It may be 2009, but it appears that in some sectors of corporate Yunnan, other companies' intellectual property rights mean very little.

Yunnan-based coffee producer Hogood Coffee (云南德宏后谷咖啡有限公司) is playing the victim after government employees confiscated Hogood non-dairy creamer which was illegally using the "Coffee-Mate" (咖啡伴侣) name, which in China is a registered trademark of multinational food and beverage giant Nestlé.

On September 3, around 12,000 bags of Hogood-produced non-dairy creamer packaged under the name "Coffee-Mate" were seized by Industrial and Commercial Bureau employees in the Panlong district. Panlong officials confirmed the next day that the confiscation was a response to a complaint filed by Nestlé.

However, on September 15 a Nestlé China public relations manager reportedly claimed that Nestlé had filed no such complaint. The source of the complaint is currently under investigation by the Panlong government.

Hogood CEO Xiong Xiangru (熊相入) told reporters after the confiscation that the company had no idea that Coffee-Mate was a trademark – despite it being clearly marked as such on all Nestlé Coffee-Mate products.

Xiong's denial seems more implausible considering that Hogood has been a supplier of beans to Nestlé, which it grows on farms in Dehong in southern Yunnan.

The Yunnan Coffee Industry association is standing behind Hogood, insisting that Nestlé should not continue to "monopolize" the Coffee-Mate trademark and that Nestlé should let Chinese companies use the name on their own products.

Yunnan Coffee Industry Association vice secretary-general Hu Lu (胡路) put the following argument forward for why Nestlé should rescind the trademark that it has successfully built up in China and throughout the world:


Other Chinese coffee producers have been fined for violating the Coffee-Mate trademark in the past, according to the report.

Acknowledging that Nestlé was one of the main driving forces behind the development of China's coffee market, Hogood CEO Xiong pleaded to "big brother" Nestlé to rescind its Coffee-Mate trademark in order to bring "fair competition" to the Chinese coffee market.

The main questions that this particular episode of intellectual property rights violation raises are:

1. Should Nestlé or other companies with trademarks that have entered everyday parlance as a term representative of a certain type of product (think Coke, Hoover, Xerox) be forced to give up their trademarks because they've been marketed successfully?

2. If Nestlé were to bow to the weak logic of the above arguments and revoke its Coffee-Mate trademark in China, what would prevent the trademark being snapped up by a Chinese company who would prevent other companies from using it in China?

3. Is it possible that a company calling itself "Hogood" in English is unwilling to invest the necessary resources into the development of its own corporate identity and product branding, preferring rather to whine about "fair competition" after blatantly violating a registered trademark almost eight years after China's accession to the World Trade Organization?

Yunnan Dehong Hougu Coffee (云南德宏后谷咖啡有限公司) is aiming to expand from its current status as a coffee supplier to a major Chinese coffee brand over the next three years. The company announced on Tuesday that it intends to become China's first listed coffee producer by 2011, according to a Reuters report.

The company, which is reportedly restructuring itself and hiring accountants and lawyers for its listing, is best known for being a supplier to Nestle, but in recent years its own branded products have been appearing around Yunnan. Hougu instant coffee vending machines selling brewed coffee and cappuccinos can be found throughout Kunming.

"We're transforming from a coffee grower to a branded coffee maker and seller," Reuters quoted Hougu Vice President Deng Gang as saying. "Nestle is still our client and we're still too small to compete with it."

Hougu said it hopes to raise 3 billion yuan (US$437 million) by going public, which it intends to use for expansion. Although China's coffee market is small on a per capita basis, it is growing around 20 percent yearly, according to Starbucks, which announced that it would begin sourcing coffee beans from Yunnan in September of last year.

Yunnan is China's largest coffee producing region – its coffee beans have been a favorite of locals and travelers in the province for years, but the outside world is only just starting to wake up to its unique flavor and market potential.

Image: www.ynbrd.yn.gov.cn

Related article:

Starbucks warming up to Yunnan coffee