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Ownership of the trademarks Stolichnaya and Moskovskaya vodka brands has been a hotly contested matter since proceedings began in the Federal Court of Australia in December 2004. Since then, most of the proceedings have settled.

In February of 2005, two Russian state entities representing the Russian Federation, Federal Treasury Enterprise (FKP) Sojuzplodoimport and Federal Public Unitary Enterprise External Economic Union Sojuzplodoimport (FGUP VO) issued a cross claim against Spirits International B.V. (Spirits), alleging that they are the true owners of the trade marks, in spite of Spirits presently being the registered owner. FKP sought rectification of the Register of Trade Marks to record itself and FGUP VO as the registered owners of the trade marks in Australia, or to otherwise cancel the trade marks. In support of their cross claim, FKP alleged that the Australian trademarks were misappropriated shortly after the collapse of the former Soviet Union, resulting in them being registered to Spirits.

In October 2019, a judge ordered that the proceeding on the cross-claim be permanently stayed, on the basis that FKP failed to comply with an invitation to give discovery over “an unreasonably extensive period of time”. In the circumstances of the failure of FKP to provide relevant documents under the discovery process, his Honour determined that the cross-claim was an abuse of process. This appeared to bring some finality to the resolution of the matter.

appeal to the full court

However, that permanent stay order was recently challenged on appeal in the Full Court of the Federal Court, reigniting the long-running battle between the parties.

FKP argued three grounds of appeal against the permanent stay.

1. They argued that the primary judge had erred in finding that FKP had failed unreasonably to give discovery and that their continuing inaction or delay had reached a point where the cross-claim had become an abuse of process.
2. Secondly, it was argued that the primary judge ought to have found that the cross-claim was not an abuse of process, given the primary judge’s findings that:

• FKP was the emanation of the Federation charged with the task of returning to the Federation ownership of the trademark;
• FKP had been and was making reasonable efforts to obtain documents within the discovery categories in the control of the Federation and to provide them to Spirits;
• FKP had complied with its own discovery obligations as ordered by the Federal Court on 4 December 2013; and
• The Russian Federation is not obliged to comply with the Court’s processes. Therefore, the pressuring of FKP to produce the documents held by the Federation’s entities was unreasonable.

3. Finally, that the primary judge erred in finding that there remained substantial searches for documents in the control of the Federation which had not been conducted and which would not be conducted in the foreseeable future.

full court decision

The Full Court rejected FKP’s first and second points, however agreed on FKP’s third point, stating at paragraph 334, that, “in our view, the primary judge did not give sufficient consideration to the needs of justice as between the parties by failing to determine what effect any actual non-provision of documents by the Federation would have upon Spirits’ ability to defend the cross-claim in light of any issues estoppel that might flow from the Dutch decisions.”

The Full Court continued at paragraph 386 to say that “Granting a permanent stay is a draconian remedy. It is fair to say that Spirits could not speculate as to what was missing. But it is not enough to say that discovery was not complete. Spirits needed to do more to persuade the Court that the interests of justice warranted a permanent stay. It ought to have explained why, with what it had, it was nevertheless still substantially prejudiced in its conduct of the discretionary defences. There was no such analysis either by Spirits or the primary judge.”

For those reasons, FKP’s appeal was allowed and the permanent stay to the cross claim was lifted and modified, reigniting the long-running battle between the parties. The matter has been remitted to the Federal Court for reconsideration, with the Full Court indicating that FKP should be entitled to its costs of the appeal.

This article first appeared on WTR Daily, part of World Trademark Review, in June 2021. For further information, please go to www.worldtrademarkreview.com.