Timing of HAVANA CLUB compliance modified

The United States and the European Union have agreed to modify the deadline by which the United States must comply with the rules and recommendations of the Dispute Settlement Body (DSB) of the World Trade Organization (WTO) in a dispute concerning Section 211 of the Omnibus Appropriations Act of 1998.

Section 211 was enacted in response to a dispute between Bacardi Company and Havana Club Holding over ownership of the mark HAVANA CLUB in the United States. The HAVANA CLUB mark and Havana Club distillery were originally owned by the Arechebala family of Cuba. After the Cuban revolution, the Arechebala family moved to the United States, and a Cuban state-run company acquired ownership of the Havana Club distillery.

The Cuban state-run owner of the Havana Club distillery registered the HAVANA CLUB mark in the United States in 1976 and later assigned that registration to Havana Club Holding SA, a joint venture between Pernod Ricard of France and another Cuban state-run company. In the 1990s, the Arechebala family assigned whatever rights they had in the HAVANA CLUB mark to Bacardi. Subsequently, Havana Club Holding sued Bacardi for trademark infringement in the United States.

The US Congress enacted Section 211 some time after the infringement action started. The new law's immediate effect was to immunize Bacardi from being found liable for trademark infringement. The European Union, on behalf of Pernod Ricard, requested that a DSB panel be established at the WTO to determine whether Section 211 violated provisions of the Agreement on Trade-Related Aspects of Intellectual Property Rights. The DSB Appellate Body agreed with the European Union in a decision of January 2002. Subsequently, the United States and the European Union agreed that the United States was to implement the recommendations and rulings of the WTO by December 31 2002.

Under that ruling and recommendation, the United States must ensure, among other things, that US marks held by Cuban nationals or companies are enforceable and protectable. However, the deadline was later extended to June 30 2003 and subsequently to December 31 2003. In a communication dated December 19 2003, the US and EU representatives agreed to extend the deadline once again, this time to December 31 2004

This deadline extension should give the US Congress time to pass the bill necessary to repeal Section 211. A bill was introduced in the House of Representatives last June (see US-Cuba Trademark Protection Act introduced to congress) and was referred to the House Judiciary's Subcommittee on Courts, the Internet and Intellectual Property. The identical bill was introduced in the Senate in December and is currently before the Senate Committee on the Judiciary.

Accordingly, the United States filed a status report with the DSB last month and advised that:

"[t]here are legislative proposals pending in the US Congress that would, among other things, repeal Section 211. The [US] Administration is continuing to work with the US Congress with respect to appropriate statutory measures that would resolve this matter."

Leigh Ann Lindquist, Sughrue Mion PLLC, Washington DC

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