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A trademark battle before the 3rd U.S. Circuit Court of Appeals has many elements in common with a trademark case that the U.S. Supreme Court declined to review this term. Both cases involve distilled spirits, �migr�s who fled Communist regimes, and old family names used as trademarks. The suit that the 3rd Circuit has under consideration has the British food and spirits conglomerate Diageo on one side and, on the other, a Russian company that bills itself as the “Trade House of Descendants of Peter Smirnov, Official Purveyor to the Imperial Court.” The two companies are fighting over the rights to the Smirnoff family name as a trademark for the world’s best-selling vodka. The Joint Stock Society v. UDV North American Inc., No. 99-5433. Parties in the other case are Bacardi and Co. Ltd. of Bermuda and France’s Pernod Ricard. Their battle involves the trademark for Havana Club rum. That case is being fought both in U.S. courts and before the World Trade Organization, which has established a settlement panel to determine whether a section of U.S. law that benefits members of the Bacardi family violates international treaty arrangements. On Oct. 2, the U.S. Supreme Court denied Pernod Ricard’s request for review of the trade-law section. Havana Club Holdings v. Bacardi, No. 99-1957. Pernod Ricard is now calling for a repeal of the law, Section 211 of the 1998 Omnibus Appropriations Bill, which blocks U.S. courts from recognizing certain Cuban-origin trademarks. In a prepared statement, Mark Orr, Pernod’s vice president for North American affairs, said that “early repeal of Section 211 is needed to ensure that internationally agreed intellectual property protections are enforced in the U.S. and worldwide.” Section 211 bars courts in the United States from recognizing trademarks of Cuban origin that are “the same as or substantially similar” to those used by businesses confiscated during the Castro regime, even if the former owners have made no efforts to enforce the mark for decades. This measure was enacted quietly, with no input from the bar or congressional intellectual property committees. It was not until two weeks after the bill was signed into law that the Senate Judiciary Committee heard of its existence. And, according to an internal memo circulated at the Office of the U.S. Trade Representative, Section 211 “is problematic because it violates our obligations under the TRIPS [Trade Related Intellectual Property Rights] agreement.” However, the office is now in the awkward position of having to argue on behalf of this law because the European Union has complained to the World Trade Organization. Section 211 found a champion in former Patent Commissioner Bruce A. Lehman, who has said it is essential to protect the IP rights of those whose property was seized without compensation by hostile governments. But a broad range of organizations filed amicus briefs urging the high court to consider Section 211 in light of the Bacardi dispute. They included the French National Committee of the International Chamber of Commerce, the Organization for International Investment, and the European-American Business Council. In the Smirnoff case, the plaintiffs claim succession rights to a family distillery that was established in Moscow in the 1860s. During the Russian Revolution, all private property was confiscated, and members of the Smirnov family fled Russia for Italy and France, where they changed the spelling of the family name to Smirnoff. Back in Moscow, the family distillery was turned into a state garage. DUBIOUS SALE The plaintiffs claim that a predecessor to Diageo bought the Smirnoff name in 1933 from someone who did not have the right to sell it. (Diageo does business in the United States as UDV North America Inc., based in Stamford, Conn.) Smirnoff vodka was marketed in the United States, but for decades failed to gain much consumer acceptance. But the rise of the three-martini lunch and the popular “it leaves you breathless” advertising slogan of the 1950s helped the label to corner a large chunk of the “white goods” spirits market. Today, Smirnoff sells between 5 million and 6 million cases of vodka in the United States every year. Jerry P. Blackstock, who heads the litigation department at Atlanta’s Powell, Goldstein, Frazer & Murphy, is representing the Russian company that is challenging Diageo’s rights to the Smirnoff name. He said that the rightful owners of the Smirnoff name repeatedly tried to get documents from Russia to prove their ownership, but it wasn’t until the third generation came along — and the Soviet Union dissolved — that company records surfaced. When the case was argued before the 3rd Circuit on Sept. 27, Chief Judge Edward R. Becker took Blackstock’s clients to task for failing to assert their rights to the name for so many years. “It’s boilerplate trademark law that you lose the trademark rights if you’re not associated with a product, and they were not associated with this product for 70 to 75 years,” he said. DIFFERENT LEGAL SYSTEMS “This is one of the hard questions we have to face,” said Blackstock. Part of the problem lies in the difference between civil- and common-law countries, he said. “We think in this country in terms of people’s getting on a witness stand and testifying to their rights to a company. But in a civil-law country, the documentary interest is everything. They don’t put a lot of stock in someone’s testifying to be a rightful owner. Documents are what carry the day.” Diageo is represented by William L. Webber, a partner at Washington, D.C.’s Howrey Simon Arnold & White. He declined to discuss the case in detail, other than to say that the September oral argument was the second made in the case. Shortly after the first time the case was argued this summer, one member of the three-judge appellate panel was recused for undisclosed reasons. At the second argument, Judge Becker had some harsh words for Webber’s client, too. According to wire reports, he said that the Smirnov family member who allegedly sold the name, so that it ultimately ended up with the Diageo company, “was nothing but a rogue.” The rum and vodka disputes are not the only ones involving a famous name in the liquor business and a former Soviet-bloc country. Anheuser-Busch Inc. of St. Louis has a long-standing battle with the Czech beer producer Budejovicky Budvar over the rights to the name Budweiser. In some countries, Anheuser-Busch is barred from using the Budweiser name; in others, the Czech beer must be marketed as “Budejovicky Budvar.” And in Great Britain, both companies are allowed to share the mark.

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