March 3 (Bloomberg) -- Groupe Danone SA, the French company fighting its former Chinese partner Hangzhou Wahaha Group for control of the $2.4 billion Wahaha beverage brand, should pursue its claims in China’s courts, a U.S. judge said.

California has no jurisdiction in a case over Ever Maple Trading Ltd. and Hangzhou Hongsheng Beverage Co., the state’s Superior Court Judge Carl J. West said in a ruling filed Feb. 27 in Los Angeles. China is a more suitable place for Danone’s claims against the wife and daughter of Wahaha Chairman Zong Qinghou, the legal representatives of the companies, the judge said in his order.

“China qualifies as a ‘suitable’ alternative forum, notwithstanding a number of glaring disparities between the Chinese Communist party system and the American judicial system,” West said. He declined to dismiss the claims.

Danone, the world’s biggest yogurt maker, has yet to win a case in the legal battle that’s sparked more than 30 lawsuits in at least seven countries as it tries to gain control of the Chinese brand that means “laughing child.” China was Paris- based Danone’s third-biggest market after France and Spain before the dispute with Wahaha Group became public in 2007.

“The ruling is procedural in nature and does not address the merits of Danone’s claims against the defendants,” Michael Chu, a Shanghai-based spokesman for Danone at Ogilvy Group, said yesterday in an e-mailed statement.

Right Reserved

West, in his order, declined to dismiss Danone’s claims against You Zhen Shi, Zong’s wife, and Kelly Fuli Zong, his daughter. The judge required both sides to report every six months on the status of the case in China and reserved the right to let the claims against the two individuals proceed in California if China proves to be an unsuitable forum.

“Our clients are thrilled with this ruling,” Lance Etcheverry, a lawyer for the defendants, said today in a telephone interview. “This case had no business being brought in California in the first place.”

Wahaha spokesman Shan Qining said in an interview that the courts are the best place to solve the case. “We will leave it to the law.”

Danone established its venture with the Chinese beverage maker in 1996 to produce bottled water, teas and juices for the world’s most-populous nation using the Wahaha brand. As part of their original agreement, Wahaha Group agreed to transfer ownership of its trademark to the venture.

Outside the Venture

The French company sued Ever Maple Trading Ltd. and Hangzhou Hongsheng Beverage Ltd. on allegations they were involved in “unlawfully” producing and selling Wahaha beverages outside the venture.

Wahaha has said that it continues to own the trademark because the Chinese government rejected its applications to transfer the brand to its venture with Danone.

The Arbitration Institute of the Stockholm Chamber of Commerce in Sweden is reviewing the dispute. Danone and Wahaha agreed when they formed their venture to settle disagreements through arbitration in Stockholm. Wahaha won an earlier arbitration in China that ruled it owned the brand.

Danone’s sales in Asia fell 30 percent to 1.54 billion euros ($1.94 billion) in 2007 after the company stopped including sales from its Wahaha venture starting in the second half of the year, according to the company’s annual report.

The case is Group Danone v. Kelly Fuli Zhong, BC372121, California Superior Court (Los Angeles.)

To contact the reporters on this story: Edvard Pettersson in Los Angeles at epettersson@bloomberg.net; John Liu in Shanghai at jliu42@bloomberg.net.

Last Updated: March 3, 2009 00:09 EST