In the seven-year offensive and defensive battle between Chinese and foreign Red Bulls, who is wasting judicial resources?

The Red Bull dispute between China and foreign countries has made waves again. The focus remains on the multi-year confrontation between the two sides this year, a letter of agreement signed on November 10, 1995, known as the "50-year agreement".

Recently, the Beijing Supreme People's Court made a final ruling, announcing the revocation of the first-instance rejection ruling made by the Beijing No. 4 Intermediate People's Court in June this year on the contract dispute case filed by Red Bull Vitamin Beverage Co., Ltd. ("China Red Bull"). The dispute over the 50-year agreement was heard in the Beijing No. 4 Intermediate People's Court.

Until the original was found, the Red Bull 50-year agreement was found to be "questionable". In fact, after the original document was found and submitted, it was first authenticated by the Shenzhen Court of International Arbitration, and then judged by the People's Court of Qianhai Cooperation Zone in Shenzhen, Guangdong Province to be authentic, legal and valid. After the Beijing High Court's judgment, the authenticity, legitimacy and validity of the 50-year agreement will be clearer, and the dispute between Chinese and foreign Red Bulls will deepen and attract much attention.

01 The 50-year agreement gives Chinese Red Bull confidence

The 50-year agreement has become the focus of controversy between China Red Bull and Thailand's Tencel, and it has also given China Red Bull the confidence to continue to operate.

In the 90s of the last century, Xu Shubiao, a Thai-Chinese who invented "Krating Daeng", was invited to Hainan to build a joint venture factory in an attempt to introduce the beverage to the Chinese market. However, due to the fact that he could not get the production license and the registered trademark of the bullfighting pattern, he was at a loss until he was introduced and met Yan Bin, chairman of Reignwood Group.

It can be said that without Yan Bin, there would be no Chinese Red Bull. After Yan Bin intervened, he conducted a lot of research in China and reached cooperation with China Food Company and Zhonghao Company. Mr. Yan Bin also signed a cooperation agreement with Mr. Xu Shubiao, and the two parties established Red Bull Thailand in March 1995.

The entity is composed of Thai Reignwood, Yan Bin and a number of small shareholders of Thailand. In the same month, Thailand Red Bull, Thailand Reignwood, China Food Company and Zhonghao Company reached a "Letter of Intent" and reached the basic terms of the 50-year "Letter of Agreement". One of the core clauses is that the cooperation between China and foreign parties involves the approval of special licenses by the Chinese government, the opening of the Chinese market and a large amount of continuous investment, and the life of the joint venture must be long-term, and the parties have agreed on a 50-year cooperation period.

On April 5, 1995, a signing ceremony and a press conference were held during the visit of Chinese enterprises to Thailand. On September 22, 1995, the former Ministry of Health issued the Reply on the Production of "Vitamin Functional Drinks" (Wei Jian Fa [1995] No. 51). On November 10, 1995, Yan Bin, on behalf of China Red Bull (Party C), signed a "50-year agreement" with China Food Company (Party A), Zhonghao Company (Party B) and Thailand Tencel (Party D) on behalf of China Red Bull (Party C).

Under the leadership of Yan Bin, China National Food Industry Corporation, Shenzhen Zhonghao Group, Thailand Red Bull and Thailand Tencel led by Yan Bin established a joint venture company, Red Bull Vitamin Beverage Co., Ltd. ("China Red Bull"), with Yan Bin as the chairman, who is fully responsible for the overall operation of China Red Bull's production and sales.

With a large number of minority shareholders and an uncertain market outlook, the 50-year agreement became a charter document to ensure the interests of all parties. According to the policy at that time, Red Bull Beverage was a restricted foreign investment project, and the government's approval of the joint venture period should not exceed 30 years in principle, while the business period of industrial and commercial registration was later approved for 20 years. In view of this situation, China Food Company said that the common opinion of all parties at that time was that the term of the joint venture should remain unchanged for 50 years, and the registration would be renewed after the expiration of the contract.

The focus of this judgment is the 50-year agreement. According to the first instance of the Beijing Fourth Intermediate People's Court in June 2023, it held that China Red Bull was not a qualified plaintiff in this case, and its claim was also artificially split into a separate contract clause that was not independent and required judicial confirmation, which was a great waste of judicial resources and directly led to its claim not having the meaning of litigation. Therefore, China Red Bull's lawsuit did not meet the conditions for accepting the case, and China Red Bull's lawsuit was dismissed in accordance with relevant regulations. China Red Bull appealed to the Beijing High People's Court.

