Where there's Rum, there are Pirates

Where there's Rum, there are Pirates

The history of the “Havana Club” brand rum is a long one.  It was originally produced and sold by the Arechabala family until 1960, when the Castro government confiscated their holdings without compensation.  Since this included the Arechabala’s rights to sell their rum, the Cuban government began selling the rum themselves under the stolen “Havana club” trademark.  In 1976, after the Arechabala’s expiration of the Havana Club trademark in the US, Cuba registered the “Havana Club” trademark and was accepted by the United States Patent and Trademark Office (USPTO) despite Cuba’s inability to sell the brand in the US because of the 50-year embargo.   However, apart from the US, Havana Club is sold in more than 120 countries and is distributed (since 1993) through Pernod Ricard, a French company.

The Arechabala’s didn’t disappear however, and in 1997 finalized a deal with Bacardi to sell them the name Havana Club and their recipe. VP of Corporate Communications at Bacardi was familiar with the Arechabala’s situation saying “This is not a question of market share. Rather, this comes from our own experience as Bacardi’s assets in Cuba were illegally confiscated in 1960”.  From Bacardi’s perspective, they were simply purchasing these rights from the true owners who had simply allowed their trademark to lapse in the US.  Bacardi filed for trademark registration of the name “Havana Club” and began selling the rum in Florida.  What followed was a bill lobbied for by Bacardi which prevented Cuban nationalized companies from enforcing their trademarks in the US, and also required any renewals of the trademark to be licensed by the Office of Foreign Assets Control.  So naturally, when it came time for Cuba’s “Havana Club” trademark to be renewed in 2006, they could not get the necessary licence from the Office of Foreign Assets Control and therefore could not renew the trademark.

The Cuban government sued the US government for the right to renew their trademark and lost, with the US Supreme court declining to review the action.  As a result, the Havana Club trademark has been available since June 13th 2012 and Bacardi has wasted no time in announcing its plans to expand the brand across the US.  Pernod Ricard has responded by registering the name “Havanista” as a trademark in the US, under which they plan to sell their rum once the embargo has been lifted.    

In reaction to the loss of the trademark, the director of Cuba's office of intellectual property suggested that the US was disrespectful to the legitimate Cuban owners of the brand, and threatened that this result would put all American patents and brands in Cuba in jeopardy.  From Cuba’s perspective, they were the legitimate owner of the brand.  Within their own legal system, they may have a point.  The Cuban government did declare itself the legal owners of the brand since 1960, and they did hold a trademark on the brand in the US since 1976.  If America was willing to accept that Cuba could hold this trademark in 1976, what has changed since then?  Perhaps it was because of Bacardi’s recent interest in the brand that caused America to take a harder look at how the Cuban government originally acquired the brand.

Regardless of why the brand was registered in the first place, it doesn’t change the fact that the brand was taken from the Arechabala family by the Cuban government.  This potentially invalid appropriation of the Havana Club brand arguably renders any subsequent action taken by the Cuban government, including its dealings with Pernod Ricard, invalid in connection with the trademark “Havana Club”.  Doug Gibson, Vice President and General Counsel for Bacardi made a similar argument, "These principles provide that an entity should not be recognised as the owner of a trademark if it was stolen from its rightful owner without payment”.

Besides the legal and political implications of this decision, I prefer to think of this as a victory for the rum-drinkers of America (40% of the world’s rum-drinkers). They will now be able to enjoy Havana Club anywhere in the US, and I’ll raise a glass to that. 

Adam Stevenson is a JD Candidate at Western University