2021-07 (Part 1) Red Bull Trademark Century Battle Stirs the Functional Beverage Market

Thirsty to drink Red Bull, sleepy, tired to drink Red Bull", once upon a time, this advertising slogan in the country's major media "bombing in turn", almost household names. As one of the best-selling functional drinks in the Chinese market, Red Bull almost monopolized the market before 2013. However, with the protracted litigation war between Chinese and Thai companies over the Red Bull trademark, Red Bull's market share has declined year by year. Until December 2020, the Supreme People's Court finally ruled that the "Red Bull Series Trademark" belonged to Thai Tencel Pharmaceutical and Healthcare Co., Ltd. (hereinafter referred to as TENCEL Pharmaceutical), and Red Bull Vitamin Beverage Co., Ltd. (hereinafter referred to as China Red Bull) did not enjoy the legitimate rights and interests of the trademark owner.

Just like Wang Laoji and Jiaduobao at that time, the trademark war hurt the vitality of the enterprise and lost market share. Today's functional beverage market is no longer the only one of Red Bull, with the entry of Lehu, Zhongwo, dongpeng special drink, the functional beverage market has been divided.

From "honeymoon" to courtroom

According to public information, Xu Shubiao, who died in 2012, founded Tencel Medicine in 1956, which sells antibiotics, and later turned to the research and development of energy supplements, and invented a drink made of caffeine, sugar and amino acids, taurine in 1975, namely Thai Red Bull.

In 1984, Yan Bin founded reignwood Group in Thailand. In December 1995, Reignwood Group, Red Bull thailand and TENCEL Group established a joint venture with Red Bull china and has the right to operate the "Red Bull REDBULL" trademark in China.

In 1998, the two parties and another shareholder signed a new joint venture contract, in which TENCEL Pharma provided technical support for Red Bull of China in terms of production process and product formulation, and Reignwood Group led the production and operation of products.

In 2012, Xu Shubiao died, and since then, there has been a rift in the cooperation between TENCEL Pharma and Reignwood Group. In the years that followed, TENCEL Pharma accused Reignwood Group of secretly diverting business and profits.

In October 2016, TENCEL Pharma announced that the Red Bull trademark licensing contract had expired and would not be renewed. However, Reignwood Group has since continued to dominate the production and sale of Red Bull products. In this regard, TENCEL Pharma chose to go to court, and the ownership of the right to use the "Red Bull Series Trademark" became the focus of contention between the two sides.

The ability to continue to legally use the "Red Bull Series Trademark" means that Red Bull China can continue to sell Red Bull beverage products in the Chinese market. In order to obtain the right to use the trademark, Red Bull of China has put forward a number of claims, such as as the actual user of the trademark involved in the case, which has made great contributions to the improvement of the goodwill of the trademark, and should enjoy the trademark right.

After years of litigation between the two parties, on November 25, 2019, the Beijing Municipal Higher People's Court rendered a first-instance judgment rejecting Red Bull China's claim that the court confirm its legitimate rights and interests as owners of the 17 "Red Bull Series Trademarks". Red Bull of China then appealed to the Supreme People's Court, requesting that the first-instance judgment be set aside.

The final adjudication confirms the right, and the dust settles

On October 10, 2020, the dispute over the ownership of the trademark between Red Bull of China and TENCEL Pharma was heard in the Fourth Court of the Supreme People's Court, and the live broadcast of the trial reached 300,000 people.

Red Bull of China appealed, saying that the court of first instance did not review the established facts and that a number of basic facts were not clearly determined, so it requested that the first-instance judgment be revoked and the case be remanded for retrial. Red Bull of China has also made it clear that its claim is to confirm the legitimate rights and interests of the owner of the relevant trademark, not the ownership of the trademark.

The appellee, TENCEL Pharma, replied that the relevant judgment of the court of first instance was in accordance with legal procedures, and TENCEL Pharma held clear, independent and complete ownership of the Red Bull series trademarks. The meaning of the relevant clauses in the "1995 Joint Venture Contract" signed by TENCEL Pharma and other shareholders on November 10, 1995 means that TENCEL Thailand, as the trademark owner, provides a trademark license to Red Bull Beverage Company, and does not transfer the ownership of the Red Bull trademark.

