Spirits International loses US rights to RUSSKAYA mark

United States of America

In a decision after a full trial, the Trademark Trial and Appeal Board has held in AV Brands Inc v Spirits International BV (Cancellation 92043340, March 31 2009) that the RUSSKAYA mark registration owned by Spirits International BV, a large international company primarily engaged in the production and sale of Russian vodka sold under the RUSSKAYA and other marks, should be cancelled based on abandonment. The board refused to recognize Spirits’ explanation that it had not used the mark in the United States because of its attempts to stop the Russian Federation seeking to take over the brand through litigation filed around the world. Spirits also contended that AV Brands Inc had brought the proceeding on behalf of the Russian Federation as well as on its own behalf, and as a result did not have the necessary standing.

AV Brands, which had a pending intent-to-use application for a RUSSKAYA mark, sought cancellation because it claimed that:
  • Spirits' existing registration had not been used in the United States for more than three consecutive years; and
  • without cancellation the registration barred AV Brands' intent-to-use application for the same mark. 
In reaching its decision, the board first considered AV Brands' standing to assert a claim of abandonment. Recognizing that its intent-to-use application established standing, despite the fact that it had been assigned from one entity to another as part of an apparent asset purchase, the board recognized AV Brands' right to assert an abandonment claim on several grounds. The board recognized that there was nothing to indicate that the assignment was made without that portion of business that the mark represented. In all events, the board held that AV Brands' standing as an entity which would sell the same type of goods as Spirits independently established its standing to assert abandonment. In fact, the evidence that Spirits had introduced showed that AV Brands had filed an application with the Bureau of Alcohol Tobacco and Firearms for a certificate of label approval for RUSSKAYA vodka - a prerequisite for any company wanting to sell alcoholic beverages in the United States.

Regarding the claim of abandonment, the board noted that AV Brands bore the initial burden to prove abandonment. Once the prima facie case on non-use of the mark for three consecutive years was met, Spirits then bore the burden to rebut the presumption of abandonment from the lack of use for three years. Excusable non-use requires evidence of an intent to resume use. This evidence must be more than “mere conclusory statements or denials”. AV Brands could not meet that standard: it provided no documentary evidence to corroborate witness testimony as to the reasons for non-use. Reasons given for non-use based on other litigation outside the United States did not stand up to scrutiny because most of the litigation began only after the initial three-year non-use period. In all events, trademark law is territorial. For example, a ruling by a Russian court would not determine or affect rights in the United States, rendering Spirits' alleged reason of being distracted by worldwide litigation “not factually credible, and… legally unreasonable in any event”.

Spirits also failed to establish proof of intent to resume use during the three-year non-use period. Here too, conclusory statements of intent to resume use were held to be insufficient. The board relied heavily on the fact that Spirits had not come forward with a single document that reflected any intent to resume use of the mark.

The board's 53-page decision should serve to remind registrants of both the importance of use of the mark in the United States and the need to have and produce documents proving use, or proving intent to resume use, as well as valid justification for non-use.
Rochelle D Alpert, Morgan Lewis, San Francisco

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