Treasury Wine Estates scores rare victory in Chinese court against Rush Rich over Penfolds copycat

Treasury Wine Estates scores a win against Chinese-Australian company Rush Rich, which it alleges has been copycatting its Penfolds wine in China.

Treasury Wine Estates has scored a major win in a Chinese court against Rush Rich. Picture: Supplied

Treasury Wine Estates has received a landmark win in the Supreme People’s Court of China against Chinese-Australian company Rush Rich, which it alleges has been copycatting its Penfolds wine in China.

The decision ends a long standing battle in courts in Australia and China, which TWE sees as highlighting its determination to stamp out fakes and copycatting of its popular Penfolds brand in the China market.

Once the biggest single foreign exporter of wine to China, TWE’s wine sales to China were hit by the announcement of high tariffs on imports of Australian wine in November 2019, a move seen as a reflection of increasing political tension between the two countries.

TWE’s earnings before interest and tax from exports of Australian wine to China slumped from more than $78m in the six months to December 2020 to a mere $2m in the six months to December 2021.

But the company has made it clear it is determined to continue to sell in the rapidly growing China market through the export of wines including the Penfolds brand made in France and the US.

It has also recently announced plans to make a Chinese version of Penfolds which is expected to come on the market later this year.

TWE announced on Wednesday that China’s highest court had found the registration of the Chinese characters by Rush Rich which used the words “Ben Fu” — the Chinese name for Penfolds — was invalid.

TWE said the court decision followed moves by Rush Rich to register trademarks which were similar to a large number of luxury brands selling in China including Penfolds and car company Bentley.

“The decision was made on the grounds of bad faith and Rush Rich’s illicit conduct in registering a large number of trademarks for a range of renowned global luxury brands including Penfolds and Bentley,” TWE said in a statement.

Penfolds sees the move as another sign of increasing commitment by Chinese authorities to protect international brands and work with international companies to help stamp out fakes.

The position in recent years represents a turnaround from the earlier image of China being a Wild West where there was no brand protection in its highly competitive market of brand conscious consumers.

Penfolds managing director, Tom King, who is based in Shanghai, said the judgement “highlighted China’s unwavering commitment to protecting intellectual property rights.”

“We welcome the judgement by the Supreme People’s Court of China and thank the Chinese authorities for their continued support in protecting the rights of luxury brand operators,” he said.

“Penfolds has a long and proud heritage in China that’s been protected and nurtured since the first bottle of wine was exported from South Australia to Shanghai in 1893.”

“Our long term commitment to China, together with international legal protections to prevent infringement of our trademarks, gives our consumers the confidence to continue to enjoy award-winning quality wine from the Penfolds collection.”

Eleven recently hosted a $300 a head dinner with Penfolds. Staff member Clayton Johnson serving Divesh Lormorh and Nikki Potter. Picture: Naomi Jellicoe

The judgement follows six years of litigation and enforcement against the Rush Rich group of companies in China and Australia, which TWE alleges was attempting to exploit the Penfolds brand.

The Australian arm of Rush Rich, which was based in South Australia, went into liquidation in 2019 following court decisions against it in Australia but its associated entities in China have aggressively continued their copy catting of Penfolds and other brands.

The up-market highly popular Penfolds brand has been regularly subject to fakes and copycatting in China with operators using labels similar to that used on Penfolds bottles.

In March 2021 the Chinese government formalised tariffs of more than 200 per cent on Australian wine — a move which has all but killed once lucrative wine export trade to China.

Australian wine sales to China which were once running at a record $1.1bn a year, are now down to around $25m in the year to June this year as a result of tariffs first announced in November 2020.

The tariffs are set to remain in place for at least five years.

But TWE’s global operations have allowed it to export its range of brands including Penfolds from other parts of its operations around the world.

Anna Olsen, TWE’s global director of intellectual property said the company would “spare no effort” to protect its brands and would pursue its rights “to the highest courts where necessary.”

“This case shows we wont tolerate attempts to exploit and infringe intellectual property rights and the reputation of brands in the Treasury Wine Estates portfolio,” she said.

TWE has some 40 different cases on foot in China against instances of fakes and copycatting.