Putin at War To Regain Russian Control of Stoli

Putin at War To Regain Russian Control of Stoli|Putin at War To Regain Russian Control of Stoli

Lawsuits brought by the Russian government in multiple countries around the globe to recover the trademarks for Stolichnaya vodka were brought on direct orders from Vladimir Putin, the current Russian president, in 2000.

“I request urgently to take measures directed to restoration and protection of the rights of the state concerning intellectual property in the sphere of production and turnover of vodka products, and also for detection and bringing to account of the persons involved in violation of these rights,” reads a poorly translated version of Putin’s order that was filed in the lawsuit pending in US federal court. “Report on the results monthly.”

The order was signed by “V. Putin” and dated March 13, 2000. By November of that year, the Russian Ministry of Agriculture had created regulations that allowed it to implement Putin’s demand. By July 2001, an “interdepartmental working group” was established that had nine members, including senior officers from Russia’s Ministry of Internal Affairs, the tax police, the General Prosecutor’s Office, and the Federal Security Service.

While the order discusses “vodka products,” the Russian government appears to be pursuing only the Stolichnaya and Moskovskaya vodka brands, which are owned by Yuri Shefler and Alexey Oliynik and Spirits International (SPI), their company. Russkaya, a third vodka brand that SPI owned, has already been returned to the Russian government.

The small number of monthly reports that were filed in the US lawsuit mention the three SPI brands. The only non-SPI brand that is discussed, and only once, is Russian Standard vodka. The 2006 reference to Russian Standard says that the company may “contribute a considerable share of its income in the form of royalties from the current sales to the State.” Russian Standard did not respond to an email seeking comment.

The Stolichnaya brand was embroiled in controversy in 2013 when LGBTQ activists called for a boycott of Russia and Russian products after that country enacted an anti-gay propaganda law that barred positive depictions or advocacy of LGBTQ causes or people. After selling Stolichnaya, now called Stoli, as an authentic Russian vodka for years, SPI insisted it was a Latvian product and later a European product.

In 2018, SPI made overtures to the LGBTQ community by commemorating Harvey Milk, the first, openly gay elected official in California, on a Stoli label. Milk was assassinated in 1978. The labeling angered some of Milk’s friends, notably longtime activist Cleve Jones. This year, Stoli has produced a Stonewall 50 commemorative label.

The allegation in the lawsuits is that Shefler, Oliynik, and at least one other Russian effectively stole the vodka trademarks. Published reports say they paid $285,000 for them in 1997. Following the collapse of the Soviet Union in the early ‘90s, the economic scheme put in place was to privatize the many businesses that had been owned by the government. A commission was supposed to determine fair prices for those businesses, but many were purchased by private citizens, often Soviet Union government employees, at very low prices. From 1948 until the ‘90s, Stolichnaya was owned by the Russian government.

Over time, Putin has constructed a “tribute system” that “severely punishes disloyalty while allowing access to economic predation on a world-historic scale for the inner core of his elite,” Karen Dawisha wrote in her 2014 book “Putin’s Kleptocracy” Who Owns Russia?” The press speculation is that Shefler and Putin had a falling out. SPI’s offices in Russia were raided by police at least 25 times and Shefler faced criminal charges. He left Russia and SPI moved its headquarters to Luxembourg. The Russian government seized the vodka trademarks in Russia and has sued for their return in roughly 30 countries.

To bring the lawsuits, the Russian government gave the trademarks to Federal Treasury Enterprise Sojuzplodoimport (FTE) and Moscow Distillery Cristall, two private Russian entities, and authorized them to sue to recover them. The US lawsuit began in 2004, was suspended for some time, and restarted in 2014. The case is now engaged in issues over discover, and documents from lawsuits filed in other countries were placed in the federal courts database by the parties.

According to published reports, the Russian government has recovered the trademarks in Austria, the Netherlands, Belgium, and Luxembourg. An attorney who represented Russia in the Netherlands predicted that win would result in another 13 European countries giving the trademarks to Russia in a European Union proceeding, according to a document filed in the US lawsuit. Russia lost in Brazil. Lawsuits in the US, Australia, and Greece are ongoing. Gay City News could not determine the location or status of the other lawsuits.

Recognizing that it may lose the trademarks and perhaps be required to compensate Russia for trademark infringement, SPI filed a counterclaim in 2016 asking that the money it has spent promoting the brand over the years be counted toward any judgment against it. The company has been buying whiskey, rum, wine and tequila brands to expand its product portfolio.

The company’s use of Stoli versus Stolichnaya is an apparent attempt to effectively create a different brand that it can continue to use if it loses the trademark. The Austrian court would not allow SPI to do that.

SPI Group did not respond to an email seeking comment.

Russian President Vladimir Putin has a keen interest in Russia regaining all trademarks for Stolichnaya worldwide.