The design of vodka stood up in court

Beluga Group, a large alcohol producer, was unable to ban the Russkiy Sever plant from producing Altai Vertex vodka, the label of which it considered to be an imitation of its Arkhangelskaya brand. The court considered insufficient evidence of unfair competition. Beluga Group may try its chances with the Federal Antimonopoly Service or encourage retailers and distributors to get rid of a competitor’s product.

The structure of the Beluga Group failed in court to prohibit the Russkiy Sever plant from using the label design for a number of Altai Vertex vodkas because of the alleged imitation of the design of its Arkhangelskaya vodka. At the end of September, the Presidium of the Intellectual Property Rights Court confirmed the decision of the first instance, which refused to satisfy the requirements.

Alexander Mechetin’s Beluga Group is one of the largest alcohol producers in the Russian Federation. In January-September 2022, sales of own brands grew by 6.2%, to 9.5 million decalitres year-on-year. Arkhangelskaya is one of the main vodka brands in the group’s portfolio: in 2021, its sales exceeded 3 million decaliters. The Beluga Group declined to comment.

“Russian North” in the market was previously associated with the holding Global Spirits of Ukrainian businessman Yevgeny Chernyak, who owns the brands “Khortytsya”, “Morosha”, “Pervak”. Representatives of the “Russian North” denied the connection. According to the Unified State Register of Legal Entities, since 2014, the Cypriot Oxford AMG-77 Ltd has owned Russkiy Sever, and Alexander Bespalov became the owner in the spring of 2022. The company then announced the termination of licensing agreements for the release of previous brands. In the “Russian North” did not promptly respond.

The Arkhangelsk distillery (ALVIZ), which is part of the Beluga Group, argued that the imitation of the Arkhangelskaya type is aimed at redistributing demand in favor of the Altai Top, causing losses to ALVIZ in the form of lost profits and damage to business reputation. And Arkhangelskaya vodka is widely known due to significant investments in promotion, a long sales period since 2001 and large production volumes, ALVIZ claimed.

The Intellectual Property Court recognized the high likelihood of consumer confusion between the two brands, but noted insufficient evidence of unfair competition. As stated in the decision, the products of the plaintiff and the defendants are made in a common handicraft style, there is no evidence of a decrease in sales of Arkhangelskaya for a year and a half after the launch of Altai Vertex, just as there is no evidence of the wide popularity of Arkhangelskaya.

BGP Litigation advisor Anna Bolshakova notes that the Intellectual Property Court initially set “rather high standards” for proving unfair competition. Partner, head of the digital law practice at A-PRO law firm Anton Vorobyov considers the chances of a successful appeal against judicial acts to be small. The plaintiff’s arguments about the similarity are based on a comparison of the elements of the labels, the chances of protection could be higher when registering the rights to the bottle itself, he points out. Kirill Nikitin, director of the law firm Vegas Lex, added that the Beluga Group could try to initiate proceedings with the Federal Antimonopoly Service, but given the court decisions, this would be problematic.

Director of CIFRRA Vadim Drobiz notes that Arkhangelskaya is one of the most popular vodka brands in the country and it is logical for the manufacturer to protect it in a growing market. According to the EGAIS, in January-September 2022, the production of vodka in the Russian Federation increased by 8.1%, to 58.21 million deciliters year-on-year. The owner of the Kaufman brand agency, Stanislav Kaufman, adds that in addition to continuing litigation, the Beluga Group may require distributors and retailers to refuse to sell Altai Vertex if they want to work with Arkhangelskaya.

Anatoly Kostyrev