Success Story:
BUD Trademark Dispute Resolution in Russia

Frank Hellwig, Senior Associate General Counsel, Anheuser-Busch Companies
and
Chairman, Executive Policy Committee
Coalition for Intellectual Property Rights

Remarks at the Euroforum Conference on "Protection of Intellectual Property Rights in Russia and CIS"

Moscow, Russia
January 30, 2002

Good afternoon, ladies and gentlemen. Thank you, Peter, for that fine introduction. I would also like to thank Euroforum for this opportunity to address this most esteemed audience. This has been an excellent program and I am proud to be a part of it. I am particularly pleased to be able to address you here today because it gives me the opportunity to speak on two of my favorite subjects: trademarks and beer.

Where does one begin when one wants to speak about a dispute that had its beginning nearly 100 years ago. Especially when I only have a half hour. I do think some background is in order before beginning the case study. First, I would like to tell you a little about Anheuser-Busch. Anheuser-Busch was founded in 1852 in St. Louis, Missouri in the USA. I am proud to point out that this year, 2002, is the 150th anniversary of our company. During these 150 years we have been able to develop from a small local brewery on the banks of the Mississippi river to the world's largest brewery, selling beer in over 80 countries world wide, with 12 breweries in the U.S. as well as a brewery in the U.K. and another one in Wuhan, China. We also brew our beer under license in a number of other countries, including the countries of Italy, Ireland and Spain. In addition to being the world's largest brewer, we are the producers of the world's largest selling beer, BUDWEISER. We began making BUDWEISER in 1876, over 125 years ago. In 1876, BUDWEISER was first sold at a local restaurant. Its popularity increased and it soon became a national brand and then became an international brand with sales in Europe and much of the world dating back to the early 1900's. Budweiser has been around for quite some time.

Some of you may know that we are engaged in a trademark dispute with a brewer from the Czech Republic called Budejovicky Budvar. They are located in the town of Ceske Budejovice. This brewer was founded in 1895, 43 years after Anheuser-Busch was founded and 19 years after Anheuser-Busch began brewing BUDWEISER in the U.S. And while we had first registered BUDWEISER in 1878, Budejovicky Budvar did not register the term anywhere until the mid-1930's, over 50 years after Anheuser-Busch first registered the term. Further, Budejovicky Budvar did not even make prominent use of the term until the 1960's.

As you know, trademark rights are established on a country by country basis. So in spite of the fact that Anheuser-Busch began using the BUDWEISER trademark in 1876, Budejovicky Budvar was able to establish priority in a number of countries. Seeing that we also referred to our product as BUD, as well as BUDWEISER, Budejovicky Budvar also took steps to register the term BUD. Today, Anheuser-Busch holds the rights to the BUDWEISER trademark in nearly the entire world outside of Europe. In Europe, Anheuser Busch sells its beer under the BUDWEISER trademark in 14 countries. In 15 other countries where we cannot use the BUDWEISER trademark, we sell the beer under the BUD trademark. In spite of several attempts to resolve the situation, the dispute rages on in a quite a few countries. While there are some disputes outside of Europe, most of the pending actions in the dispute are focused in Europe.

With this background and I will now move on to the particulars of the dispute as it relates to the Russian Federation.

In Russia, the dispute with the Czech company Budejovicky Budvar is focused on the BUD trademark. The story begins in 1989, when Anheuser-Busch filed to register the BUD trademark for beer in the Russian trademark office. Budejovicky Budvar filed BUD for beer later that year. Even though our mark enjoyed priority, Budejovicky Budvar's trademark was registered. So our first action required that we cancel Budejovicky Budvar's BUD registration. We were successful in canceling this registration based upon our priority. This was our first success and removed the first impediment to registration. We then faced refusal by Rospatent for a variety of other grounds, including conflict with other registered trademarks. After some time, this refusal was overcome. It then looked like we would be entitled to registration.

But while we are trying to overcome the refusal issued by Rospatent, Budejovicky Budvar, even though they had previously applied to register BUD as a trademark, then applied to register BUD as an appellation of origin. As background, let me explain what an appellation of origin is. An appellation of origin is a geographic term; which designates the origin of the product and where the quality of the product designated is due exclusively to the geographic origin of the product. Let me repeat: an appellation is a geographic term, which designates the origin of a product and where the qualities of the product are determined by their geographic source. An example of this is Bourdeaux for wine.

So Budejovicky Budvar applies for BUD as an appellation of origin, as is allowed by the Russian laws. This application of Budejovicky Budvar, however, was clearly a bad faith attempt to block our entry into the market.

Nevertheless, Rospatent issued this appellation or origin registration for BUD.

After overcoming the prior refusal, we were then refused registration on the grounds that it conflicted with this later filed appellation of origin for BUD issued to Budejovicky Budvar.

This then left us with no choice but to file a cancellation action against this appellation of origin, which we did. There were two grounds upon which we based this action. The first ground for our cancellation action was that BUD does not qualify for appellation of origin protection because there is no geographic location that is known as BUD. The Czech brewer is located in the town of Ceske Budejovice. The town is not nor has it ever been known as BUD. It is clear that there is no geographic location known as BUD. Therefore, it did not satisfy the first requirement of an appellation of origin: BUD is not a geographic term.

The second ground for our cancellation action was that beer does not qualify for appellation of origin protection because the quality of the beer is in no way dictated or controlled by the geographic location where it is brewed. That is, beer with the same exact qualities can be brewed anywhere in the world.

Rospatent duly considered these arguments. And, not surprisingly, given the strength of the arguments, Rospatent decided to cancel the appellation of origin BUD. The ground for this cancellation was because, as we had urged, BUD is not a geographic location. (I have brought some copies of the decision if you would like to take a look at it. As you can see, it is very well reasoned and comprehensive.)

