Background

For more than a decade Russian state-owned company FKP Sojuzplodoimport fought a legal battle with Dutch company Spirits International regarding the ownership of, among other marks, well-known vodka trademarks STOLICHNAYA and MOSKOVSKAYA. The issue under debate was whether Spirits International, owned by Russian businessman Yuri Shefler, had obtained the trademarks legitimately following the demise of the Soviet Union. Spirits International argued that it had rightfully acquired the trademarks from FKP, which originally owned the trademarks, after it had been privatised.

On July 24 2012 the Court of Appeal of The Hague confirmed a 2006 interlocutory judgment of the Rotterdam District Court in favour of Russia. The appeal court ruled that no valid privatisation of FKD had taken place and that Spirits International had not obtained the trademarks in good faith. Consequently, the trademarks remained with Russia. Following a cassation appeal by Spirits International, on December 20 2013 the Supreme Court upheld the appeal court decision and referred the case back to the Rotterdam District Court to resume the main proceedings.

On March 25 2015 the Rotterdam District Court ordered Spirits International to transfer the trademark rights to Russia, subject to a penalty of €100,000 and an additional daily fine of €50,000. The decision set a precedent for other similar cases pending worldwide. In addition, the Rotterdam District Court prohibited Spirits International from infringing the STOLICHNAYA and MOSKOVSKAYA marks (subject to the same penalty).

Separate from FKP's request that certain trademarks be transferred to it due to being acquired illegally, FKP also requested the revocation of other trademarks that had been registered by Spirits International. In this regard the Rotterdam District Court decided to revoke the STOLICHNAYA and MOSKOVSKAYA word and figurative trademarks registered by Spirits International. However, the court denied the request to invalidate various trademark registrations (word and figurative) owned by Spirits International, which were limited to STOLI (as opposed to STOLICHNAYA), as it held there to be no likelihood of confusion between these trademarks and the STOLICHNAYA marks.

The latest dispute between FKP and Spirits International concerned alleged trademark infringement by Spirits International by using the trademark STOLI for vodka in Benelux.

Facts

The sale of Stolichnaya-branded vodka in Benelux ceased following the Rotterdam District Court ruling. However, after the decision, Spirits International marketed its vodka in Benelux under the registered STOLI mark (below left) and promoted the vodka under the slogan "Same Vodka. Different Label".

Click here to view image.

Click here to view image.

FKP sought an injunction in summary proceedings at the District Court of The Hague, invoking:

  • a trademark which Spirits International had been ordered to transfer to it (as discussed above), but which had not yet been transferred; and
  • another earlier trademark (above right).

In addition, FBK requested Spirits International's sales and profit information, the recall of supplied Stoli bottles and the destruction of Stoli-branded bottles.

Spirits International argued that:

  • the Rotterdam District Court had already held that the STOLI trademarks were not confusingly similar to the STOLICHNAYA trademarks;
  • in the assessment, only the words 'Stoli' and 'Stolichnaya' (which were not similar) should be taken into account because the use of the other elements in the trademarks was common practice and therefore could not contribute to the distinctive character of the mark (ie, the use of particular colours, stripes, coins, buildings and terms such as 'premium' and 'vodka'); and
  • it carried out no acts (in Benelux) that were reserved for the mark owner – the vodka was imported directly from Latvia by the Benelux distributors of Spirits International.

In reply to this last argument, FKP argued that the defendant, in its capacity as owner of the STOLI marks, had commited trademark infringement by allowing its distributors to sell Stoli-branded vodka in Benelux.

Decision

The court (in preliminary judgment) held that the signs were confusingly similar, in particular since Spirits International's sign was used in relation to goods that were identical to those covered by FKP's trademark registration. The court held that the differences would not go unnoticed by the relevant public – in particular, between the words 'Stoli' and 'Stolichnaya' – but that the relevant public could think it was a restyle of the label. Further, FKP submitted evidence of actual confusion.

The defendant's reference to the verdict of the Rotterdam District Court was irrelevant since in that judgment, other trademarks were compared. The overall impression of the STOLI trademark at issue could not be considered equal to that of the STOLI (word and figurative) trademarks assessed by the district court, even if – as the defendant claimed – the distinctive character of the particular individual elements was considered to be limited.

Since the court had already concluded that the sign was confusingly similar to FKP's STOLICHNAYA trademark, there was no need to carry out further assessment of the similarities with the STOLICHNAYA trademark still to be transferred to FKP by Spirits International. Consequently, the court remarked that it did not need to rule on whether FKP could invoke a trademark which had not yet been transferred to it.

However, given the absence of relevant acts by Spirits International in Benelux, the court concluded that no trademark infringement had occurred. The existence of an agreement between the defendant and its distributors allowing it to place Stoli-branded bottles on the Benelux market could not be considered to be an act of infringement.

Although Spirits International had not infringed FKP's trademark rights, the court held that in the circumstances, Spirits International had acted unlawfully by facilitating trademark infringement by its distributors in Benelux through use of the STOLI trademark. The specific circumstances were that Spirits International:

  • in its capacity as owner of the STOLI trademark, had facilitated infringing use in Benelux;
  • had admitted that it had facilitated this use with the purpose of transferring the goodwill in one of the STOLICHNAYA mark that it had been ordered to transfer to FKP to its own STOLI trademark; and
  • was therefore aware of the confusing similarities between the marks.

The act was unlawful irrespective of the fact that Spirits International had created goodwill in the STOLICHNAYA trademark while it held the trademark rights. In this regard, the court remarked that Spirits International might be entitled to claim compensation from FKP based on, for example, unjustified enrichment. However, this did not justify Spirits International independently transferring the goodwill from the STOLICHNAYA trademark to the STOLI trademark by using a confusingly similar mark.

Therefore, the District Court of The Hague prohibited the unlawful acts carried out by Spirits International in Benelux, also taking into account the fact that Spirits International did not dispute that it had the power to end use of the STOLI trademark in Benelux. However, the court held that as Spirits International itself did not perform any infringing acts, the other claims were denied (disclosure of sales and profit information, recall and destruction).

Comment

Dutch case law on the issue of unlawful facilitation of trademark infringement is scarce. In this decision the District Court of The Hague gave some further guidance on the topic. The court deemed it important that Spirits International was the trademark owner and was aware that infringement would occur when the trademark was used by its distributors.

Quite surprising is the general remark of the court that Spirits International may, under the circumstances, be entitled to compensation from FKP relating to the goodwill created in the STOLICHNAYA trademark which it must transfer to FKP following the Rotterdam District Court order. In this regard the court suggested that Spirits International could rely on the tenet of unjustified enrichment. However, Article 6:212(1) of the Civil Code requires a test of reasonableness: "The person who has been unjustifiably enriched at the expense of another person, has the obligation towards that other person to repair the damage up to the amount of his enrichment, as far as this is reasonable."

It is hard to imagine that it would be reasonable if Spirits International were entitled to compensation from FKP relating to the goodwill that it had built up in the STOLICHNAYA trademark. After all, after extensive litigation the Rotterdam District Court held that Spirits International had acted in bad faith when it acquired the STOLICHNAYA trademark and therefore must transfer the trademark to its rightful owner. It comes across as unreasonable if a party which acted in bad faith could nevertheless profit from this act through a claim of unjustified enrichment. Acquiring (and subsequently using) a trademark in bad faith entails the risk of being unable to materialise the created goodwill in the trademark when it has to be transferred to its rightful owner.

For further information on this topic please contact Bram Woltering at AKD by telephone (+31 88 253 50 00) or email (bwoltering@akd.nl). The AKD website can be accessed at www.akd.nl.

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