Joint Stock Society v. UDV North America Inc.

• Decision Date: 14 September 2001
• Docket Number: No. 99-5422,99-5422
• Citation: 266 F.3d 164
• Court: U.S. Court of Appeals — Third Circuit
• Parties: (3rd Cir. 2001) THE JOINT STOCK SOCIETY, "TRADE HOUSE OF DESCENDANTS OF PETER SMIRNOFF, OFFICIAL PURVEYOR TO THE IMPERIAL COURT" AND THE RUSSIAN AMERICAN SPIRITS COMPANY, APPELLANTS v. UDV NORTH AMERICA, INC. AND PIERRE SMIRNOFF COMPANY

Page 164

266 F.3d 164 (3rd Cir. 2001)

THE JOINT STOCK SOCIETY, "TRADE HOUSE OF DESCENDANTS OF PETER SMIRNOFF, OFFICIAL PURVEYOR TO THE IMPERIAL COURT" AND THE RUSSIAN AMERICAN SPIRITS COMPANY, APPELLANTS v. UDV NORTH AMERICA, INC. AND PIERRE SMIRNOFF COMPANY

No. 99-5422

UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT

Argued September 27, 2000

September 14, 2001

ON APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF DELAWARE District Court Judge: Gregory M. Sleet (Dist. Court No. 95-749-GMS) [Copyrighted Material Omitted]

[Copyrighted Material Omitted]

[Copyrighted Material Omitted]

James W. Hawkins (Argued) Hilary Harp Todd E. Jones Powell, Goldstein, Frazer, & Murphy LLP 191 Peachtree Street, 16th Floor Atlanta, Georgia 30303, Duncan M. Grant Pepper Hamilton LLP 1201 Market Street, Suite 600 P.O. Box. 1709 Wilmington, Delaware 19899-1709, Attorneys for Appellants

Arlin M. Adams Schnader, Harrison, Segal & Lewis LLP Suite 3600 1600 Market Street Philadelphia, Pennsylvania 19103, Attorney for Amicus Curiae in Support of Appellants

Allen M. Terrell, Jr. Richards, Layton & Finger One Rodney Square Wilmington, Delaware 19899, William L. Webber (Argued) Kenneth W. Brothers Kelly A. Clement Charles A. Loughlin Erik Bertin Howrey Simon Arnold & White, LLP 1299 Pennsylvania Avenue, N.W. Washington, District of Columbia 20004, Attorneys for Appellees

Before: Becker, Chief Judge, and Alito and Fuentes, Circuit Judges.

OPINION OF THE COURT

Alito, Circuit Judge

The Joint Stock Society ("Joint Stock") and the Russian American Spirits Company ("RASCO"), filed this action against UDV North America, Inc. ("UDV") and the Pierre Smirnoff Company, asserting claims under the Lanham Act, 15 U.S.C. S 1051 et seq., for false designation of origin, false advertising, and trademark cancellation. The plaintiffs also raised claims under the Delaware Uniform Deceptive Trade Practices Act, 6 Del. Code SS 2531-36 et seq. The plaintiffs alleged that the defendants have fostered the mistaken impression that Smirnoff vodka is made in Russia and is the same product that was produced in Russia and sold to the czar before the Russian Revolution. The District Court dismissed the complaint for lack of subject matter jurisdiction, holding that the plaintiffs had failed to present a case or controversy that was ripe for decision within the meaning of Article III of the United States Constitution and that, even if the plaintiffs' claims were ripe, the plaintiffs did not meet constitutional or prudential standing requirements. In the alternative, the Court granted summary judgment in favor of the defendants under the doctrine of laches. See Joint Stock Soc'y v. UDV N. Am., Inc., 53 F. Supp. 2d 692 (D. Del. 1999). We hold that the plaintiffs did not satisfy Article III or prudential standing requirements, and we affirm the judgment of the District Court.

I.

In the 1860s, Piotr Arsenvitch Smirnov ("P.A. Smirnov") began a vodka trade house in Russia named "P.A. Smirnov in Moscow." During his lifetime, P.A. Smirnov built his trade house into a nationally and internationally renowned vodka distillery, winning numerous awards. Perhaps the greatest recognition he received was being named the "Official Purveyor to the Russian Imperial Court" in 1886.

P.A. Smirnov died in 1898, leaving the trade house to his widow and five sons. After his widow died in 1899, the business was owned by his sons, who were, from eldest to youngest, Piotr, Nikolai, Vladimir, Sergei, and Alexey. The plaintiffs allege that the three oldest brothers bought Sergei's and Alexey's interests in the business in 1902. Plaintiffs also allege that Nikolai and Vladimir sold their interests to Piotr in 1904 or 1905, leaving Piotr as the sole owner of the trade house. In addition, the plaintiffs claim that Vladimir agreed to relinquish his "right to the company name, privileges, and honors" in exchange for monetary compensation. When Piotr died in 1910, his wife, Eugenia, became the sole owner of the trade house. She operated the trade house successfully until 1917.

In 1917, as the Bolshevik revolution spread through Russia, Eugenia married an Italian diplomat and fled to Italy. She eventually settled in Nice, France. In 1918, the newly formed Communist government in Russia nationalized the Smirnov trade house. Under state control, the trade house no longer used the "Smirnov" name, although vodka production continued.

