“I’m going to allow discovery to go forward,” U.S. District Judge Sidney Stein said at a two-hour hearing Thursday in New York.
A Russian word that translates as “from the capital,” Stolichnaya was run by the Soviet Union in 1969 when it obtained protected U.S. trademark status to market its vodka domestically and abroad.
Just a year before the government’s dissolution some two decades later, the Soviet Union assigned this registration to PepsiCo. Stoli’s rights transferred again amid sweeping privatization to the SPI Group, owned by Russian billionaire Yuri Shefler.
Russia’s state-run Federal Treasury Enterprise Sojuzplodoimport (FTE) filed suit in 2014 against SPI, Shefler and various other entities that acquired rights in the vodka. The Dutch company Allied Domecq International Holdings BV and its U.S. subsidiary are part of this group.
After years of false starts and successful appeals, FTE finally got the case off the ground in Judge Stein’s New York courtroom.
Keith Hummel, an attorney for SPI Group with Cravath, Swaine & Moore, argued that the case is not a typical infringement case in that there was no violation of a trademark until the FTE made its claim.
“Right now, there is no infringing activity,” he said. “There is an allegation of infringing activity.”
SPI filed a countersuit seeking compensation for the trademark, if the company is forced to relinquish it.
FTE’s attorney Guyon Knight, an associate at Quinn Emanuel, said his opponent’s counteroffensive “stinks.”
“It provokes a visceral reaction,” he added.
SPI insists that it deserves compensation for unjust enrichment because the state-run company allowed them to spend money on the brand while sitting on its rights.
Rebuffing that argument, Knight said: “Those facts just ain’t there.”
Stein said he would give both parties the opportunity to determine those facts.
“I’m going to adhere to my initial determination, and deny the motions [to dismiss],” he said.
Lawyers for the parties declined to comment on the rulings following the hearing.