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The "Du Kang" trademark dispute has lasted for more than 20 years; Luoyang Du Kang and Baishui Du Kang have engaged in complaints and lawsuits in multiple places; courts in the two companies' locations have "different opinions."

After 20 years, the "Du Kang" dispute remains unresolved.

On September 11, the case of Shaanxi Baishui Du Kang Wine Industry Co., Ltd. ("Baishui Du Kang") suing the Beijing Chaoyang District Administration for Industry and Commerce was heard in the Beijing Chaoyang District People's Court, with Luoyang Du Kang Holdings Co., Ltd. ("Luoyang Du Kang"), the first Chinese liquor company to list overseas, participating as a third party.

This is one of many lawsuits between Baishui Du Kang and Luoyang Du Kang over the "Du Kang" trademark. Since 2008, the two sides have conducted multiple lawsuits over trademark issues, with litigation locations including Shaanxi and Henan.

The "Du Kang" trademark, which became famous due to Cao Cao's line "What can relieve worries? Only Du Kang" from a thousand years ago, has become the trigger for the trademark dispute between the two companies.

The trademark dispute between Wang Laoji and JDB has concluded, but the "Du Kang" trademark dispute remains intertwined in complaints and lawsuits. In previous rounds of complaints and lawsuits, both sides have had wins and losses.

Timeline of the Du Kang trademark dispute:

  • In the 1970s, Yichuan Du Kang, Ruyang Du Kang, and Baishui Du Kang were established, producing Du Kang liquor.
  • In the early 1980s, all three Du Kang distilleries applied for the "Du Kang" trademark.
  • In 1981, under the coordination of multiple government departments, Yichuan Du Kang registered the "Du Kang" trademark, which was jointly used by Ruyang Du Kang and Baishui Du Kang.
  • In 1983, the Trademark Law was implemented. In the same year, Yichuan Du Kang signed cooperation agreements with Ruyang Du Kang and Baishui Du Kang, licensing the "Du Kang" trademark to the latter two companies.
  • In 1992, when the "Du Kang" trademark entered its renewal period, the three companies again disputed over the trademark, and coordination by regulatory authorities failed to resolve the issue.
  • In December 1996, upon application by Baishui Du Kang, the Trademark Office approved its "Baishui Du Kang" trademark.
  • In 2009, Yichuan Du Kang and Ruyang Du Kang merged, both under Luoyang Du Kang, and the "Du Kang" trademark was used by Luoyang Du Kang.
  • In 2016, Baishui Du Kang sued Luoyang Du Kang for commercial defamation in the Weinan Intermediate Court. The Shaanxi High Court made a second-instance judgment supporting Baishui Du Kang's claim. Luoyang Du Kang, dissatisfied with the judgment, prepared to appeal.
  • In 2016, authorities in Tianjin, Beijing, and other places issued "Orders to Correct" to local companies for prominently using "Du Kang" on Baishui Du Kang liquor, infringing on trademark rights.
  • In May 2016, Luoyang Du Kang sued Baishui Du Kang for trademark infringement in the Luoyang Intermediate Court. The first-instance judgment ordered Baishui Du Kang to stop producing and selling goods infringing the "Du Kang" trademark and to pay damages. Baishui Du Kang has appealed.
  • In September 2017, Luoyang Du Kang planned to sue Baishui Du Kang for trademark infringement in Tianjin.

Baishui Du Kang sues Beijing Chaoyang Administration for Industry and Commerce

The September 11 lawsuit in Chaoyang District Court stems from an "Order to Correct" issued by the Beijing Chaoyang District Administration for Industry and Commerce.

On August 24, 2016, the Chaoyang Branch determined that the series of liquor products produced by Baishui Du Kang constituted infringement of the exclusive right to use the registered "Du Kang" trademark (held by a Luoyang Du Kang subsidiary) and ordered Yonghui Superstores Co., Ltd. Chaoyang Beiyuan Branch to stop selling the involved liquor.

Baishui Du Kang filed an administrative lawsuit in court, requesting the court to revoke the "Order to Correct" issued by the Chaoyang Branch.

This is one of the latest cases in the "Du Kang" trademark dispute between Baishui Du Kang and Luoyang Du Kang.

Luoyang Du Kang's predecessor was Xianglong Holdings, listed in Singapore. After acquiring and integrating Yichuan Du Kang and Ruyang Du Kang, the company was renamed Luoyang Du Kang. Luoyang Du Kang listed on the main board of the Singapore Exchange in September 2008 and issued Taiwan depositary receipts on the Taiwan Stock Exchange in March 2011, making it the first Chinese liquor company to list overseas.

In fiscal year 2016, the Du Kang brand liquor series brought in approximately 870 million yuan in revenue. Luoyang Du Kang stated that although its gross profit and gross margin increased year-on-year in fiscal 2016, it still incurred losses because the group's sales and distribution expenses increased by 35.4% year-on-year to 220 million yuan, mainly due to higher advertising and promotional expenses for its promotion in Henan Province.