It is understood that the above-mentioned "1995 Joint Venture Contract" refers to the fact that on November 10, 1995, TENCEL Pharmaceutical signed the "Red Bull Vitamin Beverage Co., Ltd." contract with China Shenzhen Zhonghao (Group) Co., Ltd., China Food Industry Corporation and Red Bull Vitamin Beverage (Thailand) Co., Ltd. (hereinafter referred to as "Red Bull Thailand"), agreeing to jointly invest in the establishment of Red Bull China, in which TENCEL Pharmaceutical Company "provides Red Bull Beverage Company's product formula, process technology, trademark and subsequent improvement technology" and " Trademarks of Red Bull Beverages' products are part of Red Bull Beverages' assets"

According to the november 2019 judgment of the Beijing Municipal Higher People's Court, Red Bull Vitamin Beverage Co., Ltd. (Red Bull of China), as the plaintiff, requested the court to confirm its interest in the 878072, 878073, 1289559, 1264582, 5608276, 1219609, 5035427, 969643, 11227127, 11460102, 5035426, 3478098, 24144331, 11227115, 5033257, 592693 and 5033255 registered trademarks 17 Red Bull series trademarks enjoy the legitimate rights and interests of the owners, and require Tencel Pharmaceutical and Healthcare Co., Ltd., the owner of Red Bull Thailand, to pay a total of 3.753 billion yuan in advertising expenses. Red Bull China requests confirmation that the above-mentioned Red Bull series trademarks are exclusively owned by Red Bull Vitamins, and if this cannot be confirmed, Red Bull Vitamins and TENCEL Pharma are jointly owned. On November 25, 2019, the Beijing Municipal Higher People's Court rendered a first-instance judgment on the case, rejecting all of Red Bull's claims.

Red Bull of China said in a statement on the evening of November 28, 2019 that Red Bull of China is the only investor and contributor to the "Red Bull Series Trademark" in the Chinese market from zero value to tens of billions of market value. The core claim of Red Bull of China in this case was to request the court to confirm that the Company had a legitimate interest in the "Red Bull Series Trademark", that is, the right to use the "Red Bull Series Trademark" and enjoy the legitimate rights and interests such as the proceeds attached thereto, rather than requesting the court to confirm that the Company was the owner of the registered trademark. However, the first-instance judgment avoided the above-mentioned core issues, and only examined and adjudicated whether the "Red Bull Series Trademarks" enjoyed trademark ownership rights, deviating from the company's true claims.

In December 2020, TENCEL Pharmaceutical issued a statement saying that the Supreme People's Court rejected Red Bull China's appeal in the final instance, upheld the first-instance judgment made by the Beijing Municipal Higher People's Court, and the final judgment once again clarified that the ownership of the "Red Bull Series Trademarks" belonged to TENCEL Medicine.

According to tencel Pharma's previous statement, it will no longer authorize Red Bull of China to use its trademark and prosecute trademark infringement. This means that it is difficult for Red Bull China to seek trademark use through new cooperative licensing methods.

Red Bull of China issued a statement saying that "the second-instance judgment is not the final decision of the legal relationship between the two sides" and that "it will safeguard its legitimate rights and interests in accordance with the law through all possible legal remedies, including applying for retrial and filing a protest".

After the final trial, the case was selected as one of the top ten intellectual property cases announced by the Supreme People's Court and the top ten cases of judicial protection of intellectual property rights in Beijing courts in 2020 on World Intellectual Property Day in 2021.

Wave after wave, wave after wave. Entering 2021, red bull trademark disputes have once again been staged. On April 20, 2021, TENCEL Pharmaceutical filed a lawsuit with the Chaoyang District People's Court of Beijing Municipality for the sale of infringing goods with the "Red Bull Series Trademark" produced by Red Bull of China in Hualian Supermarket.

On May 12, 2021, the Chaoyang District People's Court of Beijing Municipality served a civil ruling on both parties, and from now on, Hualian Supermarket stopped selling "Red Bull Vitamin Functional Drink" products with "Red Bull Series Trademark" produced by Red Bull of China, and ruled to start enforcement immediately.

Three Red Bulls, don't be silly and confused

In the process of the tug-of-war between the two sides, the figure of Red Bull's other interest in Red Bull Beverage, Red Bull Austria, gradually appeared.

