Recently (November 25), a judgment from the Beijing High People's Court was made public, bringing the long-dormant Red Bull dispute back into the spotlight. Notably, this judgment is the first to provide a relatively substantive outcome in the multiple lawsuits involving Red Bull.

This case comes just over a month after Yan Bin lost his lawsuit in Thailand. On August 20, 2019, the Thai court of second instance rejected Yan Bin's appeal, affirming the legality of the resolution to remove Yan Bin, Yan Danhua, Zhang Ligang, and Fei Xiaoxuan from their positions as directors of Red Bull Vitamin Drink Company, as well as Yan Bin's removal as chairman and legal representative.

With consecutive defeats, the dispute over the Red Bull trademark between Huabin Group and TCP Group seems to be nearing a resolution.

A careful reading of the judgment reveals several "hidden treasures"—evidence and clues not previously disclosed. Let me analyze them for you.

-01- Court Confirms: Trademark Belongs to TCP Group This is the first time China has legally confirmed the ownership of the Red Bull trademark. The lawsuit was initiated by Red Bull Vitamin Drink Company (referred to as Red Bull Beverage Company), controlled by Huabin Group Chairman Yan Bin. In this lawsuit, Red Bull Beverage Company raised two core demands, but both were rejected by the court.

Red Bull Beverage Company's Two Core Demands and Analysis:

  • Demand 1: Red Bull Beverage Company requested confirmation that it enjoys legal rights to the Red Bull series trademarks. During the proceedings, the company clarified its request: to confirm that the "Red Bull series trademarks" are solely owned by Red Bull Beverage Company, or if not, to confirm that they are jointly owned by Red Bull Beverage Company and TCP Group. This demand was rejected.

  • Analysis: Red Bull Beverage Company has repeatedly played the "sympathy card" in official statements, emphasizing its years of hard work and contributions in the Chinese market. In this lawsuit, it sought to claim trademark rights based on its contributions, but naturally, this did not hold up.

In the evidence submitted, Red Bull Beverage Company mostly provided self-authored materials to demonstrate its contributions to the Chinese market and the immeasurable value it created for the brand. However, the law requires objective evidence. In contrast, TCP Group presented multiple trademark licensing contracts during the trial to prove the licensing relationship between the two parties.

Moreover, over the past two decades, both parties have recognized this relationship. Legally, Red Bull Beverage Company lacks factual and legal basis. Therefore, the court ruled that the ownership of the "Red Bull series trademarks" is clear and belongs to TCP Group.

While Red Bull Beverage Company unilaterally emphasized its contributions, it also reaped enormous wealth from operating Red Bull over the past 20 years, building a vast business empire and securing Yan Bin's position on the rich list.

According to Caijing, the Xu family also discovered that Yan Bin had used related-party transactions to transfer funds from Red Bull Beverage Company to his own companies. The Xu family filed a lawsuit against Yan Bin with Inter Biopharma Holdings Limited as the plaintiff.

Public records show that Yan Bin had previously filed a jurisdictional objection, arguing that he was not a Chinese citizen but a Thai citizen, and that Beijing was neither his domicile nor habitual residence (this was rejected). The case is now under the Supreme People's Court's International Commercial Court. In terms of both reason and fairness, claiming ownership of others' property based solely on contributions is untenable.

No wonder a netizen commented on Yan Bin's actions: "After renting a house for over 20 years and making money, he treats the house as his own and even asks the landlord for a huge renovation fee." Not to mention that this tenant-manager may have also been involved in diverting the house's operating income.

Civil Ruling (2017) Supreme Court Min Xia Zhong No. 241

  • Demand 2: Red Bull Beverage Company requested that TCP Group pay advertising and promotional expenses totaling RMB 3.753 billion. This demand was rejected.

  • Analysis: Red Bull Beverage Company argued that, based on the principle of fairness, TCP Group, while enjoying the benefits of the "Red Bull series trademarks," should reasonably bear the advertising costs incurred by Red Bull Beverage Company for these trademarks.

Since 1996, Red Bull Beverage Company and related Red Bull enterprises have invested heavily in advertising and promotion for the Red Bull brand. This substantial cost has also resulted in significant financial expenditures for Red Bull Beverage Company. It was precisely the long-term, sustained investment and cultivation by Red Bull Beverage Company and related enterprises that brought the Red Bull trademark to its current value.

The court held that Red Bull Beverage Company did not provide evidence to prove that it had agreed with TCP Group on the sharing of advertising costs for the "Red Bull series trademarks." As a licensee, Red Bull Beverage Company could decide whether to conduct market promotion to gain consumer favor and market share. Furthermore, Red Bull Beverage Company had no evidence that the advertising activities were carried out at the request of TCP Group, nor did TCP Group gain additional commercial benefits beyond trademark licensing fees from increased product sales due to Red Bull Beverage Company's promotions.

Since Red Bull Beverage Company acted out of its own commercial interests and had already included the advertising costs in its operating expenses, its request for TCP Group to bear these costs lacked factual and legal basis. Therefore, the court did not support the claim.

-02- Huabin Responds with Statement, Dissatisfied with the Outcome

Once the case was reported, it immediately attracted high industry attention. As news spread and time passed, on November 28, Red Bull Beverage Company issued a statement saying it would appeal. The first defeat was not only a setback for Huabin in terms of operations but also brought astronomical litigation costs.

