Is Stoli Really a Russian Vodka?

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Is Stoli Really a Russian Vodka?

If you are a gay or lesbian (not that there is anything wrong with that, as the famous catch phrase in U.S. TV sitcom Seinfeld goes) or their supporter, please stop pouring Stoli vodka down the drain.

We get it. You are protesting Russia’s Anti-Gay Propaganda Law and wish to send a strong message to the Russian government. (We also agree with you to the extent that this law will not likely help protect Russian children—the alleged goal of that law, according to Russia’s lawmakers—from propaganda of alternative sexual orientation and lifestyle. What is propaganda, anyway?)

The Russian government will not hear you. Or worse, it will smile at you.

Well, the Russian government itself got nothing to smile about when it lost the Stoli brand or rather did not even have its day in court. The U.S. Appellate Court affirmed a dismissal of a Russian state-owned entity to try to claw-back the well-known STOLICHNAYA brand from a private entity due to a mere “formality,” that is lack of standing. Put differently, the Appellate Court agreed with the New York district court that took the position that Federal Treasury Enterprise Sojuzplodoimport ( (SPI) has no authority to represent the Russian Federation in this dispute.

SPI sued SPI Spirits Ltd. (Spirits), and its distributors in the U.S. arguing that the companies, which began using the STOLICHNAYA trademark (and its short version STOLI) after the collapse of the Soviet Union, did not have the rights to the mark. According to the Russian government and SPI, the entity it created to represent its rights, Spirits, that is controlled by the former managers of a state-owned entity with the same name Sojuzplodoimport or their successors allegedly acquired the Stoli brand outside the official privatization process and, therefore, that acquisition was illegal. The Russian government argued rather convincingly that a few individuals could not usurp the assets created by the entire nation. The Russian government invalidated the Spirits acquisition transaction as void in Russia and re-nationalized the STOLI brand, among with the other Soviet brands such as Moskovskaya vodka, Sovetskoe Shapmanskoe (Soviet Champagne) in Russia.

However, the Russian government encountered difficulties in the United States. In particular, the U.S. judge found that its state-owned SPI did not meet the criteria under U.S. law to stand in the shoes of the mark’s alleged real owner, the Russian Federation, a position with which the Appellate Court (Second Circuit) agreed.

We conclude that [SPI] is not an “assign” of the Russian Federation for statutory standing purposes under the [U.S. Trademark] Act…..The various documents presented to support plaintiffs’ position that [SPI] is an ‘assign’ of the Russian Federation do not resemble an assignment under United States law,” Judge Susan L. Carney said, writing for the panel.

Dismissal of its lawsuit, without even consideration on the merits, is a real blow to both, the Russian government and the well-respected New York-based law firm that represented SPI entity in this dispute. The case is Federal Treasury Enterprise Sojuzplodoimport, et al. v. SPI Spirits Ltd., et al., case number 11-4109, in the U.S. Court of Appeals for the Second Circuit.

So, the Stoli vodka that is sold in New York and the rest of U.S. is not vodka from Russia or related to Russia in any way other than the name and history, let alone owned or controlled by the Russian government. So, it does not make sense for the LGBT (Lesbian, Gay, Bisexual or Transgender) community or their supporters to continue to boycott Stoli in protest of Russia’s anti-gay laws, does it?

Curiously, and on a different but related subject, Russia recently created a specialized IP court. The first case this court put on its docket involves another vodka brand called SHUSTOV or SHUSTOFF depending on whether you are the Russian or Ukrainian entity involved in the case. The two entities fight over the rights to this heritage brand from imperial Russia in various jurisdictions, and chose Russia’s specialized court as their new battleground. This may create a wrong perception that vodka brands are the only IP that comes from Russia. Wrong perception.

Text © Maxim A. Voltchenko 2013
* This piece is not intended to be a technology or legal review. This posting may not necessarily represent the views of the author’s employing law firm. Although every effort has been made to verify the accuracy of items in this Blog, readers are urged to check independently on matters of specific concern or interest.