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Then there is the famous Starbucks case. Starbucks had planned to open its first store in Russia in 2007 in the Mega Mall north of Moscow. The companyâs business partner in Russia, Kuwait-based M.H. Alshaya, said earlier this year that it planned to open Starbucks shops in Moscow and St. Petersburg in August 2007 and have 10 stores in Russia by the end of the year. However, the companyâs entry into the Russian market was delayed for years by a trademark dispute.
Hereâs some background on the dispute. According to news sources (stories here and there), Starbucks initially registered STARBUCKS as a trademark in 1997 when it began making plans to enter the Russian market. In 2002, however, a company called Press appealed to Rospatent, the Russian trademark office, for rights to the mark on the ground that Starbucks had not used it in the country for more than three years. Rospatent granted its request. Press then sold the trademark rights to Starbucks, a company reportedly owned by Moscow lawyer, and trademark warehouse, Sergei Zuykov. Mr. Zuykov reportedly then offered to sell the mark to Starbucks for $600,000. The parties litigated the matter before Rospatent, which Starbucks won in 2005. However, during the delay in entry into the Russian market, prices of real estate had gone up, the costs of labor had gone up and other coffee companies had established a foothold in Russia.
Mr. Zuykov is a colorful character. A Moscow television news show about him on REN TV stated that âgaps in legislationâ have allowed the 39 year-old lawyer to âcaptureâ foreign trademarks and offer them back to their rightful owners. The show said Mr. Zukov began dealing in trademarks in August 1998 when he failed at selling car alarms. The show added that âmany companiesâ have paid Mr. Zuykov rather than âlose time and their reputation in the Russian market.â
It is of course for clients to determine how much a fight over a trademark is worth to them, in terms of money, market share, expenses, etc. However, a cost benefit analysis should be part of that consideration. Unfortunately, this is an area where the law simply has not caught up to the technology. Often, litigation to recover the use of a trademarked domain name that is being cybersquatted can be cost prohibitive or result in such an extensive increase in expenses that make the litigation cost prohibitive. What is necessary is an expedited dispute resolution process via the ICANN UDRP ( Internet Corporation for Assigned Names and Numbers - Uniform Domain Name Resolution Policy) or an amendment to the ACPA (Anticybersquatting Consumer Protection Act) to provide for an expedited process. Until then, paying the cybersquatter off will continue to be an unfortunate but very real economical option.