Joint Stock Society v. Udv North America, Inc.

Citation53 F.Supp.2d 692
Decision Date24 May 1999
Docket NumberCivil Action No. 95-749-GMS.
PartiesTHE JOINT STOCK SOCIETY, "Trade House of Descendants of Peter Smirnoff, Official Purveyor to the Imperial Court," and the Russian American Spirits Company, Plaintiffs, v. UDV NORTH AMERICA, INC., and Pierre Smirnoff Company, Defendants.
CourtU.S. District Court — District of Delaware

M. Duncan Grant, Tara L. Lattomous, Pepper Hamilton LLP, Wilmington, DE, James W. Hawkins, Hillary Harp, Carrie A. Hanlon, Powell, Goldstein, Frazer & Murphy LLP, of counsel, Atlanta, GA, for plaintiff.

Allen M. Terrell, Jr., Srinivas M. Raju, Richards, Layton & Finger, Wilmington, DE, William L. Webber, Kenneth W. Brothers, Charles A. Loughlin, Erik J. Berlin, Therese K. Francese, Kelly A. Clement, Timothy E. Boyle, Howrey & Simon, Washington, DC, of counsel, for Defendants.

AMENDED OPINION

SLEET, District Judge.

I. INTRODUCTION.

The plaintiffs in this action, the Joint Stock Society and the Russian American Spirits Company ("RASCO"), have sued the defendants, UDV North America, Inc. and the Pierre Smirnoff Company, for false advertising, false association, and trademark cancellation. According to the plaintiffs, the defendants have violated several provisions of the Lanham Act, 15 U.S.C. § 1051 et seq. (1994), as well as two state laws prohibiting unfair competition, see Del.Code Ann. tit. 6, §§ 2531-36 (1993), by knowingly engaging in over fifty years worth of false advertising and trademark misuse concerning their SMIRNOFF vodka products. This court has jurisdiction over the Lanham Act and state law claims pursuant to 28 U.S.C. §§ 1331, 1338, and 1367, respectively.

Between April 28, 1998 and August 20, 1998, the defendants filed a series of motions for summary judgment. Because the court is convinced by some of the arguments raised in the defendants' case dispositive motions as well as by the responses to some of the questions the court posed to the parties at the hearing on these motions, summary judgment will be granted in favor of the defendants on all counts of the complaint.

The reasons for the court's decision are three-fold. First, the plaintiffs have not taken sufficient preparatory steps to enter the U.S. market and, as a result, have failed to satisfy the Article III case or controversy requirement imposed by the United States Constitution. Second, even if the plaintiffs could establish facts or articulate a theory demonstrating that this matter constitutes a justiciable case or controversy, the plaintiffs do not have standing to bring these particular claims. Third, and finally, even if the plaintiffs were able to satisfy the constitutional and prudential standing requirements under the relevant statutes, their legal action would be barred as a result of their years of inaction under the doctrine of laches. For these reasons, the court will grant summary judgment in favor of the defendants.

II. SUMMARY JUDGMENT STANDARD.

The court can grant summary judgment only if there are no genuine issues of material fact and the moving party is entitled to judgment as a matter of law. See Fed.R.Civ.P. 56(c) (1998); see also Berner Intn'l Corp. v. Mars Sales Co., 987 F.2d 975, 978 (3d Cir.1993) (citing the rule); Lucent Info. Mgmt. v. Lucent Technologies, Inc., 986 F.Supp. 253, 257 (1997) (same). An issue is "genuine" if, given the evidence, a "reasonable jury could return a verdict in favor of the nonmoving party." See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). A fact is "material" if it might affect the outcome of the case. See ACCU Personnel, Inc. v. AccuStaff, Inc., 846 F.Supp. 1191, 1203 (D.Del.1994) (citing Anderson, 447 U.S. at 248, 100 S.Ct. 2124).

On summary judgment, the court must refrain from "weigh[ing] the evidence and determin[ing] the truth of the matter" asserted. See Anderson, 477 U.S. at 249, 106 S.Ct. 2505. Instead, the court should only determine whether there is a genuine issue for trial. See Berner, 987 F.2d at 978 (citing Anderson, 447 U.S. at 250, 100 S.Ct. 2124).

In making this determination, the court must refrain from determining the credibility of witnesses or their testimony. See Country Floors, Inc. v. A Partnership Composed of Charley Gepner and Gary Ford, 930 F.2d 1056, 1061 (3d Cir.1991). In addition, the court must draw all inferences and resolve all doubts in favor of the nonmoving party — here, the plaintiffs. See Iberia Foods Corp. v. Romeo, 150 F.3d 298, 302 (3d Cir.1998); see also ACCU Personnel, 846 F.Supp. at 1204. In other words, on the defendants' motions for summary judgment, the court must view the evidence in the light most favorable to the plaintiffs. See Berner, 987 F.2d at 978; Lucent, 986 F.Supp. at 257.

