FacebookTwitterRedditEmail

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.

bernie-the-sandernistas-cover-344x550
Weekend Edition
August 16, 2019
Friday - Sunday
Paul Street
Uncle Sam was Born Lethal
Jennifer Matsui
La Danse Mossad: Robert Maxwell and Jeffrey Epstein
Rob Urie
Neoliberalism and Environmental Calamity
Stuart A. Newman
The Biotech-Industrial Complex Gets Ready to Define What is Human
Nick Alexandrov
Prevention Through Deterrence: The Strategy Shared by the El Paso Shooter and the U.S. Border Patrol
Jeffrey St. Clair
The First Dambuster: a Coyote Tale
Eric Draitser
“Bernie is Trump” (and other Corporate Media Bullsh*t)
Nick Pemberton
Is White Supremacism a Mental Illness?
Jim Kavanagh
Dead Man’s Hand: The Impeachment Gambit
Andrew Levine
Have They No Decency?
David Yearsley
Kind of Blue at 60
Ramzy Baroud
Manifestos of Hate: What White Terrorists Have in Common
Evaggelos Vallianatos
The War on Nature
Martha Rosenberg
Catch and Hang Live Chickens for Slaughter: $11 an Hour Possible!
Yoav Litvin
Israel Fears a Visit by Ilhan Omar and Rashida Tlaib
Neve Gordon
It’s No Wonder the Military likes Violent Video Games, They Can Help Train Civilians to Become Warriors
Susan Miller
That Debacle at the Border is Genocide
Ralph Nader
With the Boeing 737 MAX Grounded, Top Boeing Bosses Must Testify Before Congress Now
Victor Grossman
Warnings, Ancient and Modern
Meena Miriam Yust - Arshad Khan
The Microplastic Threat
Kavitha Muralidharan
‘Today We Seek Those Fish in Discovery Channel’
Louis Proyect
The Vanity Cinema of Quentin Tarantino
Bob Scofield
Tit For Tat: Baltimore Takes Another Hit, This Time From Uruguay
Nozomi Hayase
The Prosecution of Julian Assange Affects Us All
Ron Jacobs
People’s Music for the Soul
John Feffer
Is America Crazy?
Jonathan Power
Russia and China are Growing Closer Again
John W. Whitehead
Who Inflicts the Most Gun Violence in America? The U.S. Government and Its Police Forces
Justin Vest
ICE: You’re Not Welcome in the South
Jill Richardson
Race is a Social Construct, But It Still Matters
Dean Baker
The NYT Gets the Story on Automation and Inequality Completely Wrong
Nino Pagliccia
Venezuela Retains Political Control After New US Coercive Measures
Gary Leupp
MSNBC and the Next Election: Racism is the Issue (and Don’t Talk about Socialism)
R. G. Davis
Paul Krassner: Investigative Satirist
Negin Owliaei
Red State Rip Off: Cutting Worker Pay by $1.5 Billion
Christopher Brauchli
The Side of Trump We Rarely See
Curtis Johnson
The Unbroken Line: From Slavery to the El Paso Shooting
Jesse Jackson
End Endless War and Bring Peace to Korea
Adolf Alzuphar
Diary: What About a New City Center?
Tracey L. Rogers
Candidates Need a Moral Vision
Nicky Reid
I Was a Red Flag Kid
John Kendall Hawkins
The Sixties Victory Lap in an Empty Arena
Stephen Cooper
Tony Chin’s Unstoppable, Historic Career in Music
Charles R. Larson
Review: Bruno Latour’s Down to Earth: Politics in the New Climatic Regime
Elizabeth Keyes
Haiku Fighting
FacebookTwitterRedditEmail