FTE sued SPI (among others), asserting claims under Lanham Act Section 32(1) and other claims, for misappropriating and commercially exploiting the Stolichnaya trademarks related to the sale of vodka and other spirits in the U.S.
Stolichnaya was registered in 1969 by a Soviet enterprise, V/O-SPI. In the 1990s, SPI was privatized, but in 2000 a Russian court held that SPI was not validly privatized and that ownership of the Stoli marks remained with the Soviet Union and thus the Russian Federation. The Russian Federation formed FTE in 2002 to be the legitimate successor and exclusive licensor to Cristall (Moscow) of the Stoli marks. FTE previously sued SPI but that case was tossed for lack of standing on the ground that the Russian Federation retained too great an interest in the marks.
After the prior case was tossed, the Russian Federation issued a decree requiring its rights in the marks to be transferred to FTE, and an assignment was executed to that effect.
Regarding the non-section 32(1) claims, the district court found them to be barred by both res judicata and laches, and those determinations were affirmed by the Second Circuit.
The Second Circuit and district court diverged, however, in reviewing the assignment that purportedly transferred the Russian Federation’s “entire right, title, and interest in and to the [Stolichnaya marks]” to FTE. The district court found that the assignment was not valid under Russian law, so FTE continued to lack standing. Considering doctrines of international comity and acts of state (and rejecting any commercial exception), the Second Circuit reversed the district court’s determination, the appeals court holding unreviewable the efficacy of the Russian Federation Decree and Assignment in vesting FTE with authority.