Jeb Bush lobbies hard for Bacardi in Havana Club rum trademark lawsuit

[seafan]

Suit Seeks to Block Bacardi From Selling Havana Club Rum

Julie Kay
Daily Business Review
August 18, 2006

French liquor giant Pernod Ricard has filed a federal lawsuit against rival Bacardi U.S.A. to block the Miami-based liquor company from selling rum under the Havana Club label.
The lawsuit, filed Monday in U.S. District Court in Delaware, alleges Bacardi falsely claimed it owns the Havana Club trademark in statements to National Public Radio and newspapers. The suit also claims Bacardi is misleading consumers in calling its rum Havana Club when it is made in Puerto Rico, not Cuba.

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Pernod Ricard sells a Cuba-made Havana Club rum in partnership with the Cuban government. The partnership sells the rum in dozens of countries, but not in the United States due to the U.S. trade embargo against Cuba.

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Bacardi claims it purchased the rights to the Havana Club trademark from the original owners, the Arechabala family, who made the rum in Cuba from the 1930s until Fidel Castro took power.
The Arechabala family wound up in Spain. In 1973, it allowed the trademark registered at the U.S. Patent and Trademark Office in Washington, D.C., to lapse. In 1976, the Cuban government registered the Havana Club trademark with the office. In 1993, Cuba, through CubaExport, entered into a contract with Pernod Ricard to form Havana Club Holding and sell the rum in 80 countries around the world.

Last week, Bacardi started selling its Havana Club rum in South Florida and hopes to do a nationwide launch in the future. Bacardi claims that its Havana Club rum is based on the original recipe created in Cuba.
The question of who owns the trademark to the famous brand name is at the heart of a long-running, politically charged dispute between Pernod Ricard and Bacardi.
Earlier this month, the U.S. Patent and Trademark Office handed a victory to Bacardi by canceling Pernod Ricard's trademark to the brand name. Bacardi has an application pending for the name. Bacardi is also challenging Pernod Ricard's trademark in other countries.

Pernod Ricard has claimed that Bacardi used its strong Republican political connections to win favorable treatment from the Bush administration in the trademark dispute. The Washington Post and the Daily Business Review reported that Gov. Jeb Bush personally lobbied patent officials in Washington, D.C. on Bacardi's behalf. Meanwhile, Bacardi was funneling tens of thousands of dollars to the Florida Republican Party and Bush's re-election campaign in 2002.

Bacardi has denied that it engaged in any improper action.

(emphasis added)

[LisaM]

1. Jeb Bush had the attorney on the case changed for a $50K donation

to the Republican GOP. I remember distinctly - this was a number of years ago. The attorney, David Mermelstein at the Trademark Trial and Appeal Board, was apparently passing decisions against Barcardi and he was summarily pulled from the case. I've worked in trademarks since 1993 and I have never heard of anything remotely like this.

In fact, if you look at the US Patent and Trademark Website (www.uspto.gov) you will see that it has become a de facto campaign ad for Republican lawmakers. I find it extremely obnoxious - I need to log on to the site 20 or 30 times a day, and I'm greeted by the smiling faces of various Republicans at meet and greet or photo ops apparently staged for their benefit. The Commissioner of Trademarks, Jon Dudas, was also involved in the Bacardi case, which I presume led to his promotion.

In my position, I cannot call the Trademark Office and complain about this obvious politicking, but I would strongly encourage any of you to call your own Senators and complain vociferously.

[seafan]

2. Thanks for the information from "the inside", LisaM. I am disgusted

by the pervasiveness, underhandedness and audacity of the people we are dealing with now.

The overarching influence of political corruption is what is so demoralizing.

But it just makes honorable people much more motivated to remove it.

[LisaM]

3. Pernod is a big player

I think that their case has more merit than Bacardi's, and that they will prevail internationally.

[seafan]

4. Bacardi campaign $$$ to Sen. Mel Martinez under FEC scrutiny also.

It's just par for the course.


