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Long-Running Rum War Between Bacardi, Pernod Ricard Shifts To

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Long-Running Rum War Between Bacardi, Pernod Ricard Shifts To Vol. 15, No. 5 May 2007 www.cubanews.com In the News Long-running rum war between Bacardi, Pernod Ricard shifts to federal courts Fidel’s recovery Despite his improving health, don’t expect BY ANA RADELAT and politics between the powerful Bacardí exile family and the Castro government, which has a Fidel to return to power ...............Page 3 fter bouncing from the Patent and Trade- mark Office to federal courts to Congress willing ally in Pernod Ricard. A to the World Trade Organization, the bit- “I’m certain there is some long-term animosi- Phone home ter fight over the Havana Club trademark has ty between the Bacardi family and the Cuban U.S. carriers pay Cuba’s Etecsa $102m to finally shifted back to the courtroom. regime. They have long memories and under- The combatants are Havana Club Holdings standably so,” said Mark Orr, vice-president of complete long-distance calls ........Page 4 (HCH) — a 50-50 venture between the Cuban Pernod Ricard North America. “But I’ve also government and French drinks conglomerate seen that the French are stubborn and have Vitral closes down Pernod Ricard — and Bacardi, the giant spirits long memories, too.” Feisty Catholic newspaper in Pinar del Rió empire owned by Cuban exiles whose property Huge amounts of money have been spent on was expropriated by the Castro government in legal fees over the Havana Club name and there publishes its last issue ..................Page 5 the 1960s. is no indication that spending on lawsuits will Federal district courts in Washington and stop anytime soon. Yadira’s invitation Delaware are considering lawsuits that could Pernod has good reason to fight alongside Top Cuban official invites U.S. energy com- determine which party in this battle will ulti- the Cuban government for Havana Club. HCH mately control the name of one of the world’s has resulted in untold hundreds of millions of panies to develop oil sector ..........Page 7 most famous rums: Havana Club. dollars in revenues and profits following a wide- But there’s more to the battle over Havana spread global marketing effort. Newsmakers Club than the lure of potentially billions of dol- Last year, the venture sold over 2.6 million lars in U.S. rum sales. The more than decade- nine-liter cases of rum, primarily in Spain, Italy Cynthia Thomas, founder of Texas-Cuba long fight has also become a feud of principle See Havana Club, page 2 Trade Alliance, sees big potential for Lone Star commodity exporters ............Page 8 Smuggling trial raises questions about Taking on traffickers Miami lawyer Nicolás Gutiérrez sues vio- Major League Baseball’s future in Cuba lators of Helms-Burton Act ........Page 10 BY VITO ECHEVARRÍA and his co-conspirators planned to relocate the Expensive painting n April, Cuban exile sports agent Gustavo ballplayers to Mexico and the Dominican “Gus” Domínguez was convicted of nearly Republic, so that they could get false passports Florida’s Fanjul family sues Sotheby’s to I two dozen charges at a federal court in Key there, and re-enter the United States to compete recover valuable piece of art ......Page 11 West, Fla., for his role in smuggling then- as free agents in the MLB. unknown baseball players out of Cuba and har- Domínguez, vice-president of Total Sports In- Business briefs boring them once in the United States. ternational in Encino, Calif., is scheduled for Prosecution witnesses, including an admitted sentencing on July 9. According to his lawyer, J. Cuba aspires to single-currency system; drug felon, testified that Domínguez financed a Stephen Salter, the sports agent’s legal battles aren’t over. VCRs may now be imported ......Page 12 2004 smuggling operation that brought five defecting Cuban baseball players to the Florida “There’s no relief regarding venue [as a legal Keys. Two of them are currently playing minor issue],” Salter told CubaNews in a recent e-mail. Provinces: Guantánamo league baseball for the Atlanta Braves and Ari- “We do plan to appeal. The issue of being cut off Guantánamo, famous for U.S. base, is one zona Diamondbacks, while the other three are from arguing and using the ‘wet foot/dry foot’ policy and the Cuban Adjustment Act immedi- of Cuba’s poorest provinces ........Page 14 no longer playing baseball. Among other things, the prosecution intro- ately comes to mind, [as does] the issue of these duced bank records in support of its case charges requiring proof of ‘specific intent.’” CubaNews (ISSN 1073-7715) is published monthly against Domínguez, 48, showing how he funded That substantive legal argument was thrown by Luxner News Inc. © 2007. All rights reserved. out by Federal