According to the judgment, the case acceptance fee was RMB 18,806,800, borne by Red Bull Beverage Company. The property preservation fee was RMB 5,000, also borne by Red Bull Beverage Company. In other words, Huabin must bear a total litigation cost of 18,811,800 yuan (nearly 20 million). If it appeals, it will have to pay another substantial case acceptance fee to the court. Truly "rich and willful."

According to incomplete statistics, to delay time, Huabin has filed and then withdrawn at least four lawsuits, each costing hundreds of thousands of yuan.

Previously, Red Bull Beverage Company had filed a lawsuit based on a trademark licensing agreement (later voluntarily withdrawn).

However, for Huabin, appealing is the only option. TCP Group also pointed out in a subsequent statement that the frequent lawsuits are Huabin's tactic to delay time. Only by continuously filing lawsuits can Huabin buy more time to negotiate and potentially secure vested interests.

Ni Songhua, former executive president of Huabin Group, once said that Red Bull business accounts for about 90% of Huabin Group's cash flow. According to previously released performance data from Huabin FMCG, over 90% of its revenue comes from Red Bull. Therefore, losing Red Bull means losing everything, so Huabin must fight to the end.

-03- Speculation on the Case's Future Development

The announcement of this judgment will inevitably affect the morale of both sides. To turn the tide, Huabin will take actions to control the situation. Here are some bold speculations from the author, not conclusions, for those concerned about the event to consider or judge.

Speculation 1: A Head-On Market Battle Next Year: Red Bull Vitamin vs. Red Bull Anji or + Thai Imported Red Bull

According to the author's understanding, Huabin has already begun preparing to increase distributors' task volumes for next year. Some distributors have reported that salespeople have already hinted that next year's Red Bull tasks will be significantly increased.

As mentioned in previous reports, many distributors simultaneously handle both old Red Bull and Anji. Once Huabin raises task volumes and pressures distributors, many old Red Bull distributors will not have extra funds to sell Anji. Huabin will push inventory to distributors, who will then push it to terminals. Old Red Bull will definitely invest heavily in seizing more market share, which will inevitably mean less attention to the previously supported War Horse brand.

However, according to feedback from Anji distributors, the news of the case victory is like a shot in the arm. Not only can they sell openly, but it also dispels doubts among terminal store owners and consumers about the brand. For those fighting in the market, it is undoubtedly a huge help. So, even if some distributors have to choose one, TCP Group will intensify efforts to develop more distributors. After all, with the Red Bull brand, distributors will be tempted.

Earlier, there were reports that TCP Group showcased original imported Red Bull products during the China International Import Expo (CIIE). Although these products are not yet visible in the market, it is believed that their launch is only a matter of time.

In its statement, TCP Group also said it would increase investment and input in the Chinese market, explore more business models and cooperation possibilities, and hoped to bring more quality products from its "Brand House" to Chinese consumers, continuously providing high-quality, legal Red Bull products. This shows TCP's confidence and determination in the Chinese market.

Therefore, the author speculates that a fierce market battle in 2020 is inevitable.

Speculation 2: Huabin Will Continue to Appeal Around the 1995 Agreement to Buy Time

The previously mentioned 1995 agreement was brought up again in this trial.

During the proceedings, Red Bull Beverage Company argued that it had signed an "Agreement" with TCP Group in 1995, which stipulated that Red Bull Beverage Company would pay TCP Group an annual royalty fee. Therefore, the trademark licensing fee mentioned by TCP Group was actually the royalty fee stipulated in the "Agreement."

This was intended to prove that TCP Group had not authorized the trademark to Red Bull Beverage Company, but it inadvertently exposed the previously undisclosed agreement.

Earlier, Huabin had publicly stated that there was an agreement proving that the authorization had not expired—not 20 years but 50 years. This should be that agreement. However, Huabin claimed it would release the agreement to the world but never actually did.

In this case, Red Bull Beverage Company seemed to present the agreement during the trial but later explicitly withdrew it, not submitting it as evidence. Therefore, the court did not rule on whether the "50-year validity" clause was effective.

As for why it was raised and then withdrawn, the author speculates that the evidence may indeed have some problems. According to previous media reports, this 50-year agreement likely has no legal effect, being merely empty talk, and the signatories were not the same as the shareholders who later established the joint venture.

So, the initial proposal of the agreement may have been just a stopgap measure for Huabin. It could provide some questionable evidence for Huabin to continue appealing and delay other lawsuits. The delay tactic is beneficial for Huabin, as 80% of its profits come from Red Bull. As long as it is still selling, Huabin does not have to worry about a lack of funds.

We will wait and see what happens next. Whether Huabin will face another embarrassing loss remains unknown. But for TCP Group, the pressure for subsequent battles has indeed been significantly reduced. After all, this judgment legally confirms TCP's ownership of the Red Bull series trademarks, providing a solid legal foundation and basis for TCP's trademark infringement lawsuits against Huabin's Red Bull factories.

With the ruling on this key case, the remaining cases are expected to be resolved more quickly. Time is running out for Huabin.

How will Huabin's worry and unwillingness to lose the trademark operation, and TCP's confidence and determination to expand in the Chinese market, play out? We will continue to follow the development of subsequent cases and report the latest updates.

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