updated 1/2/2006 9:48:14 AM ET 2006-01-02T14:48:14

A Chinese court has sided with Starbucks in a trademark dispute, fining a Shanghai coffee house company and ordering it to change its name because it’s too similar to the American company’s, according to news reports.

The dispute in China’s booming market for gourmet coffee highlights the country’s struggle to mediate trademark disputes, a new concept for the communist legal system.

The Shanghai No. 2 Intermediate People’s Court said Shanghai Xingbake Cafe Corp. Ltd. engaged in “illegitimate competition” by using Starbucks’ Chinese name and imitating the design of its cafes, the China Daily said. Xing (pronounced “shing”) means star, and bake, or “bah kuh,” sounds like bucks.

Judge Lu Guoqiang’s ruling Saturday also ordered Shanghai Xingbake to pay Seattle-based Starbucks Corp. 500,000 yuan, or $62,000, in damages, the China Daily and the Shanghai Daily reported.

Starbucks opened its first cafe in China in 1999. It later caused a stir by adding outlets in Beijing’s imperial palace and at the Great Wall, north of the Chinese capital.

Foreign rivals and Chinese upstarts have jumped into the market to compete for well-heeled customers who pay up to $6 for a cup of coffee — more than the average Chinese worker makes in a day.

Starbucks sued Shanghai Xingbake in 2003.

The Shanghai coffee house argued that its name was valid because it was registered in 2000, before Starbucks applied for its own Chinese trademark.

Starbucks rejected that, saying its name and mermaid trademark were registered in China beginning in 1996.

The Shanghai Daily report Sunday said the Starbucks ruling was the first of its kind under a 2001 Chinese law meant to protect well-known international trademarks.

Foreign companies have complained for years that the Chinese government is failing to stamp out piracy of copyrighted or trademarked goods such as movies or designer clothes.

More recently, Chinese companies have begun to turn to the courts to protect their own names. A Shanghai soft drink maker, Yaqing Industry and Trade Co., lost a lawsuit last January against the Coca Cola Co. and its local bottler over the name of a new beverage.

Yaqing claimed the characters for Coke’s Qoo fruit drink — “Ku-er” in Chinese — were too close to those of Yaqing’s Kuhai drink. But a Shanghai court ruled that the two names were different enough that consumers wouldn’t confuse them.

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