The herbal tea lawsuit between Guangzhou Pharmaceutical and Jiaduobao has begun again. On the morning of June 24, 2016, GPHL claimed 2.9 billion yuan from Jiaduobao on the grounds of trademark infringement. The case was heard in the first instance of the Guangdong Provincial Higher People’s Court.

Guangzhou Pharmaceutical and Jiaduobao have been involved in more than a dozen lawsuits over disputes over trademarks, red can decoration and advertising slogans. The claim amount of 2.9 billion in this lawsuit is not only the largest among more than a dozen lawsuits between Guangzhou Pharmaceutical and Jiaduobao in recent years, but also the largest infringement case in the field of intellectual property rights in China. The focus of the court hearing that day focused on whether Jiaduobao's behavior constituted infringement; if so, how to calculate the amount of compensation and whether Jiaduobao needs to bear joint liability.

How was the claim amount of 2.9 billion yuan obtained? It is reported that when GPHL initially appealed to the Guangdong High Court in 2014, it requested 1 billion, claiming that it had investigated through formal channels the net profit of Jiaduobao's production and sales of Wanglaoji from May 2010 to May 2012. The modification of the amount to 2.9 billion is based on GPHL's calculation of the six Jiaduobao companies from May 2, 2010 to May 19, 2012, that is, the total profit during the period of infringement determined by GPHL was approximately 2.93 billion yuan.

Jiaduobao believes that from April 2011 when GPHL filed for invalid arbitration until the arbitration award was made, the respondent’s use of the trademark involved in the case was not subjectively wrong when the license fee has been paid. It is an act of good faith use and does not constitute trademark infringement. Yao Lan, legal counsel of Jiaduobao Group, further pointed out that Jiaduobao has played a great role in promoting the Wonglaoji brand. GPHL should rely on the principle of balance of interests and the unjust enrichment system to evaluate the huge contribution of Jiaduobao in the use of trademarks. The value of the trademark will be refunded instead of litigation claims.

In fact, since the herbal tea war started in 2012, the "later goodwill" licensed to use the Wanglaoji trademark and the transplantation of its economic value have triggered extensive discussions. The so-called "goodwill is released later", according to the popular explanation of Professor Tao Xinliang, Dean of the School of Intellectual Property of Shanghai University: There are two situations in which registered trademarks are licensed to be used. One is "goodwill is released first" where "it is known first and then licensed", and the other is "goodwill is released first", which means "it is known first and then licensed". One situation is "licensing first, then becoming famous" and "goodwill comes later". For example, the licensed use of many well-known brands and their registered trademarks in my country, such as Coca-Cola, Nescafé, and Starbucks, belongs to "first-issue goodwill." The registered trademark and brand goodwill of "Wanglaoji" involved in the case was obtained during the trademark licensing process. The most typical case of "latecomer goodwill" leapfrog improvement.