The owner of the rights to Lesnaya Morosha, Rodnik and K, decided to ban the production of vodka at the Yaroslavl Distillery

A conflict has broken out over one of the best-selling vodka brands in Russia, Lesnaya Morosha. The owner of the rights to this brand, Rodnik and K, is trying in court to prohibit the production of such vodka by the Yaroslavl Distillery (YALVZ), despite the previously issued consent to use the brand and the intention to transfer the rights to the brand. The outcome of the dispute will depend on the agreements of the parties, lawyers say.

The manufacturer of Khorta and Lesnaya Morosha vodka, Rodnik and K, filed an application with the Arbitration Court of the Yaroslavl Region to prohibit YALVZ from using on its labels designations similar to the trademarks Lesnaya, Lesnaya Moroshka and Lesnaya Morosha. The application has been accepted for proceedings, a preliminary hearing is scheduled for February 2024, as follows from the file of cases. “Rodnik and K” did not answer “Kommersant”.

Rodnik & K is part of the Traditions of Success Group of Companies and operates an alcoholic beverage plant in the Moscow region with a capacity of 300 million bottles per year. Together with the Russian Sever plant, the enterprise produced drinks from the portfolio of the Global Spirits holding (Khortytsya brand) of Ukrainian businessman Evgeniy Chernyak, and in 2022 the factories launched other brands, including Khorta. Kommersant’s interlocutors connected the enterprises themselves with Global Spirits, but the parties denied this.

The business of Traditions of Success Group of Companies probably became greatly complicated after the initiation of a criminal case against Evgeniy Chernyak on suspicion of financing the Armed Forces of Ukraine, when the owner of Rodnik and K and Russian North, Alexander Bespalov, and the general director of Rodnik and K, Andrei Lazutin, were accused in giving a bribe (see “Kommersant” on July 4). In January-October, the group’s factories reduced vodka production by 53% year-on-year, to 2.68 million decaliters, according to data from market participants. Kommersant’s interlocutors at the market said that the brands of the enterprises could go to YALVZ. Brand LLC, associated with YALVZ, has already submitted applications for registration of the Khorta and Lesnaya brands (see “Kommersant” dated October 10). YALVZ, according to data available to Kommersant, increased vodka production by 20 in January-October % year on year, up to 1 million decaliters.

YALVZ explained to Kommersant that in January 2023 they received irrevocable written permission from Rodnik and K to use trademarks associated with Lesnaya Morosha vodka, as well as the Shustov, Pervak, and Shokolatier brands up to 31 December 2024. And in May, Brand LLC entered into agreements with Rodnik and K on the alienation of exclusive rights to trademarks. But in October, YALVZ continues, Rodnik and K notified of the withdrawal of letters of consent and warned that the production of vodka under these labels would be considered a violation of the rights of Rodnik and K. YALVZ reported that they would file a counterclaim against Rodnik and K, demanding recognition of the rights to the brands and a ban on obstructing the use of the brands.

General Director of Online Patent Alina Akinshina notes that Rospatent is still considering applications for registration of alienation of exclusive rights under contracts in relation to the trademarks under discussion. But Rodnik and K still remains the copyright holder, so it can demand to stop using the trademarks, points out Yuri Fedyukin, partner at Enterprise Legal Solutions. According to him, Rodnik and K may try to prove the invalidity of the agreement with YALVZ due to a violation of the company’s interests and the conclusion of the document by a person who does not have the necessary authority. But if the fact of the legality of the irrevocable permit does not raise questions, then the court will leave the demands of Rodnik and K unsatisfied, adds Mr. Fedyukin.

According to a Kommersant source on the market, in January-October, Lesnaya Morosha ranked fifth in vodka sales, and later – 14th place. The owner of the Kaufman brand agency, Stanislav Kaufman, says that due to the ban on the use of trademarks, YALVZ may be forced to stop the production of “Lesnaya Morosha”, which means spending time replacing the brand and again presenting the products to customers. With large volumes of production and sales, such a “false start” is highly undesirable, the expert notes. CIFRRA director Vadim Drobiz believes that in any case, the shares of the Traditions of Success Group of Companies brands in the Russian market will be eroded in favor of competitor brands. According to the Federal Service for Alcohol Market Regulation, retail sales of vodka in January-October decreased by 0.7% year-on-year, to 62.09 million decaliters.

Anatoly Kostyrev