Transcript EU versus US: Havana Rum Case

EU versus US:
Havana Club Rum Case
Presenters:
Will Prible
David Razmgar
Alicia Skiba
Timothy Skrynnikov
History and Context
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Complicated Story
Several issues:
– Trademark violations
– Revolution
– Capitalism versus socialism
Two groups of players:
– US versus EU
– Bacardi versus Havana Club
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US vs EU & Cuba
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EU brought the case before the WTO
on behalf of Cuba and France.
– Support from several other countries as
well.
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Politically charged:
– Forty year trade embargo on Cuba
– Influential Cuban exile community
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VS
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Havana Club was sold in pre-revolution Cuba by an
enterprise owned by the Bacardi Company.
– The Bacardi family fled Cuba and went into exile
in 1960.
Trade name “Havana Club” was revived in 1993 by
a joint enterprise of the principal rum producers of
Cuba and the French consortium Pernord Ricard
enterprise
Bacardi began using the trademark “Havana Club”
Pernord Ricard filed suit, but a NY Federal Judge
ruled that Cuban nationals could not assert their
trademark rights
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Issues: US Law
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Section 211 (a)(2) of the Omnibus
Consolidated and Emergency Supplemental
Appropriations Act adopted by the U.S.
Congress in 1998
– “prohibits the enforcement of, and transactions
related to, the registration and renewal of
trademarks that are the same or substantially
similar to those used in connection with a
business that was confiscated by the Cuban
government”
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Issues: WTO
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The EU and several other countries raised claims against
Section 211 (a)(2) under the Trade-Related Aspects of
Intellectual Property Rights (TRIPS) Agreement
The European Union presented to the first panel 14
complaints contending various violations of a part of the law,
known as Section 211, but the three-member board upheld
only one.
Violations:
– Articles 2.1 and 16.1 of TRIPS
– Article 42
– Article 3.1
– Article 4
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Violation Descriptions
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Articles 2.1 and 16.1 of TRIPS- WTO members to provide
protection for trademarks, trade names or commercial names.
Article 42- WTO members make civil judicial procedures
available to right holders concerning the enforcement of any
intellectual property right covered by the agreement.
Articles 2.1 and 3.1- WTO members provide treatment to
nationals of other member countries no less favorable than
that granted to home nationals
Article 4- requires that any advantage granted to nationals of
one WTO member country be granted to nationals of all other
WTO members immediately and unconditionally.
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Conflicts: EU vs. US
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Party Positions
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APPLICATION OF TRADEMARK
LAW IN HAVANA CLUB CASE
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A primary conflict in this case arises regarding the
right to sell Cuban rum in the United States. The
embargo against Cuba prohibits trade between the
two countries.
If this rum that Bacardi sells in the United States
under the name "Havana Club" actually is Cuban
rum, it is illegal. However, Bacardi is not a Cuban
company, nor do they produce any rum in Cuba.
In this case, Bacardi may sell their version of
Havana Club in the United States. At this point, the
issue becomes the (knowingly or unknowingly)
pirated trademarked name "Havana Club."
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ARTICLE 42 – FAIR AND
EQUITABLE PROCEDURES
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The E.U. requested that the WTO consider
the validity of Section 211 in light of TRIPS
of which both the E.C. and the U.S. are
members.
TRIPS requires that members of the
agreement make available civil judicial
procedures concerning the enforcement of
intellectual property rights covered by the
agreement.
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US ARGUMENT
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The United States claimed that the
core issue in the Havana Club dispute
"is whether the TRIPS agreement
requires the United States to recognize
and enforce trademarks used in
connection with assets that have been
confiscated/expropriated without
compensation from their rightful
owners."
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WTO DECISION
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On August 6, 2001, a panel of the World Trade
Organization (WTO) decided that a United States
law violates international intellectual property rules.
The WTO panel found that Section 211 violates this
aspect of TRIPS by failing to provide to certain
Cuban trademark holders judicial recourse in U.S.
courts. The panel recommended that the United
States bring its laws into conformity with its
obligations under the TRIPS agreement.
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WHY THE RULING IS
IMPORTANT
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Hundreds of United States companies have registered their
trademark names in Cuba, where Castro has threatened not
to recognize U.S. trademarks if the U.S. fails to
acknowledge Cuban trademarks.
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The United States has invoked the TRIPS agreement in
order to protect its pharmaceutical industry against generic
medicines produced more cheaply in developing countries
without any trademark licensing agreement.
