A can of herbal tea made by Jiaduobao Group is?pictured at a supermarket in Shanghai, Dec 20, 2013. [Photo / icpress.cn]

GUANGZHOU - A court in southern China's Guangdong province has ruled that Jiaduobao Group (JDB), a Hong Kong-based beverage manufacturer, must compensate Guangzhou Pharmaceutical Holding Limited (GPH) for false advertising.

JDB must pay a total of 10.81 million yuan ($1.78 million) to GPH, best known for manufacturing Wong Lo Kat herbal tea, and stop using false slogans, the Guangzhou Municipal Intermediate People's Court said on Friday.

GPH filed a lawsuit against JDB for use of false slogans, such as "Wong Lo Kat has been renamed Jiaduobao" and "the nation's leading red tin herbal tea has been renamed Jiaduobao," and accused the company of unfair competition by using false advertisements.

JDB had been using the Wong Lo Kat brand since 1995, when it leased the brand from GPH. However, the company was only authorized to use the brand until 2010, and had the lease contract extended by bribing administrative staff of GPH.

The case went to arbitration in April 2011, with the China International Economics and Trade Arbitration Commission ruling in May of 2012 that the brand rights rest with GPH.

JDB has since then produced a red tin herbal tea branded with the "Jiaduobao" name.

The court ruling on Friday said JDB was convicted of false advertisement as there was no evidence that the Wong Lo Kat brand name had been renamed "Jiaduobao."

The false promotion of JDB has confused the public about the two different herbal tea brands, which has infringed on the rights of GPH, the ruling said.

JDB also has to make public apology to GPH, it added.

JDB announced on its official website on Friday it would appeal to a higher court.