Trevor Little

A bipartisan congressional delegation has called on the Trump Administration to reverse a US Office of Foreign Assets Control (OFAC) decision to grant a licence allowing Cubaexport to renew the HAVANA CLUB trademark registration in the United States. Slamming the licence as “misguided”, the group has catapulted the long-running dispute between Pernod Ricard and Bacardi back into the political arena.

In January 2016 we reported that Cubaexport has been granted the licence from OFAC. As a recap, the Arechabala family produced Havana Club rum in Cuba until the 1959 revolution, when the Cuban government expropriated the family’s physical assets. The Cuban government later entered into a joint venture between Pernod Ricard and Cuban state company Cubaexport to distribute the product globally. However, due to the US embargo on goods from Cuba, the joint venture has been unable to sell its Havana Club rum in the country. Meanwhile, Bacardi struck a deal with the Arechabalas family to commercialise the original recipe and now sells its own rum, manufactured in Puerto Rico, under the HAVANA CLUB brand in the United States.

In 2006, an appeal by Bacardi over its failed bid to have the TTAB cancel Cubaexport’s US registration was stayed when Cubaexport applied to renew its registration and OFAC prevented it from doing so by retroactively applying Section 211 of the US Omnibus Appropriations Act of 1998 (which forbids the registration or enforcement of a trademark in the United States that is identical or similar to one used in connection with a business or assets that were expropriated). In December 2014 President Obama ordered the restoration of full diplomatic relations with Cuba and, in January 2016, came the news that Cubaexport had received a licence allowing it to renew its HAVANA CLUB registration in the United States. The move meant that the US Federal District Court in Washington was expected to be the next battleground, with the previously stayed legal challenge expected to resume.

However, the focus swung back onto the political arena yesterday with the bipartisan call for a review and explanation of last year’s OFAC decision to grant the licence to Cubaexport. Co-signed by 25 Members of Congress, the letter describes OFAC’s move as “untenable”, adding that the “decision to grant a licence to Cubaexport to renew an expired trademark places an illegally-obtained and expired trademark back in the hands of the regime that illegally confiscated it”. It therefore expresses concern that the move could “undermine our national interests by diluting our nation’s protections against the expropriation of American intellectual property by foreign governments”.

As noted, the licence was granted following the Obama administration’s restoration of diplomatic relations with Cuba. This week’s letter comes at a time when the current administration is in the midst "of a full review of all US policies towards Cuba”. The letter characterised the previously cited arguments that the change in foreign policy towards Cuba as necessitating the approval of Cubaexports OFAC licence as “misguided”, stating that it “glosses over the intellectual property policy implications of granting such a licence, and ignores applicable law”.

In a media statement, Republican Representative Ileana Ros-Lehtinen argued that the OFAC decision was “made for political expedience that ignored standing US law and potentially opened a Pandora’s box that could see US intellectual property rights holders subject to unlawful and unjust foreign confiscations. We are [therefore] asking the new administration to review this licence, reverse its decision and protect rightful intellectual property owners before any lasting damage is done”. Democrat Presentative Debbie Wasserman Schultz echoed these sentiments, stating: “I urge OFAC to reverse this misguided decision and send a loud and clear message to the international community that the United States has been and always will be a global leader on intellectual property rights.”

Bacardi, in a statement issued to The Miami Herald, welcomed the development, a spokesperson stating that “the company supports both legislation and legal action to uphold the principle of protection of trademarks and ensuring trademarks that have been confiscated by the Cuban government without the consent of their rightful owners not be recognised by the international community”.

For its part, in a statement provided to World Trademark Review, Pernod Ricard remains focused on developments in the legal forum. It told us: “We are aware of the letter sent by a bipartisan Florida congressional delegation to the US Departments of State and Treasury relating to the OFAC licence granted to Cubaexport in February 2016. Cubaexport has been the registered owner of the Havana Club Trademark in the US since 1976. In 2004, the US TTAB refused Bacardi’s attempt to cancel Cubaexport’s registration. The ongoing dispute with Bacardi regarding the validity of the registration is currently before the Federal District Court in Washington, which we believe is the appropriate forum to resolve this matter. We are confident we will prevail when the case is eventually decided on its merits.”

The battle over the HAVANA CLUB mark has raged for decades, and is a rare instance of a trademark dispute being elevated into the political arena. As it stands, President Trump’s Cuba stance is likely to be revealed in the coming weeks, with some analysts expecting him to turn the clock back on diplomatic relations. In the meantime, the bipartisan letter is careful to make both policy and legal arguments for the reversal of OFAC’s recent decision to grant a licence. Whether either argument proves persuasive remains to be seen but it is clear that this bitter and emotive dispute, keenly watched by legal and IP professionals, will likely continue for some time. 

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