French company ordered to pay up to Rmb33 million for trademark infringement

In 2011 a Chinese court ordered that French wine producer Castel's rights in the trademark CASTEL be 'frozen' in China. The French company had been sued for trademark infringement by a local company that had registered the trademark KA SI TE – a popular form of the Chinese transliteration of 'Castel'. It appears that Castel was not quick enough to register the Chinese equivalent of its mark, but took the risk of using its Chinese name in its distribution channel in China.

The action in the Wenzhou court was a direct threat to the French company, as the court stated that the CASTEL mark could be auctioned to compensate the plaintiff should Castel lose the case.

In April 2012 the Wenzhou court held that the French company had infringed the Chinese plaintiff’s mark and awarded damages of up to Rmb33.73 million (approximately €4.2 million) to the plaintiff. Reportedly, this case is just one of three actions filed by the same plaintiff against Castel. The total amount of damages could reach over €10million in the future.

It is expected that the French company will appeal the decision - if this has not already been done - to the Zhejiang Higher People’s Court.

The Wenzhou court has taken several decisions against French companies over the past few years. For example, Schneider was held liable for patent infringement and was ordered to pay a record amount of damages (Rmb335 million).

The Castel case will unnerve many foreign brand owners - especially smaller companies with great business prospects in China. 

He Jing, ZY Partners, Beijing