Click to read the original article for details. With Red Bull Vitamin Drink Co., Ltd. (hereinafter referred to as "Red Bull Vitamin") withdrawing its lawsuit, the ownership of the Red Bull trademark seems to be becoming clearer. August 16 was supposed to be the public hearing date for the case where Red Bull Vitamin sued Thai Tiansi Pharmaceutical & Health Products Co., Ltd. (hereinafter referred to as "Thai Tiansi") over the ownership of the Red Bull trademark. However, a Beijing Business Today reporter learned that the plaintiff, Red Bull Vitamin, had withdrawn the lawsuit on August 14. In the view of industry experts, Red Bull Vitamin's withdrawal likely indicates a lack of strong legal grounds. In the long run, the endless entanglement between Thai Tiansi and Red Bull Vitamin will only leave market space for competitors and is not conducive to brand development.

Withdrawal Before Hearing

The case of Red Bull Vitamin v. Thai Tiansi was scheduled for public hearing on August 16. On that day, a Beijing Business Today reporter learned that the plaintiff, Red Bull Vitamin, had filed a withdrawal application on August 14, and the Dongcheng District People's Court approved the withdrawal. As the plaintiff, Red Bull Vitamin withdrew the lawsuit before the hearing. In this regard, legal professionals told Beijing Business Today, "There are many reasons for a last-minute withdrawal, but most are due to insufficient evidence or a settlement between the parties." Yao Liming, director of the China Commercial Business Research Center, also believed: "The plaintiff may not have confidence in winning, or both sides may have found a compromise. It is also possible that neither side intended to have a full-blown lawsuit." Beijing Business Today sought confirmation from Jiao Hongbin, the attorney representing Red Bull Vitamin from King & Wood Mallesons, but Jiao declined the interview, citing "inconvenience." A person in charge at Thai Tiansi told Beijing Business Today: "Thai Tiansi has had no contact with Red Bull Vitamin, and the withdrawal came without any warning." Thai Tiansi has not yet issued an official statement regarding the withdrawal, but previously stated on its website: "Yan Bin has adopted delaying tactics in his litigation strategy, which have indeed delayed the progress of Thai Tiansi's lawsuits and allowed Yan Bin and his affiliated companies to continue using our brand." On September 19, 2017, the Beijing Dongcheng District Court accepted the case filed by Red Bull Vitamin against Thai Tiansi over trademark ownership. Red Bull Vitamin requested the court to confirm that the Red Bull registered trademark and other similar Red Bull series trademarks registered on similar goods belong to Red Bull Vitamin; to order Thai Tiansi to immediately handle the transfer of the Red Bull registered trademark and similar series trademarks to the plaintiff's name with the Trademark Office of the State Administration for Industry and Commerce; and to order Thai Tiansi to bear all litigation costs. In 1993, Xu Shubiao, the controller of Thai Tiansi, built the first Red Bull factory in China in his ancestral hometown of Hainan. In 1994, Thai Tiansi applied to register the Red Bull trademark for beverage production, and the registration was completed in 1996. In 1995, Xu Shubiao partnered with Yan Bin, chairman of Huabin Group, to establish Red Bull Vitamin Drink (Thailand) Co., Ltd., and set up Red Bull Vitamin in Shenzhen. In September 1998, Red Bull Vitamin was re-registered in Beijing. The major shareholder of Red Bull Vitamin is Red Bull Vitamin Drink (Thailand) Co., Ltd., holding 88% of shares. This company was established with capital from the Xu family, which fully controls Thai Tiansi, and Yan Bin, holding 51% and 49% respectively.

