On January 5, 2015, the United States Court of Appeals for the Second Circuit in New York City ruled that a federal judge had not appropriately considered the validity of trademark transfers under Russian law in the matter of Fed. Treasury Enter. Sojuzplodoimport v. Spirits Int'l B.V.. Bearing in mind the ideas of state sovereignty and comity, Judge Dennis Jacobs writes: …the US District Court for the Southern District of New York erred in considering whether the asserted basis for standing to pursue the section 32(1) claims was valid under Russian law.
During the prime of the Soviet Union, the Soviet enterprise known as VVO-SPI obtained a trademark in the United States in order to sell its vodka Stolichanya through various US distributors such as PepsiCo. VVO-SPI eventually assigned the trademark licenses to PepsiCo from 1990 to 2000.
The subsequent collapse of the Soviet Union in the early 1990s led to widespread privatization of various Soviet enterprises, purportedly including VVO-SPI, which ultimately became controlled by SPI International. As successor in interest to VVO-SPI, SPI International claimed ownership of the Stolichanya trademarks. After discontinuing the licensing agreement with PepsiCo in 2000, SPI sold the trademark rights to the Dutch company Allied Domecq. However, in 2001, a court in the Russian Federation ruled that VVO-SPI had not actually been privatized. In response to the ruling, the Russian Federation established the agency and VVO-SPI successor known as the Federal Treasury Enterprise Sojuzplodoimport in an effort to reclaim the trademarks. FTE and Cristall - a company that FTE had entered into exclusive licensing agreements with - sued Allied Domecq, its subsidiaries, and SPI International.
In the US District Court for the Southern District of New York, FTE laid claim to the Stolichnaya vodka trademarks that originated during the Soviet Union, arguing violations of section 32(1) of the Lanham Act, as well as other federal and state law claims. Ultimately, the district court dismissed all the claims, citing incontestability of the trademarks due to the duration of the trademark's existence.
A subsequent issuance of a Decree by the Russian Federation on behalf of FTE led to the vacating of the dismissal of section 32(1) claim. As Judge Jacobs writes:
The Degree and Assignment were indisputably acts of a foreign government. The declaration of a United States court that the executive branch of the Russian government violated its own law by transferring its own rights to its quasi-governmental entity (FTE) would be an affront to the government of a foreign sovereign.The court further cited a potential violation of foreign sovereignty, stating,
The doctrines of comity and act of state preclude a United States court from invalidating an action of a foreign sovereign with respect to a transfer of rights among its branches or entities on the ground that the transfer is invalid under the law of that foreign sovereign.Put simply, the ruling acknowledges the power of the sovereign state and its government - a factor that cannot be ignored in a United States Court. The case, in regards to the section 32(1) claim, has been remanded for further proceedings. -- Kathryn Campbell, Legal Assistant, Berliner Corcoran & Rowe LLP, Washington, DC.
Thu, / Embassy Law Link