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. Last Updated: 07/27/2016

Trademark Battles Rage Over Top Soviet Brands

VedomostiFirms vied for the "Sovietskoye" brand.
When a state-controlled company declared itself the sole owner of the nation's most famous champagne brand, "Sovietskoye," earlier this month, it looked like yet another government attempt to snatch up a popular Soviet-era label.

Patent lawyers were mystified as to why Soyuzplodoimport should be more deserving of the bubbly trademark than any of the other 25 factories that make it. But the company, which had already snatched up the Stolichnaya and Moskovskaya labels in 2002, was successful in its bid.

The victory for Soyuzplodoimport casts light on a problematic area of trademark law, namely the fate of nostalgically cherished brands of the Soviet Union.

"You have the impression that there is no single legal playing field for resolving these problems," said Alexander Leonov, head of Ip-Pro law firm.

Other firms that had tried to register the name Sovietskoye with the state's trademark and patents agency all failed. The authorities said the brand did not meet the legal definition of a trademark, since it identifies a type of champagne rather than a particular manufacturer.

But now that Soyuzplodoimport controls the brand, it has the right to collect 80 kopeks (3 cents) in royalties on each of the 90 million bottles of Sovietskoye that go on sale in Russia each year.

Soviet brands have had a checkered history since the collapse of the command economy.

The seemingly innocuous soft cheese "Druzhba," or "Friendship," has been caught up in a not-so-amicable court battle for the past year.

Karat, a private company, set off the cheese war when it registered Druzhba's cheerful red and yellow label to itself.

Leonov, who represents a number of longtime Druzhba manufacturers, is astounded that just one factory can lay claim to the brand. After all, he argues, its recipe was developed in government laboratories in the 1960s and manufactured in plants across the Soviet Union.

"And at the end of the day they decide it's a trademark," he said ruefully.

Meanwhile an uneasy truce exists on the confectionery market, which is overloaded with old favorites like Mishka na Severe, Stratosfera, Belochka, and others.

Confectionery stalwarts Red October and Red Front managed to register a clutch of these names to themselves on the grounds that the labs that developed the recipes were in their factories.

And since Guta Bank now owns Red Front and Red October, as well as confectioner Babayevsky, infighting doesn't make sense anymore.

Yet the market is still "thick" with violations by smaller plants, said Vadim Uskov, head of the Uskov & Partners law firm, who specializes in patent and trademark disputes.

"The big firms watch [the violations] and do nothing. They understand that at the end of the day they don't own the brands entirely fairly," he said.

Even names that lawyers say should have no protection have been registered.

Uskov unsuccessfully fought the Sistema corporation's registration of Detsky Mir as a trademark in 2002. Research he commissioned showed that 70 percent of respondents associate Detsky Mir with a store in their own town and not with the central store on Moscow's Lubyanskaya Ploshchad.

"Suddenly there was a situation where the other 149 stores that use the trademark are in violation of the law," he said.

The result would be rather like registering "Fish and Chips" to a single company in the United Kingdom.

"What's to stop people from registering Dom Knigi, Gastronom or even Produkty and Moloko?" said Uskov, referring to generic store names that can be encountered in virtually every town in Russia.

A possible compromise could lie in the example set by the Tabakprom association of cigarette manufacturers, which was formed in 1999.

Members pay a hefty $250,000 membership fee for the right to produce the hugely popular Prima brand. Critics argue that the membership fee is prohibitively high. Ideally, a similar model should be applied by the state if it hopes to establish control over a particular brand, experts say.

Rather than winning legally dubious registrations from the state's patent service, companies like Soyuzplodoimport should strike a deal with manufacturers, lawyers said. Acting as mediators they could broker a collective trademark registration for all manufacturers.

Those who wish to continue using the brand would pay the state a token sum to continue using the label, backed up by tough quality-control standards, Uskov said.

Ip-Pro's Leonov said he tells his clients not to place too much hope in the labels they inherit from the Soviet Union.

"We tell them to use these unowned labels but to put the money they make from them into supporting their own brand."