Rum Wars

Trademark Dispute Pits Two Rival Rum Makers

Posted June 8, 2007 at 6:32pm

French liquor company Pernod Ricard, which is locked in a fight with rival Bacardi, is stepping up its lobbying pressure this Congress in hopes of finally putting an end to its decade-long dispute.

Both companies claim they have a right to the U.S. trademark for “Havana Club” rum, a battle that has included a middle-of-the-night rider on an omnibus spending bill and become tangled in the prickly web of politics over Cuba’s Fidel Castro. Lobbyists working for Pernod Ricard, which markets Havana Club rum in many countries, say Senate Judiciary Chairman Patrick Leahy (D-Vt.) is readying legislation that could help their side. But already this year, Members have introduced bills that Bacardi backs, as well.

Leahy’s bill, lobbyists said, would repeal Section 211 of an omnibus appropriations bill passed in 1998. That measure, which Pernod Ricard lobbyists say was slipped into the massive spending bill, has given Bacardi’s side a leg up in litigation with Pernod over Havana Club because it effectively ties the court’s hands, Pernod’s lobbyists contend.

Patricia Neal, a spokeswoman for Bacardi U.S.A., said in an e-mail that Section 211 ensures that trademarks that have been illegally confiscated by the Cuban government not be recognized by U.S. courts.

But Pernod Ricard USA’s top lobbyist, Mark Orr, said the measure puts the United States at odds with international intellectual property agreements.

Orr said that because of Section 211, when the U.S. trademark for Havana Club came up for renewal last year, the Patent and Trademark Office was blocked from renewing it. Yet, Pernod Ricard’s U.S. trademark for Havana Club has not yet been canceled, either, putting it in a state of limbo, Orr said, explaining why time is of the essence for both sides of the fight. “In a way, we’re in overtime,” he said.

Leahy’s Judiciary Committee spokeswoman said she did not know the exact timing of a Leahy bill, but some sources said they expect a narrow, stand-alone measure as early as this week.

“I think Bacardi would like to know exactly what Leahy is doing, and he’s not telling them because they would lay the groundwork for opposition,” said one contract lobbyist working for Pernod Ricard. This lobbyist said he also expects a similar measure to be introduced in the House.

Another reason the issue has taken a new level of urgency is because many observers believe the Cuban government is ripe for change, as an aging and ailing Fidel Castro already has stepped aside.

“At some point, one can see considerable transition in Cuba,” said Orr, Pernod Ricard’s vice president of North American affairs.

In addition, the fiercely pro-embargo Bush administration also is coming to a close.

Orr said Pernod Ricard is not actively lobbying to end the embargo with Cuba, but he admitted his company would like the opportunity to sell its product in the United States.

“On the first day [the embargo is lifted], we’d like to offer you this product that you can’t drink today,” he said. “It’s very much about future competition.” And it’s not about Castro, Orr said, adding that Bacardi has “skillfully woven this into an anti-Castro” matter.

“I don’t believe that Bacardi has any intention of actually selling their version of Havana Club in the United States after the embargo ends,” said Vorys, Sater, Seymour and Pease’s Brett Kappel, who represents Pernod Ricard. “They just want to own the Havana Club trademark in the U.S. to prevent Pernod from being able to sell the Cuban Havana Club here.”

For its side, the Miami-based Bacardi U.S.A. supports legislation sponsored by Rep. Robert Wexler (D-Fla.). Wexler spokesman Josh Rogin said his boss’s bill, which has been introduced in previous Congresses, is a “technical correction” to Section 211. The current 211 did not comply with international trade rules because it only applied to Cuban nationals, Rogin said. The Wexler bill would apply the same rules to any confiscated trademarks regardless of nationality.

It’s no surprise, he said, that Pernod Ricard opposes Wexler’s bill. “They’re using an illegal trademark and they don’t want to have to stop using an illegal trademark, so they’re not happy with the bill,” Rogin said.

William Reinsch, president of the National Foreign Trade Council, which supports lifting the Cuban embargo and Pernod Ricard’s side in the rum dispute, said this Congress is prime for the repeal of Section 211. Both Judiciary chairmen, Leahy and Rep. John Conyers (D-Mich.), were upset that the intellectual property measure did not go through the proper committees back in 1998, he said.

Reinsch and Orr added that then-Sen. Connie Mack III (R-Fla.) helped get Section 211 enacted. Since entering the private sector, Mack has kept a watchful eye on the Section 211 provision. He has registered to lobby specifically for 211, and Mack and his firm, King & Spalding, reported earning $60,000 from Bacardi for the first half of 2006, according to Senate public records.

Ogilvy Government Relations and the all-GOP shop Fierce Isakowitz & Blalock also are registered to represent Pernod Ricard.

In the past eight years, Bacardi U.S.A. has poured more than $4.5 million into federal lobbying, while Pernod Ricard has dished out more than $8 million to lobby the federal government. “It’s a full employment act for lawyers and lobbyists and PR mavens,” Orr said.

The Pernod side is helped, Reinsch said, because former Majority Leader Tom DeLay (R-Texas) is gone.

Though it’s not an issue that breaks down by party lines, DeLay had long been an ally of Bacardi. “I think we’re more optimistic that something will pass and make its way to the president,” Reinsch said. Bacardi was indicted in Texas, as part of a larger campaign contribution probe, for making illegal contributions to a political action committee associated with DeLay.

Reinsch said that despite the U.S. embargo on Cuban goods, both countries have long respected many of each other’s trademarks and intellectual property. “There are 5,000 trademarks that the Cuban government is protecting,” he said.

Reinsch said that even if Congress repeals Section 211, that doesn’t necessarily mean Pernod Ricard will win the trademark battle against Bacardi. “But we think these are issues that ought to be solved by courts,” he said, “not a political decision.”

The skirmish between the two rum companies, Reinsch says, has “affected every branch of government. It impacts regulatory, legislative and judicial issues.”