"I had to turn to legal means for the sake of our reputation," Liang said.

Ill-matched contest

"It was an ill-matched battle between an elephant and an ant," said Wu. In one corner was Lanye, a little known small company with only 3 million yuan of registered capital and 13 million yuan of total assets. In the other corner was Pepsi, a multinational giant with a brand value of $12 billion. Such a contest left much room for public imagination.

"Everyone suspected our motives," said Wu, who wasted no time hesitating and signed an agreement with Lanye after two months of investigation and evidence collection, promising that he wouldn't take a penny if he failed to win the case.

Wu is a professional lawyer with over 10 years of experience and believed Pepsi's infringements were quite evident. He was puzzled that Pepsi had invested huge sums in the marketing campaign without spending a couple of minutes doing research on the Internet to make sure the logo hadn't been registered as trademark.

"It's an unacceptable mistake," Wu stated.

Wu disclosed that Liang had attempted to negotiate with Pepsi's Shanghai-based China branch via mail and received no reply before he filed the lawsuit.

The Hangzhou Intermediate People's Court ruled against Lanye in November 2006, citing that Pepsi's "Blue Storm" was a logo, rather than a trademark, meaning that Pepsi was free from any intentional infringement.

Feeling the result unacceptable, Liang appealed to the higher court of the province, which overturned the decision for Lanye on May 30 this year, marking a rare victory for a small domestic company.

Why were there two opposing judgments?

Wu said the two courts had different views about the facts. "Trademark infringement can be ruled if there is objective confusion between the two," he explained. "It can be ruled regardless whether the infringement was intentional or not, which is in line with the international conventions."

It was not a question of whether Pepsi's "Blue Storm" was a logo or trademark, said Wu, comparing the question to that of asking Wu whether he is a man or human, because "logo is a concept beyond trademark."

A judge in the higher court of the province echoed Wu. During an interview with the Southern Weekly, he said they were very prudent with the case and made references to similar cases at home and abroad.

"Small enterprises are at a disadvantage in infringement lawsuits because the public believe famous companies won't infringe on small ones," said the judge. "We believed that Pepsi had no intention of infringement but the ruling process would consider no intentional infringement but focus on where the infringement was a fact."

"The very fact is, the two trademarks were similar and this confused consumers," the judge explained.

The 77 valid questionnaires submitted to the court by Pepsi showed that 21 thought Pepsi's logo on the package was similar to Lanye's trademark, 10 mistook Pepsi's "Blue Storm" series for Lanye's products due to the similar logo and five were confused. Based on the result, the higher court of Zhejiang Province determined that Pepsi's "Blue Storm" campaign had confused a certain proportion of consumers.

Pressing for trademark protection

According to international conventions, trademark protection is locally biased and a majority of countries and regions are adopting the principle of "protecting the first registered." As a result, companies having their trademarks infringed will either give up the trademark and invent a new one, purchase back the trademark at high cost, or resort to legal means to annul the trademark registration. All of these solutions add to the company's operation costs or decrease its market share.

An increasing number of Chinese companies have been sued by their foreign counterparts over IPR infringement in recent years, including producers of color TV sets, cars, lighters and snack food. The number of lawsuits between domestic and foreign companies over IPR infringements filed at the Beijing No.1 Intermediate People's Court in 2006, for instance, was three times the number of 2002. Of these, 90 percent of plaintiffs were foreign companies and 60 percent of those won their cases.

Wang Jiabin, a patent attorney with King & Wood, one of the first partnership law firms in China, said that there is a lot of work to do before Chinese companies can take the initiative in these cases. The Patent Law of China came into effect only two decades ago, while European and American countries have had a long history of IPR protection.

"National brands entering the global market face a dual duty to improve their own competitiveness as well as to protect their IPRs," said Zhang Shengru, Director of Tianjin Intellectual Property Rights Bureau. "An important lesson for them is to become familiar with international rules, improve awareness of IPR protection and learn how to take advantage of international IPR protection rules to safeguard their own rights and benefits."

It was not easy for Lanye to win the case after two years' persistence. "Usually, domestic companies wouldn't take the initiative to file a lawsuit because they have no access to legal assistance and lack awareness of protecting their rights," explained Wang. "The triumph of Lanye is heartening and we believe more Chinese companies will learn to use legal means to protect their rights in the future.

"Companies should establish a precautionary mechanism against possible IPR infringement and keep on their toes," advised Wang. "Chinese brands can secure a position in the global market and can grow only when they are adept at using legal means to protect their rights and benefits."