Thursday, December 27, 2007

Marketer Asserts Actual Controversy in Russian Vodka Advertising Dispute

This posting was written by William Zale, Editor of CCH Advertising Law Guide.

A vodka marketer seeking to enter the U.S. market by touting the "authentically Russian" character of its product established the existence of an actual controversy for purposes of a declaratory judgment action against the marketer and U.S. importer of the well-established Stolichnaya vodka, the federal district court in New York City has ruled.

"Not Truly Russian"

The vodka marketer (Russian Standard) sought a declaration that it would not violate the Lanham Act through its advertising campaign, highlighting the distinction between its Imperia vodka and Stolichnaya—which Russian Standard had publicly claimed to be "not truly Russian" because some of its production processes occurred in Latvia.

The marketer (Pernod Ricard) and importer (Allied Domecq) of Stolichnaya had engaged in conduct indicating that there would be a controversy between the parties by sending a cease and desist letter to Russian Standard and initiating a proceeding at the National Advertising Division (CCH Advertising Law Guide ¶62,367). Although Pernod and Allied had waived their right to sue for past statements, the threat of legal action based on Russian Standard's future conduct was sufficiently immediate to create an "actual controversy."

Stay Pending NAD Decision

A motion by Pernod and Allied to stay litigation for 30 days was granted, pending resolution of the relevant issues in the National Advertising Division (NAD) proceeding. Allowing the NAD to provide its expert view on Stolichnaya's authenticity as a Russian vodka would be extremely useful in resolving the case, according to the court.

The November 19 decision is Russian Standard Vodka (USA), Inc. v. Allied Domecq, SD N.Y., CCH Advertising Law Guide ¶62,764.

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