Chibuku demands US$21m from National Breweries over infringement of trademark rights

MALAWI – Chibuku Products Limited Malawi (CPL) is demanding US$21 million (about K15.5 billion) from Zambia’s leading brewer National Breweries plc (NB) for breach of trademark rights and loss of business on its bottled opaque beer, Chibuku Super.

Through their lawyer Ritz Attorneys, CPL, brewers of the country’s popular commercial sorghum beer opaque beer, Chibuku Shake Shake, is demanding the aggravated sum from the Zambian company for allegedly allowing the distribution and sale of its Chibuku Super in Malawi.

Both CPL and NB produce, distribute and sell Chibuku Super but they have different trademark rights in respect of their products in Malawi and Zambia, respectively.

Ritz Attorneys managing partner, Lusungu Gondwe confirmed demanding the money from NB whose action had caused “severe shrinking of Chibuku Products Limited’s market share”.

He said NB was aware that the trademarks law which only allows them to distribute and sell their Chibuku Super in Zambia and not in Malawi but for some time they “had been deliberately distributing and selling their product or have caused their product to be distributed or sold in Malawi.”

“This infringes our client’s trademark rights in respect of Chibuku Super in Malawi. Their product is mostly smuggled into Malawi. No duties are paid and this makes their product cheaper thereby unfairly distorting the market.”

“This has also occasioned significant shrink of our client’s market share. It would be otherwise if they competed within the law. The unjustified or unfair loss of business to our client is enormous and the claim for US$21 million (K15.5 billion) mirrors that loss,” explained Gondwe.

According to a demand letter dated February 21 2020, CPL is further demanding NB to immediately cease and desist from distributing Chibuku Super or allowing its sale and distribution in Malawi.

“Your product has infiltrated the Malawian market so pervasively as to significantly affect their [CPL] market share,” reads part of the letter from Ritz Attorneys which was hand-delivered to National Breweries plc head offices in Lusaka, Zambia.

CPL, which also manufactures, distributes and sells in the country several other beverages both alcoholic and non-alcoholic, claims it registered a trademark Chibuku Super pursuant to the Trademarks Act of Laws of Malawi and by virtue of the trademark it has the right, “inter alia to delete, restrict, prevent or limit the use” of the trademark within Malawi by NB.

“CPL is aware that you have trademark rights in respect of your products in Zambia. You can exercise such rights only in Zambia. You have no such rights outside Zambia as your trademark rights have no extraterritorial application,” reads the demand letter.

The Malawian brewer claims that NB infringement of their trademark is “deliberate and negligent calculated” to occasion economic loss and damage to CPL.

CPL has since warned NB that failure to pay the demanded sum within 30 days (from February 25 2020), the company would take drastic legal steps including litigation in the High Court of Malawi without further reference to them.

In light of this there has not been any comment yet from National Breweries plc.

CPL is locally owned by the Bowler Consortium, who has 75 percent shares while Nico Holdings has 25 percent shareholding while the National Breweries is owned by a Zimbabwean firm, Delta Corporation.

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