The truth about the dispute between Wahaha and Danone

1. The reason why the joint venture Danone obtained the controlling stake

In 1996, Hong Kong Peregrine negotiated with Wahaha Food Group Company Investment cooperation, and then the strategic partner Danone Group was brought in to discuss cooperation. It was negotiated that Wahaha Food Group Co., Ltd. and Wahaha Food City Co., Ltd. would invest in existing factories, equipment, and land, and Hong Kong Peregrine and Danone would invest in cash. When the joint venture contract was formally signed, the five joint ventures were invested by Jinjia Investment Company established in Singapore by Peregrine and Danone, forming a joint venture with Wahaha accounting for 49% and Jinjia accounting for 51%. Mr. Liang Botao of Peregrine will serve as the first director, while Qin Peng and Du Haide of Danone will serve as directors. In 1996, Peregrine appointed Huo Jianhua as director. In April 1998, Peregrine's directors were replaced by directors sent by Danone. It was later learned that Peregrine had sold its equity to Danone due to the impact of the Asian financial crisis. Jinjia Investment Company became the exclusive holding company of Danone. Therefore, the joint venture between Wahaha and Danone became Danone Holdings. At the beginning, Wahaha accepted the lessons of some state-owned enterprises that lost operating control and harmed the interests of employees after joint ventures. The focus was on operating rights and the interests of employees, and it did not understand the rules of the game for capital operations. Therefore, Baihaha When Fulin sold its equity to Danone, since it was selling Jinjia's equity, there was no need to consult the Chinese side, and the Chinese side had no chance to obtain a controlling stake. Judging from the current situation, Danone actually designed a trap for China with premeditation and achieved its purpose of capital control.

2. The truth about the trademark dispute between Wahaha and Danone

Danone stated to the media that when signing the joint venture contract, it also signed a trademark transfer agreement, and it was approved by the government seal. , therefore, the joint venture company owns the ownership of the trademark, and since the right to change the trademark and the registration of change in trademark ownership have not been fully determined, a use contract was signed in which the joint venture company exclusively has the right to use the Wahaha trademark. In fact, Wahaha did sign a trademark transfer agreement with the joint venture company, and the local government also agreed and stamped it. However, the authority of the local government to stamp and approve is to allow Wahaha to apply for transfer to the National Trademark Office, and the real approval power belongs to the National Trademark Office. . After Wahaha applied for approval, the State Trademark Office did not approve it from the perspective of protecting its own national well-known trademarks and well-known brands. Therefore, the trademark transfer agreement did not take effect. The foreign party also went to the Trademark Office to negotiate and found out why the Trademark Office had not approved and disapproved the trademark transfer agreement, so it also requested to sign a trademark license contract. Although the trademark license contract is a license in name, it is actually a disguised transfer agreement, which deprives the Chinese party of ownership and stipulates that the Chinese party must obtain the approval of the joint venture company's board of directors before using the trademark. Foreign parties know that according to the trademark laws at that time, trademark licensing contracts must also be compulsorily filed. This disguised trademark licensing contract is also unlikely to be approved by the Trademark Office. Therefore, it proposed two yin and yang contracts that were completely inconsistent in content, reported to the Trademark Office for filing and actual execution, and required China to enforce the contract that had not been filed with the Trademark Office. This not only deceived the government regulatory authorities, but also ignored Chinese laws. behavior. According to the mandatory filing requirements at that time, contracts that have not been filed with the Trademark Office are invalid. The valid contract should be the simplified contract that was reported for filing at that time. This valid contract has no relevant restrictive clauses for the Chinese party, and the contract is valid. The contract stipulates that the trademark license period is the validity period of the trademark (according to the provisions of the Trademark Law, the trademark validity period is ten years). Therefore, from the signing of the trademark license contract in 1999 to the present, the license period has basically expired.

Since the "Trademark License Contract" originally licensed the joint venture between Wahaha and Jinjia, in the past ten years, among the 39 joint ventures established by our company and Danone, in addition to the original Danone Jinjia Company, In addition, there are three other Danone investment companies, which have far exceeded the scope of the original Wahaha Jinjia joint venture. Therefore, the two parties signed the "Amendment Agreement No. 1" of the contract in October 2005 to expand the permissions of the original contract. and re-licensed product scope, and changed the original Wahaha Jinjia joint venture to Wahaha Danone joint venture, but did not increase the licensing fee.

The above is the process of modifying the contract three times as stated by Danone to the media. In fact, what the two parties modified three times was not the joint venture contract, but the trademark transfer agreement signed at the same time as the joint venture contract was signed at that time.

Attachment: The contract terms and relevant legal provisions at the time

lTrademark Transfer Agreement

4. Transfer Procedure

4.1 In this Agreement After signing and within 90 days after Party B is issued the business license, Party A and Party B shall submit the relevant trademark registration transfer application and the original registration certificate of the trademark to the China Trademark Office. Party A shall assist and cooperate with Party B so that Party B can handle other relevant procedures for trademark registration and transfer in China. As for trademarks registered and applied for registration outside China, Party A and Party B shall cooperate with each other to handle the procedures for transferring such trademarks to Party B.

