Beverage firm China Huiyuan Juice Group Ltd has been accused of trademark fraud after one of its subsidiaries authorized several firms to use the Huiyuan brand though it had no right to grant such authorization.

"It is a fraud," Zhu Qiang, chairman of Shangri-la Kawagebo Water Company, told the Global Times Monday, noting that his company is seeking criminal prosecution against Huiyuan.

After paying 2 million yuan($314,000) to the drinking water subsidiary of Huiyuan group, Zhu got authorization in July last year to use the Huiyuan brand by the end of 2014, according to Zhu.

However, after he spent over 10 million yuan on equipment, production moulds and advertising, he was asked by Huiyuan not to use the brand.

According to Zhu, Huiyuan's drinking water subsidiary signed similar authorization contracts with a total of 28 firms last year, involving more than 20 million yuan in authorization fees.

Huiyuan was not available for comment Monday. Its Vice President Zhou Hongwei was quoted as saying by huanqiu.com Sunday that there is a dispute over the contracts as Kawagebo's production environment, equipment and employee management could not meet Huiyuan's requirements and Kawagebo did not pay quality deposit in accordance with the contracts.

Zhu refuted Zhou's claims that Huiyuan had never paid visits to Kawagebo based in Shangri-la, Southwest China's Yunnan Province.

Huiyuan did not reach an agreement on the use of its brand with Kawagebo though both agreed to develop the business of Huiyuan branded drinking water together, the Hong Kong-listed company said in a statement Wednesday.

Meanwhile, Kawagebo failed to fulfill its payment liabilities in accordance with the cooperation agreement, Huiyuan Group said, noting that "Huiyuan's water subsidiary has the right to terminate the agreement without any compensation to Kawagebo."

Huiyuan has filed a lawsuit against Kawagebo for its breach of contract, according to the statement.

Zhu said he received summons Monday from the People's Court in Beijing's Miyun County for a trial Thursday.

Although Huiyuan said the outcome of the litigation would not have big influence on the group's financial situation and operation, its share price dropped over 5 percent Friday on the news.

The authorization was given informally as the fee was paid to personal accounts instead of Huiyuan's account, You Yunting, a partner at Shanghai DeBund Law Offices, told the Global Times Monday.

Growing brand awareness has led to an increase in trademark disputes recently, including the spat between JDB Group and Guangzhou Pharmaceutical Holdings over the Wong Lo Kat brand.

"Lack of supervision over trademark management is the major reason for trademark disputes," said Liu Guizeng, a partner with Beijing-based Hanhow Intellectual Property Partners.

To avoid trademark disputes, brand owners should choose cooperation parties cautiously and supervise the use of their trademarks. And licensees need to hire attorneys to review contracts and contract signing process, Liu said.