With these legal principles in mind, the court turns to a recitation of the facts giving rise to this lawsuit.

III. BACKGROUND.

As stated in an earlier opinion, "[a]n understanding of the plaintiffs' claims requires a brief lesson on Russian history." See Joint Stock Soc'y v. Heublein, Inc., 936 F.Supp. 177, 182 (D.Del.1996). Consequently, the court now embarks upon a journey which covers over 130 years worth of world events.1

A. The Rise And Fall Of The Original Smirnov Trade House.

Sometime around 1860, a man named Piotr Arsenyevitch Smirnov founded a Russian trade house called "P.A. Smirnov in Moscow." This trade house distilled and sold vodka in addition to a number of other spirits. Beginning in 1873, Smirnov's vodka started to win a number of prestigious national and international awards,2 culminating in his being named the "Official Purveyor to the Russian Imperial Court" in 1886.

In 1898, Smirnov died, leaving the trade house to his widow and five sons. Four years later, in 1902, the three oldest sons bought out the interests of their two younger brothers — Sergei and Alexey — to form the company "Piotr, Nikolai, and Vladimir Smirnov Trading under the name P.A. Smirnov, Moscow." This new partnership, however, did not last long. Between 1904 and 1905, both Vladimir and Nikolai sold their interest in the company to Piotr. Pursuant to the most relevant agreement, Vladimir relinquished his "right to the company name, privileges, and honors" in exchange for 500,000 Rubles or, roughly, $250,000 in 1904 dollars.

As sole owner of the trade house, Piotr soon enlisted the aid of his wife, Eugenia, to help him run the enterprise. With Piotr's passing in 1910, Eugenia became the trade house's sole owner, running its operations until 1917, the year of the Bolshevik revolution, when she married an Italian diplomat and fled the country.

In the wake of the Russian revolution, the new government passed laws abolishing private property. As a consequence, the government nationalized the trade house, taking over its operations in 1918. While the facilities were still used to make vodka, it was no longer produced under the SMIRNOV name. Instead, it bore the name of a company created, owned, and run by the Soviet State.

B. Evidence Of U.S. Sales.

Although there is no direct evidence that any SMIRNOV products were actually purchased in the United States prior to 1918, it appears as if a small quantity of SMIRNOV products were shipped to the U.S. between 1907 and 1914. Specifically, according to a limited series of advertisements or articles concerning SMIRNOV products that appeared in Bonfort's Wine and Spirits Circular around this time, the J.B. Martin Importation Company of New York, New York was the "sole agent in the United States" for distributing SMIRNOV products. In 1907, roughly 50 cases of SMIRNOV cordials were shipped to J.B. Martin in New York. Finally, prior to 1914, at least two retailers in New York City, one of them apparently being MACY's, had carried SMIRNOV products for sale.

Thus, despite the lack of direct evidence showing that American consumers actually bought these SMIRNOV products, it is probably reasonable to infer that some of the bottles that were imported into the country were indeed purchased by the American buying public — especially when the limited evidence available is viewed in the light most favorable to the plaintiffs.

However, as the parties agree, it is probably fair to say that no SMIRNOV products were being shipped to the U.S. after 1918 since the trade house was taken over by the Soviet State that year. Moreover, with the advent of Prohibition in 1920, it is also fair to say that if there were any SMIRNOV products remaining in the United States, they were probably bought and sold, if at all, only surreptitiously and, thus, in even more limited quantities than before 1918, when it was apparently offered for sale at select New York City locations.

Finally, there is no evidence that the original trade house ever formally filed any trademark registrations with the U.S. Patent and Trademark Office prior to the company's closing in 1918.

C. The Rise Of A New Smirnoff Company.

Around 1920, after fleeing Russia, Eugenia settled in a Russian émigré community located in Nice, France. Around this time, the Soviet State began to refine its laws concerning the ownership of private property. Most relevant to this lawsuit, the communist regime adopted a harsh criminal code that prohibited, among other things, private capital enterprise under severe penalty since it was deemed counter-revolutionary or insurrectionist.

In the face of these laws, Vladimir — who had signed away his rights to the family business in 1904 — also fled the country. By 1923, he had settled in Lvov, Poland where he established "Ste. Pierre Smirnoff Fls.," which loosely translated means the "Company of the Sons of Piotr Smirnov." Like its predecessor and namesake, Vladimir's company was formed for the purposes of making and distilling alcoholic beverages, including vodka products. In fact, during this time, Vladimir held out his company as the "Successor to P.A. Smirnoff in Moscow and PN & V Smirnoff." In an attempt to further profit from this asserted...

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