4.2 If this Agreement requires any authorization or approval from the Chinese government, or requires registration or transfer procedures with government agencies in China or other countries, Party A shall obtain authorization and approval or complete these registration procedures. The parties shall cooperate with each other to obtain all necessary governmental authorizations and approvals.

Relevant provisions:

"Trademark Law (Revised in 1993)" (National People's Congress)

Article 25 If a registered trademark is transferred, the transferor and The transferee shall submit an application to the Trademark Office at the same time. The transferee shall ensure the quality of the goods using the registered trademark.

After the transfer of a registered trademark is approved, it will be announced.

"Several Provisions on Enterprise Trademark Management (1995)" (State Administration for Industry and Commerce)

Article 8 When an enterprise transfers its trademark, it shall comply with relevant trademark management laws, regulations and policies, and Submit the trademark transfer agreement and trademark evaluation report to the Trademark Office for approval.

The Trademark Office will not approve or reject transfer applications that may cause misunderstanding, confusion or other adverse effects.

lTrademark License Contract

Party A (and Wahaha Enterprise as defined in Appendix 2 of this contract) is the owner of the trademark (listed in Appendix 1)

According to (i) Article 5.3 of the joint venture contract, and (ii) the trademark transfer agreement signed between Hangzhou Wahaha Group Company and Hangzhou Wahaha Food Co., Ltd. on February 29, 1996, and (iii) Hangzhou Wahaha Group According to Article 1.1 of the asset transfer agreement signed between the company and Hangzhou Wahaha Food Co., Ltd. on February 29, 1996, Party A has transferred the ownership of the trademark to Hangzhou Wahaha Food Co., Ltd.

Party A and Party B hereby agree to sign this licensing contract to set out the rights and obligations of both parties during the period when the China Trademark Office is reviewing and approving the trademark transfer registration, and agree that if the approval is rejected, both parties will also execute according to this contract. .

Article 2 Rights and License

2.1 According to Article 2.6, Party A agrees to provide Party B with an exclusive and irrevocable right and trademark license to use during the contract period. To manufacture and sell products in domestic and foreign markets, including the right to use the word "Wahaha" as part of a trade name or company name. According to the terms and conditions stipulated in the joint venture contract, Party B shall have the right to license the trademark use only to the Wahaha joint venture.

2.2 Party A and Party B shall sign a simplified license contract and an application form for filing. If Party B submits proof that the Trademark Office vetoes the registration of the use license between Party B and Wahaha/Jinja joint venture in the name of Party B, Party A agrees and promises (when requested by Party B) to take all necessary actions to register such use license in its own name. License filing.

2.4 Party A and Party B understand and agree to sign the simplified license contract only for the purpose of registration with the China Trademark Office and the Administration for Industry and Commerce, and all terms and conditions governing the use of trademarks are included in this contract middle. Party A and Party B further understand and agree that if there is any inconsistency between this contract and the simplified license contract, the terms of this contract shall prevail.

2.5 This contract shall not be regarded as part of the trademark transfer agreement, and even if the trademark transfer agreement is not approved by the China Trademark Office for any reason, this contract will remain valid.

2.6 Both parties agree that the exclusive license only applies to the products in this contract. Party A can use the trademark in the production and sales of other products in the future, and these product items (I) have been submitted to Wahaha/JINJA The board of directors of the joint venture (the shareholding ratio of the Wahaha/JINJA joint venture is 49:51) will consider it, but the Wahaha/JINJA joint venture decides not to participate in the project (or the board of directors of Wahaha/JINJA does not make a decision within 30 days after providing the written plan) , or (iii) the production, sale and promotion of the product will not adversely affect the image of the trademark.

Article 5 Consideration (Price)

Party A hereby grants Party B the exclusive right and license to use the trademark on the products in accordance with Article 2.6. The consideration (Price) includes the RMB 50,000,000 as part of Party A's contribution to Party B's registered capital, and an additional RMB 50,000 paid by Party B to Party A as the balance of the trademark value stipulated in Article 1.1 of the trademark transfer contract, 000 yuan.

Article 6 Term and Early Termination

6.2 This contract shall remain fully valid until the China Trademark Office approves the trademark transfer agreement or until the joint venture contract is terminated, whichever is earlier allow.

Other Terms of Article 8

8.5 If any provision of this contract is held to be invalid, illegal or unenforceable by any court, either party shall have the right to terminate this contract or notify the other party in writing. Party, declares that such invalid, illegal and unenforceable provision shall not affect any other provision of this contract. In the event that such statement is made, the description and interpretation of this contract shall be as if such invalid, illegal or unenforceable provisions had never appeared in this contract.

Relevant regulations: "Several Provisions on Enterprise Trademark Management (Amended in 1998)"

Article 7 A trademark license contract shall be reported to the Trademark Office for filing. For trademark license contracts that do not comply with relevant trademark management laws, regulations and policies, the Trademark Office will not record or announce them.

