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Russia: Vodka Battle Pits Smirnoff Against Smirnov

Moscow, 11 September 1997 (RFE/RL) - Both sides in the battle over the right to own the Smirnoff vodka brand name in Russia said they were encouraged that President Boris Yeltsin intervened publicly in the dispute last week.

Yeltsin called on September 4 for a review of Smirnoff imports into Russia and said the issue should be raised at the next meeting of the high-level Gore-Chernomyrdin commission.

The commission, set up by U.S. Vice President Al Gore and Russian Prime Minister Viktor Chernomyrdin to regulate bilateral trade issues, is due to meet in Moscow later this month.

"We welcome Yeltsin's call for the commission to look into it," said Neil Garnett, a spokesman for International Distillers and Vintners (IDV), the beverage arm of Grand Metropolitan which owns the Smirnoff name worldwide. "It is not just a Russian issue but a worldwide intellectual property rights issue," he said.

The British drinks group has been in a two-year legal battle with its Russian rival set up by Boris Smirnov, the great grandson of Peter Smirnoff who founded the original company, over the right to use the brand name. In June, a Moscow Arbitration Court rejected an appeal by Grand Metropolitan's U.S. subsidiary Heublein and upheld an earlier decision to revoke Smirnoff's trademark registration in Russia.

Smirnov said Yeltsin's statement would add weight to his case. He said he was "enthused by the fact that President Boris Yeltsin is backing Russian producers." In his statements last week, Yeltsin threw his support behind the Russian Smirnov, saying it was of higher quality than its western rival.

"Only active state efforts can protect the Russian market from the intervention of western businessmen into the food industry, which causes tremendous damage to our country," Smirnov said.

Heublein maintains it bought the rights to the Smirnoff name in 1933 from an American businessman who had acquired it from Peter Smirnoff's son, Vladimir. But Smirnov says he has documents proving that Vladimir sold the company to his older brothers in 1904.

The Smirnoff versus Smirnov battle is likely to intensify as both sides try to win over the massive Russian market. According to company figures, Smirnoff sells about 15 million cases of vodka in some 140 countries around the world, including 1 million cases in Russia annually. The western Smirnoff won the backing of the Romanov family last year when the Grand Duchess Leonida Georgiyevna called it "the vodka of choice on tsarist tables."

Smirnov's Krasnodar-based distillery produced 600,000 bottles in 1996, but boosted output to 2.5 million bottles a month this August.

IDV's Garnett said the company is not concerned about Yeltsin's call for a review of Smirnoff imports because it produces all its vodka for the Russian market at a factory in St. Petersburg.

Garnett also said IDV was cheered by a recent statement by the Deputy Chairman of the Russian Supreme Court, Nina Sergeyeva, who urged the Krasnodar Regional Court to reconsider its original 1995 ruling against Heublein, calling it "unfounded and illegitimate."

The Supreme Court's call could help Smirnoff overturn earlier rulings by lower courts, Garnett said, adding that the company plans to take its legal battle to higher courts.