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Distillations: A Rum Thing

April 6, 2017


Distillations: A Rum Thing

April 6, 2017

Back to Fish's Trademark and Copyright Blog


The first time this blogger wrote about the HAVANA CLUB trademark dispute, it was for the November/December issue of World Trademark Review  in 2006.  Even then, it was a long-running and complicated feud.  I wrote at the time:

Why would these two parties spend so much time and money fighting over a mark that has not been used in the United States in over 40 years?  Consider that while the latest sparring was going on this past summer, [Fidel] Castro underwent serious abdominal surgery and on July 31 turned over executive power (at least temporarily) to his brother Raul.  Little has been released about the 80-year-old Castro’s condition, and rumors are rampant that he is near to death.  This has sparked speculation that a reopening of the Cuban market may come sooner rather than later.

More than ten years have passed.  In 2015, the U.S. and Cuba began to normalize relations.  In November 2016, Fidel died.  Travel and trade restrictions have been lifted (to an extent).  Airline and mail service have been reestablished.  The U.S. president even visited Cuba and attended a major league baseball exhibition game there in Spring 2016.  Much has changed.  But one thing has remained constant: Bacardí and Pernod Ricard are still fighting over the HAVANA CLUB trademark.

To the extent one can briefly summarize a decades-long dispute, the basic facts – brutally oversimplified – are these.  The Arechabala family distilled HAVANA CLUB rum in Cardenas, Cuba for many years prior to the Cuban Revolution.  After the Revolution the business was seized by the Castro regime and the Arechabalas were forced to flee the country.  The new Cuban government re-started the business and resumed making and selling rum under the HAVANA CLUB name (but with a new recipe because the original recipe was kept solely in Arechabala family memory and escaped with them).  The Cuban entity eventually partnered with Pernod Ricard to distribute it world-wide – except for the U.S.A. which was off limits because of the 1963 trade embargo.  The Arechabalas, meanwhile, ultimately made a deal with Bacardí to produce HAVANA CLUB rum using the original family recipe in Puerto Rico.

The Arechabalas and Bacardí could legally sell their Puerto Rican rum in the U.S.A. (and did so on a small scale from time to time), but they were frustrated for years in their efforts to secure a U.S. trademark registration, because of a series of prior registrations dating back to the original business and now owned by Cuban-government-controlled Cubaexport.  All of the registrations lapsed in due course, until there was one left.  Much bitter litigation ensued in both the federal courts and at the Trademark Trial & Appeal Board (TTAB).

Enter the U.S. Congress.  In 1998, Congress passed what is known as Section 211, a rider on an omnibus appropriations bill which bars the USPTO from accepting fees for the registration or renewal of any trademark that had ever been seized by a foreign government without due compensation, absent a license from the Office of Foreign Assets Control (OFAC).  The universe of trademarks affected by this restriction is very small and very Cuban.

This seemed to put an end to things.  Or did it?  Victory seemed to be within Bacardí’s grasp when the TTAB in 2004 declined to cancel Cubaexport’s registration (notwithstanding the failure to renew), reasoning (inter alia) that the issue was a matter of foreign relations outside its competence.  More bitter litigation ensued while Cubaexport’s un-renewed registration and Bacardí’s suspended application continued to hang in the balance at the USPTO.  Then, in an unexpected twist apparently connected to the “Cuban Thaw”, OFAC suddenly and without explanation decided to disregard section 211 and grant Cubaexport the proper license to renew their trademark registration in February 2016.

Pernod Ricard and Cubaexport had best not start pouring the Cuba Libres just yet, however, because Congress has once again been roused.  Last month a bi-partisan group of 25 members of the House of Representatives – all from Florida – presumably inspired by President Trump’s promise to completely re-evaluate U.S. relations with Cuba, have written to the Secretaries of State and Treasury asking for a review of OFAC’s decision.  “It was a decision made for political expedience that ignored standing U.S. law and potentially opened a Pandora’s box that could see U.S. intellectual property rights holders subject to unlawful and unjust foreign confiscations,” said Rep. Ileana Ros-Lehtinen.  Bacardí was understandably heartened by this development.  A spokesperson said the company was “pleased to see that support for intellectual property rights and opposing illegal foreign confiscations continues to have bipartisan Congressional support.”

The U.S. consumes a lot of rum – approximately 25 million cases a year.  Numbers of that magnitude might very well provide the incentive to extend this dispute now into its third decade.  So too can the still raw emotions over the Cuban Revolution.  This combination appears to have achieved the extraordinary feat of getting GOP and Democratic House members to agree on something.  This case promises more twists and turns in the years to come.

The opinions expressed are those of the authors on the date noted above and do not necessarily reflect the views of Fish & Richardson P.C., any other of its lawyers, its clients, or any of its or their respective affiliates. This post is for general information purposes only and is not intended to be and should not be taken as legal advice. No attorney-client relationship is formed.

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