Havana Club and the Face of State-Corporate Alliances in War by Other Means

The battle lines over trademark protection may be heating up between the US and Cuba. What makes this battle front in the non-military war between the U.S. and Cuba more interesting is that in this case multinational corporations, rather than the belligerent state parties, appear to be both directing and taking the lead.  The object for these multinationals is not political, but almost purely economic--the control of a brand name for a liquor that may be exploited to the profit of the winner of the contest.  For states the corporation provides a useful proxy for engaging in warfare in the style that has become acceptable  now--no human casualties but lots of opportunities for causing political, economic, social and cultural damage through lawfare. For corporations, this provides a means of leveraging corporate power through strategic alliances with states.

(Pix (c) Larry Catá Backer 2011; Barcelona Spain)

 Here is a nice example of the way in which polycentric governance--the existence of multiple and autonomous governance units--are now beginning to form alliances for advancing their own, and quite distinct interests.  In this case, Cuba and its ally Pernod Ricardi have engaged the United States and its ally Barcadi.  States remain powerful actors in transnational governance and law remains an import mechanics of control. But one wonders if these actions suggest the ways that states are increasingly de-centered as non-state actors begin to participate in (and in some cases guide) actions once reserved solely to states and law serves as both structure and object in the inter-systemic battles.   

At the center of this new election year controversy is Havana Club, and the right to control the mark and an opportunity to extend very long running disputes that keep the revolutionary moment quite alive between the Cuban state and many of the people who left the Island after 1959. .

This from the San Francisco Chronicle of an Associated Press report:

There was the Cold War, the Bay of Pigs and the Cuban Missile Crisis, and there is still no end in sight to U.S.-Cuban animosity. Now a bitter dispute over a sweet-tasting spirit appears to be nearing an end after more than a decade of legal wrangling.

Time and again, U.S. courts have ruled against Cuba in its fight to control the U.S. rights to the trademark Havana Club, the island’s flagship rum brand that is sold in more than 120 countries around the world – but not in the United States.

By mid-June, Cuba could lose all chance of pressing its legal claims against Bacardi, which distributes a limited quantity of its own Havana Club rum in Florida and says it plans to expand to other states.

Indignant over what it considers wholesale piracy of a national symbol, Cuba accuses the United States of using an under-the-radar maneuver to block Cuba from paying the small trademark-renewal fee, and has raised its concerns at increasingly high levels of government. If the trademark expires, Cuba says, it could retaliate on U.S. trademarks currently protected on the island.

Although the U.S. sanctions prevent Cuba from marketing Havana Club in the United States, the island has held the trademark there since 1976 after the Cuban family that originally owned the brand let their registration lapse.

But since it came time to renew in 2006, Cuba says, it has been unable to do so because the U.S. Treasury Department’s Office of Foreign Assets Control, which enforces the embargo against the island, has not issued a license for Havana to make the $200 renewal payment.

Cuba sued the U.S. government, but lost. And when the U.S. Supreme Court declined to review the ruling on May 14, a 30-day countdown began after which the U.S. Patent and Trademark Office can cancel the trademark.

That means that as soon as June 13, Cuba’s claim to the name could expire, and with it the island’s best hope of continuing its legal battle. (Cuba-U.S. fight over trademark for Havana Club rum, San Francisco Chronicle, June 6, 2012)

(From Cuba-U.S. fight over trademark for Havana Club rum, San Francisco Chronicle, June 6, 2012. “In this Oct 22, 2010 photo, a man works on the assembly line at the Havana Club rum factory in Havana, Cuba. Time and again U.S. courts have ruled against Cuba in its fight to control the U.S. rights to the trademark Havana Club, the island’s flagship rum brand which is sold in more than 120 countries around the world, but not in the United States. By mid-June, Cuba could lose all chance of pressing its legal claims against Bacardi, which distributes a limited quantity of its own Havana Club rum in Florida and says it plans to expand to other states in the near future.” (AP Photo/Franklin Reyes))

The Cubans have been clear about the stakes, though they are far higher for the Cubans than for the U.S.:

"The United States' disrespectful attitude in divesting the legitimate Cuban owners of the Havana Club brand can put at risk the brand and patent rights of American companies in our country," Maria de los Angeles Sanchez, director of Cuba's office of intellectual property, said Tuesday. "Cuba reserves the right as a sovereign nation to act at the appropriate moment."
Such retaliation might have limited immediate impact, as most U.S. goods are barred from being sold to the island under the 50-year-old U.S. embargo. However there are some legal sales of food items, and companies could also face tough and costly legal battles to win back their trademark rights in a post-embargo Cuba. (From In Rum War, US Close to Wresting Havana Club from CubaAP, Fox News Latino, June 5, 2012).

