diff --git a/gvfs-1.3.5-mkdir-exists-error.patch b/gvfs-1.3.5-mkdir-exists-error.patch
new file mode 100644
index 0000000..8683450
--- /dev/null
+++ b/gvfs-1.3.5-mkdir-exists-error.patch
@@ -0,0 +1,32 @@
+From 3fe8a3b48eb45392db2489434fb1b3682ccdc5ab Mon Sep 17 00:00:00 2001
+From: Tomas Bzatek <tbzatek@redhat.com>
+Date: Mon, 17 Aug 2009 15:40:52 +0200
+Subject: [PATCH] sftp: return proper error when directory exists
+
+Nautilus depends on properly reported errors when an operation fails.
+In this case, user was not able to create new directory on sftp share
+when "untitled folder" already existed.
+
+So let's mask sftp's universal SSH_FX_FAILURE error for SSH_FXP_MKDIR.
+Specification says: "An error will be returned if a file or directory
+with the specified path already exists."
+---
+ daemon/gvfsbackendsftp.c |    2 +-
+ 1 files changed, 1 insertions(+), 1 deletions(-)
+
+diff --git a/daemon/gvfsbackendsftp.c b/daemon/gvfsbackendsftp.c
+index f810b31..cf33eaf 100644
+--- a/daemon/gvfsbackendsftp.c
++++ b/daemon/gvfsbackendsftp.c
+@@ -4350,7 +4350,7 @@ make_directory_reply (GVfsBackendSftp *backend,
+                       gpointer user_data)
+ {
+   if (reply_type == SSH_FXP_STATUS)
+-    result_from_status (job, reply, -1, -1); 
++    result_from_status (job, reply, G_IO_ERROR_EXISTS, -1); 
+   else
+     g_vfs_job_failed (job, G_IO_ERROR, G_IO_ERROR_FAILED,
+                       _("Invalid reply received"));
+-- 
+1.6.4
+
diff --git a/gvfs.spec b/gvfs.spec
index dad3c8e..efe4bb8 100644
--- a/gvfs.spec
+++ b/gvfs.spec
@@ -1,7 +1,7 @@
 Summary: Backends for the gio framework in GLib
 Name: gvfs
 Version: 1.3.4
-Release: 6%{?dist}
+Release: 7%{?dist}
 License: LGPLv2+
 Group: System Environment/Libraries
 URL: http://www.gtk.org
@@ -42,6 +42,9 @@ Patch4: gvfs-1.3.4-dont-strip-mount-prefix-for-local-paths.patch
 # http://bugzilla.gnome.org/show_bug.cgi?id=590730
 Patch5: gvfs-1.3.5-gdaemonmount-root-path.patch
 Patch6: gvfs-1.3.5-mountspec-prefix-ensure-ending-path-separator.patch
+# nautilus can't create "unamed folder X" if it exist on the target via sftp
+# https://bugzilla.redhat.com/show_bug.cgi?id=512611
+Patch7: gvfs-1.3.5-mkdir-exists-error.patch
 # https://bugzilla.redhat.com/show_bug.cgi?id=497631
 Patch8: gvfs-1.2.2-dnssd-deadlock.patch
 # https://bugzilla.redhat.com/show_bug.cgi?id=504339
@@ -143,6 +146,7 @@ and iPod Touches to applications using gvfs.
 %patch4 -p1 -b .mount-prefix
 %patch5 -p1 -b .root-path
 %patch6 -p1 -b .prefix-slash
+%patch7 -p1 -b .sftp-mkdir
 %patch8 -p1 -b .dnssd-deadlock
 %patch9 -p1 -b .sftp-timeout
 %patch10 -p1 -b .afc
@@ -299,6 +303,9 @@ update-desktop-database &> /dev/null ||:
 %{_datadir}/gvfs/remote-volume-monitors/afc.monitor
 
 %changelog
+* Mon Aug 17 2009 Tomas Bzatek <tbzatek@redhat.com> - 1.3.4-7
+- Fix Nautilus can't create "untitled folder" on sftp mounts (#512611)
+
 * Fri Aug 14 2009 Bastien Nocera <bnocera@redhat.com> 1.3.4-6
 - Update AFC patch