A district court in Rotterdam has ruled that Shefler's Dutch company, Spirits International, should hand over the trademark rights to the country or pay a penalty of $109,700 plus an additional daily fine of $52,000.
Shefler gained control over the vodka brands in the mid-1990s when he was head of Soyuzplodoimport, the successor to the Soviet Union's food and drink export-import agency.
However, in 1997 Shefler removed one of the middle "Os" from the brand title, re-branding it Soyuzplodimport, and sold himself the rights to 43 brands for $300,000. He then set up a Swiss-based exporting company, the SPI Group, to manage the rights and went on to register the trademarks in more than a hundred countries.
The Dutch ruling forces SPI Group to stop selling Stolichnaya and Moskovskaya vodka in the Netherlands, Belgium and Luxembourg. However, the decision now leaves open legal action in other countries, including the US, Australia, Switzerland and 12 other European Union countries.
SPI Group 'disappointed' over Stolichnaya ruling http://t.co/ypSIimEiXq— just-drinks.com (@just_drinks) March 26, 2015
Hoyng Monegier, the law firm which represented Russia, said:
"Yuri Shefler took possession of the vodka trademarks after the collapse of the Soviet Union and has exploited them since."
The Spirit of the Law
The ruling was disputed by SPI Group, which said the decision was "not correct in light of the facts. We are examining all of our options for the next steps. In any case, the decision affects only a small part of our overall global market."
"The brands were not legally transferred," the court said in a summary of the decision published on its website.
"So the brands still belong to the previous owner: the Russian state."
The ruling covers the Stolichnaya, Moskovskaya and Na Zdorovye brands, and also specifies that Spirits International is no longer allowed to say its vodka is "Russian" or produced in Russia. However, the court rejected claims by Sojuzplodoimport to the nickname "Stoli".