Business registration information shows that Baishui Du Kang was established in March 2002, with the industrial and commercial approval date of December 2016, registered address at Dukang Town, Baishui County, Weinan City, Shaanxi Province, and business scope including liquor brewing, research, development, production, and sales, as well as research and development of fruit juice, mineral water, and beverages. Baishui Du Kang's shareholders include Shaanxi Xideng Hui Technology Industrial Co., Ltd., Shaanxi Dukang Wine Industry Group Co., Ltd., etc., with Zhang Hongjun as chairman. Baishui Du Kang has not publicly disclosed its revenue and profit figures. As of the time of writing by the Beijing News reporter, Zhang Hongjun had not responded to inquiries about Baishui Du Kang's current revenue and profit status.

Similar cases have also occurred in Tianjin. Documents obtained by reporters show that the Tianjin Municipal Quality and Supervision Commission issued no fewer than 9 "Orders to Correct" to relevant companies, stating that some companies "prominently used 'Du Kang' on Baishui Du Kang liquor," constituting infringement of registered trademark rights, and ordered the companies to stop selling the above-mentioned liquor.

Jiuxian.com's 2016 semi-annual report revealed that on June 16, 2016, the Tianjin Municipal Quality and Technical Supervision Bureau issued an "Order to Correct," ordering Jiuxian.com E-commerce (Tianjin) Co., Ltd. to immediately stop selling the above-mentioned liquor that infringed registered trademark rights due to prominently using "Du Kang" on Baishui Du Kang liquor.

However, a statement circulated online, allegedly issued by Baishui Du Kang in response to media reports, said that on March 30, 2017, the erroneous administrative penalty imposed by the Tianjin Municipal Quality and Supervision Commission on Baishui Du Kang had been revoked by the Tianjin Heping District People's Court.

Baishui Du Kang Chairman Zhang Hongjun confirmed to reporters on September 8 that the article was indeed issued by their company.

A judgment obtained by reporters shows that the judgment was a first-instance ruling on one of the "Orders to Correct" issued by the Tianjin Municipal Quality and Supervision Commission: Jin Shi Shi Jian Cha Cha Gong Ze Gai Zi [2016] No. 12, requiring the Tianjin Municipal Quality and Technical Supervision Bureau to withdraw the notice and re-make the administrative act.

A complaint obtained by reporters shows that the Tianjin Municipal Quality and Supervision Commission filed an appeal with the Tianjin First Intermediate Court on April 10, requesting the revocation of the above judgment by the Tianjin Heping District People's Court.

Zhang Hongjun did not respond to whether the other 8 "Orders to Correct" had been cancelled.

"Du Kang" and "Baishui Du Kang" trademarks coexist for 20 years

The history of Luoyang Du Kang and Baishui Du Kang dates back to the 1970s. In the early 1970s, Du Kang distilleries were established in Yichuan and Ruyang in Henan Province and Baishui County in Shaanxi Province.

According to "Ten Years of Chinese Trademarks" published by the Trademark Office, at that time, none of the three companies had registered "Du Kang" as a trademark.

In the early 1980s, the Du Kang distilleries in Yichuan, Ruyang, and Baishui in Henan and Shaanxi provinces all competed to register the Du Kang trademark.

On December 15, 1981, after consultation with the Ministry of Light Industry and the Ministry of Commerce, the Trademark Office decided to approve the Du Kang trademark for Yichuan County Du Kang Distillery, with Ruyang and Baishui distilleries using it, under registration number 152368.

On March 1, 1983, the Trademark Law of the People's Republic of China was officially implemented, and the Du Kang trademark faced new issues.

Industry insiders explain that before 1983, trademark registration had no time limit. After the Trademark Law was implemented, it stipulated a validity period of ten years, after which renewal and contracts were required for continued use.

To confirm the legal validity of the use of the Du Kang trademark by the three Du Kang distilleries in Yichuan, Ruyang, and Baishui, in July 1983, the Trademark Office convened a symposium with the responsible persons of the three distilleries to discuss the use of the Du Kang trademark.

The result of the symposium was that the trademark owner, Yichuan Du Kang Distillery, signed trademark license contracts with the other two companies separately.

Reporters exclusively obtained the agreement on the use of the "Du Kang Pai" trademark signed on October 25, 1983, between Yichuan Du Kang Distillery and Baishui Du Kang Distillery.

The agreement stipulated that the "Du Kang Pai" trademark was registered by Yichuan Du Kang and agreed that Baishui County Du Kang Distillery could continue to use it.

When the Du Kang trademark was renewed in 1992, no consensus was reached on the renewal of the "Du Kang Pai" trademark and the renewal of the license agreement.