But the stakes were highest in another governance sphere--between rival multinational liquor companies, Barcadi and Pernod Ricardi who between them control a large variety of famous and famously marketed brands.

For more than 15 years, millions of cases of authentic Cuban rum have been marketed outside the United States under the name "Havana Club” by a joint venture between Pernod Ricard S.A. and Corporación Cuba Ron. In the United States, the joint venture's "Havana Club” rum cannot be sold because of the embargo on Cuban products.

Ian FitzSimons, General Counsel of Pernod Ricard, said, "We disagree with the court's decision, which is unfair to consumers in the United States who are being deceived by a product labelled "Havana” which has no connection whatsoever with Cuba. It is important to note that this decision does not grant any right in the 'Havana Club' trademark to Bacardi. We are determined to continue to fight for fair competition in the United States market where ownership of the ‘Havana Club' trademark dates back to 1976.”

Pernod Ricard USA's parent company, the French wine and spirits distributor Pernod Ricard S.A., is a partner in the Havana Club joint venture that has always successfully defended its ownership of the "Havana Club” trademark in over 120 countries where the Cuban rum is registered and commercialized. (Press Releases, Pernod Ricard USA to Continue Fight Against Misuse of ‘Havana Club’ Name in the U.S.: Pernod Ricard USA to consider options following decision from Court of Appeals,August 4, 2011)

But Bacardi has invaded what Pernod Ricardi and the Cuban state consider their own liquor brand turf in the United States.  "Pernod Ricard USA pledged to continue to fight against a competitor's use of the "Havana Club” name in the United States for non-Cuban rum following today's controversial ruling by a three-judge panel of the US Court of Appeals for the Third Circuit. The panel refused to block Bacardi from using the "Havana Club” name in the United States to sell its non-Cuban spirit despite evidence that the name misleads consumers into believing that Bacardi's "Havana Club” rum comes from Cuba." (Press Releases, Pernod Ricard USA to Continue Fight Against Misuse of ‘Havana Club’ Name in the U.S.: Pernod Ricard USA to consider options following decision from Court of Appeals,August 4, 2011).  Pernod Ricardi-Cuba's Havana Club operations in Europe remain unaffected, and indeed, outside the United States, American brands routinely ignore the extraterritorial effects of the American containment policy.  See, Larry Catá Backer, The Cuban Bloqueo/Embargo, Law at the End of the Day, June 7, 2011.  

Right now Bacardi dominates worldwide with 19.3 million cases of its rums sold in 2010, according to Impact Databank. That compares to 3.8 million cases of Pernod Ricard's Havana Club sold in 2010, according to the French company.

Bacardi says it legitimately has the right to market Havana Club in the United States. The Bermuda-based company says it purchased global rights to the trademark in 1997 from the Arechabala family, the original owners who had let their registrations lapse. At the time, Bacardi was already embroiled in a legal dispute over its use of the name.

In rulings favoring Bacardi, courts cited 1998 U.S. legislation ? which Bacardi lobbied for and some call the "Bacardi Bill" ? preventing lawsuits to enforce a trademark involving a company that was nationalized by Cuba. That same legislation also amended U.S. law so that such trademarks could no longer be renewed automatically, and required a specific license from the Office of Foreign Assets Control.

Pernod Ricard considers the legislation unfairly retroactive.

Bacardi applauded the Supreme Court decision. It said it has a trademark pending with the patent office since 1994, and is confident of gaining approval soon.

"Cuba does not have a valid registration," said Patricia M. Neal, a spokeswoman for Bacardi USA. "As a matter of law, the United States Patent and Trademark Office will formally cancel the registration of Cuba Export for the mark in due course."

