Cuba prevails in Havana Club rum dispute with Bacardi

Cuba prevails in Havana Club rum dispute with Bacardi

Bacardi claimed it had the right to the Havana Club name in the U.S. market
U.S. Patent and Trademark Office allows Cubaexport to register the name
Havana Club is Cuba's most iconic rum

A two-decades-old battle over who has the right to use the Havana Club
trademark in the United States played out quietly at the U.S. Patent and
Trademark Office this week with the decision that the rightful owner is
a Cuban government company.

The fight pitted Bacardi against Cubaexport, the Cuban partner of French
spirits maker Pernod Ricard in the worldwide distribution of Cuba's most
iconic rum — Havana Club.

Because of the embargo, Cuban-made rum isn't even able to be sold in the
United States. But with the thaw between the United States and Cuba, rum
makers are looking ahead to the day when Cuba rum doesn't just arrive in
the suitcases of visitors to the island but is sold freely in the U.S.
market.

The fight is about future market share in the world's largest rum market.

On Wednesday, the trademark office informed David Bernstein, a New York
lawyer who represents Cubaexport that the Cuban company's U.S.
registration of the Havana Club trademark had been renewed — but only
until Jan. 27. That's because the 10-year registration period dates to
2006 when Cubaexport was rebuffed in its attempts to re-register the mark.

Olivier Cavil, a spokesman for Pernod Ricard, said a petition has
already been filed to renew the trademark for another 10-year period.

This week's turn of events caught Bacardi by surprise, and the company
plans to continue legal action for ownership of the Havana Club
trademark, which includes the small figure of Giraldilla — the symbol of
Havana.

"Bacardi is shocked and very concerned by this unprecedented action
taken by the United States government," the company said in a statement.
"In essence, this administration has reversed long-standing U.S. and
international public policy and law that protects against the
recognition or acceptance of confiscatory actions of foreign governments."

The case dates back to 1994 when Bacardi, the largest privately held
spirits maker in the world, applied for a U.S. trademark for Havana Club
rum after purchasing rights to the name from the Arechabala family, who
made rum in Cuba and had sold Havana Club in the United States as early
as the 1930s.

But after going into exile after the 1959 revolution, the Arechabalas'
registration of Havana Club lapsed in 1973. Cubaexport saw opportunity
and registered the Havana Club trademark in 1976.

In the trademark fight, Bacardi — a top rum maker in Cuba before its
holdings were taken over by the Cuban government after the revolution —
won a string of victories in U.S. courts against Cubaexport.

Bacardi also tried to bolster its case by selling its own three-year-old
Havana Club rum, made in Puerto Rico from the Arechabala family recipe,
in select retail stores and high-end bars in Florida, Georgia,
Massachusetts, Colorado and Michigan to establish its ownership rights
through use of the brand.

In 2012, Pernod said that it had registered the trademark for another
premium rum, Havanista, that would be launched in the United States
after the embargo is lifted. Its label closely mimics the labels on
Havana Club bottles, right down to the Giraldilla and the red circle
rimmed in gold. The registration of Havanista was something of an
insurance policy in case Cubaexport couldn't get the Havana Club mark
back, and it's unclear what plans are for it now.

After the Supreme Court declined to review the case in May 2012, Bacardi
waited for the U.S. Patent and Trademark Office to cancel Cubaexport's
right to use the name in the United States.

But Cubaexport filed a petition with the trademark office, saying that
the registration couldn't be revoked and remains "frozen while the
embargo of Cuba is in place."

Even though the United States and Cuba restored diplomatic ties last
year, the embargo prohibits most financial transactions with the island
unless they are licensed by Treasury's Office of Foreign Assets Control.

When Cubaexport tried to get a license from OFAC in 2006 so it could pay
$500 to renew the Havana Club trademark, OFAC declined, saying it had
consulted with the State Department and granting Cubaexport a license
"would be inconsistent with U.S. policy."

The result: Cubaexport's registration was declared "canceled, expired."

The filing also was complicated by Section 211, which was attached to a
1998 federal spending bill and prohibits any trademark actions or
payments in connection with a confiscated business or assets.

Cubaexport challenged OFAC's decision in federal court in Washington
D.C. but lost and also lost on appeal. When the Supreme Court declined
to hear the case, it went back to the trademark office in 2012.

But recently, Cubaexport again applied for a license from OFAC to pay
its registration fees and this time it was granted, said Cavil.

On Tuesday, Cubaexport presented a license that authorized payment of
its filing fee for the 2006 registration renewal "as well as all other
transactions necessary to renew and maintain the registration." The next
day, the trademark registration was renewed.

Bacardi said it will continue to defend "fundamental rights against
confiscation without compensation" and "has and will continue to pursue
all the necessary legal action to defend its position" as the owner of
the Havana Club brand.

Asked if the rapprochement between the United States and Cuba played
into OFAC's decision, Cavil said he couldn't comment on political
matters. As far as the current impact of the decision, he said: "It's
not too significant. There's no business impact at all because the
embargo is still in effect."

Pernod Ricard, which also has survived challenges from Bacardi over the
international use of the name Havana Club, continues to distribute the
brand in more than 100 countries and sells around 4 million cases
annually. And with the pickup of tourism in Cuba since the
rapprochement, sales of Havana Club are also brisk on the island.

Source: Cuba prevails in Havana Club rum dispute with Bacardi | Miami
Herald -
http://www.miamiherald.com/news/nation-world/world/americas/cuba/article54863035.html