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Federal Treasury Enterprise Sojuzplodoimport v. Spirits Int'l B.V.

United States District Court, S.D. New York

August 25, 2014

FEDERAL TREASURY ENTERPRISE SOJUZPLODOIMPORT and OAO " MOSCOW DISTILLERY CRISTALL,", Plaintiffs,
v.
SPIRITS INTERNATIONAL B.V., SPI SPIRITS LIMITED, SPI GROUP SA, YURI SHEFLER, ALEXEY OLIYNIK, ALLIED DOMECQ INTERNATIONAL HOLDING B.V., ALLIED DOMECQ SPIRITS & WINE USA, INC., WILLIAM GRANT & SONS USA, WILLIAM GRANT & SONS, INC., and STOLI GROUP (USA) LLC, Defendants

Page 396

For Plaintiffs: Daniel H. Bromberg, Esq., Jones Day, Washington, DC; Jessica Anne Rose, Esq., Marc Laurence Greenwald, Esq., Robert Lloyd Raskopf, Esq., Quinn Emanuel Urquhart & Sullivan LLP, New York, NY.

For Defendants: David M. Zionts, Esq., Bingham B. Leverich, Esq., Eugene Gulland, Esq., Covington & Burling, LLP, Washington, DC; Emily Johnson Henn, Esq., Covington & Burling, LLP, Redwood Shores, CA; Hope Ivy Hamilton, Esq., Holland & Hart LLP, Boulder, CO; David H. Bernstein, Esq., Carl Micarelli, Esq., Michael Shaper, Esq., Debevoise & Plimpton, LLP, New York, NY; Edward T. Colbert, Esq., Kenyon & Kenyon LLP, Washington, DC.

Page 397

OPINION AND ORDER

Shira A. Scheindlin, United States District Judge.

I. INTRODUCTION

Federal Treasury Enterprise Sojuzplodoimport (" FTE" ) and OAO " Moscow Distillery Cristall" (" Cristall" ) bring this action against Defendants based on their alleged unlawful misappropriation and commercial exploitation of the Stolichnaya trademarks (the " Marks" ) related to the sale of vodka and other spirits in the United

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States.[1] Defendants include Yuri Shefler and Alexey Oliynik, their companies -- Spirits International B.V., SPI Group SA, and SPI Spirits Limited (collectively " SPI" ); Allied Domecq International Holding B.V., and Allied Domecq Spirits and Wine USA, Inc. (collectively " Allied Domecq" ); William Grant & Sons USA and William Grant & Sons, Inc. (collectively " WGS" ); and Stoli Group (USA) LLC (" Stoli Group" ).[2] FTE brings claims for federal trademark infringement (Claim 1), federal unfair competition (Claim 2), federal trademark dilution (Claim 3), state law trademark infringement (Claim 4), state law unfair competition (Claim 5), state law trademark dilution (Claim 6), contributory trademark infringement (Claim 7), contributory unfair competition (Claim 8), contributory federal trademark dilution (Claim 9), federal rectification of register (Claim 10), and federal cancellation of registration (Claim 11).[3]

In prior litigation among these parties, the Second Circuit ruled that FTE lacked standing to assert similar claims under Section 32(1) of the Lanham Act.[4] FTE now argues that it has cured its standing defect and should be allowed to re-assert its claims.[5] Defendants move to dismiss under Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6). They argue that (1) FTE lacks standing under Section 32(1) of the Lanham Act; (2) all of FTE's claims are barred by res judicata; and (3) FTE has failed to state a claim because all of its claims are premised on a time-barred misappropriation claim.[6] For the following reasons, Defendants' motion is GRANTED in part and DENIED in part.

II. BACKGROUND

A. Factual Background

FTE is owned by the Russian Federation and is organized and operates under the laws of Russia.[7] The Russian Federation formed FTE in December 2001 to assume the functions and operations of VVO-SPI, the original owner of the Marks.[8] Cristall is a corporation organized under the laws of Russia.[9] Cristall has the exclusive license to produce vodka and other products in the United States bearing the Marks.[10] SPI purports to own United States Trademark Registration Nos. 865, 462, 1,244,735, and 1,291,454 for the Marks.[11] Allied Domecq, WGS, and Stoli Group are corporations licensed to do business in New York by the Alcoholic Beverage Control State Liquor Authority.[12]

1. The Marks

In the late 1940's, the Soviet Union began producing vodka under the Stolichnaya trademark.[13] In 1967, the Soviet Union

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created an enterprise named V/O SPI to export Stolichnaya vodka.[14] That same year, V/O SPI applied to register the Stolichnaya trademark with the United States Patent and Trademark Office (" USPTO" ).[15] In 1969, V/O SPI was granted Trademark Registration No. 865,462 for the Stolichnaya trademark.[16] In 964 and then again in 1983, V/O SPI applied for and was granted Trademark Registration No. 1,244,735 for the STOLI Mark and Registration No. 1,291,454 for the Stolichnaya Mark.[17] In 1990, V/O SPI was reorganized and renamed VVO-SPI.[18]

From 1969 until 2000, immense quantities of Stolichnaya vodka were sold in the United States by authorized licensees and distributors of V/O SPI: Monsieur Henri Wines, Ltd. and PepsiCo, Inc. (" PepsiCo" ).[19] V/O SPI, and subsequently VVO-SPI, spent millions of dollars annually to promote and advertise the Stolichnaya brand in the United States.[20]

2. Events Leading to this Suit

In 1990, the Soviet Union began to collapse and " billion dollar enterprises were hijacked by their managers and/or directors." [21] FTE alleges that VVO-SPI's General Director, Evgeniy Filippovich Sorochkin, hijacked VVO-SPI to make it appear that VVO-SPI had been lawfully transformed into a private joint stock company, VAO-SPI.[22] VAO-SPI asserted in its Charter that it was the successor to VVO-SPI.[23] However, FTE alleges that VAO-SPI was not the successor to VVO-SPI, and that VVO-SPI was never privatized.[24]

Defendants, however, claim to have rights in the Stolichnaya Marks based on a chain of purported transfers, starting with the purported assignment by VAO-SPI to an entity that SPI controls.[25] This purported assignment has been declared null and void by the Russian courts.[26]

In general, FTE alleges that Defendants have unlawfully imported and sold vodka bearing the Marks in the United States.[27] The vodka sold by Defendants is allegedly different in quality and character than the vodka sold by VVO-SPI.[28] However, FTE alleges that U.S. consumers may mistakenly believe that the vodka sold by Defendants is the same quality as that sold by VVO-SPI between 1969 and 2000.[29]

a. Allied Domecq's Alleged Infringement

In November 2000, VAO-SPI and Allied Domecq entered into an agreement that allowed Allied Domecq to distribute and sell vodka bearing the Marks.[30] Furthermore, in January 2001, SPI induced PepsiCo to assign whatever ...


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