Brazil: A Barroom Brawl

Last Updated: 15 April 2010
Article by Eduardo Turkienicz

A barroom brawl often erupts in a flash and is over as soon as it has started. This, however, is the story of a brawl for the barroom itself, which, at least as far as the round that has taken place in Brazil is concerned, is only now coming to an end. The victory Felsberg e Associados law firm has achieved for its client, FKP Sojuzplodoimport, entails the rights to the use of the famous Stolichnaya vodka trademark in Brazil for importation and distribution purposes.

The saga starts with the fall of communism and the opening of the Russian market for free enterprise. Within the economic environment which saw the privatization of state companies, many opportunities were taken which adhered to all the regulations concerning company and brand registration whilst there were others which did not.

One product ready for privatization was the world-famous Russian vodka Stolichnaya, the rights to which were owned, at the time, by the state company 'VVO Sojuzplodoimport'. In 1990, a private company was registered by the newly formed Russian government, under the name of 'VAO Sojuzplodoimport', illegally claiming to be the rightful successor to the Soviet State owned company.

During the years in which the Russian economy was opening up, with the Russian authorities' attentions focused elsewhere, VAO passed a number of the vodka brand names registered to VVO outside Russia into its own name.

Smokescreens

In Brazil, the registrations of the brands of vodka under the name VVO were filed in the 1970s and in 1993, the first request for transfer into the name of VAO was received by the Brazilian authorities. In June 1994, a company called Plodimex do Brasil requested transfer of VAO's registration to its own name, and in March 2000, Dutch company 'Spirits International' requested the transfer of brand ownership from Plodimex to itself.

"These changes in the corporate organization of the company and the transfer of rights from one brand name to another appeared to be smokescreens to hide the true origins of the company," explains Eduardo Turkienicz, Partner with Felsberg e Associados and member of the firm's Intellectual Property department.

By this time, the brand rights had been registered in other countries for a number of years, and quite often the statute of limitations for appeal against such registrations had passed – as was the case in Brazil.

Meanwhile, FKP Sojuzplodoimport had been established by the Russian Federation as the state organ responsible for controlling and defending those brand names which belonged to the State.

In October 2001, FKP claimed a great victory when the Russian Supreme Court of Trade ruled that VAO was not in fact the natural successor to VVO and the company's articles claiming such status were annulled. This, however, was really just the beginning of FKP's struggle to remove the vodka being distributed by Spirits from the international market.

Along the Way

"In 2002, Spirits appealed to the European Court of Human Rights, arguing that the Russian Justice Department had not allowed it the right to defense, but the Court considered that the decision had been correct," explains Thomas Felsberg, Founding Partner of Felsberg e Associados, which was contracted to defend FKP in 2004.

During the years in which it has defended FKP, Felsberg e Associados filed a case with the Federal Regional Court of Rio de Janeiro requesting the annulling of the transference of the brand name to Spirits which had requested such transfer from the National Institute for Industrial Property as far back as 1993. This request for annulment was unsuccessful at the time, with both Spirits and FKP being granted rights to the brand name whilst awaiting the decision from the Supreme Court.

However, Felsberg e Associados was able to undermine the Spirits case by successfully proving that Spirits' 'Stolichnaya' was not in fact Russian!

"We sent an administrative representation to MAPA (the Ministry of Agriculture, Cattle Raising and Provisions) stating that the Spirits vodka being presented as a genuine Russian product in fact originates from Latvia," explains Ernani Guimarães, Partner with Felsberg e Associados.

Victory!

FKP has been fighting Spirits in the courtrooms of fourteen different countries and in eight of them positive outcomes have now been achieved. On March 3, the Brazilian Superior Court of Justice ratified the Russian decision annulling the legitimacy of VAO's claim to the VVO-held brand names. This therefore paves the way to establish FKP as the legitimate owner of rights to the exploration of the Stolichnaya brand, as well as a number of other quality vodkas, in Brazil.

"FKP is over the moon," says Turkienicz. "The path has opened up for our client to fully develop its business in Brazil."

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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