"Measures for the Registration of Trademark License Contracts" (Trademark Office of the State Administration for Industry and Commerce, August 1, 1997)

Article 3: The conclusion of a trademark license contract shall be voluntary. and the principle of good faith.

No unit or individual may use the license contract to engage in illegal activities and harm the interests of the public and consumer rights.

Article 11 If any of the following circumstances occurs, the Trademark Office will not file the record:

(4) The permitted period of use exceeds the validity period of the registered trademark;

Article 16 If the registration is obtained by deception or other improper means, the Trademark Office shall cancel the registration of the trademark license contract and make an announcement.

"Trademark Law (1993 Revision)" (National People's Congress)

Article 23 The validity period of a registered trademark is ten years, calculated from the date of approval of registration.

lTrademark License Contract

1. Rights and License

Party A hereby grants Party B exclusive, irrevocable and sublicensable rights and licenses , use the trademark within the validity period of the trademark to sell the products produced by Party B and operate the services provided by Party B in the domestic and foreign markets.

Relevant legal provisions:

"Measures for the Registration of Trademark Licensing Contracts" (Trademark Office of the State Administration for Industry and Commerce, August 1, 1997)

Eleventh If any of the following circumstances occurs, the Trademark Office will not file the record:

(4) The period of licensed use exceeds the validity period of the registered trademark;

The Trademark Law (1993) (Revised)" (National People's Congress)

Article 23 The validity period of a registered trademark is ten years, calculated from the date of approval of registration.

3. Who is breaching the contract? Has Wahaha breached the contract?

1. Danone proposed that in recent years, Mr. Zong has directly or indirectly established more than 30 companies outside the joint venture company to produce Wahaha products without permission to compete with the joint venture company, and I only found out about this recently. In fact, Wahaha had ten companies in its joint venture with Danone and Peregrine, and Danone only invested in five. At that time, Wahaha also hoped that Danone would invest in the remaining companies, but in the end Danone did not invest. This included Wahaha’s counterpart support for the Three Gorges Project. Fuling Company in the reservoir area. Moreover, the resolution of the first meeting of the joint venture company's board of directors required the joint venture company to sign seven contracts, including a trademark use agreement and a product processing agreement with Wahaha's non-joint venture company. Therefore, the non-joint venture company signed the agreement in the early stages of the joint venture. already exists.

2. Since Wahaha needs investment to develop, but Danone is unwilling to invest, the number of non-joint venture companies has increased year by year. However, in order to abide by the contract, Wahaha sells all the products produced by non-joint venture companies through the joint venture company. In fact, they are processed by the joint venture company, and Danone entrusts its designated audit agency to conduct audits every year. This should be reflected in the financial accounts of the sales company. It's very clear, there's no way he doesn't know it.

3. The use of Wahaha’s trademark on products not produced by the joint venture company is approved by the board of directors of the joint venture company. Article 2 of the No. 1 Amendment Agreement to the Trademark Licensing Contract signed by both parties on October 12, 2005 also states that the licensed Wahaha Company (not included in the definition of Wahaha Danone Joint Venture) also has the right to obtain the rights granted by the joint venture company. trademark license, and also listed a list of twenty-seven non-joint venture companies.

4. After Danone acquired Wahaha's non-joint venture without Wahaha's consent, in order to exert pressure, it proposed that Wahaha breach the contract and produce products that compete with the joint venture. After Wahaha proposed to stop processing and producing products for the joint venture company, rebrand them, and set up a separate marketing company to sell the products itself, Danone asked the government to coordinate and required Wahaha to immediately transfer the existing products produced by non-joint venture companies to the joint venture's sales company. Sale.

5. The real breach of contract was Danone. Although the joint venture contract between the two parties stipulates that the Chinese party will not engage in any production and operating activities that compete with the joint venture's business, and the foreign party will not harm the interests of the joint venture, which is an unequal clause in itself. In fact, in 2000, Danone acquired 92 equity stake in Robust, which was Wahaha’s biggest competitor at the time. After Danone injected funds, it increased its competitiveness with the joint venture with Wahaha, allowing Wahaha to compete with Robust in the bottling industry in 2001. The sales profit per ton of aquatic products dropped from 165.02 yuan in 2000 to 135.93 yuan in 2001, causing a profit loss of 34.89 million yuan that year. The profit per ton of AD calcium milk dropped from 870.26 yuan in 2000 to 760.75 yuan in 2001, causing a profit loss that year. The loss was 48.795 million yuan, and has continued to decline since then, which has brought huge losses to the interests of the joint venture. Moreover, after Wahaha sent a letter to Mr. Lu Bu, chairman of Danone, to raise objections, it not only ignored it, but intensified its efforts to acquire 50 shares of Shanghai Zhengguanghe. , Huiyuan Group’s 22.18 stake, Shanghai Guangming Yogurt and Preserved Milk projects in the dairy industry 45.2 stake, and the acquisition of a series of companies that compete with the joint venture company, including 49 stake in Mengniu Dairy, seriously damaged the interests of the joint venture company.