More from GRANMA INTERNATIONAL, Cuba

BY GABRIEL MOLINA
August 18, 2006

The lawsuit, filed before the Federal Court of Delaware on Tuesday by the Pernod Ricard subsidiary in the United States, is in response to maneuvers by the George W. Bush government to favor Bacardi, a firm charged with buying Congress members and officials to achieve its aims.
The Pernod-Ricard lawsuit alleged that Bacardi Ltd is deceiving consumers by making them think that its Havana Club rum is made in Cuba. It accuses Bacardi of violating the Lanham Act, and also maintains that the company does not have rights to the use of the Havana Club trademark in the United States, according to an article in the Nuevo Herald daily.
"They are implying that this is a Cuban product, despite the fact that they know that it isn’t," stated Mark Orr, vice president of U.S. Affairs for Pernod Ricard. "An informed consumer will expect Havana Club to be made in Cuba, from Cuban sugar cane."

Citizens for Responsibility and Ethics in Washington (CREW), a U.S. political corruption watchdog group, filed a complaint with the Federal Elections Commission (FEC) on August 7 against Bush’s former housing secretary and current Senator, Cuban-American Mel Martínez, of having illegally accepted more than $60,000 from the Bacardi beverage and rum company, which controls a good share of the world market for alcoholic beverages, for his 2004 Senate election campaign.

The watchdog group is accusing Bacardi of violating FEC regulations by soliciting contributions from a list of the corporation’s distributors for Martínez’ Senate campaign, and for using corporate funds to pay for food and beverages at a May 11, 2004 campaign event.
The complaint says that employees of at least three of Bacardi’s distributors — Hunton & Williams, Chesapeake Enterprises and the MWW Group — made contributions to Martínez’ Senate campaign, responding to an appeal by the company.
Bacardi has already admitted to the FEC that it broke the law by using corporate funds to pay for an election campaign event, and was fined $750 for "failing to report in a timely manner on campaign contributions."

The CREW group said that Martínez violated election law by failing to identify the employer of Bacardi executives, including Eduardo Sardiña, chief executive officer of Bacardi USA, and Frederick Wilson, general counsel to Bacardi USA, who together contributed $5,000 to the Senate campaign. Likewise, CREW demanded that the FEC carry out an investigation and audit of Martínez’ 2003-2004 campaign for the Senate.

Melanie Sloan, CREW executive director, noted that the situation was "an archetypal example of how special interests use corporate money to buy influence in Washington."

The U.S. Treasury Department cleared the way for Bacardi by denying the necessary license to renew trademark rights with the U.S. Patent and Trademark office to Havana Club International, a joint enterprise between French company Pernod Ricard and Cuban enterprise Havana Rum and Liquors. Havana Club International (HCI) distributes Havana Club rum all over the world except in the United States, where, in spite of owning the rights to the trademark since 1974, sale of the rum is prohibited by the U.S. blockade against Cuba – known in the United States as the embargo.

The long history of disregard for brand and patent laws came to a peak in 1996 when Bacardi introduced onto the U.S. market a rum called Havana Club produced in the Bahamas. Havana Club International filed a lawsuit, given that Cuba has owned the rights to the brand since 1974, transferred to HCI.
However, an April 13, 1999 ruling by Judge Shira Scheindling of a New York district court threw out the lawsuit, and Havana Club Holding (HCH) decided to appeal.
Scheindling’s ruling was based on Section 211 of the Budget Law approved by the U.S. Congress a few months earlier, in October 1998, described by analysts as a legislative move to benefit Bacardi.

Pernod appealed Scheindling's ruling and won the appeal, but....

....the pressure continued and the Treasury Department maneuver to deny the license to prolong the right, allowed the Office to declare it extinguished. The Bush government’s decision this month is over and above the law.

