Starbucks targets Russia after trademark win

19/08/2005 – Coffee chain icon Starbucks has confirmed its renewed interest in Russia after finally winning a tradename battle with a domestic firm that took clever advantage of national trademark rules.

Starbucks has been holding negotiations with prospective partners in Russia, including the Arcady Novikov and Arpikom restaurants, for the last few months, according to Russian press reports.
But, it is known that at the end of May, Starbucks started supplying its coffee to the Renaissance Moscow hotel, which belongs to the international Mariott network, and on 1st June the corporation opened a café there.

Julio Guteres, chairman of Starbucks’s European division, told Russian newspaper Vedomosti recently that he expected Mariott to become a Starbucks partner in Russia.

Evidence suggests it will take time to build a coffeehouse culture in Russia similar to that now seen in the UK and US. Russia still only has 1,000 coffee houses, less than one outlet per 100,000 people, according to Restcon.

Starbucks has been keen to develop in Russia for some time but had, until last month, fallen foul of the country’s trademark laws.

Starbucks registered its name in Russia in 1997. But the country’s tradename authority, Rospatent, cancelled the registration for the ‘mineral and fruit drinks’ and ‘restaurants and café services’ in 2002, because Starbucks had not actively used the name for more than three years.

The Starbucks trademark was subsequently registered by a Russian company of the same name, and this was only overturned by the Chamber on Patent Disputes in July this year.

The Russian firm has said it will appeal against the decision and continue to fight the American trademark.

Starbucks’ troubled start in Russia therefore represents a lesson to all international food and drink firms, looking at launching in the country, to keep a close eye on rules and regulations.

Such issues have caused problems in other sectors too. Alcohol Association chairman Pavel Shapkin said a dip in Russian wine manufacture was partly caused by contradictions between regional and federal laws.

From the beginning of the year, wines were no longer subject to excise payments. But they are still subject to the requirements, which say that one can only sell wines that carry both federal and regional excise stamps.

Mikhail Mishenko, a partner at consultant agency CVS, said recently that Federal laws did not correspond with the regional ones, making it very complicated to prove anything and leaving manufacturers sinking amid various court trials and controls.

Starbucks, created in 1971, now has about 8,800 coffee shops around the world. In 2004, Starbucks sales exceeded $5bn, while income was $391m.