The long-running dispute over the red can packaging between Wanglaoji and JDB has finally been resolved. Today, the Supreme People's Court publicly announced its ruling in the first courtroom on two appeals concerning the unauthorized use of well-known product-specific packaging and decoration, filed by appellant Guangdong JDB Beverage Food Co., Ltd. (JDB) against respondents Guangzhou Wanglaoji Big Health Industry Co., Ltd. (Big Health) and Guangzhou Pharmaceutical Holdings Limited (GPHL).
The Supreme People's Court's final judgment held that both GPHL and JDB have made significant contributions to the formation of the packaging and decoration rights of the 'Red Can Wanglaoji Herbal Tea', and they can jointly enjoy these rights without harming the legitimate interests of others.
On July 6, 2012, GPHL and JDB filed lawsuits on the same day, each claiming exclusive rights to the packaging and decoration of the 'Red Can Wanglaoji Herbal Tea' and alleging that the other's red-can herbal tea products constituted infringement. The Guangdong Higher People's Court's first-instance judgment held that GPHL was the rightful owner of the packaging and decoration rights, and that Big Health's production and sale of red-can herbal tea under GPHL's authorization did not constitute infringement. Since JDB did not enjoy these rights, its production and sale of red-can herbal tea with 'Wanglaoji' on one side and 'JDB' on the other, or 'JDB' on both sides, constituted infringement. The first-instance court ordered JDB to cease infringement, publish a statement to eliminate the impact, and pay GPHL 150 million yuan in economic damages and over 260,000 yuan in reasonable enforcement costs.
JDB appealed both first-instance judgments to the Supreme People's Court. The Supreme Court's final judgment held that the well-known product in this case is 'Red Can Wanglaoji Herbal Tea', and the overall content on the can, including the yellow 'Wanglaoji' text, red background color, patterns, and their arrangement, constitutes the unique packaging and decoration of the well-known product. Both GPHL and JDB claimed rights to this packaging. Specifically, as the owner of the 'Wanglaoji' trademark, GPHL argued that the trademark is an inseparable part of the packaging and plays a significant role in indicating the source of the product, so consumers would naturally associate the red-can herbal tea with the trademark owner, and the formula or taste would not affect consumer recognition. As the former actual operator of the red-can herbal tea, JDB argued that the packaging rights and the trademark rights are independent and do not affect each other. Consumers prefer the red-can herbal tea produced by JDB with a specific formula, and since JDB used the packaging in close connection with the product, the packaging rights should belong to JDB.
The Supreme Court considered the historical development of the red-can herbal tea, the cooperation background of both parties, consumer perception, and fairness principles. Since GPHL and its predecessors, as well as JDB and its affiliates, have each played a positive role in the formation, development, and goodwill of the packaging rights, awarding the rights entirely to one party would lead to an obviously unfair result and could harm the public interest. Therefore, under the principles of good faith, respect for consumer perception, and without harming others' legitimate interests, GPHL and JDB can jointly enjoy the packaging rights. Consequently, the claims by GPHL that JDB's red-can products infringed its rights, and by JDB that Big Health's products infringed its rights, were both rejected.
The Supreme Court also noted that the intellectual property system aims to protect and encourage innovation. Laborers who create and accumulate social wealth through honest labor and fair dealing should be protected by law. Judicial protection of intellectual property should maintain an orderly, fair, and vibrant market environment and provide clear legal expectations to the public. Intellectual property disputes often arise from complex historical and practical backgrounds, and the division of rights and balance of interests are intertwined. Handling such disputes requires full consideration of historical causes, current usage, consumer perception, and other factors, with the basic principles of upholding good faith and respecting objective reality, strictly following legal guidance, and resolving disputes fairly and reasonably.
Based on these principles, the Supreme Court confirmed that both parties can jointly enjoy the packaging rights without harming others' legitimate interests. Both GPHL and JDB have made positive contributions to the accumulation of the 'Wanglaoji' brand's goodwill. While effectively enhancing their corporate visibility, they have also gained substantial market benefits. However, after the termination of the trademark licensing relationship, the continuous intellectual property disputes and huge amounts involved have raised public concerns and may damage the companies' social evaluation. In this regard, both parties should act with mutual understanding and reasonable avoidance, implement the judgment in good faith, uphold corporate social responsibility, cherish their business achievements, respect consumer trust, and strive to strengthen the national brand and provide better products to consumers through honest, trustworthy, and standardized market behavior.