This decision was a major victory on our part. And it removed the third impediment to registration. Finally after nearly 12 years of pendency, Rospatent issues Anheuser-Busch a registration for BUD on May 15, 2001.

So how did we achieve this measure of success? And what lessons can we learn from this story.

The first lesson is that you must have patience. Success takes time and will not be achieved overnight. We faced three different and successive impediments to success. If we got frustrated and stopped trying once we hit a roadblock, we would not have achieved what we were able to achieve.

Secondly, you must be Diligent. While it is important to be patient, it does not mean that you are waiting around doing nothing. You must also be diligent in putting your arguments forward.

Thirdly, and one of the more important aspects of this success, you must establish credibility. It is difficult to establish credibility when your product is not on the market. Likewise, it is impossible to enter the market when you don't have the trademark. Nevertheless, there were things we were able to do to establish a measure of credibility and to establish that we are really committed to the region. One way we were able to do this was by our membership and participation in the Coalition for Intellectual Property Rights. Our involvement established the fact that we are truly committed to the development and protection of intellectual property rights in the region. This was done not by trying to dictate our agenda to the trademark offices, but by engaging in an honest exchange of ideas and concerns. Listening as well as talking. It was this exchange that showed a true and continuing commitment not only to the region but also to the development of the intellectual property regimes of each of the countries in the region. Also, it is important to be personally involved, you cannot stay behind your desk in your home office. I, personally, was involved in training seminars and conferences here in Moscow; Chisinau, Moldova; Riga, Latvia; and Yalta, in the Ukraine.

Next, you must, of course, develop and prepare the necessary evidence and arguments. Leave no stone unturned. Be creative. Work hard. Talk about different approaches. Come up with new ideas. Come up with different legal approaches. I am always amazed at how thinking about a problem and discussing the problem so often results in great ideas and creative solutions. You want to make the decision maker's job as easy as possible by giving them as much support for you position as possible. In this case, we had an expert opinion of a Doctor of Geography. We had an affidavit of a Slavic language expert. We included excerpts from numerous encyclopedias and geographic sources. We had numerous official Czech maps. We had official lists of Czech towns and communities. We had a certification from the main post office in Prague. All of this evidence was to show that there is no geographic location called BUD.

Finally, in order to achieve success, it is extremely important to engage a top notch legal and public relations team. While this is listed last, it is probably your first step towards achieving success. We had a good story to tell, but if we didn't have the right people telling it and telling it in the proper way and in the proper forum, it wouldn't matter. Having a good story to tell is important. Telling it properly is just as important.

Now that we have achieved success, what does this success mean? What is the significance of this decision?
First, for Anheuser-Busch, it means we can enter the market. It not only opens the market to our product, it also makes investment opportunities look more attractive. After being kept out of the market for over 12 years, we can now get on with our future here in Russia.

Second, for Rospatent and the Russian trademark regime, it increases their stature. This was a good decision and the right decision. At this critical time when Russia is attempting to enter the WTO, what it says is that Russia respects and protects intellectual property. During the pendency of our trademark application, we saw a huge development in the way trademarks were handled by Rospatent. Rospatent has grown greatly over the last 10 years in efficiency, in protection and in renown. This decision is just one more indication to the world that Russia is ready for WTO membership.

I would be remiss if I didn't mention at this time the countries of Moldova and Kazakhstan as well. In each of these jurisdictions we had similar success in canceling the BUD appellation of origin. So I would like to commend those countries as well in properly reaching the correct conclusion in this regard.

Lastly, it is an indication to the rest of the trademark owners that your intellectual property can be dealt with fairly and effectively by the Russian decision makers. In the last 10 years, the Russian intellectual property regime has truly improved greatly.

Now that we have achieved this registration, what next. Are we done? Need we just sit back and relax? The answer is "not yet."

First, we must deal with the appeal to the Supreme Patent Chamber. Budejovicky Budvar has appealed the decision that cancelled BUD as an appellation of origin. I am not sure this appeal was such a good idea. Given the weakness of their case, they are likely to set an even higher precedent that BUD is not a geographic term. So they may actually be doing us a favor. So while we cannot let down our guard, given the strength of the decision by Rospatent, we are confident that we will be victorious.

Next, we must continue to push for first in time first in right. Let me take a quick moment to explain what this means. As you may recall from the chronology, we had filed for protection of BUD as a trademark and it was sometime later that Budejovicky Budvar filed for protection of BUD as an appellation of origin. Some owners of appellations of origin argue that appellations of origin should take precedence over even earlier filed trademarks. That is, a later filed appellation can be the grounds for canceling an earlier filed trademark. This argument is in clear violation of TRIPs that establishes first in time first in right. That is, the earlier right holder, whether it be a trademark or an appellation, takes precedence over the later right. Or, in other words, first in time first in right. We must continue to push for this principle, not only because it is required by TRIPs, but it also protects all trademark owners from the potential loss of their rights due to a later appellation of origin. (You will find outside on the table a paper issued by CIPR that goes into greater detail on geographic indications if you have an interest.)

Lastly, we must introduce the product into the market. While a formal introduction of the product onto the Russian market will take place in a matter of weeks, I invite you to enjoy a preview sample of BUD after the close of the conference today. This would be a fitting way to celebrate with me, not only the success of Anheuser-Busch, but also the success of the Russian trademark system. So, in conclusion, Russia and Rospatent, for all you do, this BUD truly is for you!!!

About |  Members |  Calendar | Activities |  Coalition |  News |  Reference |  Contact |  Map