District Court Judge K. Michael Subscriptions: $429 for one year, $800 for two years. the ballplayers’ escape from Cuba in “go-fast” For editorial inquires, please call (301) 452-1105 boats normally associated with drug-traffickers, Moore, who agreed with federal prosecutors or send an e-mail to: [email protected]. and their subsequent arrival in Florida. that wet-foot/dry-foot was irrelevant in the The prosecution also alleged that Domínguez See Baseball, page 4 2 CubaNews ❖ May 2007 Havana Club — FROM PAGE 1 and Canada. That’s up from 1.5 million cases in 2001, and 300,000 cases when the venture began in 1994. LARRY LUXNER Business is so good that a $66 million dis- tillery has opened at San José de las Lajas, 20 miles east of Havana. Manuel Arias, the ven- ture’s chief of domestic sales, says exports of Havana Club might reach 5.0 million cases by 2013 (see CubaNews, February 2007, page 4). Havana Club rum is now 79th on the Im- pact list of the world’s 100 top-selling spirits brands. That’s still way behind Bacardi, which is No. 6, with 2006 sales of 19.3 million cases. But Bacardi’s overall sales are dropping, while Havana Club has seen average annual growth of 11.6% over the last five years. That makes Havana Club the 13th fastest-growing spirits brand in the world. THE HAVANA CLUB RUM SAGA: A TIMELINE OFAC AT CENTER OF TRADEMARK CONTROVERSY One of the latest court fights over the Hav- 1959 — The Cuban Revolution takes place. The Arechabala family, with the exception ana Club name was filed last September by Cubaexport — the Cuban partner of Pernod of one member who is imprisoned, leaves Cuba. — against the Treasury Department’s Office 1960 — The assets of the Arechabalas are nationalized. of Foreign Assets Control. 1966 — The Cuban government — through a company called Cubaexport — registers Orr said the venture’s registration was due the Havana Club name in 80 countries, but not in the United States, where it is prohibited by to be renewed on July 28, 2006, and that the embargo from selling the rum. Cubaexport duly filed an application with the PTO. But OFAC advised the PTO it could not 1973 — The Arechabala trademark registration in the United States lapses. accept the fee for doing so. 1976 — The U.S. registers the Havana Club trademark with the U.S. Patent and The Pernod suit said OFAC had improper- Trademark Office (PTO). ly denied Cubaexport’s request for a license. 1993 — The Cuban government enters into a 50-50 joint venture with French drinks To date, the court has not decided whether to conglomerate Pernod Ricard, forming Havana Club Holdings (HCH). hear Cuba’s lawsuit over its right to pay fees to renew the trademark. 1995 — The Treasury Department’s Office of Foreign Assets Control grants a license “If OFAC has actually done its homework, to transfer the Havana Club trademark from Cubaexport to HCH. Bacardi petitions the it would have concluded…that issuing a Patent and Trademark Office to cancel the registration. license is what it should do,” Orr said. 1995 — Bacardi begins to sell a Bahamas-made rum called Havana Club in the United Bacardi has had an application at the PTO States. to license the Havana Club name for over a decade. The company claims Castro illegally 1996 — HCH sues Bacardi for trademark infringement. Bacardi stops production of seized the property of the Arechabala family, Havana Club rum. the original producers of Havana Club rum. 1997 — Bacardi buys the Havana Club mark from the Arechabalas for an undisclosed Bacardi also says it paid the Arechabala amount of money. family for the rights to the name of the 1998 — Before a federal court can rule on HCH’s trademark infringement case, a law famous rum in 1997. But the Cuban government and HCH say called Section 211 comes into effect. It prevents recognition of trademarks confiscated with- the trademark was abandoned by the Arecha- out compensation by Cuba. balas when they failed to renew it in 1973. The 1999 — HCH’s lawsuit against Bacardi is dismissed. The judge rules that Section 211 Havana Club trademark lapsed in the United prevents the court from ruling on the case. An appeal is rejected and the Supreme Court States that year. says it won’t review the rejection. “The Arechabalas never abandoned the trademark,” Bacardi spokeswoman Patricia 2000 — The European Union files a complaint about Section 211 with the World Trade Neal told CubaNews. “They had no means to Organization. be reunited with their product.” 2002 — The WTO rules that the United States can make its own trademark laws, but Most of the Arechabala family left Cuba in must apply equally to everyone. It recommends the United States amend Section 211 so that 1959. On Jan. 1, 1960, the company was it applies to confiscated property everywhere. nationalized and its private assets seized.
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