China Starbucks

BEIJING (AP) - A Chinese court has sided with the Starbucks coffee house chain in its battle with a Shanghai rival over their use of the same Chinese name, news reports said.

The dispute in China's booming market for gourmet coffee highlights the country's struggle to mediate trademark disputes, a new concept for the communist legal system.

A Shanghai court ordered Shanghai Xingbake Cafe Corp. Ltd. to stop using the name Xingbake, the name used in Chinese by Starbucks Corp., the Shanghai Daily and China Daily newspapers said. Xing, pronounced "shing," means star in Chinese, and bake, or "bah kuh," sounds like bucks.

The Shanghai No. 2 Intermediate People's Court said the Shanghai firm engaged in "illegitimate competition" by using Starbucks' Chinese name and imitating the design of its cafes, the China Daily said.

Judge Lu Guoqiang's ruling Saturday also ordered Shanghai Xingbake to pay Starbucks 500,000 yuan (US$62,000; euro50,000) in damages, the reports said.

Starbucks opened its first cafe in China in 1999. It later caused a stir by adding outlets in Beijing's imperial palace and at the Great Wall, north of the Chinese capital.

Foreign rivals and Chinese upstarts have jumped into the market to compete for well-heeled customers who pay up to 50 yuan (US$6; euro5) for a cup of coffee more than the average Chinese worker makes in a day.

Starbucks sued Shanghai Xingbake in 2003.

The Shanghai coffee house argued that its name was valid because it was registered in 2000, before Starbucks applied for its own Chinese trademark.

Starbucks rejected that, saying its name and mermaid trademark were registered in China beginning in 1996.

The Shanghai Daily report Sunday said the Starbucks ruling was the first of its kind under a 2001 Chinese law meant to protect well-known international trademarks.

Foreign companies have complained for years that the Chinese government is failing to stamp out piracy of copyrighted or trademarked goods such as movies or designer clothes.

More recently, Chinese companies have begun to turn to the courts to protect their own names. A Shanghai soft drink maker, Yaqing Industry and Trade Co., lost a lawsuit last January against The Coca Cola Co. and its local bottler over the name of a new beverage.

Yaqing claimed the characters for Coke's Qoo fruit drink "Ku-er" in Chinese were too close to those of Yaqing's Kuhai drink. But a Shanghai court ruled that the two names were different enough that consumers wouldn't confuse them.