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Federal Treasury Enter. Sojuzplodoimport v. Spirits Int'l B.V.

United States Court of Appeals, Second Circuit

January 5, 2016

FEDERAL TREASURY ENTERPRISE SOJUZPLODOIMPORT, OAO " MOSCOW DISTILLERY CRISTALL", Plaintiffs-Counter Defendants-Appellants-Cross-Appellees,
v.
SPIRITS INTERNATIONAL B.V. F/K/A SPIRITS INTERNATIONAL N.V. SPI SPIRITS LIMITED, SPI GROUP SA, YURI SHEFLER, ALEXEY OLIYNIK, STOLI GROUP (USA) LLP, Defendants-Counter Claimants-Appellees-Cross-Appellants, WILLIAM GRANT & SONS USA, WILLIAM GRANT & SONS, INC., Defendants-Appellees-Cross-Appellants, ALLIED DOMECQ INTERNATIONAL HOLDINGS B.V. ALLIED DOMECQ SPIRITS & WINES USA, INC. D/B/A ALLIED DOMECQ SPIRITS, USA, Defendants

 Argued August 24, 2015

Rival claims to the " Stolichnaya" trademarks have been asserted by successors in interest to a Soviet enterprise and by an agency of the Russian Federation. The principal issue is whether the agency of the Russian Federation has been endowed by that government with rights and powers that support standing under section 32(1) of the Lanham Act. The question has been here before. We conclude that the United States District court for the Southern District of New York (Scheindlin, J.) erred in considering whether the asserted basis for standing to pursue the section 32(1) claims was valid under Russian law, but that the district court correctly dismissed all of the other claims as barred by res judicata and laches.

DANIEL H. BROMBERG (Kathleen M. Sullivan, Marc L. Greenwald, Robert Raskopf, and Jessica Rose, Quinn Emanuel Urquhart & Sullivan LLP, New York, NY, on the brief) Quinn Emanuel Urquhart & Sullivan LLP, Redwood Shores, CA for Plaintiffs-Counter Defendants-Appellants-Cross-Appellees.

Eugene D. Gulland, Bingham B. Leverich, and David M. Zionts, Covington & Burling LLP, Washington, D.C.; Emily Johnson Hemm, Covington & Burling LLP, Redwood Shores, CA, for Defendants-Counter Claimants-Appellees-Cross-Appellants.

EDWARD T. COLBERT (William M. Merone, on the brief) Kenyon & Kenyon LLP, Washington, D.C. for Defendants-Appellees-Cross-Appellants.

Before: NEWMAN, WALKER, and JACOBS, Circuit Judges.

OPINION

[ 117 U.S.P.Q.2d 1335] DENNIS JACOBS, Circuit Judge:

Rival claims to the " Stolichnaya" trademarks have been asserted by an agency of the Russian Federation and by successors in interest to a Soviet enterprise. The principal issue is whether Federal Treasury Enterprise Sojuzplodoimport (" FTE" ), an agency of the Russian Federation, has been endowed by that government with rights and powers that give it standing to pursue claims under section 32(1) of the Lanham Act (the " section 32(1) claims" ). The question has been here before. We conclude that the United States District Court for the Southern District of New York (Scheindlin, J.) erred in determining whether FTE's asserted basis for standing was valid under Russian law. We further conclude that the district court correctly dismissed all of FTE's other claims (the " non-section 32(1) claims" ) as barred by both res judicata and laches.

FTE and co-plaintiff OAO " Moscow Distillery Cristall" (" Cristall" ) allege that the defendants unlawfully misappropriated and commercially exploited the Stolichnaya trademarks [ 117 U.S.P.Q.2d 1336] related to the sale of vodka and other spirits in the United States (the " Marks" ). Currently, control over the Marks in the United States is exercised by defendants as successors in interest to a Soviet state enterprise: Spirits International B.V. f/k/a Spirits International N.V., SPI Spirits Limited, SPI Group SA, Yuri Shefler, and Alexey Oliynik (collectively, " SPI" ). The other defendants are licensed distributors of SPI: William Grant & Sons USA and William Grant & Sons, Inc. (collectively, " William Grant" ); Allied Domecq International Holdings B.V. and Allied Domecq Spirits & Wines USA, Inc. d/b/a Allied Domecq Spirits, USA (collectively, " Allied Domecq" ); and Stoli Group (USA) LLP (" Stoli Group" ).

In a prior suit, FTE brought claims against SPI under section 32(1) of the Lanham Act, as well as analogous federal and state law claims. We dismissed FTE's section 32(1) claims on the ground that the Russian Federation itself retained too great an interest in the Marks for FTE to qualify as an " assign" with standing to sue. Fed. Treasury Enter. Sojuzplodoimport v. SPI Spirits Ltd., 726 F.3d 62, 66 (2d Cir. 2013). FTE's non-section 32(1) claims were either dismissed on the merits, voluntarily dismissed, or dropped during the course of that litigation.

Subsequently, the Russian Federation issued a decree (the " Decree" ), directing the Federal Agency for State Property Management (" State Property Management" ) to transfer to FTE " the rights of the Russian Federation" to the Marks. Pursuant to the Decree, an assignment was executed (the " Assignment" ), purporting to transfer the Russian Federation's " entire right, title, and interest in and to the [Marks]" to FTE. FTE then filed the present lawsuit, once again asserting both section 32(1) and non-section 32(1) claims against SPI. Defendants moved to dismiss.

In a series of orders, the district court ruled that: (i) FTE lacked statutory standing to assert the section 32(1) claims because the Assignment was invalid under Russian law; (ii) FTE's non-section 32(1) claims were barred by res judicata in light of the prior litigation; and (iii) the non-section 32(1) claims were also barred by laches.

We conclude that the doctrines of comity and act of state preclude a United States court from invalidating an action of a foreign sovereign with respect to a transfer of rights among its branches or entities on the ground that the transfer is invalid under the law of that foreign sovereign. Accordingly, because the district court undertook to determine whether the Assignment from the Russian Federation to FTE was valid under Russian law, we vacate the district court's dismissal of FTE's section 32(1) claims for lack of standing and remand for ...


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