The manufacturer of REDBULL brand energy drinks in
Under Chinese law, trademark licensing agreements are generally not considered to be perpetual. Failure to secure an extension of the licensing agreement means that the licensee no longer has rights to use the licensed marks. Accordingly, the term during which the license is valid must be clearly defined in licensing agreements. Absent explicit words such as "automatically renewed," "perpetual," or "indefinite," Chinese courts will not award the licensee reimbursements of continued expenses following expiration of licensing terms, even if the licensee has greatly contributed to the goodwill associated with the licensed marks.
In this case, T.C. Pharma entered a joint venture agreement with the parent companies of RedBull China,
However, the '96 Agreement explicitly stated that the joint venture would expire in 1999. So, in 1998, RedBull China secured a second agreement with T.C. Pharma, where the term was re-defined as twenty years or from 1996 to 2016 (the '98 Agreement). Unfortunately, the '98 Agreement was silent on the ownership of the RedBull Marks and used phrases such as "T.C. Pharma will provide the trademarks," as opposed to "T.C. Pharma will own or license the trademarks."
Although not explicitly discussed in the terms of the '98 Agreement, the parties' course of performance suggested that T.C. Pharma owned the REDBULL trademarks. While RedBull China initially filed applications to register the REDBULL marks in
For twenty years, the joint venture achieved great commercial success in
In reaching its decision, the Court said that the '98 Agreement should control the parties' understanding of the ownership issue. RedBull China's arguments primarily rested on the '96 Agreement, which provided that the RedBull marks should belong to RedBull China. While the '98 Agreement addressed similar, if not the same issues covered by the '96 Agreement, it was not an amendment or extension to the '96 Agreement. The stakeholders had changed significantly in the RedBull China joint venture between 1996 and 1998. Specifically,
With respect to the licensing relationship, the Court noted that T.C. Pharma had always been the record owner with the
Turning to the '96 Agreement, the Court noted that the language of that agreement would not change its decision favoring T.C. Pharma. According to the '96 Agreement, T.C. Pharma was the majority shareholder of the joint venture. Even if the Court considered the '96 Agreement to be the controlling document, it would likely interpret T.C. Pharma as the ultimate owner of the REDBULL trademarks. The fact that that T.C. Pharma, as the majority shareholder in the joint venture, initially allocated the corporate assets to RedBull China was not enough for the Court to interpret the Agreements as naming RedBull China as the owner of the marks at issue.
Most importantly, the Court ruled that trademark ownership would not change simply because a different party paid the advertising expenses. The Court emphasized that unlike in real estate or property law, there is no "accession" in trademarks. In other words, ownership of real estate property naturally carries with it the right to possess all the things that are added to that property, whereas the ownership of trademarks does not carry that right.
RedBull China has indicated that it will appeal the decision to the
This case is
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