(Yicai) April 24 -- Costco Beijing International Business Development has sued Costco China Investment, the official operator of Costco stores in China under US retail giant Costco Wholesale Corporation, escalating a dispute over brand use and alleged reputational damage.

Costco China, which operates all Costco warehouses currently open in the country, is a wholly-owned subsidiary of Costco Wholesale International, registered in Nevada, and is widely recognized as the legitimate China arm of the US-based retailer.

Costco Beijing said yesterday that it filed a civil lawsuit with the People’s Court of Pudong New Area in Shanghai over alleged reputation infringement, unfair competition, and intellectual property disputes. The court has accepted the filing application for review, the company said.

Costco China said earlier yesterday that it has no relationship with Costco Beijing and is the lawful operating entity in the Chinese market.

Costco Beijing is preparing to begin operations. The company has said it plans to position itself as Costco’s China headquarters, initially focusing on Beijing, Chengdu, Wuhan, Guangzhou, Tianjin, and Hefei.

Costco Beijing said Costco China had repeatedly issued false statements on its official WeChat account and other public channels since Costco Beijing announced that Costco Wholesale International, registered in New York state, had set it up as its China headquarters.

Costco China identified Costco Beijing as one of the entities “misusing the Costco trademark and enterprise name” and accused it of “spreading false information and misleading the public,” claims that Costco Beijing said have seriously harmed its reputation, business credibility, and operations.

Costco Beijing said on April 22 that, apart from a trademark licensing relationship, it and its parent Costco Wholesale International, registered in New York state, have no equity, control, licensing, franchise, joint venture, or other legal or factual relationship with Costco Wholesale Corporation, Costco Wholesale International registered in Nevada, Costco China, or Price Costco International.

A Costco Beijing employee confirmed that the company has no legal equity connection with Costco China and that the two operate independently, Jiemian News reported today.

Under the US Uniform Commercial Code and state company laws, company name uniqueness is typically limited to individual states, meaning separate entities can legally register identical names in different states if they comply with local regulations, the report noted.

Editor: Emmi Laine