A judgment obtained by reporters shows that to thoroughly resolve the "Du Kang" trademark dispute, the Trademark Office of the State Administration for Industry and Commerce finally agreed that Baishui Du Kang Distillery could apply to register the "Baishui Du Kang" trademark with a geographical indication. Later, Yichuan Du Kang Distillery handled the renewal of the "Du Kang" trademark.

In March 1995, the Shaanxi Baishui Du Kang side applied to register the "Baishui Du Kang" trademark, which was approved by the Trademark Office in December 1996, with the designated goods being liquor, and Baishui Du Kang Distillery obtained the "Baishui Du Kang" trademark.

A judgment from 2009 shows that in 2001, Yichuan Du Kang applied to the Trademark Review and Adjudication Board of the State Administration for Industry and Commerce to cancel the "Baishui Du Kang" trademark, but the application was rejected. The Board did not cancel the "Baishui Du Kang" trademark because its formation had historical reasons and the two trademarks had been used for a long time, forming different markets.

Henan Du Kang Wine Industry Co., Ltd., a subsidiary of Luoyang Du Kang, sued the Trademark Review and Adjudication Board of the State Administration for Industry and Commerce at the end of 2008, requesting the cancellation of the disputed ruling on the "Baishui Du Kang" trademark, but the first-instance court rejected the lawsuit.

In 2009, Yichuan Du Kang and Ruyang Du Kang merged, and the merged company was renamed Luoyang Du Kang. The "Du Kang" trademark was attributed to Yichuan Du Kang Jiuzu Asset Management Co., Ltd. ("Du Kang Jiuzu Company"), with Luoyang Du Kang holding 49% of Du Kang Jiuzu Company's equity. In September 2012, Du Kang Jiuzu Company signed a general trademark license agreement with Luoyang Du Kang, licensing the "Du Kang" trademark to the latter.

After Luoyang Du Kang integrated the two Du Kang companies in Henan Province and carried out brand promotion, it also filed complaints and lawsuits across the country regarding Baishui Du Kang's "trademark infringement" issues.

"Du Kang" trademark dispute: courts in the companies' locations have different opinions

Previously, Luoyang Du Kang and Baishui Du Kang have engaged in "sword and sword" lawsuits and counterclaims in Henan, Shaanxi, and other places, with both sides winning and losing.

In the lawsuits and counterclaims, besides the companies having different opinions, the courts in the provinces where the two companies are located also have different "opinions." The Luoyang Intermediate People's Court in Henan ruled that Baishui Du Kang constituted infringement, while the Shaanxi High Court held that in the current market, the registered "Du Kang" trademark and registered trademarks containing the words "Du Kang" both legally exist, and Luoyang Du Kang's printing of "the only enterprise holding the Du Kang trademark" on product packaging affected competitors' goodwill.

In April 2016, Luoyang Du Kang applied for evidence preservation in Ruyang County, Henan, and purchased Du Kang 22V liquor at Guocan Department Store in Luolong District, Luoyang City.

The notarized and preserved Du Kang liquor product and its outer packaging bore the "Baishui Du Kang" trademark. The judgment described: on the outer packaging of the product, the two characters "Du Kang" were arranged separately, with the character "Du" having "Bai Shui" text on the upper left, with "Bai" and "Shui" arranged vertically, resembling the character "Quan," and the two characters were significantly smaller than "Du Kang," with lighter text color, making them less likely to attract consumers' visual attention.

Luoyang Du Kang subsequently sued Baishui Du Kang for trademark infringement in court, and the Luoyang Intermediate People's Court filed the case in May 2016.

Luoyang Du Kang argued that Baishui Du Kang, without its permission, prominently used the "Du Kang" trademark on the packaging of its liquor products, which was sufficient to cause consumer confusion and misidentification, infringing on the plaintiff's right to use the registered "Du Kang" trademark.

Luoyang Du Kang requested the court to order Baishui Du Kang to stop prominently using the "Du Kang" text on its produced and sold liquor products and to compensate 30 million yuan.

Baishui Du Kang argued that it was a co-owner of the Du Kang trademark and legally entitled to use it, and claimed that the "Baishui Du Kang" trademark had been registered after long-term use and had high recognition among consumers.

In addition, Baishui Du Kang also argued that the involved products were not produced by it.

The Luoyang Intermediate Court ruled that although the involved products bore the "Baishui Du Kang" trademark, when labeling the name of the "Baishui Du Kang" liquor, the four characters "Baishui Du Kang" were not used as a whole; the characters "Du Kang" and "Bai Shui" were split, with "Du Kang" prominently used and "Bai Shui" very small.

The court held that on the actual product and packaging, the characters "Du Kang" were in a prominent position, identical to Luoyang Du Kang's "Du Kang" trademark, which could easily cause consumer confusion and misidentification, and ruled that Baishui Du Kang constituted infringement of the exclusive right to use the "Du Kang" trademark. It also ordered Baishui Du Kang to pay 15 million yuan in damages.

