Tuesday, April 28, 2009

TTAB Finds "RUSSKAYA" for Vodka Abandoned, Cancels Registration

Got your screwdriver? We're going to dismantle a 53-page TTAB opinion granting a petition for cancellation of a registration for the mark RUSSKAYA for vodka. The Board found that Petitioner A.V. Brands had established a prima facie case of abandonment based on at least three consecutive years of nonuse, and that Registrant Spirits International, B.V. failed to overcome Petitioner's case because it established neither an excuse for the nonuse nor a bona fide intent to resume use. A.V. Brands, Inc. v. Spirits International, B.V., Opposition No. 92043340 (March 31, 2009) [not precedential].

Respondent Spirits' chain-of-title to the RUSSKAYA registration "originated in the early 1990s with the privatization of the previously state-owned Russian vodka industry, which itself occurred as part of the process of privatization in Russia and the former Soviet Union known as perestroika." Spirits claimed that this cancellation proceeding is part of a "worldwide campaign to recapture for the Russian Federation the vodka marks owned by Spirits.

A.V. Brands claimed that Spirits has abandoned the RUSSKAYA mark due to nonuse in this country for at least three years. Spirits contended that its nonuse was excusable, "citing its uncertainty about its rights in the mark which has been generated by the worldwide litigation between respondent and the Russian Federation and its proxies." Spirits also contended that it has always maintained an intent to resume use of the mark.

Standing: Spirits challenged A.V. Brand's standing to pursue this cancellation petition, asserting that the intent-to-use application upon which its petition is based (i.e., in that application the PTO refused registration under Section 2(d) in light of the RUSSKAYA registration), was illegally assigned to A.V. Brands in contravention of Section 10(a)(1) of the Trademark Act.

The Board looked at the assignment document by which A.V. Brands acquired the registration, and noted its reference to an "Asset Purchase Agreement." The Board litotically deemed it "not unreasonable to assume that the 'assets' ... included more than just the trademarks": i.e., that the assignee succeeded to the import and distribution system of the assignee, or to the portion of the business to which the mark pertains. [TTABlog comment: since A.V. Brands had the burden to prove its standing, shouldn't the Board have required real evidence rather than merely assuming what the assets were that supposedly accompanied the transaction?] And so, the Board concluded that Section 10 was not violated.

In any case, the Board found that A.V. Brands had a real interest in the outcome of the proceeding because the evidence showed that it is engaged in the sale and distribution of vodka and it intends to use the RUSSKAYA mark in connection therewith.

Abandonment: Spirits acquired the RUSSKAYA registration from Pepsico on May 10, 2001. Three years and nine days later this petition for cancellation was filed. There was no dispute that Spirits made no use of the mark for that three-year period. As a result, A.V. Brands established a prima facie case of abandonment under Section 45, shifting the burden to Spirits to rebut that case.

Spirits offered two excuses for the nonuse: it made a prudent business decision to postpone use of the mark due to the uncertainty of its ownership rights in light of worldwide litigation with the Russian Federation and its allies; and the drain on its financial and manpower assets caused by the litigation prevented it from re-introducing and building the RUSSKAYA brand. The Board found Spirits' testimony vague and sometimes contradictory, and it bought neither excuse.

As to the litigation uncertainty, the Board reviewed the pertinent litigations, observing that much of the litigation occurred after May 2004 and thus was too late to affect Spirits' nonuse decision, and concluding that none of the litigation should have "caused any reasonable uncertainty on respondent's part as to its ownership rights in the registered RUSSKAYA mark in the United States."

As to the "drain on resources" excuse, the Board again found the testimony vague and unpersuasive. Although Spirits claimed that a resumption of use of the RUSSKAYA mark would require "huge investments" and "big marketing support and push," the Board noted that in October 2005 Spirits shipped thirty cases of RUSSKAYA vodka to its U.S. Distributor, apparently without any such major investment.

Indeed, on this record it appears that the more likely reason for respondent's nonuse of the RUSSKAYA mark in the United States for at least the three years prior to May 2004 was not due to its litigation with FTE, which for the most part was commenced after May 2004, but rather was the result of a purely business-driven decision not to market RUSSKAYA vodka in the United States during that period.

The Board next found that Spirits had failed to provide proof of a bona fide intent to resume use of the mark. Vague and conclusory testimony regarding negotiations with its U.S. distributor was unpersuasive. Spirits did not provide any documentation or other tangible evidence to corroborate the testimony, and the lack of such evidence "weighs against a finding that, during the nonuse period, respondent had maintained the requisite bona fide intent to resume use of the mark in United States commerce."

And so the Board concluded that Spirits abandoned the RUSSKAYA mark "at least as early as May 2004, and that its registration of the mark must be cancelled and removed from the register."

TTABlog comment: Spirits International seems to be in a TTAB slump. Last year its mark MOSKOVSKAYA for vodka was held to be primarily geographically deceptively misdescriptive under Section 2(e)(3). TTABlogged here.

Text Copyright John L. Welch 2009.


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