Supreme Court: famous vodka trademarks belong to Russia

On December 20 2013 Dutch company Spirits International was defeated in the Supreme Court in its longstanding legal battle with Russian federal company FKP. At the centre of the dispute was the claim to ownership of two Benelux trademark registrations for the renowned Vodka trademarks STOLICHNAYA and MOSKOVSKAYA. The Supreme Court ruled that they belonged to FKP.  

In 1973 the trademarks were registered by a state-owned company of the Union of Soviet Socialist Republics (USSR), VO. In the turbulent years directly after the fall of the USSR, the trademarks were attributed to a Russian private company, VAO. VAO was (allegedly) a transformation and, therefore, was the successor in universal title of VO. The trademarks were transferred to another Russian private company, ZAO, in 1998.

In 1999 Spirits obtained the rights to the trademarks from ZAO. However, the Court of Appeal of The Hague ruled that Spirits had not obtained the trademarks in good faith (its co-founder and principal shareholder knew or should have known that ZAO was not entitled to them) and concluded that the marks (still) belonged to FKP. The court thus ordered Spirits to allow the trademarks to be registered in FPK’s name.  

The Supreme Court upheld this decision.

The Supreme Court also found that FPK was entitled to the cancellation of several of Spirits’ Benelux trademarks (ie, those registered after some of FPK’s own vodka trademarks). The Supreme Court held that FPK had not forfeited its right to seek cancellation. The fact that FPK had “tolerated” the existence of one of these trademarks for more than five years was irrelevant, because the application for this mark had been filed in bad faith. The Supreme Court added that, to exclude a finding of bad faith, FPK would have had to actively grant a licence to use the mark to Spirits, which was not the case.                

The Supreme Court further held that the concept of 'bad faith' in trademark law is an autonomous Community law concept that should be interpreted accordingly. The Supreme Court referred to the recent decisions of the Court of Justice of the European Union (ECJ) in Malaysia Dairy v Yakult (Case C-320/12) and Lindt v Frans Hauswirth GmbH (Case C-529/07) regarding the concept of bad faith. In these decisions, the ECJ said that bad faith should be assessed in view of all relevant circumstances in a concrete matter, and that bad faith may be assumed if an applicant knew, or should have known, that it was acting in bad faith. The Supreme Court ruled accordingly.

This decision shows that, under Dutch law, the ‘real’ owner of a trademark has an effective alternative to a action for cancellation on the ground of bad faith, which must be initiated within five years of registration. Instead of seeking the cancellation of the bad-faith registration, it may demand the transfer of the mark by changing the name of the owner in the trademark register. Such an action is possible up to 20 years after registration. In the case at hand, this option offered FPK a practical solution in its quest to retrieve some of the many trademarks that it has lost in the years following the fall of the USSR.

Sebastiaan Brommersma, Klos Morel Vos & Schaap, Amsterdam