Mel Martínez, who was Secretary of Housing and Urban Development at the time, together with fellow Cuban-American Congress members Ileana Ros-Lehtinen and the Díaz-Balart brothers, financed by Bacardi, were the architects of that legal freak (Section 211), which has been criticized by business organizations like the National Foreign Trade Council (NFTC). Bill Reinshi, its president, warned that there are currently more than 5,000 U.S. trademarks in Cuba vulnerable to being infringement, thanks to that private interest legislation. The business sector is concerned about the future of trademark rights being infringed on, with incalculable consequences.

[soothsayer]

5. getting prepped to reestablish relations with cuba, eh? gotta get

all their legal ducks in a row

Well, good! Finally get some legal 'gars from that joint

[seafan]

6. Cubaexport intends to appeal result of the "Bacardi Bill", Section 211.

The GOP-controlled Congress/Judiciary is very fond of passing legislation/rulings for the benefit of one entity... Bush v Gore, Schiavo and Bacardi are just a few examples.


Bacardi's victory in the Havana Club trademark fight could spell trouble for many other U.S. businesses

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Now some fear the recent U.S. refusal to renew the Havana Club rum trademark claimed by a Cuban joint venture and Bacardi's launch of Havana Club -- a brand it also claims -- has placed the delicate balance of respecting other nations' trademarks in jeopardy. The recent developments also raise the possibility of Cuban retaliation, experts say.
Bacardi's fight with Cubaexport, a Cuban company that partnered with French liquor giant Pernod Ricard in 1993 to sell the rum around the world, has been simmering in U.S. courts, Congress and in the World Trade Organization for a decade. But the United States' recent decision to invalidate Cubaexport's Havana Club trademark registration really fanned the flames.

''Our government has done a real injustice that will come back to bite a lot of other companies,'' said William A. Reinsch, president of the National Foreign Trade Council. The council, which is based in Washington, represents corporate members such as Microsoft, Wal-Mart, Caterpillar and General Motors.
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On August 3 the U.S. Patent and Trademark Office said the Havana Club trademark would be ''canceled/expired'' -- although Cubaexport had filed its renewal application correctly with a $500 fee and on time.

The Patent Office refused to accept the renewal after J. Robert McBrien, the acting director of the Office of Foreign Assets Control, wrote the office had received guidance from the U.S. State Department ``informing us that it would be inconsistent with U.S. policy.''
That decision stems from a provision called Section 211 that was inserted in a 1998 budget bill. Sometimes called the ''Bacardi Bill,'' Section 211 has been criticized as a measure solely aimed at benefiting the rum giant.
Now the recent Havana Club denial has raised concerns that Cuba could return the favor by canceling U.S. trademark registrations based on the communist nation's own ''policy'' considerations.

Cuba could, for instance, cancel the trademarks for Levi's jeans or Heinz ketchup and sell its version in island stores. Those products could filter into other markets, too, harming U.S. companies that have long sought to keep fakes off store shelves abroad, said the National Foreign Trade Council.
Such a scenario could force U.S. companies to spend millions defending trademarks in many different countries and make the Cuba market ever more difficult to enter if it ultimately transitions into a market economy. And some think that day may be sooner rather than later due to leader Fidel Castro's shaky health.
'Some day Cuba could say, `The heck with it, we will not honor any of these registrations, because you guys are not honoring ours,' '' said Jesus Sanchelima, a Miami lawyer who has represented U.S. companies in trademark cases in Cuba.

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For the time being, there are two Havana Clubs -- one distilled in Puerto Rico by Bacardi and sold in the United States and another made in Cuba and distributed around the world.
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Now there are two Cohiba cigars -- the version made in Cuba and another one rolled in the Dominican Republic and distributed by General Cigar.
The Cohiba and Havana Club decisions are ''two big hits in rapid succession,'' said Miami attorney Jorge Espinosa. ``Assuming refocuses from health issues, every one of these is something that adds possibility to retaliation.'