Now, the judgment of the Beijing High Court has been issued, and the signatory of the "50-year agreement" has been confirmed again. The court of second instance held that China Red Bull was one of the signatories of the "50-year agreement". According to the evidence on record, China Red Bull is the signatory of the agreement, and the corresponding rights and obligations are stipulated in the agreement, and China Red Bull, as the signatory of the agreement, shall bear the corresponding obligations and enjoy the rights agreed in the agreement. As the subject of the contract, China Red Bull has the right to file a lawsuit in accordance with the contract. Second, China Red Bull has the right to file a separate lawsuit against some of the terms in the contract. Based on the relative independence of the terms of the contract, China Red Bull filed separate lawsuits based on different terms of the "50-year agreement", which did not violate the law. The second-instance final judgment revoked the first-instance ruling and ordered the first-instance court to continue hearing the case.

In fact, after China Red Bull found the original agreement, its authenticity, legality and validity have been recognized by many courts and arbitration institutions. The Beijing No. 4 Intermediate People's Court, which accused China Red Bull of wasting judicial resources, has been revoked by the Beijing High Court. The dispute over the 50-year agreement has been heard in Shenzhen and Beijing.

02 More than 5,000 merchants were dragged into the quagmire of operation

In the dispute between China and foreign Red Bulls, the most obvious party affected is the merchants, who have also been sued or reported for the "lack of martial arts" of Thai Tencel and related parties, and the business rhythm has been disrupted.

In 2016, in the name of trademark protection, Thailand Tencel began to sue China Red Bull and a number of business entities in the industrial chain on a large scale, including manufacturers, suppliers, distributors, channel providers, including key terminal merchants. There are more than 20 direct lawsuits between the two parties, as well as many lawsuits directly filed with Chinese Red Bull suppliers and distributors, distributed in courts in Beijing, Guangdong, Zhejiang, Jilin, Heilongjiang, Jiangsu, Hubei, Hunan, Fujian, Jiangxi and other places.

In fact, so far, Thailand Tencel and related parties have not achieved a final victory in the lawsuit with China Red Bull, but in order to promote the launch of their two own products, on the one hand, they have launched a trademark infringement lawsuit nationwide with great fanfare, and on the other hand, after the judgment on Red Bull's "trademark ownership" (not trademark infringement) was served, they and the agent did not hesitate to distort the judgment and mobilized the national legal and sales personnel to report the dealer in the name of "trademark infringement", interfering with the normal market order of Red Bull. There has been a large number of out-of-context and one-sided propaganda in the market, such as "all 50-year agreements have been rejected", "a great waste of judicial resources", "unstable Red Bull", etc., to maliciously lower the social evaluation of China Red Bull. As far as the market is concerned, these acts not only harm the legitimate interests of China Red Bull and its upstream and downstream partners, but also cause distress to consumers and damage the interests of consumers.

Thailand Tencel said that since 2020, the market supervision departments in many places across the country have investigated and dealt with the illegal acts of "infringing" the exclusive right to use the registered trademark of the Red Bull brand Fang Tencel Group (there is no law enforcement basis). Up to now, more than 5,000 law enforcement documents of various types have been made. In fact, these dealers and merchants are partners who have made outstanding contributions to Red Bull's market expansion and Red Bull brand building for 5 or 10 years.

Despite the endless emergence of various "three indiscriminate" tricks, it still failed to shake the market position of China's Red Bull. According to China Red Bull, refusal to sell Thai Tencel products is the right of merchants to operate independently. However, in the context of many litigation disputes between China Red Bull and Thailand Tencel have not yet been finalized, Thailand Tencel and its agents have reported and deterred them, and even arranged lawyers to threaten them, making their normal business activities in a predicament. More than 98% of these cases have been dismissed or resolved through communication with Red Bull, and Red Bull's sales and operations have returned to normal.

03 Publicly lying and tearing up agreements may lead to credit bankruptcy

The China Red Bull dispute is a complex commercial dispute involving trademark law, civil and commercial law and other fields, which involves many factors such as brand equity, contract agreement, principle of good faith, and goodwill contribution.

