Firms in Anbang Hotels Clash Said to Be ‘Trademark Trolls’

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A group of Delaware companies whose trademark dispute with the Chinese owner of a U.S. hotel portfolio is interfering with their sale is engaged in similar fights with other huge companies, including the Alibaba Group, it emerged in court this week.

The revelation came in emails as well as testimony from an executive of Dajia Insurance Company, the seller of 15 luxury hotels to Mirae Global Asset Investment Co. of South Korea, which is trying to walk away from the deal because of the Delaware firms’ claims.

Dajia pointed to the other disputes as evidence that the operation is a fraud.

“My understanding is these guys are, at best, trademark trolls,” the Dajia executive, Zhongyuan Li, told Delaware Chancery Court Judge Travis Laster.

Trademark trolls seek registration for marks likely to be used by big companies or similar to established brands. Their goal is to get paid for dropping the right to use the confusingly similar name.

‘Alipay’

Documents show that the Delaware group went after Alibaba over the right to control the “Alipay” name in the U.S. for its electronic-payment system.

Alipay, which allows users to pay through a digital barcode on mobile phones, is now a unit of Ant Group Co., a financial-technology firm that filed an initial public offering in Hong Kong earlier this week. Some analysts say the company is worth as much as $200 million.

Amer Group, one of the Delaware limited-liability companies, owns the U.S. trademark to the word ‘Apay,” and has challenged Alibaba’s mark in a pending action before the U.S. Patent and Trademark Office, according to public records.

Candice Huang, a U.S.-based spokesperson for Alibaba, didn’t immediately return a call and an email for comment.

Alibaba has owned the Alipay mark since October 2011 and Amer officials contend it creates a “likelihood of confusion” with their Apay trademark.

In February 2019, an administrative law judge in Washington rebuffed Alibaba’s attempt to have Amer’s challenge thrown out, concluding “there is a genuine dispute of material fact regarding, at a minimum, the similarity or dissimilarity of the marks.” The case is still pending.

Similar trademark cases Amer officials brought against Apple, GoPro and WhatsApp have been terminated, according to public records.

Fraud and Embezzlement

In the Dajia case being heard this week, the group relied on a highly disputed agreement -- based on a Delaware arbitration law -– that allegedly resolves trademark claims involving Dajia’s predecessor, Anbang Insurance. Anbang’s now-jailed chief, Wu Xiaohui, signed the pact in 2017 before his conviction for fraud and embezzlement in an apparent attempt to protect his assets from seizure by the Chinese government.

The Delaware group is led by a mysterious figure who sometimes goes by the name Andy Bang. Zhao Yan, a director of the companies, who said last week that the disputes over Dajia are legitimate and not scams, wasn’t available for comment Wednesday on the firm’s trademark action involving Alibaba.

Mirae says Wu’s accord raises legitimate questions about ownership of the hotels in the canceled deal. The South Korean company also points to fallout from the Covid-19 pandemic to justify pulling the plug.

Robin Hui Huang, a professor at the Chinese University of Hong Kong, cast doubt on Thursday on the validity of the agreement signed by Wu and others that gave the Delaware companies a claim to the hotels. Huang said any agreement involving the transfer of assets worth billions would have required approval by vote at a shareholders meeting of Anbang.

The Delaware companies in the case sought to hire lawyers to bring a case against Alibaba under the Delaware Rapid Arbitration Act, according to emails filed publicly in court dockets.

The law, created in 2015, is designed to speedily recognize and pay private arbitration awards reached anywhere in the world. The system allows arbitrators to decide business disputes more quickly and cheaply than the regular court system.

That’s what officials of the Delaware companies did in their trademark dispute with Dajia. They set up arbitration panels under the DRAA that awarded the firms $936 billion in compensation over the hotels’ seizures. Laster later threw out those awards, suspecting they were fraudulent.

The busted-deal case is AB Stable VIII LLC v. MAPS Hotel and Resorts One LLC, No. 2020-0310, Delaware Chancery Court (Wilmington). The arbitration-award dispute is World Award Foundation Inc. v. Anbang Insurance Group Co., No. 2019-0605.

©2020 Bloomberg L.P.

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