An appeal obtained by reporters shows that Baishui Du Kang has appealed the judgment. Regarding the appeal, Baishui Du Kang's attorney, Liu Xiaoyan of Beijing Dacheng (Xi'an) Law Firm, told the Beijing News reporter that it was inconvenient to respond.

Baishui Du Kang Chairman Zhang Hongjun also did not respond, stating in a text message on September 8 that during the litigation stage, he could not express any views.

On the other hand, Luoyang Du Kang has also filed complaints with industry and commerce departments in multiple regions across the country, alleging that local companies' sales of Baishui Du Kang products infringed its trademark rights.

Baishui Du Kang also filed a counterclaim against Luoyang Du Kang. In 2015, Baishui Du Kang filed a lawsuit in the Weinan Intermediate People's Court in Shaanxi, requesting the court to order Luoyang Du Kang to stop infringing on Baishui Du Kang's business reputation and product reputation, and to compensate for losses. Baishui County also belongs to Weinan City.

The case was later appealed to the Shaanxi High Court, which made a final second-instance judgment in June this year.

The Shaanxi High Court held in its judgment that Luoyang Du Kang's printing of "the only enterprise holding the Du Kang trademark" on its product packaging, literally, stated a fact, and the statement would not cause consumers to have a mistaken understanding.

However, because the formation of the "Du Kang" trademark is a complex historical process, with several distilleries having shared it, and currently both the registered "Du Kang" trademark and registered trademarks containing the words "Du Kang" legally exist in the market, the word "only" in the expression "the only enterprise holding the Du Kang trademark" is sufficient to create a comparative meaning for consumers.

The Shaanxi High Court held that although literally Luoyang Du Kang stated a true fact, because it was inconsistent with history and objective reality, it was one-sided, easily misleading, and affected competitors' goodwill, constituting commercial defamation.

Regarding Baishui Du Kang's claim that Luoyang Du Kang's complaints to various industry and commerce administrative departments were inappropriate, both courts held that Baishui Du Kang did not provide sufficient evidence to support its claim and could seek relief through other legal channels, so its claim was not supported.

The Shaanxi High Court ultimately upheld part of the Weinan Intermediate Court's judgment, ordering Luoyang Du Kang to stop printing the advertising slogan "the only enterprise holding the Du Kang trademark" on product packaging, and also ordered Luoyang Du Kang to compensate Baishui Du Kang 500,000 yuan in losses and publish a statement in newspapers to eliminate the impact on Baishui Du Kang's business reputation and product reputation.

Regarding the Shaanxi High Court's judgment, Luoyang Du Kang stated: "We cannot accept the judgment." And said it "will continue to appeal for rights protection."

Luoyang Du Kang claimed that its advertising slogan "the only enterprise holding the Du Kang trademark" was true, an objective statement about the "Du Kang" trademark, and it did not fabricate or spread false facts to damage competitors' business reputation or product reputation.

"The most basic function of a trademark is to distinguish the source of goods and services. The law requires distinction, and trademark owners require distinction. If 'Du Kang' and 'Baishui Du Kang' are not distinguished, that is not allowed by law, not acceptable to enterprises, and not understood by consumers," said Luoyang Du Kang.

Luoyang Du Kang claimed that non-standard trademark use had caused consumer confusion and misidentification, causing trouble for the company, which is why it made the trademark declaration, and "the court did not fully consider this factor."

Luoyang Du Kang said it has prepared to file an appeal with the Supreme People's Court.

Baishui Du Kang: "Hope both sides can sit down and talk"

Regarding the lawsuits between the two sides, Baishui Du Kang's Zhang Hongjun, in a text message to reporters on September 8, said that during the litigation stage, he would not express any views.

Zhang Hongjun also replied that after research and decision by the company and the party committee, it would file lawsuits against relevant media for violating relevant regulations and causing negative impacts and losses to the company, and report to relevant departments.

On the same day, Zhang Hongjun called the Beijing News reporter, saying that these lawsuits have lasted for many years, "I don't want to fight anymore," and hoped both sides could sit down and talk.

Zhang Hongjun proposed a model where the two companies "do your own thing, and I do mine," citing Coca-Cola and Pepsi as examples.

Regarding this proposal, Luoyang Du Kang, in response to the Beijing News reporter's interview, said that as long as it is a negotiation based on trademark and relevant legal consensus, the company's door is always open.

Luoyang Du Kang also stated that Baishui Du Kang has been continuously licensing its "Baishui Du Kang" trademark across the country in recent years, and its non-standard use has caused consumer confusion and misidentification. "In this regard, we hope the companies involved can seriously think about and handle this."

Source: Beijing News

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