In response, JDB quickly issued a statement on its official website expressing 'sincere gratitude'.
JDB's external spokesperson, Feng Zhimin, director of the Chairman's Office, said: 'We thank the Supreme People's Court for its fair and just ruling on the red can packaging case. JDB's achievements today would not have been possible without the nurturing of the times, the understanding and support of the Party, governments at all levels, many partners, and hundreds of millions of consumers. JDB will continue to actively respond to the Belt and Road Initiative, strengthen the herbal tea industry, promote Chinese herbal tea culture to the world, and build JDB into a national brand.'
'In the future, as long as it is beneficial to the development of the herbal tea industry, JDB will do it,' Feng Zhimin added.
Subsequently, Wanglaoji issued an official statement saying it 'respects the result'.
What industry experts say:
Wang Haiying, general manager of Beijing Jingrui Zongheng Marketing Consulting Co., Ltd., analyzed that the success of herbal tea is the result of favorable timing, geographical advantage, and human harmony, as well as intensive cultivation in the catering channel. Attributing Wanglaoji's success solely to 'fear of getting heaty' or the 'red can packaging' is too one-sided. The lawsuits between JDB and Wanglaoji over these issues are of little significance, just a matter of pride. Now the attrition war between the two at the terminal is intensifying, and changing the can color won't solve it. However, based on my understanding of JDB's original management team's character, the possibility of switching back to the red can is relatively high.
Han Liang, deputy secretary-general of the China Planning Experts Committee and founder of Hexiao Planning Agency, believes that the red can dispute has come to an end, and any further disputes can only be attributed to 'hype'. Whether JDB switches back to the red can is of little practical significance, but it cannot be ruled out that it may reintroduce the red can packaging to disrupt competitors, as some consumers may still have a 'special preference' for the red can JDB.
Zhang Shengjun, general manager of Beijing Jintian Shengde·Yun Think Tank Business Department, believes that from a market perspective, JDB's future product line should include both gold and red cans in parallel, with a longer price range, to further expand the herbal tea market space and promote market growth.
Tan Xun, president's special assistant at Gaozheng Group, who has many years of FMCG experience, also believes that JDB should maintain the gold can while using the red can to grab market share.
Yu Jianmin, dean of the First Yingxiao.com Marketing Research Institute and industry observer, believes that the gold can consumption has matured and its main position will not be shaken. Switching to the red can only has strategic defensive significance.
Ni Xukang, chairman of Shanghai Jinshang Information Technology Co., Ltd., bluntly stated that JDB has paid too much to keep the gold can alive, so there is no need to wade into muddy waters again.
Jiang Jun, CEO of Shenzhi Precision Marketing, holds the same view. JDB should proactively give up the red can and draw a clear line. Future market competition is not just about the red can. The red can is important, but it is history and a burden. It is better to decisively abandon it and actively differentiate from Wanglaoji, which is a sign of progress. JDB now has the state-owned background of Beijing Enterprises and COFCO, so it has more confidence, and the competition between the two will be more 'interesting'.
Extended reading:
COFCO Packaging Invests in Qingyuan JDB
On August 10, COFCO Packaging announced that its subsidiary, COFCO Packaging Investment, signed a framework agreement with Qingyuan JDB Herbal Plant Technology and its existing shareholders. The subsidiary intends to invest in Qingyuan JDB in exchange for approximately 30% equity. The actual percentage of equity to be invested, the amount and method of capital injection, and other terms of the proposed investment are subject to further negotiation and will be determined in a formal agreement.
The announcement stated that Qingyuan JDB is mainly engaged in the research, development, production, processing, and sale of fruit and vegetable beverages, tea beverages, herbal tea, etc. The existing shareholders are the holders of all equity in Qingyuan JDB.
The announcement said that if the proposed investment is implemented, the group will work with the existing shareholders to build Qingyuan JDB into an operating platform integrating brand, concentrate, and supply and marketing.
In addition, the proposed investment can enhance the group's profitability and consolidate its leadership in the packaging industry. The proposed investment allows the group and JDB Group to leverage their respective resource advantages to enhance the market influence of JDB herbal tea, thereby promoting the healthy and sustainable development of the herbal tea industry and achieving a win-win situation.
Editor's note: What do you read from these two news items?
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