Havana Club Rum: Case Analysis

The Havana Club trademark dispute1 between United States and Cuba has been one of the most prolonging, controversial and potentially acrimonious cases for the World Trade Organization (WTO) till date. In this case Cubaexport (official name being Empresa Cubana Exportadora de Alimentos y Productos Varios) and French firm Pernod Ricard, jointly owning two corporations, i.e., Havana Club Holding, S.A. and Havana Club International S.A., (hereinafter, the Plaintiffs) sued Galleon S.A., Bacardi-Martini USA Inc., Gallo Wine Distributors, Inc., G.W.D. Holdings, Inc. and Premier Wine and Spirits (hereinafter, the Defendants), in 1996 at the U.S. District Court for the Southern District of New York, claiming trademark infringement regarding the use of the famous Havana Club mark.

Factual matrix:

The Cuban corporation José Arechabala S.A. (JASA), owned and controlled by the Arechabala family until 1960, held the Havana club trademark, manufactured the rum in Cuba, and sold it in Cuba and overseas. Prior to the Cuban Revolution in 1959, Havana Club was one of the largest and popular selling rums in the world, with the United States being the major buyer. In early 1960, the Cuban government forcibly seized all of JASA's assets and property without an offer to repay or compensate them. Pernod-Ricard, French international spirits company, decided to enter into a joint venture agreement with a Cuban State-owned entity for the distribution and marketing of rum under the name of Havana Club.

In 1963, the United States imposed a restraint on Cuba through the Cuban Assets Control Regulations (CACR). In 1996, the United States Congress enacted the Cuban Liberty and Democratic Solidarity Act (LIBERTAD) which codified the regulations implementing the Cuban restraint. Cubaexports, a state-owned enterprise, exported Havana Club rum, primarily to the Soviet Union from 1972 to 1993. They had registered the 'Havana Club' trademark with the United States Patent and Trademark Office (USPTO) in 1976. Cubaexport decided to seek a foreign partner for its Havana Club rum business in 1993; in this regard, Havana Rum & Liquors, S.A. (HR&L) was formed under the Cuban laws.

Consequently, HR&L entered into a joint venture agreement, which formed Havana Club Holding, S.A. (HCH), a Luxemburg Corporation, and Havana Club International, S.A. (HCI), a Cuban corporation. Cubaexport then assigned its U.S. trademarks to HR&L, which in turn assigned them to HCH in 1994. HCH renewed the...