Victory for Pernod Ricard in HAVANA CLUB dispute

Spain
The latest battle in the war between Pernod Ricard and Bacardi over the ownership of the HAVANA CLUB marks ended on February 3 2011 with Spain’s Supreme Court ruling in favour of Pernod Ricard.
 
The longstanding dispute between the two companies dates back to 1999, when Bacardi brought an action against Pernod Ricard in Spain requesting that all assignments of the Spanish trademark HAVANA CLUB (Registration 99789), recorded on or after 1968, be declared null and void. Bacardi also claimed that it should be declared the rightful owner of the mark, which is registered in connection with alcoholic beverages. In addition, Bacardi sought a declaration of invalidity of several Spanish HAVANA CLUB marks (registered in the 1970s, 1980s and 1990s).
 
The HAVANA CLUB mark was first used by the Arechabala family, creator of the Havana Club rum in Cuba and owners of José Arechabala SA (JASA), which registered the trademark HAVANA CLUB in Spain (Registration 99789) in 1935. Like all other privately owned businesses, JASA was nationalised by Fidel Castro’s government following the 1959 Cuban revolution, and was stripped of its properties. Bacardi purchased the HAVANA CLUB mark from JASA over 30 years later.  
 
In 1968 the assignment of this Spanish mark to the Cuban government was recorded by the Spanish Trademark Register as a consequence of JASA’s expropriation. The mark was subsequently assigned to Cubaexport (a Cuban government agency) and, finally, to Havana Club Holding SA, a joint venture between Pernod Ricard and state-owned Corporación Cuba Ron, which currently owns the marks under dispute. Unlike Bacardi’s Havana Club rum, which is produced in Puerto Rico, Pernod Ricard’s Havana Club rums originate from Cuba.
 
This is the third victory for Pernod Ricard in the HAVANA CLUB feud in Spain. Bacardi’s arguments in connection with the alleged illegality of the assignment of the HAVANA CLUB mark to the Cuban government were first rejected by the Court of First Instance in 2005, then by the Madrid Provincial Court in 2007 and, finally, by the Supreme Court in the present decision.
 
Although the Supreme Court did not analyse the legality of the Cuban government’s expropriation of the Arechabalas’ property, it upheld the conclusions of the lower court concerning:
  • the applicable statute of limitations for claiming ownership of the HAVANA CLUB mark; and
  • the applicability of the international treaties currently in force between Spain and Cuba.
The Supreme Court argued that the original owner of the HAVANA CLUB mark, JASA, had failed to make genuine use of the mark in Spain, and had also failed to renew the mark before it was taken over by the Cuban government. The court concluded that the degree of recognition and reputation of the HAVANA CLUB mark was solely the result of the commercial efforts and investments of its current owner.
 
In addition, the judgment referred to the 1979 Spanish-Cuban commercial treaty, which prohibits the use of indications such as 'Havana' to designate rums produced outside of Cuba to prevent consumers from being misled as to the rum’s geographical origin. As mentioned above, Bacardi’s HAVANA CLUB-branded rums did not meet this requirement.
 
This new victory for Pernod Ricard is likely to sweeten the fact that it cannot market its Havana Club rums in the United States due to the trade embargo against Cuba. 
 
Bacardi has not yet confirmed whether it is prepared to continue the fight to be recognised as the rightful owner of the HAVANA CLUB mark in Spain, or what legal avenues it may be exploring to reach this end. For now, the Supreme Court has had the last say.

Celia Sueiras, Garrigues Abogados, Madrid

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