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The Russian Vodka Saga
What do the fall of the Soviet Union, a heist of trademark rights, and Stolichnaya vodka have in common? They are all key components of the Russian Federation's efforts to reclaim its trademarks in Stolichnaya vodka. After a convoluted history both of the transfer of these marks and the litigation to recover these marks, Federal Treasury Enterprise Sojuzplodoimport (FTE), the entity seeking to recover the Stolichnaya marks for the Russian Federation, has finally survived a motion to dismiss its case of trademark infringement after sixteen years of litigation. Federal Treasury Enterprise Sojuzplodoimport v. Spirits International B.V., 2020 WL 4349840 (S.D.N.Y. July 29, 2020). So why did it take so long for FTE to get to this stage?
The Stolichnaya marks have passed through many hands in a series of confusing corporate transactions. They have taken the following path to their current disputed ownership:
- In 1969, a Soviet state entity named V/O-SPI obtained a United States trademark for Stolichnaya vodka.
- V/O-SPI is renamed to VVO-SPI.
- VVO-SPI assigned the United States mark to PepsiCo in 1991; this assignment would revert to VVO-SPI in 2001.
- VVO-SPI was privatized and renamed to VAO-SPI.
- VAO-SPI represented to PepsiCo that it was the successor of VVO-SPI so that it would revert the marks to VAO-SPI.
- VAO-SPI's successor-in-interest sold the reversionary rights to ZAO-SPI.
- ZAO-SPI sold the rights to Spirits International.
- Spirits International entered into several distribution agreements; relevant here, it entered into an agreement with WGS to sell and distribute Stolichnaya vodka in the United States in 2008.
On its face, these transactions, while convoluted, do not seem to imply that the Russian Federation is still the proper owner of the Stolichnaya marks. But the list of these transactions omits one key fact — the privatization of VVO-SPI to VAO-SPI was fraudulent, as the Second Circuit found in 2010.
During the fall of the Soviet Union, the General Director of VVO-SPI, Evgeniy Sorochkin, took control of the VVO-SPI assets and privatized them in VAO-SPI. Sorochkin then convinced PepsiCo that this fraud did not occur and that VAO-SPI was the legitimate successor of VVO-SPI. Additionally, the subsequent transfer of the marks that led to Spirits International holding them could not be characterized as ones having clean hands. The transfer of rights from VAO-SPI to ZAO-SPI was calculated to get the rights to Spirits International, a company that is not organized in Russia. The same people who controlled ZAO-SPI also control Spirits International. Thus, in the tumult of the fall of the Soviet Union, Sorochkin was able to essentially steal the Stolichnaya marks from VVO-SPI and eventually transfer them to Spirits International.
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