in China but failed to get it registered as a trademark.

This allowed Li, who had spotted its popularity, to register the trademark himself.

Upon discovering it was being used for Li’s secondary company Shanghai Ka Si Te Wine Co, Castel attempted to get it revoked.

But Li sued for unlawful use and, after a ruling deeming Li the rightful owner, Castel was ordered to meet the costs.

“Chinese transliterations sometimes originate in the market—where importers, distributors, and consumers find that they need a Chinese name for foreign products that do not already have one,” Mandell said.

“When this happens, it is often very difficult for the foreign brand owner to show that they have actually made any prior use or own any prior rights in the Chinese brand.

“In some cases, it would actually be better to for the foreign brand owner to go back to the drawing board and create an entirely new Chinese brand than to go through a long term battle with questionable chances of success.”

Castel did not respond to WIPR’s requests to comment.

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Trademarks
18 July 2013   A French wine producing company has been ordered to pay a Chinese company $5 million following a lengthy trademark dispute.