Stolichnaya Still Not Russian
// American court lets brand stay with SPI
The Southern District Court of New York has rejected part of the suit filed by the state-owned Soyuzplodoimport against SPI, the company belonging to entrepreneur Yury Shefler. There is a warrant out for Shefler's arrest in Russia. Three-quarters of the sales of Stloichnaya vodka are in the Unites States. Soyuzplodoimport filed the suit jointly with the Ost-Alko, which was founded by State Duma member Vladimir Pekarev against SPI and its U.S. distributor Allied Domecq, was heard March 31.
Among other demands, Soyuzplodoimport wanted to the respondent's trademark registration for Stolichnaya cancelled, claiming that Shefler's company obtained it fraudulently and that the fact that Stolichnaya Russian Vodka is produced in Latvia represents unfair competition. The ruling was based in the fact that SPI had used the trademark in the U.S. for five years, after which term it is automatically considered undisputed. The ruling can be appealed. Soyuzplodoimport head Vladimir Loginov expressed confidence that the final victory would be Soyuzplodoimport's.
The conflict over the well-known Soviet brand began in 2001. After a number of suits between the Ministry of Agriculture and SPI, more than 40 vodka trademarks, among them Stolichnaya, Moskovskaya and Russkaya, were reregistered to the ministry, which then transferred them in trust to Soyuzplodoimport. SPI then practically ceased operations in Russia and transferred its production to the Latvijas Balzams plant, which it owns. SPI and its distributor Pernod Ricard, which own Allied Domecq, control Stolichnaya throughout the rest of the world. The U.S. market for it is estimated at $375 million per year and international sales (excluding Russia) at $100 million. In Russia, where Soyuzplodoimport controls the brand, sales are worth about $20 million per year.
Legal analysts say that the New York court's decision is a serious blow to Soyuzplodoimport's struggle. Few appeals are accepted in the U.S. The parties may still reach a settlement, however. Talks on the matter have been underway since last September, as both sides confirm, although no details are known from them other than that Soyuzplodoimport has made an agreement with Dresdner Bank and Morgan Stanley is serving as financial consultant to SPI.
Roman Ovchinnikov, Evgeny Khvostik
All the Article in Russian as of Apr. 04, 2006
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