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?

One of the more colorful old sayings in Chinese is "selling dog meat and hanging a sheep's head" (卖狗肉挂羊头) - an expression that conveys how pervasive counterfeit products have been throughout the country's history.

There is very little in China that cannot be counterfeited – that includes beer too, as the Xishan Bureau of Commerce confirmed on Tuesday when it raided a rented space behind a cement factory in the Majie area that contained more than 20,000 bottles of fake Budweiser and Carlsberg beers.

The secret behind the scam: taking a big, cheap bottle of local Kingstar Beer (金星啤酒), splitting its contents between two smaller Budweiser or Carlsberg bottles and a bottle-capping machine to fix caps to the top of the bottles. The total time it takes to increase the Kingstar's value up to ten times – ten seconds.

A former worker at the facility who was asked by the government to demonstrate how to turn a 610 milliliter Kingstar Beer into two 300 milliliter Budweisers (see image above) said that experienced workers could make two fake beers in around five seconds – making as many as more than 1,000 fake Budweisers or Carlsbergs in one evening.

The repackaging of the Kingstar beer as smaller, more expensive imported beers is then followed by an arguably more crucial step in the counterfeiting process. Once sealed, the beers were placed in large woks connected to gas burners. Each wok used a thermometer to monitor temperature, with 80 degrees Celsius the ideal temperature to maintain.

'Cooking' the beer has two reasons behind it. Firstly, Kingstar beer tends to have more flavor than Budweiser or Carlsberg – raising its temperature rendered the beer's flavor less strong. Secondly, cooking the beers ensured that upon opening, the beers would bubble up and produce a foamy head.

During Tuesday's raid, six 'northeasterners' were arrested at the counterfeit beer operation, authorities say they suspect the leader of the ring is also from northeastern China.

An investigation by the municipal commerce bureau is underway and has already discovered that the operation would go to KTVs, nightclubs and bars to collect used Budweiser and Carlsberg bottles which were then refilled with Kingstar, cooked and sold back to Kunming's entertainment establishments.

Kingstar beer costs two to three yuan per bottle, after being repackaged as two smaller import beers, the same beer could be resold for 10 to 20 yuan – a respectable profit margin of up to 1,000 percent. It is estimated that the 20,000 bottles of beer seized and destroyed in the raid would have been sold as the genuine article for between 100,000 and 200,000 yuan.

Images: www.clzg.cn