FacebookTwitterGoogle+RedditEmail

A Struggle Over the Havana Club Trademark

 

Both the Clinton and Bush II administrations professed a commitment to free trade. That may be a whimsical metaphor for the free roaming of capital, but sticking with the conceit for a moment, the dispute over who owns the Havana Club rum trademark is an example of how special-interest politics trumps the very international agreements necessary for the orderly exchange of goods under free-trade principles.

In January, the Trademark Trial and Appeal Board (TTAB) of the U.S. Patent and Trademark Office ruled in favor of a Cuban-French firm that sells Havana Club rum in some 80 countries. The ruling blocks Bacardi-Martini’s attempts to sell its own non-Cuban version of Havana Club in the U.S.

Havana Club International (HCI) is a joint venture between Cuban state-owned Havana Rum and Liquors and the French spirits firm Pernod Ricard. The original producer of Havana Club rum, Jose Arechabala S.A., left Cuba after Fidel Castro came to power. In the succeeding decades, the Arechabala family never revived the business and abandoned the trademark in the U.S. and in other countries where it had been registered.

The Bacardi company, expropriated in Cuba in 1960, moved its distillery operations elsewhere in the Caribbean under the name Bacardi Ltd., and its headquarters to the Bermuda tax haven. In North America, it operates through Miami-based Bacardi-Martini.

Bacardi paid the Arechabala family a reported $1.5 million for rights to the trademark, which the family arguably no longer owned. No matter, Bacardi began selling “Havana Club rum” produced in the Bahamas by an affiliate, Galleon, S.A., in the mid-1990s. Marketing the rum was suspended when HCI took legal steps to enjoin Bacardi from infringing on its trademark.

In effect, the TTAB held that Bacardi’s attempt to void HCI’s registration of the trademark had no legal merit because the Cuban state-owned company Cubaexport had duly registered the trademark in Cuba and transferred registration to the U.S. in 1976, three years after the Arechabala family allowed it to lapse. In 1993, Cubaexport and Pernod Ricard formed HCI, which renewed the trademark in its own name in 1996.

Bacardi lawyers argued that the renewal had been fraudulently obtained. In 1999, the U.S. District Court for the Southern District of New York rejected HCI’s claim, and rights to the trademark reverted to Cubaexport, leaving the matter in legal limbo. The ruling was later upheld by an appeals court and the Supreme Court.

Key to Judge Shira Scheindlin’s decision (Havana Club Holding, S.A. v. Galleon, S.A., S.D.N.Y., 1999) was a 1998 law known as Section 211, which was intended to favor Bacardi. Section 211 is a brief provision inserted by the two Florida senators into the massive 1998 Omnibus Appropriations bill, which was passed without debate. It is doubtful that many members of Congress read Section 211 or even knew of its existence.

Section 211 prohibits U.S. courts from recognizing any “mark, trade name, or commercial name that is the same or substantially similar to a mark, trade name, or commercial name that was used in connection with a business or assets that were confiscated unless the original owner of such a mark, trade name, or commercial name, or the bona fide successor-in-interest has expressly consented.”

It depends on what “confiscation” means

Section 211 hinges on the fact of Cuba’s confiscation of the Havana Club trademark. But the various rulings were mostly based on narrow aspects of the law and do not seriously inquire whether the trademark was ever confiscated or under what circumstances.

In a detailed analysis of the legal debate, Stephen J. Kimmerling (Association for the Study of the Cuban Economy, ASCE, proceedings, 08/12?14/1999) suggested that a case could be made that the Arechabala family never abandoned its claims to the trademark. He writes, “because the Cuban government forcibly expropriated the Arechabala’s business (including the trademark), the family did not voluntarily cease using the Havana Club mark.” Furthermore, “one could argue that…subsequent lack of capital to resume business would excuse the mark’s nonuse.”

On the other hand, HCI maintained that Havana Club was not confiscated but rather that the Arechabala family simply slid out of the picture. In his book, Bacardi: The Hidden War, Hernando Calvo Ospina writes that four years before the Castro government came to power, the Arechabala family began allowing its trademark to lapse as the business faced financial setbacks. The argument is that the government intervened to assume control of a bankrupt company.

There is also a dispute over whether a trademark is the same as a physical property than can be confiscated. And even it was confiscated in Cuba, HCI has claimed that the confiscation could have had no effect in the U.S., where the Arechabala family could have paid $20 to renew the trademark and done business in the U.S. market unchallenged.

