Property, intangible

a blog about ownership of intellectual property rights and its licensing

Over Again for STOLI – But Just For Now

Federal Treasury Enterprise Sojuzplodoimport first sued Spirits International B.V. over the STOLICHNAYA trademark 10 years ago, in October, 2004. Two lawsuits later, FTE still hasn’t survived an examination of its standing. The case has been dismissed a second in the district court, but even the district court thinks that an appeal is warranted: “In the short run, the parties to this action could benefit from a de novo appellate review of this decision—I have little doubt that FTE will seek such review.”

Where we last stood,* after losing the first case FTE obtained an assignment of the STOLICHNAYA trademarks from the Russian government and sued again. The court ruled that all of FTE’s claims were barred except for one, for infringement of a registered trademark under Section 32. The defendants moved to dismiss this claim too, arguing that under the Russian Civil Code FTE was not a type of entity that was allowed to own trademarks. The court didn’t have enough information on Russian law to rule that the assignment was invalid, so the claim survived.

The court has now heard testimony from experts on Russian law and reached a conclusion. Under Russian law, FTE is a “unitary enterprise,” which is a kind of  of entity that may only manage property, not own it. The question was whether trademarks are a kind of property that a unitary enterprise may not own, and the court concluded that they are. Therefore, FTE does not own the trademarks and does not have standing under Section 32 of the Lanham Act. I’ll leave you to read the detailed and complex opinion by the eminent Judge Scheindlin.

But even Judge Scheindlin isn’t satisfied with the outcome:

Based on the evidence before the Court, I find that FTE cannot hold exclusive rights to trademarks outside of operative management. This has not been an easy decision. I am somewhat uncomfortable telling a foreign government that a validly enacted decree cannot achieve the result that was clearly intended by its passage. I am also uncomfortable interpreting various sections of the laws of a foreign country—which I can only review in imperfect translation—when those sections have not yet been addressed and defined by the courts of that country. But Rule 44.1 requires me to determine the relevant foreign law in a dispute pending in a U.S. court. While I can rely on all available sources, and credit whatever expert testimony I choose, there is one thing I cannot do which would be the most helpful. I cannot certify these unsettled questions of Russian law to the Russian courts.

So, even the judge agrees there is more to come.

* For more information you can read the four earlier posts about it—caution, recursive link.

Federal Treasury Enterprise Sojuzplodoimport v. Spirits Int’l B.V., No. 14-cv-0712 (SAS) (S.D.N.Y. Nov. 24, 2014).

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