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The U.S. has acknowledged that the WTO dispute
resolution process is effective since members know there
will be consequences-such as trade sanctions-if they violate
WTO commitments.
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BRIEF REMINDER
-Cuba
registered the Havana Club trademark with the US Patent and
Trademark Office (PTO) in 1976 after its former owners let it lapse in
1973.
-Havana Club Holdings is a joint venture of Cuban government and
Pernot Ricard (French Company), which currently sells Havana Club
in more than 80 countries.
-In 1997, Bacardi announced it had purchased the Havana Club
trademark from its original owner, Jose Arechabala S.A.
-When Bacardi started testing Havana Club in the U.S. market,
Havana Club Holdings filed a federal trademark infringement lawsuit.
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IMPLEMENTATION
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On August 6, 2001 WTO voted in favor of the E.U.
WTO sided with E.U. objections to a U.S. law, Section 211
(This law denies protection for trademarks linked to business
confiscated by Cuban government since communist takeover in 1959).
According to the panel, Section 211 denies trademark holders access
to the U.S. court system and prevents them from defending their
rights in court. This violates WTO rules under TRIPS because it
disadvantages foreigners over U.S. nationals.
The ruling gave the U.S. until the end of 2004 to comply with WTO
rules or face sanctions.
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FRIENDS OF BACARDI
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Bacardi, a major donor to U.S. Political campaigns, pressured U.S. Congress to
pass Section 211 in 1998.
Three powerful members of Congress received campaign money from Miamibased Bacardi:
– House Majority Leader Tom Delay, R-Texas
– Rep. Henry Bonilla, R-Texas
– Sent. Ernest Holling, D-South Carolina
Each sent nearly identical letters to Secretary of Commerce in November 2001,
urging Donald Evans to intervene and cancel the Havana club trademark
registration.
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Before and after the three members of Congress sent their money to Evans,
Bacardi sent money to the political causes of the three members.
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In addition, Jeb Bush was accused of lobbying the U.S. government on behalf
of Bacardi, which donated $200,000 to Florida Republicans since 1998.
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INTERNATIONAL INTERESTS
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At stake is control in the U.S. the fastest-growing spirits brand in the world.
-In 10 years the Havana Club reached an annual worldwide sales of 2 million.
-When (not if) the U.S. lifts its sanctions that prohibit sales of Havana Club
label in the U.S. the brand could gain a big share of the 1 billion U.S. rum
market.
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Political/Foreign Interests.
-Cuban officials alleged that Bacardi has sought to oust Castro by financing
plots to murder.
-Bacardi executives have been instrumental in lobbying for tougher sanctions
against Cuba.
Global Community.
-The WTO ruling impacts not just few companies but IP owners worldwide.
-Cuba and France which own the worldwide brand in a 50-50 joint venture.
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THE BACARDI BILL
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Senator Larry Craig, R-Idaho, introduced legislation,
known as the Bacardi Bill, on December 9, 2003 to
repeal Section 211.
The S2002 was proposed “To improve and promote
compliance with international IP obligations relating to
the Republic of Cuba, and for other purposes”.
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Trademarks and trade names are vital assets of the many U.S.
companies that engage in the international trade.
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THE BACARDI BILL
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Worldwide sales of branded products of the U.S.
companies contribute in important ways to the
livelihood of American workers and businesses.
These sales also depend on the security of the U.S.
trademarks and trade names protected by
reciprocal treaties and agreements for protection of
IP.
Hundreds of U.S companies have registered their
trademarks in Cuba in order to ensure the exclusive
right to use those trademarks when the U.S. trade
embargo is lifted.
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Sources
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http://www.ladas.com/BULLETINS/2002/0502Bulletin/0502Bulletin38
.html
http://www.google.com/search?hl=en&lr=&q=Bacardi+logo
http://www.twnside.org.sg/title/piracy-cn.htm
http://www.globalpolicy.org/socecon/bwiwto/wto/2002/0103rum.htm
http://www.adti.net/Daily_report_executives_061201.html
http://global-tradelaw.com/Article.WTO%20Cuban%20Rum%20Case%20(AB)(1.2.02).
htm
www.WTO.com
www.house.gov
www.wptn.com
www.adti.net
http://www.american.edu/ted/bacardi.htm
Independent on Sunday; April 11, 2004
Broward Daily Business Review; June 18, 2004
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Q&A
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