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Stolichnaya ban spreads to Germany

22-Oct-2002

A dispute over the rights to one of Russia's best-known brands, Stolichnaya, has spread to Germany where the vodka and other brands owned by the SPI Group have been banned from sale, according to a report in the Moscow Times.

A court in Germany has issued an injunction banning sales of a host of SPI trademarks - including both Stolichnaya and Moskovkaya - which are owned by fugitive Russian vodka magnate Yury Shefler's SPI Group.

A spokeswoman for the Hamburg district court told the Moscow Times that the injunction forbidding sales by Simex, SPI's distributor in Germany, was issued by the court's trade chamber after upholding a complaint filed by Dovgan GmbH, a Hamburg-based importer of Russian food and drink products.

Dovgan, founded in 1998 by friends of flamboyant Moscow entrepreneur Vladimir Dovgan to sell his eponymous products abroad, filed the suit because SPI's brands are labelled as being imported from Russia but are actually produced in Latvia, the spokeswoman said.

The injunction, which is being appealed, bans the German drinks distributor Simex from selling or marketing the brands in Germany. Currently the German market accounts for about 10 per cent of SPI's annual global sales of around €700 million. In fact the Moskovskaya sells much better in Germany than the internationally favoured Stolichnaya brand.

SPI says that it has no doubt who is behind the suit - Soyuzplodoimport, formerly the Soviet Union's food and drink import-export agency - an allegation that has been flatly denied by Soyuzplodoimport.

Vladimir Loginov, head of Soyuzplodoimport, has even claimed that Shefler has threatened to have him killed over the hotly contended dispute.

Loginov, a former deputy Agriculture Minister, has spearheaded the legal battle to regain the domestic trademark rights from Shefler, who sold them to himself in 1997. That year, while in the position of head of Soyuzplodoimport, Shefler created a similarly named company, Soyuzplodimport, which paid $300,000 to Soyuzplodoimport for trading rights that included the Stolichnaya and Moskovskaya brands.

Since then, Loginov has resurrected the trading rights to the domestic market and has now turned his attention to regaining the international rights.

Currently Dovgan exports about 350,000 litres of Russian vodka per year - all of it from Ost-Alko's plant in the Moscow region.

Although Loginov's Soyuzplodoimport last week awarded Ost-Alko a licence to produce up to 880,000 decalitres of Stolichnaya and Moskovskaya, Kovalyov laughed at the suggestion that his company would start importing Ost-Alko's version of the vodkas.

"If we did it would be impounded and destroyed at the border," he told the Moscow Times.

Kovalyov said his company has no quarrel over the rights to the trademarks, which he said rightfully belong to SPI and its various distributors. But the present situation whereby the Russian government owns the trademarks in Russia while SPI holds the rights overseas - directly or through allied distributors - is no good for anyone, Kovalyov said.

"This is a legal cataclysm," he said. "Foreign trademark owners don't have the opportunity to receive vodka from Russia and Russia doesn't have the right to export its vodka. It's a bad situation - legally and commercially."

Either way, with both sides in this dispute at loggerheads over the international trading rights of these lucrative vodka brands, it seems that a resolution to the dispute is still a long way from being made.

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