Russia Won the Battle for Stolichnaya Vodka in a Landmark Case in the Netherlands

  • Stolichnaya vodka was created in the Soviet Union in 1938.
  • Pepsi was the first company to bring Stolichnaya to the US.
  • A court battle for the brand finally ended after 20 years.

Stolichnaya is a vodka made of wheat and rye grain. A well-known Soviet brand, the ownership of Stolichnaya has been disputed since the dissolution of the Soviet Union between Russian state-owned company FKP Soyuzplodimport and SPI Group, a private company founded and owned by Russian billionaire Yuri Shefler.

The court battle for the brand has been ongoing for 20 years and the final decision has been made. According to the Supreme Court of Netherlands, billionaire Yuri Shefler will have to repay all his profits from vodka sales for the period of over 20 years.

Supreme Court of Netherlands .

As the highest court in the fields of civil, criminal and tax law in the Netherlands, the Supreme Court is responsible for hearing appeals in cassation and for a number of specific tasks with which it is charged by law. The main task of the Procurator General of the Supreme Court is to provide the members of the Supreme Court with independent advice – known as an ‘advisory opinion’ – on how to rule in the cassation proceedings before them.

The Director of Operations and his staff are charged with facilitating the tasks of the Supreme Court and the office of the Procurator General. The Supreme Court, the Procurator General and his office and the Director of Operations form a single organization.

Yuri Shefler is the owner of SPI Group, an international consortium that sells alcohol in 160 countries, most notably the Stolichnaya vodka brand. His net worth is an estimated $3 billion.

The original formula for Stolichnaya vodka was developed in 1938 by vodka master Viktor Svirida. The first batch, according to legend, was released in the besieged Leningrad. Since 1953, “Stolichnaya” began to be poured at the Moscow distillery “Kristall.” The well-known label depicts the hotel “Moscow” by artist Andrey Johanson, who specialized in posters sketched in a few minutes, sitting in a cafe on Tverskaya street and looking at the prototype. Stolichnaya vodka even appeared in one of the James Bond movies.

Yuri Shefler.

Stolichnaya’s worldwide fame was brought about by the manic desire of the American Corporation PepsiCo and its president at the time, Donald Kendall, to penetrate the Soviet market which was completely closed to foreigners due to the Iron Curtain.

Thomas Thompson, who was the US Ambassador to the Soviet Union, gave him invaluable advice: “the Russians are beside themselves with the Smirnoff vodka that is being bottled in Connecticut. You can offer them to sell Pepsi in exchange for help with selling their vodka abroad.” The idea worked, and in 1973, Kendall signed an agreement with the head of the Soviet government, Alexey Kosygin: PepsiCo will help equip factories in the USSR and will supply concentrate for the production of its soda, and in return, will promote Russian vodka in the United States.

The more vodka PepsiCo sold, the more of Pepsi  concentrate  was allowed to import to the USSR. The project was successful. In 1976, 50 million bottles of Pepsi-Cola were already sold in the USSR, and 115,000 cases of Stolichnaya were sold in the USA.

After the collapse of the Soviet Union, somehow Yuri Shefler was able to register many major Soviet brands under his name. These transactions occurred during a tumultuous period in Russian history was done in a grey area.

The court ruled the vodka brand Stolichnaya belongs to Russia; The SPI has no right to use the trademark without a licensing agreement. This is one of the key victories pertaining to the trademark infringement, a violation of the exclusive rights attached to a trademark without the authorization of the trademark owner or any licensees.

The case is interesting given the fact that the Stolichnaya brand continued to be sold during the court battle. It is also a valuable lesson for all parties about infringing on a trademark and household name.

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Christina Kitova

I spent most of my professional life in finance, insurance risk management litigation.

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