Pursuant to the Civil Procedure Law, the facts established in a civil case need not be proved afresh should the dispute progress further through the courts. However, this principle is not absolute, as under the Civil Procedure Law a party is released from the burden of proof only if the dispute is between the same parties. Traditionally, the Latvian courts have observed this principle very strictly. Therefore, the facts established in a case must be proved afresh in subsequent proceedings even if the change in status of the parties is purely formal. In such cases the previous judgment has no force of evidence whatsoever.

Several judgments demonstrate how literally and narrowly the Latvian courts have interpreted this provision. One example is the trademark dispute over the rights to Moskovskaya Russian vodka. The trademark MOSKOVSKAYA RUSSIAN VODKA is associated with a well-known Russian brand of spirits. However, a long-established Latvian enterprise - Joint Stock Company Latvijas Balzams - has a historic right to use that trademark. Shortly after the occupation of Latvia and its incorporation into the Soviet Union in 1945, Latvijas Balzams began to produce spirits under the same brand and with a similar label.

As the trademark protection granted in the former Soviet Union was relatively weak, the issue did not prove problematic until after Latvia had regained its sovereignty in 1991. In the mid-1990s a dispute arose over the rights to the trademark. The conflict began when the Russian State Joint Stock Company Sojuzplodoimport registered the trademark MOSKOVSKAYA RUSSIAN VODKA in Latvia (Registration 30 810).

Latvian law sets out an administrative procedure for filing objections to trademark registration, which are examined by the Appeal Council of the Patent Board. If the parties are not satisfied with the outcome, they may appeal it under the judicial administrative procedure. In addition, and irrespective of the result of these proceedings, a party may also apply repeatedly to the court with regards to a trademark registration according to the general provisions for filing a claim. These two methods of challenging a registration are independent procedures under Latvian law.

Latvijas Balzams duly filed objections with the Appeal Council of the Patent Board, based on the fact that the trademark registered by Sojuzplodoimport was identical, in part, to a well-known brand name owned by the Latvian company.

Under the law effective at that time - that is, the 1993 Law on Trademarks - the right to a well-known brand name could serve as a basis for challenging a trademark registration. The Appeal Council sustained the objections and cancelled the MOSKOVSKAYA RUSSIAN VODKA mark registered by Sojuzplodoimport.

Sojuzplodoimport then took the case before the Riga Regional Court, but its complaint was dismissed on July 30 1997. A further appeal before the Civil Case Panel of the Supreme Court was dismissed on November 12 1997, while the Senate of the Supreme Court, acting as the court of cassation, also dismissed Sojuzplodoimport's claim on January 21 1988. All courts agreed that the cancellation of the trademark was just.

According to the Civil Procedure Law, an appeal court judgment becomes effective at the time it is announced, irrespective of whether it is appealed. The Civil Case Panel judgment therefore became effective on November 12 1997.

One of the main arguments behind the decisions was the fact, substantiated by numerous archive materials, that the legal predecessor of Latvijas Balzams had been producing and distributing spirits under the MOSKOVSKAYA RUSSIAN VODKA mark since 1945. Products bearing this mark were thus widely recognized by Latvian consumers as those of Latvijas Balzams.

Once the Civil Case Panel judgment took effect on November 12 1997, Latvijas Balzams moved swiftly to register the MOSKOVSKAYA RUSSIAN VODKA mark and duly obtained registration on December 20 1997 (Registration M 38 970). Sojuzplodoimport filed another claim against Latvijas Balzams, opposing the registration. On December 6 1999 the Riga Regional Court dismissed the claim, but it was subsequently upheld by the Civil Case Panel of the Supreme Court on October 12 2000. The force of the evidence was one crucial point on which the Civil Case Panel differed in its interpretation from the Riga Regional Court. Latvijas Balzams, which asserted the long-term production and distribution of Moskovskaya Russian Vodka in Latvia, supported its position by stating that this fact had already been established in the initial proceedings, in which Sojuzplodoimport's complaint had been dismissed. It based its reasoning on the fact that the same participants - Sojuzplodoimport and Latvijas Balzams - were involved in both actions.

