Bacardi threatened by HAVANA CLUB

Article from Granma International by

Bacardi threatened by HAVANA CLUB

BY FELIX LOPEZ (Granma daily staff writer)

A court case is about to begin in the New York district Federal Court in which the Bacardi company could be found guilty of violating international trademark norms. Havana Club International S.A. taken legal action against the company for its manufacture and marketing in the United States of a counterfeit Cuban rum.

However, Bacardi representatives will appear in court under the protection of one of the 12 Cuba-related amendments that were recently inserted in the U.S. annual budget legislation. Section 211 of this package establishes that the U.S. courts cannot recognize any right to any trademark or patent of any foreign (rather than U.S.) enterprise which has any connection with properties alleged to have belonged to a U.S. citizen and which have been nationalized by the Cuban revolutionary government.

The above mentioned amendment (established after the suit was filed) represents an additional step in relation to the Helms-Burton Act: now, not only are investments in properties allegedly confiscated after the triumph of the Revolution subject to penalties, but even the right to use a trademark.

Put in this way, the legal process raises certain questions. What reasons does Havana Club International S.A. have to take legal action through a U.S. court? Was Bacardi really the owner of the Havana Club trademark prior to January 1, 1959? What are the international implications of Section 211's insertion within the above litigation?

THE CLAIMANTS

Havana Club International is a trading company set up by the Cuba Ron Corporation (covering the island's principal factories) and the French group Pernod Ricard (with subsidiaries in over 90 countries, a world leader in the distribution of aniseed liquors and in a strong position in the international marketing of whisky, brandy, rum, wines, sparkling wines, aperitifs and liquors.)

Sergio Valdés, Havana Rum and Liquors (HRL) managing director, explained to Granma that the Cuban-French joint venture was established five years ago with the aim of developing the marketing of Havana Club, a fine Cuban label in need of a strong international distributor to penetrate the difficult rum market.

Valdés recalled that sales of the flagship Havana Club label were handled by Cubaexport for many years, with the eastern European countries being its principal importers. The collapse of the socialist bloc saw the end of the agreements, exchanges and compensatory sales which had been the practice. Cuban rum was also facing competition ….

Referring to the issue on January 5, President Fidel Castro reflected: "Just imagine Cuba exporting Havana Club all by itself, without a distribution network for the product, never mind what it would have cost to create one and how many further millions would have to be found for publicity etc., etc.. But this rum is ours and the factory is ours, and we have a company which is a trading partner, with which we have certain commitments, naturally, as the business is with that company."

"The result of the association," Valdés explains, "has been satisfactory. The 100,000 cases of Havana Club sold per year reached the respectable total of one million in 1998, representing an income of 27 million dollars, money that the Ministry of the Food Industry directs to the purchase of products subsequently sold to the population in national currency.

"The other success is related to the international prestige and acceptation achieved by the brand. Precisely the potential danger that our entry into the clan of those who sell one million cases per year has represented to an ultra powerful company like Bacardi, demonstrates the soundness of the associative agreement with the French firm."

It is not fortuitous that, in the middle of Cuban rum's international takeoff, Bacardi began to produce and market Havana Club within the United States, thus incurring a grave violation of the principal aspects of internationally accepted copyright, patents and trademarks, given that this is a trademark registered in the United States and one which has never belonged to it.

THE ACCUSED

El hijo alegre de la caña de azúcar (The Happy Son of Sugar Cane), Fernando Campoamor's history of Cuban rum, relates that "in 1862, the indolent Englishman John Nunes, who operated a small but quality still, sold his business to Catalonian Facundo Bacardí …."

In this way, one of Cuba's finest rum-producing firms was established in Santiago de Cuba. In a history recorded in the interior of what was his head office, Don Facundo's words presented the motives for his commercial triumph:

"In truth, at no point in history, nor in any country in the world, could there have been rum like ours. Not even anything close. Those manufacturing outside of Cuba lack access to the best raw material that exists, precisely Cuban sugarcane molasses."

But his descendants were the first to ignore that pronouncement. With the triumph of the Revolution, the company set up outside of the island, stripping its publicity material of any link with their rums' Cuban origins or roots.

At the end of the day, coinciding with the increased sales of our rum and international interest in the permanence of the Cuban social process, Bacardi decided not to conform by restoring to its labels the publicity tag stating that their rums originated in Santiago de Cuba, but ventured to produce a Havana Club rum that never belonged to the company, under the shelter of anti-Cuban legislation.

The Campoamor history attests: "after the constitution of the city of Cárdenas (1828), important molasses wharehouses were opened there, a railroad was inaugurated (1851), as was the country's first sugar refinery (1871), and the still and distillery of what are the head office of Havana Club rum (1878) …, a house founded by Basque José Arrechabala," Bacardí's historical competitor.

After the nationalization process, Arrechabala never carried out any commercial activity using the Havana Club trademark. And, in the 1970's, a U.S. company registered it in the United States without coming up against any legal opposition.

THE COURT CASE

Litigation is about to begin. In the opinion of Ricardo Alarcón de Quesada, president of the Cuban National Assembly, the application by the New York court of the abovementioned Section 211, could become the source of a serious dispute, by attempting to unjustly and illegally punish a European company, Cuba's trading partner for rum distribution and sales: "They are about to complicate a little bit more their relations with the rest of the world and to establish a negative precedent."

In honor of the truth and legality, the final verdict should go in favor of Havana Club International S.A., but U.S. laws are once again applying Plato's maxim that justice is none other than the convenience of the strongest.