China state guesthouse sues Philips over advertising

BEIJING - The Chinese arm of Dutch electronics giant Philips is being sued by an official government villa in Beijing over alleged false advertising of air purifiers, a court said Tuesday.

The Diaoyutai State Guesthouse regularly receives foreign heads of state and government - more than 1,200 since it opened in 1959 - and has accommodated US presidents Richard Nixon and Ronald Reagan, as well as British prime minister Margaret Thatcher and North Korean founding father Kim Il-Sung.

It accused Philips (China) Investment Co. Ltd of falsely promoting its air purifiers as having been specifically designed for the hotel and having "served leaders of various countries", the Haidian District People's Court said in a statement.

The advertisements, carried in newspapers and online, claimed Diaoyutai used the products during the 2014 Asia-Pacific Economic Cooperation summit in Beijing, the court said, citing the guesthouse.

But the plaintiff said it "had never purchased or used the air purifiers the defendant promoted", according to the court statement.

The hotel complained that Philips "used Diaoyutai State Guesthouse's popularity and reputation without authorisation in its product advertisements, fabricated stories and severely infringed the plaintiff's legal rights and interests", it added.

The guesthouse, affiliated to the Chinese Ministry of Foreign Affairs, demanded Philips pay 100,000 yuan (S$20,000) in compensation and apologise at least twice in national media, according to the statement.

The court is reviewing the case, it added.

At the time of the 2014 summit, public sector workers were given an extended holiday and factory closures were imposed to ensure the capital's notorious pollution did not blight the event - giving the skies a short-lived clarity derisively dubbed "APEC blue".

Philips is not the first Western company to be embroiled in a court case in China.

US technology giant Apple in 2012 paid US$60 million (S$82 million) to settle a dispute with a Chinese firm over the iPad trademark.

California-based electric car maker Tesla and a Chinese businessman sued each other for millions of dollars over trademark use in country, but resolved the case last year "at no cost" to Tesla, it said then.

A woman who answered the phone at Philips' China headquarters confirmed that Philips (China) Investment Co is its subsidiary but said she was unaware of the legal action.

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