US court rejects Stolichnaya trademark dispute over standing issues
MOSCOW, August 7 (RAPSI) - A US federal appeals court affirmed a lower court’s decision Monday dismissing a lawsuit disputing US-trademark rights to the Stolichnaya vodka brand for lack of standing.
The appeal was filed by the government-chartered Russian entity Federal Treasury Enterprise Sojuzplodoimport (FTE) and its licensee OAO Moscow Distillery Cristall (Cristall) (appellants) against SPI Spirits Limited and a long list of “other related individuals and corporations” (appellees).
Stolichnaya brand vodka was presented in the complaint as having been owned by the Soviet Union and its successor, the Russian Federation, for decades. The first US trademark connected with the Stolichnaya brand was registered with the US Patent and Trademark Office (USPTO) in 1969 by a state-run entity acting for the Soviet Union. In the course of the ensuing decades, the USPTO issued a number of other trademark registrations (marks) connected with Stolichnaya to numerous entities.
According to the opinion, During the privatization efforts of the 1990s, General Director Evgeny Sorochkin of the Soviet enterprise holding the marks at the time, VVO-SPI, sought to acquire the enterprise’s assets personally through a new corporation. According to the opinion, the new corporation “then entered into a series of complex transactions that ultimately vested all defendants with at least putative interests in the Marks, either by license or assignment.”
As explained by the appeals court, a Russian court held in December 2000 that VVO-SPI remained a public entity, after it was allegedly discovered that Sorochkin had failed to comply with privatization laws. As a result, the rights and property entrusted to VVO-SPI, including rights to the marks, were reassumed by Russia.
FTE claimed that it was formed as a state-chartered entity to act on Russia’s behalf in connection with the Stolichnaya trademarks. FTE was endowed with certain rights through its own charter, a decree governing its rights to certain trademarks – including those registered in the US, and a decree addressing its rights in connection with foreign lawsuits.
The appellants claimed that the appellees had infringed certain Stolichnaya trademark rights in violation of US law.
A lower federal district court dismissed the case for lack of standing to sue.
On appeal, the appellants argued that they did in fact have sufficient interests in the trademarks under the relevant US law to pursue their claims. According to the opinion, FTE claimed that it was entitled to sue over the alleged infringements as it had been “entrusted” by Russia with the care of the marks, and is Russia’s assign or legal representative. Cristall likewise claimed derivative standing as FRE’s exclusive Stolichnaya vodka licensee in the US. The appellants also argued that Russia had “ratified” their lawsuit.
On appeal, the court found that under US law, FTE is neither an assign nor a legal representative of the Russian Federation.
Under the relevant US law, the concept of assignment requires a duly executed written instrument, and the transfer through the assignment of ownership interests in the marks. According to the opinion: “Because the conveyance to FTE falls short on these measures, we conclude that FTE is not an “assign” of the Russian Federation for statutory standing purposes.”
The lower court had concluded that to be constitute a legal representative under the relevant law, one must have the authority to appear on behalf of the registrant/owner, and the registrant/owner must be incapable of representing itself and enforcing its own rights. According to Monday’s opinion, the lower court held that: “In this case, the District Court saw no adequate basis in the complaint or in the law for concluding that the Russian Federation is legally incapable of representing itself, and therefore held that FTE did not qualify as a ‘legal representative.’” On appeal, the court agreed with the lower court’s interpretation.
As Cristall’s rights are purely derivative of FTE’s rights, the issue of its standing was rejected as well.
The appeals court further held that Russia had not “ratified” the lawsuit. Under US law, ratification of a suit requires a party to authorize continuation of the action and to agree to be bound by its result.
In the words of the opinion, “Even accepting, based on the May 2011 letter… that the Russian Federation endorses FTE’s authority to bring this suit and is willing to be bound by this litigation – propositions that we have questioned – plaintiffs cannot… bypass the standing requirement… which permits only ‘registrants’ to bring actions for infringement of registered marks.”