A Series of Lawsuits

Thai Tiansi claimed that many enterprises not affiliated with Red Bull Vitamin were producing and selling Red Bull beverages, and these enterprises were all owned by Huabin Group, controlled by Yan Bin. Data shows that from 2007 to 2009, 13 branches of Red Bull Vitamin were gradually deregistered. Meanwhile, companies such as Beijing Red Bull Beverage Sales Co., Ltd., belonging to Huabin Group, were registered one after another. According to incomplete statistics, the total number of cases between Thai Tiansi and the Huabin system exceeds 20. At the end of 2016, the trademark license for Red Bull granted to Red Bull Vitamin expired, but Red Bull Vitamin and several enterprises under Huabin Group continued to produce Red Bull beverages. As a result, lawsuits between the two sides have been filed one after another without end. Due to damage to its own interests, Thai Tiansi began to seek legal remedies. On August 30, 2016, Thai Tiansi filed lawsuits against Beijing Red Bull, Hangzhou Red Bull, Guangdong Red Bull, and other enterprises in the Jilin Provincial High People's Court, Zhejiang Provincial High People's Court, and Guangzhou Tianhe District People's Court, respectively, on grounds of infringement of exclusive trademark rights and unfair competition, demanding these enterprises cease infringing acts and related unfair competition. These three cases are still under trial. In response to Thai Tiansi's accusations of infringement, in April 2018, Yan Bin, chairman of Red Bull Vitamin, publicly responded that when the Red Bull brand was introduced, the Ministry of Light Industry and China National Food Industry Group had archives on file, and "the authorization period is not 20 years but 50 years." That is, the Red Bull brand authorization still has 30 years remaining. However, Yan Bin's side has never publicly disclosed these archives. In addition to legal measures, Thai Tiansi also took internal corporate actions. On September 20, 2016, Red Bull Vitamin Drink (Thailand) Co., Ltd. dismissed Yan Bin from his position as chairman of Red Bull Vitamin according to the company's articles of association. However, because the company seal and business license were in Yan Bin's hands, he refused to hand over control. In October 2016, Thai Tiansi filed a lawsuit in Huairou to change the registration. Yan Bin, in turn, filed a lawsuit in a Thai court against the dismissal. In July this year, the Southern Civil Court in Bangkok ruled that the resolution by Thai Tiansi and the board of Red Bull Vitamin Drink (Thailand) Co., Ltd. to dismiss Yan Bin and several other directors was legal. Regarding the above lawsuits, Jing Linbo, president of the Chinese Academy of Social Sciences Evaluation Research Institute, believed that based on the materials disclosed so far, the Huabin system seems to be at a disadvantage and has been on the defensive. Additionally, the fact that no or very few dividends have been paid to Thai Tiansi over more than 20 years seems somewhat unfair. Red Bull Vitamin has not held board meetings or shareholders' meetings, which appears to indicate significant corporate governance issues.

Hidden Risks of Unresolved Disputes

Amid the ongoing disputes, Huabin Group has been actively preparing to capture the market. In 2016, it launched the "War Horse" energy drink, with a sales target of 1.5 billion yuan for 2018. In addition to War Horse, Huabin also introduced the Norwegian high-end water brand Voss and found a water source in China for localized production. Furthermore, Huabin Group acquired a 25% stake in Vita Coco and introduced the Capri-Sun juice drink. In the first quarter of 2018, Huabin FMCG Group's total sales exceeded 7.8 billion yuan. Thai Tiansi is not to be outdone. In March 2018, Thai Tiansi's new product, Red Bull Anaji, was exposed and obtained the national health food approval number. However, the product has not yet been launched on the market. "Endless disputes only give other energy drink companies the opportunity to encroach on market share," Jing Linbo said. The Chinese market is vast, and both sides can still work together to deeply explore the functional beverage market, develop multiple product series, and expand into other related markets. According to data from China Commercial Industry Research Institute, from 2012 to 2016, the retail sales of China's functional beverage industry grew at a compound annual growth rate of about 15%, and it is expected to exceed 45 billion yuan in 2018. In the past two years, due to legal entanglements, Red Bull's sales have continued to decline. Nielsen retail monitoring data shows that Red Bull's market share in the functional beverage category fell from 63% in 2016 to 58% last year. From 2015 to 2017, Red Bull China's sales were 23.04 billion yuan, 21 billion yuan, and 19.6 billion yuan, with year-on-year growth of 15%, -7%, and -19%, respectively. As one rises, another falls. While Red Bull's performance declined, other functional beverage brands seized the opportunity to develop. Dongpeng Special Drink sponsored the Portuguese national football team and engaged in aggressive marketing during the World Cup; Lehu continued to increase investment in e-sports and sports; Monster launched a summer offensive this year, and although still loss-making, its performance is on the rise. Traditional brands are making continuous efforts, and new brands are emerging one after another. "In the future, both sides should negotiate amicably and jointly maintain Red Bull's leading position in China's functional beverage market, rather than continuing to fight and destroy the brand," Jing Linbo said. Source: Beijing Business Today -END-