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Saturday, 16 June 2007

"Not your vodka", ECHR tells Russian business

The IPKat thanks his friend and comrade James Nurton (editor, Managing Intellectual Property) for drawing his attention to the latest addition to European trade mark jurisprudence from the First Section of the European Court of Human Rights. It's Case 1641/02 OAO Plodovaya Kompaniya v Russia, judgment being given on 7 June.

In 1966 the USSR Ministry of Foreign Trade created the State Export and Import Agency Soyuzplodoimport. Its assets included the Stolichnaya and Moskovskaya vodka trade marks. In January 1990 the agency was reorganised as the State Foreign Trade Agency Soyuzplodoimport.

In January 1992 the entity that later became OAO Plodovaya was set up as a closed joint-stock company, the Foreign Trade Stock Company Soyuzplodoimport. According to its memorandum of association, it was set up by several founders, including the State Foreign Trade Agency Soyuzplodoimport, which held 3,880 of its 17,000 shares. This company was described as a “successor” to the State Foreign Trade Agency Soyuzplodoimport. Six years later it converted into an open joint-stock company and, in December 1999, it adopted a new memorandum of association and changed its name to OAO Plodovaya Kompaniya. The new memorandum declared it was the successor of the State Foreign Trade Agency Soyuzplodoimport. While this was all going on, the company notified the trade mark registration authority that the trade marks of the State Foreign Trade Agency Soyuzplodoimport had changed ownership through succession, obtaining trade mark certificates in its own name. It subsequently used the trade marks as collateral in a number of commercial transactions with third parties.

In October 2000 the Deputy Prosecutor General challenged the new memorandum of association, particularly the declaration of succession, before the Commercial Court of Moscow - which declared the provision on succession void. It held that the company had had no legal grounds to claim succession to the State Foreign Trade Agency Soyuzplodoimport: the company had been set up as a new company and not converted from an existing one and a mere declaration in its founding memorandum of association was insufficient to enable it to become the successor of another company. While it had de facto acted as a successor before the trade mark registration authorities and courts of arbitration, this was irrelevant to the establishment of corporate succession. The Appellate Board of the Commercial Court of Moscow quashed the first-instance judgment and terminated the proceedings, without looking at the substantive issues, on the ground that the prosecutor's office had no standing to bring proceedings. This decision entered into force on the same day. This decision was not appealed.

In April 2001 the Moscow Registration Chamber registered the change of name of the State Foreign Trade Agency Soyuzplodoimport. Its new name was the Federal State Unitary Enterprise Soyuzplodoimport. Then, in June 2001, the Deputy Prosecutor General requested a supervisory review of the Appellate Board's decision. OAO Plodovaya was summoned to the hearing but the summons was not served on it because the company could not be found at its official address. The company's representatives however learned about the hearing, submitted written comments on the merits of the case and attended the hearing.

In October 2001 the Presidium of the Supreme Commercial Court of Russia examined the case in supervisory review proceedings and quashed the Appellate Board decision. On the procedural point, it held that the prosecutor's office was entitled by law to represent the State in proceedings before commercial courts where public or State interests were involved. Since the proceedings concerned State property, this provided sufficient grounds for the prosecutor to intervene. As to the merits of the case, OAO Plodovaya was not entitled to claim succession to the State Foreign Trade Agency Soyuzplodoimport because there had been no decision on the latter's conversion and OAO Plodovaya itself had been created as a new entity, not as a result of any reorganisation of an existing legal person. This decision entered into force on the same day and was not subject to further appeal.

OAO Plodovaya commenced proceedings in Strasbourg before the European Court of Human Rights (ECHR), maintaining that there had been a violation of its right to the peaceful enjoyment of its possessions, in particular the assets of its alleged predecessor corporation. In particular, it contended that the supervisory review had resulted in their claim to be the holder of the trade marks being declared void. The company relied on Article 1 of Protocol No. 1 to the European Convention on Human Rights, which provides that "Every natural or legal person is entitled to the peaceful enjoyment of his possessions". The Russian Government disagreed and pointed out that the judicial decision quashed by the supervisory instance had been a procedural one; it conferred no right or entitlement on OAO Plodavaya and did not create any legitimate expectation to acquire them. The ECHR agreed, ruling unanimously that at no stage of the Russian domestic proceedings was any judicial decision taken as to the validity of OAO Plodovaya's claim to 'possessions'. Accordingly the decisions could not be considered to be an interference with the company's "possessions". To add insult to OAO Plodavaya's injury the court added, by a six-to-one majority, that the company had not been deprived of a "fair hearing", as it did not have a "civil right" that was recognisable under domestic law.

Says the IPKat, it does seem a bit tough - but you can't complain about the Russians when they're playing by the rules. Partially dissenting Judge Tulkens says

"1. It is difficult to see how a dispute concerning the existence of a corporate succession, which was examined and determined on the merits by the commercial courts, did not constitute a “determination of ... civil rights and obligations”,
but on that basis any and every procedural issue arising out of corporate succession - and to the very existence of a corporation, for that matter - is also a de facto "determination of civil rights and obligations". Merpel says, is there not something ironic about a fight over human rights which results in an open and above-board judicial victory for an entity founded and controlled by a state that the West spent decades characterising as the very epitome of human rights violations?

Right: The IPKat occasionally engages in comparative studies as to the relative merits of whisky and vodka trade marks as subjects for litigation ...

See Managing Intellectual Property's view here
Make your own vodka here
Killer vodka here
What vodka does to your mind and body here

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