In granting Sojuzplodoimport's request to cancel the trademark registration, the Civil Case Panel pointed out that the Riga Regional Court had incorrectly referred to the January 21 1998 judgment of the Supreme Court Senate in the original proceedings between the parties. The long-term production of Moskovskaya Russian Vodka in Latvia was established under this judgment. However, the Civil Case Panel did not agree that the facts as previously established could be assumed in the current proceedings. Although the proceedings involved the same parties, their nature was fundamentally different. The first action was heard under the administrative procedure, as the complaint was submitted against a decision of the Appeal Council of the Patent Board. The second action sought cancellation of the trademark registration under the general provisions for filing a claim. As understood by the Civil Case Panel, the facts established in the 1998 judgment thus could not be assumed in the current dispute.

This judgment was subsequently overruled on January 31 2001 by the Supreme Court Senate. The case was remitted back to the Civil Case Panel for rehearing. Nonetheless, the Senate agreed that the Riga Regional Court erred in taking into consideration the judgment issued in the original proceedings, despite the fact that the court had evaluated the facts of the case in a more complete and impartial manner.

The issue was also at the heart of a second trademark dispute involving the marks SOVETSKOYE SHAMPANSKOYE and SOVETSKOYE IGRISTOYE, both of which are owned by Latvijas Balzams. However, the events in this case suggest that the courts may be shifting their position on the admissibility of previously established facts.

On March 20 1998 Joint Stock Company Rigas Vini registered the trademarks SOVETSKOYE SHAMPANSKOYE (Registration 40 177) and SOVETSKOYE IGRISTOYE (Registration M 40 178) for alcoholic beverages. In 2000 Rigas Vini merged with Latvijas Balzams, which became Rigas Vini's assignee.

Latvijas Balzams filed a claim against SIA Aroma Floris on the basis of the registered trademark rights, requesting a ban on the importation of goods manufactured by Aroma Floris bearing labels which were confusingly similar to the SOVETSKOYE SHAMPANSKOYE trademark.

The defendant counterclaimed, seeking the cancellation of the SOVETSKOYE SHAMPANSKOYE trademark. It based its claim on its assertion that the long-term production and distribution of Sovetskoye Shampanskoye sparkling wine by several companies throughout the Soviet Union meant that the term had lost its distinctiveness and had instead become the designation for a particular kind of production method.

The Riga Regional Court dismissed Latvijas Balzams's claim and partially satisfied that of Aroma Floris, by ordering that the words 'Sovetskoye Shampanskoye' be disclaimed from the registered trademark. The court recognized as proved the fact that the term had become the designation for a production method.

A dispute between Latvijas Balzams and SIA Eliots Eirovins over the SOVETSKOYE IGRISTOYE mark had a similar outcome. While the Riga Regional Court initially satisfied Eliots Eirovins's counterclaim by ordering the cancellation of the trademark in full, the court of appeal modified this decision by ordering only that the words 'Sovetskoye Igristoye' be removed from the trademark.

The facts established in these judgments came into play in an action brought by Latvijas Balzams against SIA LION & Ko in February 2002. This action was also based on Latvijas Balzams's registered rights to the SOVETSKOYE SHAMPANSKOYE and SOVETSKOYE IGRISTOYE marks. Latvijas Balzams sought an order prohibiting LION & Ko from selling a similar product with a confusingly similar label. Latvijas Balzams believed that it still had rights over the full trademarks which entitled it to seek this order.

LION & Ko contended that Latvijas Balzams had no such rights because the words 'Sovetskoye Shampanskoye' and 'Sovetskoye Igristoye' had been deleted from the respective trademarks.

Latvijas Balzams insisted that the court was not entitled to refer to the facts established in the previous proceedings involving Aroma Floris and Eliots Eirovins. However, on this occasion both the Riga Regional Court and the appeal court disregarded that those facts had been established in proceedings involving different participants and allowed them to stand, thereby dismissing Latvijas Balzams's claim.

As the proceedings are still in progress, it is difficult to say with certainty whether the Latvian courts have moved away from a formal and restrictive approach towards facts established in earlier proceedings, to a wider and more efficient interpretation which accords with the principle that facts established by the court should not be proved anew. These latest decisions seem to suggest such a shift, but they may yet be overturned by the Supreme Court Senate.

For further information on this topic please contact Janis Rozenfelds at Rozenfelds & Partners by telephone (+371 7821563) or by fax (+371 7242 202) or by email ([email protected]).