Russian firm responds to vodka trademark auction

A Russian state-owned liquor company said it would pursue ‘lengthy litigations’ if the vodka trademarks it claims ownership over are auctioned next week.

The Federal Treasury Enterprise Sojuzplodoimport (FKP) claims the rights to the Benelux trademarks of 18 Russian state-owned vodka brands to be auctioned next week are in the midst of ‘at least two lawsuits’ in the Netherlands.

Earlier this week, the District Court of The Hague rejected a last-minute appeal by FKP, giving the green light for the auction of Benelux trademarks of 18 Russian state-owned vodka brands, including Stolichnaya and Moskovskaya, on 6 December.

In response, a statement from FKP said: “The rights to the trademarks put up for sale are being disputed in at least two lawsuits in the Netherlands, the decision in which may call into question the legality of the transaction concluded as a result of the auction, with corresponding negative consequences for their acquirer.”

FKP claimed this could include returning the trademarks to “rightful owner” FKP, and future legal proceedings to return funds paid for the trademarks and “compensation for damages”.

Origins of the dispute

The dispute stems from former majority shareholders of Yukos Oil company as part of their US$58 billion damages claim.

GML, Yukos Universal, Hulley Enterprises, and Veteran Petroleum were the majority shareholders of the former Yukos Oil Company.

The former Yukos majority shareholders seized the Benelux trademarks for ‘illegal, politically motivated expropriation’ of the Russian oil giant in 2003.

In 2014, the independent Arbitral Tribunal at the Peace Palace in The Hague concluded “the Russian authorities were conducting a ruthless campaign to destroy Yukos [and] appropriate its assets”. As a result, it awarded Yukos’ majority shareholders more than US$50bn in compensation.

In February 2020, The Hague Court of Appeal upheld the awards with immediate enforceability.

The Dutch Supreme Court acknowledged the ruling in November 2021, but referred a ‘minor’ part of the case to the Amsterdam Court of Appeal on procedural grounds.

However, as the compensation was allegedly not acknowledged by FKP, the shareholders seized its assets in the form of the 18 Benelux trademarks.

The Dutch Court of Appeal in The Hague approved the seizure of the Benelux trademarks in June 2022.

FKP responds

However, the FKP response also said that in August 2022, the Supreme Court of the Netherlands considered the complaint by FKP against the Hague Court of Appeal, which “did not recognise the enterprise as the rightful owner of trademarks and considered it [im]possible to sell them in order to repay other persons’ debts, without determining what rights to them the Federal Treasury Enterprise Sojuzplodoimport has”.

The statement said: “The lack of full and reliable information about trademarks offered for sale at auction creates serious risks both for persons who have rights to trademarks and for persons who intend to buy them.

“However, for some reason, the auction organisers do not consider it necessary to provide potential buyers with the necessary information.

“The Federal Treasury Enterprise Sojuzplodoimport [will] do its best to use all legal methods available in the difficult political conditions to prevent the sale of trademarks, at least until the end of the proceedings in the Supreme Court of the Netherlands.

“At the same time, it should not be ruled out that lengthy litigations will result from the hasty sale of trademarks belonging to the Federal Treasury Enterprise Sojuzplodoimport to repay debts having nothing to do with the enterprise.”