Judge Scheindlin relied heavily on other anti-Castro legislation. She rejected HCI’s claim of unfair competition from a rum bearing the universally recognized Cuban label but containing nothing produced in Cuba. Because of the trade embargo, Scheindlin reasoned, HCI’s likelihood of selling the real thing in the U.S. was “too remote.” Thus, legislated “remoteness” meant that HCI could not show it would suffer harm from Bacardi’s use of the trademark.

This circular logic is a reminder that law is self referencing; referring to itself to justify its own outcomes. The courts did not examine the special-interest politics underlying anti-Castro legislation and its obvious potential for creating chaos in international commercial relations.

Bacardi lobbies Gov. Bush; Bush lobbies Patent Office

Then there is the matter of Florida Gov. Jeb Bush’s use of his elective office to interfere in federal administration rulings.

Patent Office regulations prohibit ex-parte efforts to sway a decision on behalf of one side in a dispute. Nevertheless, The Washington Post reported (10/18/02) that the Florida Democratic Party had secured documents showing that the governor intervened on behalf of Bacardi with the TTAB. This took place as the company donated large sums to Republican Party coffers.

While the TTAB was considering the trademark dispute, Bacardi president Jorge Rodriguez Marquez wrote Gov. Bush, “Someone needs to tell PTO [Patent Office] to stop interfering.” Bush then wrote to Patent Office Director James Rogan, “I am writing on behalf of Florida-based Bacardi-Martini, U.S.A, Inc. to ask that the Patent and Trademark Office take quick, decisive action on a pending application….The outdated registration [by Cubaexport]…should be canceled immediately.”

Rogan is a political appointee of President George W. Bush.

E-mails from Gov. Bush’s office showed that he and his staff had correspondence and secret meetings with other Patent Office officials. Rodriguez Marquez has acknowledged that he met with State Department officials, Vice President Dick Cheney’s staff, and White House political advisor Karl Rove concerning the case.

The Post also reported (12/04/02) that Rodriguez-Marquez belatedly filed a required federal report showing that he had spent $500 million in lobbying since 1998. In addition, Bacardi spent U.S. $2.2 million more to hire lobbyists.

The governor’s spokeswoman, Elizabeth Hirst, denied Bacardi’s political contributions had anything to do with the case, and explained that Bush was working in his official capacity to represent a constituent, “a company that is based in Florida, which employs a significant number of people and generates revenue to our economy.”

She did not explain the governor’s theory that Bacardi should get the trademark because Cubaexport “belongs to Fidel Castro.” This is a novel interpretation of trademark law and contrasts starkly with the legal arguments in the case. Here is an example of such an argument put before a World Trade Organization (WTO) dispute resolution panel in 2001:

“As regards Article 15.1 of the TRIPS [Trade-Related Intellectual Property Rights] Agreement, the United States contends that Section 211(a) (1) is not inconsistent with its provisions. Article 15.1 defines eligible subject matter of trademarks and limits the ability of Members to claim that a trademark is not capable of constituting a trademark, and is therefore not eligible for registration, because of the form of the trademark. It does not contain an affirmative obligation to register all eligible trademarks” (WTO, WT/DS176/R, 08/06/01).

There are hundreds of pages like this through years of judicial hearings. But Gov. Bush cuts through the legal thicket, offering as his reason to cancel Cubaexport’s longstanding ownership of the trademark the purist of political justifications: the registration “belongs to a company owned by Fidel Castro.”

The 2001 WTO panel decided largely in favor of Bacardi by accepting the U.S. view that Section 211 does not violate TRIPS because TRIPS does not offer protection to holders of trademarks.

The WTO Appellate Body reversed the dispute panel’s in 2002 finding that, “WTO Members do have an obligation under the TRIPS Agreement to provide protection to trade names,” The Appellate Body instructed the U.S. to change Section 211 or face fines and trade sanctions.

Bill would invalidate Section 211

Congress has yet to act on the WTO instructions even though U.S. businesses pointed out that the law was an open invitation for Cuba or any other country to ignore foreign registered U.S. trademarks. Castro has announced that Cuba might sell rum under the Bacardi label and sell Cuban-made AIDS medicines patented by U.S. companies.

A bipartisan bill (U.S.-Cuba Trademark Protection Act of 2003) to get rid of Section 211, now before Congress, has the support of 670 businesses organized under the coalition U.S.A.-Engage.

