Rum (pt. 1)

In a few days, I will have the privilege of being part of a delegation from the Seattle Chamber of Commerce in a visit to Havana.  Although the trip is largely a humanitarian endeavor, there will also be time to discuss existing and potential business ties between the Cuban people and the people of the United States.  In light of the recent actions by the Obama Administration to thaw diplomatic relations between the nations, the potential for trade between the two countries is better now than it has been for nearly 60 years.

Of course, for those interested in spirits, thoughts of Cuba naturally turn to thoughts of rum.  Cuba’s best-selling brand of rum, Havana Club, was originally introduced in 1934 by the Arechabala family and was subsequently nationalized by the Cuban government as part of the revolution.  Today, Havana Club is sold throughout the world by Havana Club International – a joint venture between the Cuban government and Pernod Ricard.  But you can’t buy this Havana Club in the United States, and not only because of the embargo.

The Bacardi company (originally of Cuba but having relocated following the Cuban revolution), believes it owns the rights to the name here in the States, and sells a “Havana Club” branded rum in very small quantities here in the U.S.  But theirs isn’t the original Havana Club, and the Bacardi version’s sales are pretty small.  So what is Bacardi up to?  The story is complicated and involves a bit of history.  So consider making yourself a mojito before you read further.

Got that drink?  Ok – so in the 1970s, the Arechabala family allowed the Havana Club trademark registration to expire in the United States.  Quickly thereafter, the Cuban government registered the “Havana Club” mark, and ultimately transferred the ownership of the mark to Pernod Ricard in the early 1990s.

But in 1994, the Arechabala family sold any remaining rights they had in the Havana Club name to Bacardi, which promptly launched its version here in the States.  Pernod saw this as trademark infringement and filed suit.  Pernod won the first two rounds of litigation, and looked poised to win the war.  And that is when Bacardi’s legal team really earned its keep by changing the rules of the game.

Specifically, Bacardi’s team doubled down on its lobbying efforts, resulting in the passage of Section 211 of the Omnibus Consolidation and Emergency Appropriations Act of 1999.   That provision, occasionally referred to as the “Bacardi Bill,” makes it impossible for the Cuban government (or any other “designated national” – which would include affiliates or assignees of the Cuban government such as Havana Club International or Pernod Ricard) to seek to protect or enforce intellectual property rights with respect to any trademark, copyright or trade name that was confiscated by the Cuban government without paying compensation to the original owner.  [Note: the provisions of the law do not relate solely to the Cuban government, but were drafted by one of Bacardi’s lawyers and have only ever been applied in the context of the dispute over the “Havana Club” name.]

As a result of the passage of the Bacardi Bill, Pernod no longer had the necessary legal standing to complain about Bacardi’s alleged infringement.  They lost their case against Bacardi, the Supreme Court refused to hear their appeal, and Congress didn’t do anything to change the Bacardi Bill despite pressure from the World Trade Organization.

Where does this leave Havana Club in the United States?  Well, at the end of 2015 it meant that Pernod was going to need to find another way to bring Havana Club to the United States if and when the embargo was fully lifted.  And it may still mean that.  But, curiously, in January of this year, the USPTO accepted a filing for renewal of the original Havana Club mark.

More than a few media sources suggested that the USPTO decision was proof that Cuba had won its war with Bacardi.  But at the moment, that victory (if it is indeed a victory) appears a bit hollow.  While the recent relaxation of trade relations between the countries has been meaningful, it remains impossible to import spirits made in Cuba.  So even if Havana Club is a protected trademark in the U.S., the product still can’t be sold here.

In the meantime (and before the January USPTO decision), Pernod began launching Havana Club rum under the new Havanista brand in Cuba, and registered the Havanista  mark with the USPTO.  You can be sure that if and when the embargo is ultimately lifted, Pernod will be quick to bring either Havana Club or Havanista to the States – at which point you will be able to sample Cuba’s predominant brand of rum in your own backyard.  And if that does happen, you can also be sure that the now two-decades long fight between Pernod and Bacardi over the name of the brand will continue.

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