Also in flight from the Russian Revolution, Vladimir relocated to Constantinople. In 1920, he established a distillery under the name "Supplier to the Imperial Russian Court, Pierre Smirnoff Sons." By 1924, Vladimir had moved to Lvov, Poland, and had opened a vodka distillery. In 1925, he opened another distillery in Paris under the name of "Ste. Pierre Smirnoff Fils" or "The Company of the Sons of Peter Smirnoff."

In 1933, Ste. Pierre Smirnoff Fls. entered into an agreement with Rudolph Kunett, an American businessman. Under this agreement, Vladimir granted Kunett the exclusive right to manufacture and market Smirnoff vodka in the United States in exchange for monetary compensation. Kunett soon thereafter assigned his rights to himself, Benjamin B. McAlpin, Jr., Donald M. McAlpin, and Townsend M. McAlpin. Those four individuals, in turn, assigned their rights to a newly created New York corporation, Ste. Pierre Smirnoff Fls., Inc. (NY). In 1934, Ste. Pierre Smirnoff Fls., Inc. (NY) began the production and sales of vodka in the United States, using the name of "Smirnoff"¹ and the historical Smirnoff marks.²

Five years later, G.F. Heublein & Bro. purchased Ste. Pierre Smirnoff, Fls., Inc. (NY). G.F. Heublein & Bro. established a Connecticut subsidiary to manufacture and market the sale of Smirnoff vodka in the United States, Ste. Pierre Smirnoff, Fls. (CT). In 1955, G.F. Heublein & Bro. changed its name to Heublein, Inc. Since then, Heublein and its successor, UDV, have marketed Smirnoff vodka successfully, currently manufacturing approximately six million cases per year. Smirnoff is now the largest-selling vodka brand in the United States and the second largest-selling distilled spirit. Smirnoff still uses labeling and advertising that is heavily dependent on its association with P.A. Smirnov and the Russian trade house. For example, the label of a Smirnoff vodka bottle refers to Ste. Pierre Smirnoff Fls. as "Purveyors to the Imperial Russian Court 1886-1917" and "successors to the world-famous Pierre Smirnoff." The label also includes a crown, shield, and red shrouds from the Russian Imperial Court, as well as several medals bearing the state coats of arms for Russia.

Eugenia first learned of Vladimir's use of the Smirnoff name and marks around 1925. Upset that Vladimir was marketing Smirnoff vodka without permission, she wrote a letter to her husband asking for advice. Her husband responded that any legal action would require documentary proof of her claim to be the sole owner of the Smirnov trade house. However, all papers proving the ownership of the trade house were still in Russia, where the Communist regime was repressing all facets of private enterprise. Fearing that she would be prosecuted by the Soviet authorities if she tried to obtain the needed documents in Russia, Eugenia elected not to make an attempt. She did, however, write letters to friends and family in Russia asking for their help. Eugenia also had her daughter, Tatyana, write letters to friends, relatives, and organizations to enlist their aid in obtaining documentary proof, but there is no evidence that either Eugenia or Tatyana contacted Vladimir to bring this issue to his attention.

During the 1930s, Eugenia and her family became aware that Vladimir had sold his "rights" to the Smirnoff name to Kunett and that Kunett was manufacturing Smirnoff vodka in the United States and was using the Smirnoff name and marks. Nevertheless, no one contacted either Kunett or the later producers of Smirnoff vodka in America, Ste. Pierre Smirnoff Fls. Inc. (NY), to inform them of Eugenia's claim to the Smirnoff name.

In 1958, Eugenia died. Prior to her death, however, Eugenia executed a document giving Tatyana "power of attorney" over the "defense of [her] interest in asserting [her] rights to the ownership and title of `SMIRNOFF VODKA'... which [she believed had] been unjustly used by third parties in violation of her rights." In 1977, Tatyana died intestate in France, with her "rights" in Smirnoff passing to her sons, Boris Alexandrovich Smirnoff and George Smirnoff. George Smirnoff died the next year, never having informed Heublein of his claim to the rights surrounding the name "Smirnoff." Nor did Boris Alexandrovich Smirnoff ever inform Heublein of his claim until 1994, when he learned of Joint Stock's dispute with Heublein.

II.

As noted, the plaintiffs-appellants in this case are Joint Stock and RASCO. Neither of the plaintiffs has a direct connection to Eugenia, Tatyana, Boris Alexandrovich, or George (collectively, the "French Smirnovs"). Instead, both are recently formed companies that wish to import and sell vodka in the United States under the Smirnov name.

Joint Stock was chartered in Russia in 1993 as "Trade House of Descendants of Peter Smirnov, Official Purveyor to the Imperial Court." The principal owners of Joint Stock are Andrei and Boris Alexeseevich Smirnoff (as distinguished from Boris Alexandrovitch Smirnoff, Eugenia's son), who are the descendants of P.A. Smirnov's two youngest sons, Sergei and Alexey. Joint Stock, in conjunction with Russian vodka manufacturers, currently produces and markets vodka under the Smirnov name in Russia.

RASCO is a Delaware corporation headquartered in Connecticut. RASCO has an agreement with Joint Stock under which RASCO would be the exclusive licensee for any rights Joint Stock might obtain in the Smirnoff or Smirnov trademark and trade name. RASCO was incorporated by an agent of Joint Stock with this purpose in mind....