STOLICHNAYA: In Soviet Russia, Mark Trades You.

mdbheadshotfinalI’ve long suspected that certain products–vice products, as it were–are disproportionately often involved in trademark disputes, but I’m too lazy to do actual research to confirm my suspicion. In any event, this dispute involves vodka, and–unless I’m very much mistaken–the decision is going to restart the Cold War. — MDB

bottle.stolichnaya-premium-vodkaI’m not a vodka drinker. I prefer gin. Still, I think Russia’s getting the short end of the swizzle stick in Fed. Treasury Enter. v. SPI Spirits Ltd., in which a decision of the United States Court of Appeals for the Second Circuit came down on August 5. (That is… August Fifth. Fifth! Get it?)

The plaintiffs-appellants are a Russian Federation-chartered entity (known in the matter as “FTE”) and its exclusive licensee (“Cristall”). The defendants are eleven related entities, real persons and corporations, who also claim rights to the vodka trademark at issue: “STOLICHNAYA,” which can be translated from Russian as “from the capital.” The mark has been registered with the USPTO since 1969.

The dispute is uncomplicated, even if the background might be: Because Russian law prohibits governmental bodies from conducting business activities, the Russian Federation (a governmental agency, and the one that owns the STOLICHNAYA mark), through its Ministry of Agriculture and Ministry of Property Relations formed FTE and charged it with exploiting the STOLICHNAYA trademarks on behalf of the Russian Federation. Over time, in a series of decrees, the Russian Federation endowed FTE with various rights; one gives FTE the right to prosecute suits in foreign courts.

It seems clear to this reader that the Russian Federation wants FTE to be able to handle all of its vodka-trademark-related business. The government of Russia, one presumes, has other things to worry about. Not that vodka isn’t very important… but you know what I mean.

The United States District Court for the Southern District of New York, however, didn’t think so, and now the Second Circuit has affirmed the dismissal of FTE’s claims for lack of standing to sue. Despite what (I expect) most people would find to be sufficient and satisfactory evidence of the Russian Federation’s desire and intent to have FTE sue in the United States to protect the STOLICHNAYA mark, the U.S. courts have concluded that FTE has not alleged facts sufficient to support a finding that it is either the “assign” or the “legal representative” of the Russian Federation or that the Russian Federation has “ratified” the lawsuit.

Granted—and as FTE acknowledges—the Russian Federation retains formal title to the mark, but the courts, to my mind, have bent over backward to find that FTE lacks standing. In any capacity. Because the Russian Federation retains formal title to the marks, FTE is not an “assign” under the Lanham Act. Because FTE has not demonstrated to the courts’ satisfaction that the Russian Federation is “unable or incapable of representing itself and enforcing its own rights,” FTE is not the Russian government’s “legal representative.”

And even though the District Court received in May 2011 a letter from the Deputy Head of the Federal Service for the Regulation of the Alcohol Market of the Russian Federation, “declaring that the Russian Federation had empowered FTE to bring this litigation and that ‘any final judgment on the merits of the claims for restoration of the trademark… brought by FTE… will be for the Russian Federation the final resolution of the court dispute with the defendants…,’” the Second Circuit gave the missive short shrift, deeming it “a brief ad hoc letter to the Court from the current Deputy Director of an administrative agency” that does not, “in our view, eliminate the risk of duplicative and conflicting litigation.”

In other words: нет.

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