China's fake 'Starbucks' is banned from using name

A Shanghai court ruled that the Shanghai Xingbake Coffee Co Ltd engaged in "illegitimate competition" by infringing the copyright of Starbucks and ordered it to pay compensation of 500,000 yuan (£36,000).

The judgment is a sign that China is responding to pressure from the US and EU to crack down on intellectual property rights infringements and its counterfeiting industry. China is the source of 70 per cent of the world's pirated goods and US companies claim they lose up to $250bn (£145bn) a year to piracy.

President George Bush urged the Chinese government to protect intellectual property rights during his visit to Beijing last year, and a State Council task force was set up to tackle the problem. But counterfeiters still pirate everything from car parts and clothes to DVDs and software.

The Shanghai Xingbake company started opening coffee shops under the name Xingbake in 2003. "Xing" means "star" in Mandarin and "bake" sounds like "bucks" when pronounced. Starbucks sued Shanghai Xingbake in December 2003. The case reached its conclusion on New Year's Eve, when the Shanghai No.2 Intermediate People's Court deemed Starbucks, whether written in Chinese or English, and its logo to be famous trademarks. The ruling is the first of its kind under a 2001 law introduced to protect well-known international trademarks.

Despite prices of up to 48 yuan (£3.40) a cup, more than the average daily salary of most Chinese, Starbucks coffee is a hit with the country's emerging urban middle class. The Seattle-based company opened its first shop in China in Beijing in 1999 and now has 156 outlets on the mainland.

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