The bill would force the administration to institute talks with Cuba to ensure that both countries adhere to trademark protection agreements. The bill would also expressly direct the courts to enforce trademark rights and disregard Section 211.

Because of the trade embargo, repeal of Section 211 would not mean Havana Club International could sell its rum in the U.S. However, it would prevent anyone else from selling under that label.

ROBERT SANDELS writes about Cuba and Latin America for the Latin America Database at the University of New Mexico and other publications.. He received a B.A. in Spanish literature in 1958 from the University of the Americas in Mexico City. He also received an M.A. in American history in 1962 and a Ph.D in Latin American history in 1967 from the University of Oregon. He has taught at Chico State University in California, at San Francisco State University, and at Quinnipiac College in Connecticut.

 

More articles by:

ROBERT SANDELS is an analyst and writer for Cuba-L Direct. This article was written for CounterPunch and Cuba-L Direct.

Weekend Edition
June 22, 2018
Friday - Sunday
Karl Grossman
Star Wars Redux: Trump’s Space Force
Andrew Levine
Strange Bedfellows
Jeffrey St. Clair
Intolerable Opinions in an Intolerant Time
Paul Street
None of Us are Free, One of Us is Chained
Edward Curtin
Slow Suicide and the Abandonment of the World
Celina Stien-della Croce
The ‘Soft Coup’ and the Attack on the Brazilian People 
James Bovard
Pro-War Media Deserve Slamming, Not Sainthood
Louisa Willcox
My Friend Margot Kidder: Sharing a Love of Dogs, the Wild, and Speaking Truth to Power
David Rosen
Trump’s War on Sex
Mir Alikhan
Trump, North Korea, and the Death of IR Theory
Christopher Jones
Neoliberalism, Pipelines, and Canadian Political Economy
Barbara Nimri Aziz
Why is Tariq Ramadan Imprisoned?
Robert Fantina
MAGA, Trump Style
Linn Washington Jr.
Justice System Abuses Mothers with No Apologies
Martha Rosenberg
Questions About a Popular Antibiotic Class
Ida Audeh
A Watershed Moment in Palestinian History: Interview with Jamal Juma’
Edward Hunt
The Afghan War is Killing More People Than Ever
Geoff Dutton
Electrocuting Oral Tradition
Don Fitz
When Cuban Polyclinics Were Born
Ramzy Baroud
End the Wars to Halt the Refugee Crisis
Ralph Nader
The Unsurpassed Power trip by an Insuperable Control Freak
Lara Merling
The Pain of Puerto Ricans is a Profit Source for Creditors
James Jordan
Struggle and Defiance at Colombia’s Feast of Pestilence
Tamara Pearson
Indifference to a Hellish World
Kathy Kelly
Hungering for Nuclear Disarmament
Jessicah Pierre
Celebrating the End of Slavery, With One Big Asterisk
Rohullah Naderi
The Ever-Shrinking Space for Hazara Ethnic Group
Binoy Kampmark
Leaving the UN Human Rights Council
Nomi Prins 
How Trump’s Trade Wars Could Lead to a Great Depression
Robert Fisk
Can Former Lebanese MP Mustafa Alloush Turn Even the Coldest of Middle Eastern Sceptics into an Optimist?
Franklin Lamb
Could “Tough Love” Salvage Lebanon?
George Ochenski
Why Wild Horse Island is Still Wild
Ann Garrison
Nikki Haley: Damn the UNHRC and the Rest of You Too
Jonah Raskin
What’s Hippie Food? A Culinary Quest for the Real Deal
Raouf Halaby
Give It Up, Ya Mahmoud
Brian Wakamo
We Subsidize the Wrong Kind of Agriculture
Patrick Higgins
Children in Cages Create Glimmers of the Moral Reserve
Patrick Bobilin
What Does Optimism Look Like Now?
Don Qaswa
A Reduction of Economic Warfare and Bombing Might Help 
Robin Carver
Why We Still Need Pride Parades
Jill Richardson
Immigrant Kids are Suffering From Trauma That Will Last for Years
Thomas Mountain
USA’s “Soft” Coup in Ethiopia?
Jim Hightower
Big Oil’s Man in Foreign Policy
Louis Proyect
Civilization and Its Absence
David Yearsley
Midsummer Music Even the Nazis Couldn’t Stamp Out
FacebookTwitterGoogle+RedditEmail