According to public information, in 1984, the Austrian Matt Schitz and Xu Shubiao jointly established the Austrian Red Bull Company, holding 49% of the company's shares, and the remaining 2% belonged to Xu Shuen, the eldest son of Xu Shubiao (currently the chairman of the Thai Red Bull Beverage Group). A wholly-owned subsidiary of Red Bull Austria has entered China as early as 2014. It is not difficult to see that the composition of Red Bull's trademark rights is very complicated, as early as the 80s of the last century, there were "two identical Monkey Kings", and the parties did not pay enough attention to it, and there have been hidden dangers of trademark disputes for so many years.

On December 24, 2019, Red Bull Austria held a press conference in Beijing to sign Gu Ailing, which was the first high-profile promotion event since Red Bull Austria entered the Chinese market in 2014. Industry insiders believe that due to the trademark dispute between Reignwood Group-controlled Red Bull Vitamins and Red Bull brand owner TENCEL Pharmaceuticals in the Chinese market, Red Bull Austria has kept a low profile in the early days of entering the Chinese market.

In fact, before entering the Chinese market in 2014, Red Bull Austria had set up a working group in China and applied for the "blue hat" logo of health care products. At present, Austrian Red Bull conducts offline sales in cities such as Beijing, Shanghai, Guangzhou, Nanjing, Jinan and other cities, with a price of about 15 yuan, all of which are imported products, mainly through the expansion of the dealer model. Online, Red Bull Austria has opened its own flagship stores on Tmall and JD.com.

It is understood that in 1987, The Austrian Red Bull has been introduced to the market. In 2018, Red Bull Austria sold 7 billion cans worldwide, covering all continents of Asia, Europe, Africa and the United States. Mattheitz has long since become Austria's richest man on Red Bull.

Behind the protracted lawsuit of the Red Bull trademark is the huge "cake" of China's functional beverage market.

Red Bull China has always been reignwood's "cash cow". At the end of December 2020, Reignwood Group announced that its five brands of Red Bull Vitamin Functional Drink, Warhorse Energy Vitamin Drink, Fusi Natural Mineral Water, Vita Cocoa Natural Coconut Water, and Guobei Refreshing Children's Juice achieved sales revenue of 24.201 billion yuan. Among them, the sales revenue of Red Bull Beverage exceeded 22.8 billion yuan. Some industry insiders believe that once the Red Bull series of trademarks are not allowed to be used, Red Bull china and Reignwood Group will suffer huge losses.

According to reports, Red Bull Beverage accounts for nearly 60% of the market share in China's functional beverage market, and if it is banned, the domestic functional beverage market pattern may usher in great changes.

Reignwood Group is ready for this. Over the past few years, Reignwood Group has been experimenting with new markets, trying to get rid of the situation of being too dependent on single products. For example, the company vigorously promoted another functional drink, "War Horse", in an attempt to expand new profit points, but from the current market performance, the new product is far from replacing Red Bull products in the short term.

As a dual rival in the court and the market, TENCEL Pharma is also pressing reignwood Group step by step in terms of market layout. In June 2019, TENCEL Pharma and its new partners in the Chinese market launched Red Bull Annegi Beverage, and in December 2019, it announced that it would introduce the original imported Red Bull into the Chinese market.

In early July 2021, Xu Xinxiong, CEO of TENCEL Group of Thailand, sent a letter to Chen Changzhi, Vice Chairman of the Standing Committee of the 11th and 12th National People's Congress, former Chairman of the Central Committee of the China Democratic National Construction Association and Chairman of the "Siyuan Project". Xu Xinxiong said in the letter that with the rapid development of China's economy and the growing demand of consumers, TENCEL Group of Thailand is full of confidence in China's future and will continue to uphold the purpose of "basing itself on China and giving back to China", first, continue to expand investment in China, actively respond to the relevant calls of the Chinese government, steadily promote the previously announced investment plan in China for the next 3 years, deepen the strategic relationship between partners in China, enhance marketing and research and development capabilities, expand new production bases, and provide products that better meet Chinese consumers The second is to continue to help public welfare and charity, focusing on the rural revitalization strategy proposed by China, and in the next three years, we will carry out public welfare projects such as education assistance, rural development, disaster relief and relief, and ecological environmental protection in economically underdeveloped areas with the "Siyuan Project".

The dispute over the ownership of the Red Bull trademark has come to an end, and the sandpipers are competing for profit. Intangible assets such as trademarks are not clearly defined, which brings great uncertainty risks to the operation of enterprises. It is said that all kinds of gold diggers want to seize the Red Bull dispute and launch a functional beverage market. But whether or not the "two cows" are reconciled, the wealth map of functional drinks may be rewritten.