In a fizz over trademark violations
Western companies leaving Russia are finding things are rather complicated. Jessica DiNapoli and Alexander Marrow of Reuters explain.
WESTERN companies with brands such as CocaCola that exit Russia face years of battling knockoffs and unauthorised imports clamouring to fill the void they leave behind, a risky bid as courts show little sympathy for firms that depart.
Companies pulled back from Russia after Moscow sent thousands of troops into Ukraine in February, in response to investor and public pressure. Some, like CocaCola Co, finalised their exit in August after five months, while others such as McDonald’s Corp sold their businesses. Some including Procter & Gamble Co partially remained, selling essentials.
They are defending their trademarks to protect their brands from losing value, and in case they ever return, intellectual property lawyers said.
But they face a sea of opportunists, importers and flipflopping court rulings.
CocaCola, first available in the Soviet Union in 1979, is already ensnared in legal fights against greymarket goods, which are unauthorised imports, and Russian knockoffs of its fruitinfused Fanta line.
Other companies’ battles are just beginning as Russian entrepreneurs aim to capitalise on their wellknown names as they depart.
Rospatent, the Russian government’s intellectual property agency, is receiving an influx of applications for trademarks of Western brands popular in the country, Robert Reading, head of content strategy in the intellectual property group at analytics firm Clarivate Plc, which tracks the filings, said.
In usual times, governments reject applications for trademarks that are identical or very similar to existing brands. But the Russian government has adopted a decree allowing businesses to use patents from countries deemed ‘‘unfriendly,’’ such as the United States and United Kingdom, without paying the owner of the intellectual property, putting Western brands on the defensive.
Russia also now permits parallel imports, or greymarket items, for products spanning feminine products to footwear.
The murky territory for major brands in Russia is like the
‘‘Wild West’’, Carey Kulp, a lawyer at Philadelphia intellectual property law firm Volpe Koenig PC, said.
‘‘The big issue in Russia is, will the court support Western brands?’’ Reading said.
Moscow entrepreneurs Alexander Gershtein and Vadim Ryabchenko, who own a bandage and medical materials manufacturing business, applied for about 20 trademarks including CocaCola, Adidas, Mercedes Benz and P&G’s Pampers nappy brand.
Gershtein said his firm may be able to make items such as nappies branded as Pampers and he may license others, if he wins approvals, he said.
CocaCola has so far largely failed to have a Russian judge take its side in cases against greymarket sodas imported from the US, and competitors with nearly identical names, such as ‘‘Fantola,’’ which have flooded the market.
Importer Pivoindustria LLC has been able to sell thousands of cans of Fanta peach and pineapple and CocaCola Cherry — even though the government has not added sodas to the list of goods eligible for parallel imports.
Pivoindustria buys the sodas in US Costco and Walmart stores and is considering importing more, a company executive said.
CocaCola is seeking a judgement against Pivoindustria, after unsuccessfully trying to order Customs to block the soda shipments, Sosov said.
The multinational has appealed the court’s decisions and has said it ‘‘protects its goodwill and reputation where third parties seek to trade off the company’s renowned, worldwide’’ brand.
Reporters could not attend a court hearing on one of the three cases CocaCola filed against Pivoindustria because the Atlantabased company won the approval of a judge to block public access, a move that Sosov said was illegal.
CocaCola in April also appealed the decision of a Russian court to approve beverage company Chernogolovka’s ‘‘Fantola’’ brand prior to the conflict in Ukraine, according to court documents.
Chernogolovka is aiming for a 50% share of Russia’s near $US9 billion ($NZ14b) soft drinks market now that CocaCola is reducing operations.
The company started making Cola Chernogolovka in May.
Some entrepreneurs in Russia are trying to ‘‘Russify’’ Western brands, Josh Gerben, founding partner of law firm Gerben Perrott PLLC, said.
An entrepreneur in May requested approval to use McDonald’s golden arches and red sign, emblazoned with ‘‘Mother’s Borsch’’ in Cyrillic, for cafes and bars.
McDonald’s Golden Arches logo was visible and its flagship Big Mac hamburger was still for sale at some franchised locations months after the chain first closed in March. — Reuters