OldTown White Coffee denies claims of contract fraud

PETALING JAYA: OldTown White Coffee today denied claims of contract fraud by a firm granted licence to operate the popular coffee chain in China, about a week after reports that it had been forced to shut down all its stores in the mainland.

In a statement, it said the issue remained “a contractual matter only”.

On Dec 17, Jiangsu G&L Food & Beverage Management Co Ltd, which was licensed by Shenzhen Kopitiam Asia Pacific Ltd (SZKAP) to operate the OldTown franchise in the Jiangsu province, said it had found itself the subject of a complaint filed by Ai Chang Investment Ltd in April last year. It said it had been forced to close all its outlets, and that another Chinese company in Fujian, Xiamen Kuaike Investment Management Co Ltd, was granted rights as well in March 2017.

“To date, all OldTown White Coffee outlets in mainland China have been shut down,” it said.

However, OldTown said several of the outlets in Jiangsu were already closed due to poor management before any allegation of trademark dispute.

“We would like to clarify that in December 2018, Ai Chang, through a declaration and power of attorney, began the process of assigning their trademark for the operations of cafe outlets to Kopitiam Asia Pacific Sdn Bhd, a wholly-owned subsidiary of OldTown.”

It added that it has been in constant communication with the authorities in Malaysia and China to resolve the disputes in accordance with the law.

The OldTown franchise operates about 200 cafe outlets throughout Asia.

The company is also involved in the production, marketing and sale of coffee and other beverages, including instant coffee mix, instant milk tea mix, instant chocolate mix and roasted coffee powder.

G&L meanwhile said Ai Chang had applied for use of the OldTown trademark on March 12, 2013, for the category of goods/services applying to cafes, restaurants, fast food, bar services and the like in China.

“Ai Chang received the certificate of trademark with the National Intellectual Property Administration (CNIPA) on Aug 14, 2014, for use of trademarks from Aug 14, 2004 until Aug 13, 2024.

“Kopitiam Asia Pacific Sdn Bhd, a subsidiary of OldTown Bhd, applied for the ‘OldTown’ trademark for the cafes/restaurants goods/services category in China, but was rejected by CNIPA.”

It said SZKAP had, despite full knowledge that it did not own the “OldTown” trademark in China, signed a licence agreement with G&L in May 2016, granting the rights to operate OldTown White Coffee in Jiangsu, to use the trademark and to develop it into a franchising business.

“Ai Chang reported to the local administration for industry and commerce in April 2018 that G&L infringed their ‘OldTown’ trademark, which forced G&L to shut down all operating OldTown White Coffee outlets,” it added.

It said it had reported the matter to China’s Public Security Bureau (PSB) in June 2018, and that the PSB had determined that it met the criteria of criminal filing for financial fraud.

“G&L believes that OldTown Bhd, as one of the leading F&B corporations in Malaysia, should be held fully responsible for the damages and losses faced by the franchisees.”

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