ECONOMY-CUBA: European Twist in the Rum War

By Dalia Acosta Reprint | | Print |

Dalia Acosta

HAVANA, Aug 2 1999 (IPS) - The European Union’s (EU) intervention in a dispute between the Cuban-French firm Havana Club Holding (HCH) and competitor Bacardi-Martini USA over the Havana Club trademark openly favours Cuba, said industry sources Monday.

“It is very solid backing,” assured Luis Perdomo, president of the Cuba Ron (Rum) corporation in Cuba, an entity that has been associated with the French group Pernod Ricard since 1993 in the use of the Havana Club trademark.

“There are 15 nations with strong trade traditions that are saying that they have no doubts as to the trademark’s ownership, and this is something the rest of the world will very much take into account,” said Perdomo, who added that he is very confident in the EU measure.

On July 8, the EU presented a complaint against the United States before the World Trade Organisation (WTO) for the legal support of the illegal use of the Havana Club trademark within the United States.

The parties have two months to reach a conciliation agreement, according to the mechanism established by the WTO’s conflict resolution organism.

If negotiations fail, the EU could request the creation of a panel of WTO experts to study the complaint.

The trademark war began in April, when the U.S. District Court in southern New York rejected HCH demands against Bacardi for its use of the trademark since late 1997. The Havana Club trademark is the most widely recognised of all Cuban rums.

The decision was based on the retroactive application of a law approved by the U.S. Congress in October 1998 which establishes that no U.S. court will recognise, enforce compliance, or in any way validate the rights of registered trademarks and trade names related to property confiscated by the Cuban government.

Cuba argues that the trademark in question never belonged to Bacardi and that its former owners, the Arrechabala family, did not request registration of the trademark after the confiscation of their distilleries in the early 1960s.

“Trademarks have a renewal process for each of the registries in which they are included,” said the Cuba Ron president. “The Arrechabala did nothing about the trademark. They simply abandoned everything,” he added.

As a result, the Cuban company CubaExport requested and obtained registration of the Havana Club trademark with the U.S. Trademark and Patent Office in 1974. The trademark was renewed and later passed on to HCH.

In its defence, the Bacardi-Martini company, leader in the Cuban rum market until 1960, maintained that it is in the process of buying the stocks of the former Jose Arrechabala S.A. corporation and that this gives the U.S. company rights over the Havana Club trademark.

But beyond the debate about the trademarks’s origins, there is the U.S. law that contradicts international agreements which protect those who register trademarks in another country.

Sources from the Cuban Office of Intellectual Property affirmed that the verdict against HCH violates six articles of a WTO agreement on intellectual property rights related to trade, which has been in effect since Jan. 1, 1996 for all WTO members.

For nearly 40 years, the United States has imposed strict economic sanctions against Cuba. The court decision could hurt the island nation, but it also jeopardises the French firm, Pernod Ricard, which owns 50 percent of HCH stock.

HCH has registered the Havana Club rum trademark in more than 160 countries, and the product is regularly distributed in approximately 80. As a result of its mixed Cuban-French ownership, Europe has become HCH’s largest customer.

Pernod Ricard has affiliates in more than 90 countries and is a world leader in the alcoholic beverage market, holding high rankings in whiskey, cognac, wines, and aperitifs.

From 1993 to 1998, sales of Cuban-produced Havana Club rum rose from 280,000 cases to more than a million, with profits of 27 million dollars.

Industry experts on the island say it is interesting that the Bacardi decision to begin producing and distributing rum with the Havana Club trademark coincided with the rising demand of the Cuban product in the world market.

It seems that with the picture of the Havana jetty on the label, Bacardi hopes to cash in on nostalgia for Cuban products in the United States where imports of Havana Club rum is banned, even in the luggage of tourists.

The Cuban weekly paper, Opciones – which focuses on trade, finance and tourism – reported Sunday that “the trial has paralysed the distribution of Bacardi’s pirated trademark in the North American market.”

The newspaper said the “trademark war” has brought “good indirect advertising for the Havana Club product.”