D-Day Looms In Bitter Cuba-US Rum Trademark War

News from Cuba | Wednesday, 6 June 2012

By Andrea Rodriguez and Matthew Lee for Associated Press

There was the Cold War, the Bay of Pigs and the Cuban Missile Crisis, and there is still no end in sight to U.S.-Cuban animosity. Now a bitter dispute over a sweet-tasting spirit appears to be nearing an end game after more than a decade of legal wrangling.

Time and again U.S. courts have ruled against Cuba in its fight to control the U.S. rights to the trademark Havana Club, the island's flagship rum brand that is sold in more than 120 countries around the world - but not in the United States.

By mid-June, Cuba could lose all chance of pressing its legal claims against Bacardi, which distributes a limited quantity of its own Havana Club rum in Florida and says it plans to expand to other U.S. states in the near future.

Indignant over what it considers wholesale piracy of a national icon, Cuba accuses the U.S. of using an under-the-radar maneuver to block Cuba from paying the small trademark renewal fee, and has raised its concerns at increasingly high levels of government. If the trademark expires, Cuba says it could retaliate on U.S.trademarks currently protected on the island.

"The United States' disrespectful attitude in divesting the legitimate Cuban owners of the Havana Club brand can put at risk the brand and patent rights of American companies in our country," Maria de los Angeles Sanchez, director of Cuba's office of intellectual property, said Tuesday. "Cuba reserves the right as a sovereign nation to act at the appropriate moment."

Such retaliation might have limited immediate impact, as most U.S. goods are barred from being sold to the island under the 50-year-old U.S. embargo. However there are some legal sales of food items, and companies could also face tough and costly legal battles to win back their trademark rights in a post-embargo Cuba.

Although the U.S. sanctions prevent Cuba from marketing Havana Club in the United States, the island has held the trademark there since 1976 after the Cuban family that originally owned the brand let their registration lapse.

But since it came time to renew in 2006, Cuba says, it has been unable to do so because the U.S. Treasury Department's Office of Foreign Assets Control, which enforces the embargo against the island, has not issued a license for Havana to make the $200 renewal payment.

Cuba sued the U.S. government, but lost. And when the U.S. Supreme Court declined to review the ruling on May 14, a 30-day countdown began after which the U.S. Patent and Trademark Office can cancel thetrademark.

That means that as soon as June 13, Cuba's claim to the name could expire, and with it the island's best hope of continuing its legal battle.

Cuba has sent repeated diplomatic notes to Washington about the Havana Club trademark, but without yielding any result, Vice Foreign Minister Abelardo Moreno said.

U.S. government representatives declined to comment Tuesday. But in a written response to a question posed at a May 17 briefing, the State Department said the Office of Foreign Assets Control declined to license Cuban state-run export company Cubaexport to pay the fee, per policy guidance from State.

"Cubaexport was accorded and exercised a panoply of rights available to it under U.S. law," the statement read. "Cubaexport has had its day in court."

The French company Pernod Ricard, which partners with Cuba to distribute Havana Club worldwide, vows the battle isn't over.

"We are currently studying possible legal actions and studying the decision," Olivia Lagache, general counsel for Havana Club, said by phone from Paris. "We will still fight to keep this trademark alive."

In this Oct 22, 2010 photo, bottles of Havana Club rum move along the assembly line at the company's factory in Havana, Cuba. (AP Photo/Franklin Reyes)

But the French spirits maker is also putting contingency plans into action. After the Supreme Court ruling, Pernod Ricard announced it had registered the brand name Havanista in the United States to sell rum there whenever the embargo is lifted.

The U.S. is an extremely lucrative market and home to some 40 percent of the world's rum drinkers, who would likely jump at the chance to sip the light, dry rum, distilled through a process of charcoal filtering and oak-barrel aging to give it extra sweetness.

Havana Club offers a range of rums that go from just a few dollars to the ultra-high-end Maximo Extra Anejo, which retails for more than $1,200 a bottle.

Right now Bacardi dominates worldwide with 19.3 million cases of its rums sold in 2010, according to Impact Databank. That compares to 3.8 million cases of Pernod Ricard's Havana Club sold in 2010, according to the French company.

Bacardi says it legitimately has the right to market Havana Club in the United States. The Bermuda-based company says it purchased global rights to the trademark in 1997 from the Arechabala family, the original owners who had let their registrations lapse. At the time, Bacardi was already embroiled in a legal dispute over its use of the name.

In rulings favoring Bacardi, courts cited 1998 U.S. legislation - which Bacardi lobbied for and some call the "Bacardi Bill" - preventing lawsuits to enforce a trademark involving a company that was nationalized by Cuba. That same legislation also amended U.S. law so that such trademarks could no longer be renewed automatically, and required a specific license from the Office of Foreign Assets Control.

Pernod Ricard considers the legislation unfairly retroactive.

Bacardi applauded the Supreme Court decision. It said it has a trademark pending with the patent office since 1994, and is confident of gaining approval soon.

"Cuba does not have a valid registration," said Patricia M. Neal, a spokeswoman for Bacardi USA. "As a matter of law, the United States Patent and Trademark Office will formally cancel the registration of Cuba Export for the mark in due course."

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