Guangzhou Pharmaceutical Holdings said yesterday it would seek compensation from Hong Kong-based herbal tea maker JDB Group as the latter has earned 7.5 billion yuan ($ 1.19 billion) in profits through unauthorized sales of  Wong Lo Kat branded herbal tea since 2010.

The statement came a day after JDB announced that it has filed a suit with a Beijing court appealing an earlier ruling which revoked its right to use the Wong Lo Kat brand.

"The compensation figure is calculated based on JDB's annual sales of over 18 billion yuan accruing from the brand," Ni Yidong, a spokesman for Guangzhou Pharmaceutical, told the Global Times yesterday.

JDB also held a press conference yesterday, but it was focused on launching its new herbal tea brand Jiaduobao rather than responding to the latest move by Guangzhou Pharmaceutical.

"As JDB has the patent right over the packaging of the original red-canned Wong Lo Kat brand, Jiaduobao herbal tea will continue to use the packaging," a public relations staff surnamed Chen from JDB told the Global Times yesterday.

Guangzhou Pharmaceutical claimed earlier this month that it would also produce red-canned herbal tea.

On May 9, the China International Economic and Trade Arbitration Commission ruled JDB was not authorized to use the Wong Lo Kat brand after 2010. 

"The current appeal (by JDB) is not aimed at getting the ruling overturned but to buy some time for JDB to boost the confidence of its distributors, who have been reluctant to sell the new herbal tea brand due to competition from the well-known Wong Lo Kat brand," Zhao Yong, a beverage analyst with the Shanghai-based Haitong Securities, told the Global Times yesterday.

In the lingering trademark dispute, both sides are putting pressure on each other with Guangzhou Pharmaceutical having taken an advantageous position so far, Ai Xuejiao, a crisis management professor at Peking University, told the Global Times yesterday.

"But the Guangzhou company should not try to corner JDB too much, as consumers may turn to the new JDB herbal tea brand out of sympathy," Ai noted.

JDB has invested heavily in the Wong Lo Kat brand and it is widely believed that the company's efforts have boosted the sales of the brand to some 20 billion yuan in 2011 from 100 million yuan in 2004, according to brandcn.com.

After returning to Guangzhou Pharmaceutical, whether the Wong Lo Kat brand can maintain its market position depends on the management and marketing strategy of the company, according to Ai.

In 1997, the Guangzhou-based company granted JDB the right to use its Wong Lo Kat trademark until 2010. Following two extensions of the agreement, JDB was allowed to use the trademark until 2020.

However, Guangzhou Pharmaceutical filed a complaint with the China International Economic and Trade Arbitration Commission in 2011, saying that the trademark agreement between the two companies was extended from 2010 to 2020 because one of its senior executives was taking bribes from JDB's parent company.

Guangzhou Pharmaceutical also claimed that 5 million yuan was not a fair price for JDB to pay for the trademark use each year.