Moutai solidifies legal grasp on 'Laimou' brand

Ending a dispute over the trademark Laimou that has lingered for nearly a decade, leading Chinese liquor maker Moutai announced on March 15 that it had won the suit and warned any infringing competitors to cease using the label.

While the trademark registration will become effective on March 28, the timing of the announcement to coincide with Consumer Right Day is "worth pondering", industry insiders said.

The move indicates the company, a leading brand among luxury liquors, is paying more attention to low and medium-priced products and is likely to clear the market of existing identically-named liquor soon, they said.

The name saga is closely related to Moutai's history.

Laimou was initially used when Lai Yongchu and his brother founded the Hengxing distillery at Moutai village in Southwest China's Guizhou province in the late 1930s.

Laimou's popularity at the time prompted other popular liquor brands to follow this convention and use the founder's family name as their moniker.

For instance, the alcohol made at the Chengyi distillery founded by Hua Chengyi was called Huamou and the products from the alcohol plant created by Wang Ronghe were branded Wangmou.

The government took over all three distilleries in the 1950s, integrating them into Moutai Group.

The group applied to register the trademark Laimou when the Trademark Law came into effect in 1982, but the application was challenged by Lai's descendants, who had founded their own alcohol distilleries under the same name.

The Trademark Appeal Board made a verdict in 1996 that the brand has belonged to Moutai since Lai's plant was integrated into the company's assets after 1949.

Yet the trademark was revoked on March 16, 2005, because it had been inactive for three years.

Three days later, Moutai re-applied for the trademark with the State Administration for Industry and Commerce, and it was again granted in 2007.

Lai Family Alcohol Ltd, one of the facilities claimed to be founded by Lai's descendants, filed a complaint against the Trademark Appeal Board of SAIC for the registration in 2012 and lodged an appeal with the Beijing High People's Court in 2013, which upheld the verdict of the board and ruled in favor of Moutai.

Lai Shihao, board chairman of Lai Family Alcohol, told National Business Daily that his company has not given up and will try to obtain the rights through further legal procedures.

Around 400 distilleries used the name Laimou to mark their products - up to more than 1,000 types in total - with prices ranging from 30 yuan ($4.8) to 1,000 yuan in China last year, according to Guizhou Daily.

The quality of the alcohol products carrying the brand Laimou varies according to the strength of the different distilleries, industry observers said.

Now that Moutai has solidified its legal grasp on the trademark, the chaos in the market is expected to subside, they said, adding that some businesses have already turned to building up their own proprietary brands.

Wan Xinggui, a senior expert on Chinese liquors, told the National Business Daily that the market scale for Laimou alcohol has developed to some 5 billion yuan over the years, nurtured by various distilleries.

"If Moutai can capitalize on its well-established branding advantages and operate the Laimou brand properly, it will increase its production to 10 billion yuan to 20 billion yuan within three years," Wan predicted.

The company's liquor portfolio generated 738 million yuan in revenue in the first half of 2013, down about 31.85 percent year-on-year.

China National Radio quoted Yang Lingjiang, president of the alcohol shopping portal 1919.cn, saying that Moutai hopes to capture a greater share of the market for liquors priced at between 100 yuan to 300 yuan and it needs a product to drive "explosive growth" in this segment.