From the perspective of brand equity, China Red Bull, as a leading brand that occupies more than 40% of the market share in the domestic market, has huge brand equity, and this asset is mainly the income of China Red Bull and its industrial partners for nearly 29 years. In fact, benefiting from this "50-year agreement", Thailand Tencel and related parties easily took 4.8 billion in 20 years, and now not only does not talk about it, but even does not admit to signing the agreement.

Zhao Wanyi, a professor at Southwest University of Political Science and Law and deputy director of the Academic Committee of the Civil Law Research Association of the China Law Society, believes that the trademark of China Red Bull Beverage as a combination trademark is not a copy and excerpt of the foreign Red Bull trademark, and it has made an adaptable independent adjustment and careful local cultivation for integration into the Chinese market. As far as the social significance of China's Red Bull beverage trademark is concerned, it represents the social public interest to a certain extent, and also represents the development direction of China's trademark system from brand borrowing to brand autonomy, and it also represents the development direction of China's trademark system from institutional transplantation to institutional awakening.

Wu Handong, former president of Zhongnan University of Economics and Law, also believes that the original intention of the intellectual property legal protection system is not to give rights holders a monopoly position, but to stimulate the production and dissemination of intellectual products through economic rewards, and ultimately to improve the overall welfare of society. In the view of Zhang Ping, executive vice president of the School of Intellectual Property of Peking University, if the trademark registrant as the licensor wants to re-license the trademark and tears up the contract to sublicense others, it is undoubtedly to destroy the market interests that should be enjoyed by the trademark user through the act of "free-riding", and it is also very likely to destroy the quality assurance of goods and services created by the trademark, which is a typical violation of fairness. Conduct in good faith.

In the current global competition of enterprises, brand is an important strategic resource of enterprises, and the dispute between China Red Bull and Thailand Tencel over the right to use the trademark and the term of authorization is actually a struggle for the control and ownership of brand equity. However, business integrity is the logic and foundation of business, and it is also the bottom line of legal fairness and justice. From the perspective of the contract, China Red Bull obtained the exclusive right to produce and sell Red Bull beverages in China in accordance with the "50-year agreement" signed by the two parties in 1995. Therefore, Thailand's Tencel production and sale of "Red Bull Drink" in China without the consent of China Red Bull and other relevant parties is clearly in breach of the contract. This not only harms the interests of China Red Bull, but also undermines the principles of business integrity and fair competition.

The well-known media expert "Uncle Ming's Miscellaneous" commented that for China Red Bull, taking out the original contract of the "50-year cooperation period" and confirming its authenticity is the key to turning the situation around in a series of disputes. It is worth mentioning that previously, because China Red Bull could only provide a copy of the contract for the "50-year cooperation period" and could not provide the original, Thailand Tencel took advantage of this flaw and openly denied the existence of the contract on the premise that the other two Chinese companies clearly confirmed the existence of this contract, leaving obvious flaws in the credibility and integrity of the enterprise. Whether Thailand Tencel should bear legal responsibility for this move is still to be ruled by the relevant departments, but there is no doubt that Thailand's Tencel move has lost a lot of points, at least at the level of public opinion and public opinion.

Zhu Danpeng, an analyst of China's food industry, believes that the final ruling of the Beijing High Court means that the authenticity, legitimacy and validity of the "50-year agreement" have been determined, and the 50-year exclusive right to use the China Red Bull trademark will inevitably be reviewed. Thailand Tencel and its related parties insisted on denying that they had signed the agreement, and even exaggerated the victory of the first-instance judgment, which not only harmed the legitimate rights and interests of China Red Bull and relevant stakeholders, but also caused trouble to the public, law enforcement authorities and consumers.

The appearance of China Red Bull, including packaging, decoration and other elements, is very different from that of Southeast Asian Red Bull and European and American Red Bull, and its taste and ingredients have also been significantly adjusted to create a "Chinese taste". Nowadays, Thailand Tencel has not introduced Southeast Asian products into the Chinese market, but has produced or authorized the successive launch of "Anagei", "Red Bull Vitamin Flavor Drink", "Red Bull Vitamin Taurine Drink", from the packaging and product naming not only to the maximum extent of the replication of Chinese Red Bull, but also to reproduce itself, has caused consumers to distinguish difficult, some media pointed out, has been suspected of infringing on consumers' right to know.