13:00, September 27, 2010
Charges of Unfair Competition Leveled Against Aleks Grig
Alexander Bojko, Ukraine’s Ambassador to Armenia, and Image Holding Company Director A. Kousak have written to the RoA State Commission for Economic Protection (SCEP), complaining that Saleks Group, a firm owned by MP Samvel Aleksanyan, is producing and selling vodka that closely resembles better known Ukrainian vodka brands. They argue that it is a case of trademark infringement. (Saleks Group has since changed its corporate name to Aleks Grig)
They point out that the “Khoptsi” vodka brand produced by Saleks closely resembles, in terms of bottle, cork and label, the “Khortitsa” brand produced by Image Holding. They also argue that the name is a cheap rip-off as well.
The SCEP has launched an investigation of the vodka market in Armenia and has learnt that Saleks Group also is bottling and selling other vodka as well – “Moskovskaya”, “Staraya Stolitsa” and “Gzhika”. It turns out, however, that these brands aren’t registered with Saleks Group and that they officially belong to other companies.
The SCEP reviewed the case of Aleks Grig, Ltd. (formerly Saleks) on May 19 of this year.
After its deliberations, the SCEP found that the labels affixed to vodka produced by Aleks Grig could in fact create confusion with the consumer and be misconstrued as vodka produced by another form.
The SCEP found that four vodka brands produced by Saleks violated trademark laws, resulting in unfair competition. The SCEP levied a 500,000 AMD fine against the company and directed it to stop production of the vodka brands in question and to remove any remaining stock from store shelves.
However, Aleks Grig has yet to pay the fine and has petitioned the Administrative Court to annul the May 19 decision of the SCEP.
Aleks Grig attorney Lernik Hovhannisyan told Hetq that the SCEP had no legal right to fine the company since its findings were wholly subjective and could only be presented as conjecture. Moreover, Mr. Hovhannisyan argues that there was no expert examination of the matter to gauge just how “confusing” the vodka labels were.
The attorney believes that the case actually stems from a desire to exert pressure against Samvel Aleksanyan, the owner of Aleks Grig, and other companies and businessmen, given that there is a deficit in the state budget that needs to be closed. Hovhannisyan says the SCEP is being used by the government to make up part of the shortfall.
The plaintiff doesn’t argue the fact that the vodka labels may create consumer confusion nor does it explain why Aleks Grig is producing vodka so similar to the Ukrainian brands; it merely disputes the legality of the SCEP to hand down such a decision and penalize the company.
Attorney Hovhannisyan told Hetq that Image Holding should have directly petitioned the courts and not the SCEP. The lawyer argues that the case was launched due to the direct intervention of the Ukrainian ambassador.
Mr. Hovhannisyan claims that the SCEP failed to conduct an impartial and complete examination of the case, resulting in the fact that it failed to uncover all aspects of the case; including features of benefit to the parties involved.
“In this particular case, where the SCEP has overstepped its legal bounds, it has set about on an official mission to regulate relations linked to the intellectual property rights, specifically the rights of a foreign concern, and the Commission does not have the jurisdiction to do so,” notes the attorney in his court petition.
The plaintiff argues that the SPEC can only engage in such intellectual rights matters when it can be substantiated that such rights are being utilized with the aim of preventing or restricting competition.
Furthermore, Mr. Hovhannisyan points out that Ukrainian Ambassador Bojko had no legal claim to present a complaint in the first place and that the economic enterprise whose intellectual property rights were allegedly being violated could do so.
The SCEP claims the exact opposite, pointing out that its responsibility, among others, is to guarantee a fair competitive field for all business and that to do so it must see that the appropriate laws are upheld.
The SCEP argues that it has the legal jurisdiction to adopt decisions based on perceived violations of the Law on Economic Competition, to set penalties and execute other prohibitory measures defined by the law.
As to the argument presented by Aleks Grig regarding the convening of an expert panel, the SCEP points out that such expert testimony is only required on a need to know basis; that is if an examination of evidentiary proof arises.
The SCEP argues that its sole mission in the case is to guarantee free and fair competition in the RoA and is not purposefully directed at defending the intellectual rights of the firm in question.
The RoA Administrative Court was scheduled to hold its first hearing of the case on September 18. It was postponed, however, since the plaintiff raised objections to the SCEP response. SCEP representative Louiza Tzatouryan motioned the court for additional time to get acquainted with the objections.
The case was rescheduled for September 28.
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