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A court last Friday ordered PepsiCo China Investment Co to stop selling Tianfu Cola and to return the recipe to the Chinese company, the Shanghai Daily said.
But the court in the southwestern mega-city of Chongqing rejected Tianfu's demand for one million yuan ($150,000) in compensation from its former joint venture partner, the report said.
Tianfu and PepsiCo formed a tie-up -- Chongqing Pepsi-Tianfu Beverage Co -- in 1994 to make soft drinks under the names of both companies, the report said.
But Tianfu sold its 40 per cent stake in the joint venture to PepsiCo in 2006 for 130 million yuan because it was losing money.
The Chinese company launched its action in October last year.
PepsiCo, the maker of Pepsi soft drinks, was not immediately available for comment.
Tianfu general manager Qian Huang was quoted by the Global Times saying he planned to take further legal action against PepsiCo seeking "trademark loyalties and compensation for the devalued Tianfu trademark".
PepsiCo announced in May it would invest $2.5 billion in China over the next three years in new plants, research facilities and promotional activities.
It also planned to increase its range of Chinese-designed and developed products, the company said.