Trademarks

Incontestability of Stolichnaya

The ownership of a well known trademark in vodka, Stolichnaya, has recently been questioned by a Russian distilling and bottling company, Obschestvo s Ogranichennoi Otvetstvennost’yu Chernogolovskii Zavod Alkogol’noi Produkcii (“Ost Alco”), and the Russian government, through the Russian Federal Treasury Enterprise Sojuzplodoimport (“FTE”). The plaintiffs brought their case for declaratory and injunctive relief, along with damages, against Spirits International N.V. (“SPI”) and Allied Domecq International Holdings B.V. (“Allied”) in the United States District Court, in the Southern District of New York. [1]

The concept of incontestability, which is defined in the Lanham Act, is a key concept in this case and will be the focus of this article. Incontestability provides conclusive proof of ownership along with defenses to prior use and descriptiveness. The first step in establishing incontestability is continuous commercial use for five continuous years since registration. [2] Additionally, there must not be any final decisions against the registrants claim nor any pending actions in the United States Patent and Trademark Office (“USPTO”) or other courts. [3] An affidavit must be filed with the director of the USPTO within the last year of the five year term of consecutive commercial use. [4] Finally, the mark must not be a generic term of the related goods or services to earn incontestability. [5]

In this case, tracing the chain of title is somewhat complicated. In the early 1970s, the Soviet government owned entity, the All-Union Association Sojuzplodoimport (“V/O-SPI”), which, among other things, regulated alcohol, registered the primary mark Stolichnaya with the USPTO. Rights to use of the Stolichnaya trademark in the United States were soon assigned to the firm, Kraus Brothers & Company (“Kraus”). Later, PepsiCo, Inc. (“Pepsi”) entered an agreement with V/O-SPI to export cola syrup to the Soviet Union in exchange for Pepsi to have rights in the Stolichnaya mark in the United States. Pepsi acquired Kraus in order to obtain the Stolichnaya mark. [6]

The records of the USPTO show that the rights to the Stolichnaya mark were assigned to Allied in 1999. The plaintiffs however allege that there was a cloud on the title and that the Russian rights to the mark were lost in the turmoil of the fall of the Soviet Union. [7]

The plaintiffs in this case were unable to successfully claim fraud, because such allegations were not specific. The plaintiffs simply attacked the transfer of the rights, where it is the exclusive rights to the use of the mark that are incontestable. [8]