Ruling Against Pernod-Ricard Could Trigger New EU-US Dispute
Washington, April 15 (Bloomberg) -- A federal judge ruled that liquor maker Pernod-Ricard of France and its Cuban partner can't stop another company from selling rum in the U.S. under a label that
the French-Cuban joint venture has registered in more than 160 countries.
Havana Club International SA, which Pernod formed with a Cuban government-owned company, sued Bermuda-based Bacardi Ltd. for selling rum under its own ``Havana Club'' label, a name Pernod lays
claim to. Although a 36-year trade embargo prevents the Pernod-Cuban joint venture from selling liquor in the U.S. today, the company wants to protect its right to tap this market once trade relations
improve.
U.S. District Judge Shira Scheindlin in New York ruled that Pernod and its Cuban partner had no grounds for a claim because it's unlikely the U.S. will drop its trade embargo against Cuba in the
near future. She also said U.S. law prevented her from upholding a 60-year-old treaty that protects trade names in the Americas.
``Any competitive injury plaintiffs will suffer based upon their intent to enter the U.S. market once the embargo is lifted is simply too remote and uncertain,'' she wrote. ``There is no way for
this court to reasonably foresee when these changes will occur, whether in the near future or in another 35 years.''
The fight over using the Havana Club label pits Cuban expatriates at Bacardi against a company part-owned by Fidel Castro's government. It could also unleash a new trade dispute between the
European Union and the U.S. over the trademark rights of a leading European company. That would add fuel to an already smoldering relationship between the world's largest trading partners that has
been poisoned by quarrels over banana sales, engine-muffling hushkits for jet planes, hormone-treated beef and other issues.
Pernod may ask the EU to file a complaint against the U.S. with the World Trade Organization, Pierre-Marie Chateauneuf, the company's attorney in Paris, said before the judge issued her ruling.
Havana Club
Pernod, the world's No. 6 wine and liquor maker and the owner of Jameson Irish whiskey, began to export rum from Cuba with its Cuban partner five years ago. That was more than 20 years after the
Cuban government acquired the Havana Club trademark in the U.S. The trademark became available because the Arechabala family, which previously owned it, failed to renew the registration after fleeing
Cuba. The Cuban-Pernod joint venture later registered the mark in almost every country in the world.
``We must discuss with our attorneys but our intention would be to appeal,'' said Alain-Serg Delaitte, Pernod's spokesman in Paris. ``We are expecting a long-distance run with this thing.''
Bacardi, which is privately held by another Cuban expatriate family, is the world's fifth-largest liquor maker and the leading producer of rum. It bought the rights to the Havana Club trademark
from the Arechabalas in April 1997, heightening the feud over a name the Cuban government says it's owned for more than 25 years.
Indeed, Bacardi didn't purchase the rights until two years after it started selling Havana Club. The rum was made by a subsidiary in the Bahamas, according to court records.
Jorge Rodriguez, a Bacardi spokesman who has worked for the company off and on for more than 40 years and married into the family, said the Arechabalas gave Bacardi a ``verbal commitment''
permitting it to sell Havana Club rum before production began.
``We're very happy to see justice being served,'' Rodriguez said by telephone from Madrid, where he had been meeting with members of the Arechabala family. ``Our plan is to sell as soon as it is
physically and technically possible. Most likely this is the only country where we can sell it for now.''
Bacardi hasn't shipped any of its Havana Club rum to the U.S. since 1996 because of an agreement it reached with Pernod and its Cuban partner to halt sales while the lawsuit was pending.
Pernod could have prevailed in its effort to block Bacardi from selling Havana Club in the U.S., had it not been for a new law, passed last year as part of a government spending bill. That law,
known as Section 211, makes it illegal for a judge to protect a trade name previously used by a company whose property was confiscated. The only exception is when the previous owner gives its consent.
Patent Problem
The European Union and the U.S. have already sparred over a law that enables U.S. citizens to sue foreign companies that profit from ``expropriated'' property in Cuba. The EU filed a World Trade
Organization complaint against the U.S. to challenge the law and then dropped it nearly a year ago after reaching a tentative agreement with Washington. That agreement required the consent of the U.S.
Congress, which has never approved it.
What's more, Judge Scheindlin's ruling could jeopardize more than 450 U.S. trademarks that are already registered in Cuba if authorities there choose to retaliate.
``The owners of those trademarks and patents should be concerned at the recklessness of a government which can carry out actions that would not be left unanswered,'' warned Cuban National Assembly
President Ricardo Alarcon in a speech earlier this year.
Cuban officials haven't commented on the ruling yet, said Luis Fernandez, a spokesman for the Cuban Interests Section, which represents the Castro government in Washington.
``We are worried about the trademarks of our companies that are jeopardized,'' said John Howard, director of international policy at the U.S. Chamber of Commerce in Washington. ``How they may be
violated remains to be seen.''
Howard said the Chamber, which represents 300,000 companies in the U.S., wants its members to be able to trade with Cuba. ``Our view on the embargo is quite clear: get rid of it,'' he said.
Apr/15/1999 18:20
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