- The Washington Times - Thursday, April 18, 2002

Vodka destined for the bottom of martini glasses in the United States and Britain is instead sitting on a Russian dock in the port city of Kaliningrad.

Some 150,000 cases of orphaned vodka marks the latest twist in a bitter feud over the lucrative Stolichnaya brand name. The Russian firm SPI Spirits and the Russian government both claim to be the legal heirs to the trademark.

The dispute has been playing out in Russian courts and on public relations fronts. At the U.S. Commerce Department last week, a U.S. SPI representative accused the Kremlin of "disrespect for international legal principles" and accused it of resorting to old-style Russian thuggery and intimidation against SPI employees as it tries to renationalize the brand.

SPI claims these tactics were to blame for a Moscow court's decision earlier this year that the Stolichnaya brand should go back to the state. A later Russian court ruling upheld SPI's ownership claims.

The problems with the trademark started with the fall of the Soviet Union. The new government privatized the vodka industry, and in 1992 SPI International bought the rights to the Stolichnaya trademark.

Now Russia says SPI gained the trademark rights during an illegal privatization sale and never had the rights to the brand, which sells 1.3 million cases a year in the United States.

"This is an effort by the Russian government to nationalize the Russian vodka industry. It is a violation of privatization and intellectual property rights," said Richard Edlin, a lawyer who represents SPI's American interests.

SPI argues the brand was privatized because it wasn't making money and estimates the company and its investors have spent more than $150 million marketing the brand, turning it into one of the world's best-selling vodkas.

The alcohol sitting on the Russian dock represents about 5 percent of the stock held by a company named Allied Domecq.

Chris Swonger, an Allied vice president, said U.S. consumers need not worry.

"We probably have gotten a couple of questions, but we have adequate supplies for the U.S. market," Mr. Swonger said.

Russian attempts to renationalize industries in recent years have not been limited to vodka. Other legal disputes include the animated film industry, where the Russian government and American company Films by Jove have been embroiled in an intellectual property rights dispute.

"They're completely lawless and have completely destroyed the film industry," said Joan Borsten-Vidov, Films by Jove president, whose company has invested more than $4 million in animated films.

Last month at the Commerce Department, Ms. Borsten-Vidov testified that the Russian government set up a "dummy corporation" with the same name as the company Films by Jove licenses its films from.

The new company, established in 1999, claims to be the true holder of a copyright issued in 1992, a tactic SPI claims was also used in the its case.

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