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It was a battle between an elephant and an ant, but the law sided with the insect.

The high court of East China's Zhejiang Province reversed the first verdict of the lower court and decided in favor of a local small-sized brewery to claim 3 million yuan as compensation against Pepsi Cola over trademark infringement, China Intellectual Property News reported.

Lanye, a small beer producer located in a mountainous area in the province accused the multinational beverage giant of infringing its trademark named "blue storm" and asked Pepsi for a public statement to clarify Lanye is the original user of the trademark.

A worker arranges a huge Pepsi coke bin themed "blue storm" as an advertisement in this undated photo.

The Zhejiang-based enterprise registered the trademark of "blue storm" in 2003 and used it on soft drinks, mineral water, beer and other beverages they produce.

In 2005 Pepsi launched a massive marketing campaign to promote its soft drink with the theme "blue storm". The beverage giant gave out almost 200 million prizes valued at two billion yuan to attract consumers.

"The more effort they put in to promote their soft drink, the more likely people would believe we produce fake ones," said Liang Yonghua, manager of Lanye. "People thought we were passing for a name brand."

Liang's words rang true. In November 2005, the local quality and technical supervision bureau thought Lanye's beer was fake and confiscated 107 beer cases before Lanye issued the certificate of trademark registration and got the beer back.

And because of this, another enterprise terminated their contracts with Lanye, refusing to associate with a company accused of producing fake products. "We can't afford to produce fake beverages," said an official from this company.

"I had to turn to legal means for the sake of our reputation," Liang said. He filed the lawsuit to the Hangzhou intermediate court, which ruled against Lanye in November of 2006, citing Pepsi's "blue storm" is a logo, rather than trademark.

However, the high court of the province overturned the decision for Lanye this May, marking a rare victory for the small domestic company. Why were the two judgments opposite to each other?

Wu Baojian, Lanye's legal representative said the two courts had different views over the facts. "Trademark infringement can be ruled if there is objective confusion between the two," he explained. "It can be ruled regardless whether the infringer is intentional or not."

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