Lolo trademark on almond drink a hard nut to crack

Complex tale of former parent and subsidiary using the same name

Almond milk producer Chengde Lolo says it will take "any legal means necessary" to protect its trademark from former parent company Lolo Group, which is continuing to make the popular beverage even after it sold the rights to do so, according to Chengde Lolo.

Today the former parent company and its spinoff are both making Lolo branded almond milk.

Together they have more than 90 percent of the market for the product in China.

The almond milk tempest dates back to 1999, when Lolo Group took a 39.8 percent stake in Chengde Lolo as its largest shareholder.

The group then signed a licensing agreement with its subsidiary, Shenzhen-listed Chengde Lolo, authorizing it to use the trademark until it expires, but retained ownership of the mark.

In 2006, Chengde Lolo bought out Lolo Group's share for 319 million yuan and spun itself off from the former parent company, according to Beijing Business Today.

Chengde Lolo paid 301 million yuan for 127 trademarks including Lolo, 73 patents and other intellectual property such as domain names.

The same year, agro company Wanxiang Sannong Group become the controlling shareholder of Chengde Lolo with a 42.55 percent stake.

Though then separate companies, Lolo Group and Chengde Lolo still had a close relationship. The link was key executive Wang Baolin, who served as board chairman and corporate representative of both companies.

While serving in the positions Wang signed agreements on behalf of Chengdu Lolo to license the name back to Chengde Group and other companies.

Last month Chengde Lolo announced that those agreements violate the intellectual property deal made in 2006, when Lolo Group pledged to stop using any intangible property related to the Lolo trademark.

Because the license agreements were not approved by boards of directors and supervisors - or general shareholders - deals that Wang signed were "unauthorized" and "personal acts", according to Chengde Lolo .

Major decisions at a publicly traded company should not be implemented unless they are decided by the board of directors, Securities Daily cited Meng Qinguo, a law professor of Wuhan University, as saying.

Because both the authorizing and authorized parities were the same person, there was a conflict of interest, Meng said.

Almond milk made by both Chengde Lolo and Lolo Group is now marked as Lolo and compete against each other.

Chengde Lolo's former vice-chairman Guan Dayuan, who originated at Wanxiang, was elected new board chairman in June, after which the conflict came to light.