Cuba has sent repeated diplomatic notes to Washington about the Havana Club trademark, but without yielding any result, Vice Foreign Minister Abelardo Moreno said Tuesday. U.S. government representatives declined to comment. (From In Rum War, US Close to Wresting Havana Club from CubaAP, Fox News Latino, June 5, 2012).

 (From In Rum War, US Close to Wresting Havana Club from CubaAP, Fox News Latino, June 5, 2012).

Here is a Spanish language version:

Cuba: fallo judicial sobre ron pone en riesgo marcas de EEUU en la isla
AFP | Fecha: 06/05/2012a.. Imprimira.. A+ A-a.. a.. a.. a.. a.. a.. Enviar
Cuba advirtió este jueves a Estados Unidos que el fallo judicial que impidió el registro de la marca de ron cubano Havana Club en ese país “pone en riesgo la protección” de unas 6.000 marcas de empresas norteamericanas registradas en la isla.
“La actitud irrespetuosa de Estados Unidos en despojar a los legítimos titulares cubanos de la marca Havana Club puede poner en riesgo los derechos marcarios y de patentes de nacionales estadounidenses en nuestro país”, dijo la directora de la Oficina Cubana de Propiedad Industrial, Maria de los Ángeles Sánchez, durante una video-conferencia entre La Habana y París.
“Cuba se reserva su derecho, como país soberano, de actuar en el momento apropiado”, añadió la funcionaria, tras subrayar que actualmente están registradas en la isla “unas 6.000 marcas” de empresas estadounidenses.
La videoconferencia fue organizada por la cancillería cubana luego de que la Corte Suprema estadounidense privara en mayo al grupo francés Pernod Ricard de renovar el registro de la marca Havana Club en Estados Unidos.
La marca estuvo registrada en Estados Unidos de 1976 a 2006 por Pernod, que asociada con la empresa estatal cubana Cubaexport lo distribuye en 120 países. Sin embargo, su renovación enfrentó un largo proceso judicial que comenzó en los años 90 cuando la empresa Bacardí lanzó su versión puertorriqueña del ron para el mercado norteamericano.
El vicecanciller cubano, Abelardo Moreno, destacó que “ha sido precisamente el gobierno de los Estados Unidos el que ha impedido el registro de la marca”, en un proceso marcado “por violaciones, engaños e incumplimientos” y dijo que La Habana “seguirá luchando con los colegas de Pernod”.
Olivia Lagache, directora jurídica de la empresa mixta Havana Club Internacional, formada por el grupo francés y la estatal cubana Cuba Ron, explicó que la compañía estudia “posibles acciones después del fallo de la Corte Suprema”, sin dar detalles.
Lagache consideró que el fallo “no tiene ninguna consecuencia sobre la estrategia global” de la compañía, que en 2011 vendió 3,8 millones de cajas de nueve litros de Havana Club, “la segunda marca más vendida en el mundo” de esta bedida, exceptuando al mercado norteamericano.

 Lawfare has now moved to the forefront of the mechanics of conflict.  It has generated its own following in the blogsphere.  See the blog Lawfare, for example.  And it has begun to develop its own rules and ethics, e.g., The Lawfare Project.  It had its origins in polycentricity and asymmetric warfare in a world in which physical destruction has become less acceptable but deprivations of life, liberty and property through norm based processes has been privileged.  It is the perfect vehicle for conflict in a world in which religion, corporations, states and other groups now strive to protect and expand their own "borders" but where borders are now no longer defined solely by reference to geographic or physical territory. See NGO Lawfare, NGO Monitor ("The tactic of lawfare was adopted at the NGO Forum of the 2001 Durban Conference, and is an integral part of the Durban Strategy which seeks to demonize and delegitimize Israel.").  But anyone can use it.  See, e.g., Philip Giraldi, Terrorizing through Lawfare, Anti-War, May 24, 2012 ("The preeminent promoter of the use of lawfare is the Israeli group Shurat HaDin, which on its website describes how its various courtroom victories have made it the “bane of anti-Israel groups throughout the world.”). With lawfare, the technologies of conflict have levelled the playing field as between states and non-state actors. Small states can be as powerful as large states--and corporations and other non-state actors can be more powerful than either.