World Trade Organization

• Author: International Law Group

The Appellate Body of the World Trade Organization (WTO) has reversed the earlier Panel decision in the U.S.-EC trademark dispute involving the ownership of the trademark "Havana Club" for rum. A Cuban family originally owned the "Havana Club" mark but they abandoned it in 1973. A company acquired it in 1976 and sold it to Pernod-Ricard, which is engaged in a joint venture with a Cuban company to market "Havana Club" rum.

The European Union (EU) brought its complaint in July 1999, claiming that U.S. law denied court access to trademark owners seeking to assert their intellectual property rights. The dispute focused on Section 211 of the U.S. Omnibus Appropriations Act [Pub.L. 105-277, Section 101(b), 112 Stat. 268]. It concerns trademarks and other commercial designations that are the same as, or substantially similar to, those related to businesses or assets confiscated by the Cuban Government on or after January 1, 1959.

Section 211(a)(2) provides that "[n]o U.S. court shall recognize, enforce or otherwise validate any assertion of rights by a designated national based on common rights or registration obtained ... of such a confiscated mark, trade name, or commercial name." Congress reportedly put this section in the Act at the request of Bacardi, Ltd., a Bermuda company, that wished to bar Havana Club Holdings (HCH) from enforcing the "Havana Club" trademark in the U.S.

The original Panel agreed with the EU that Section 211 violated the WTO Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS), and that Section 211 should not apply where the trade mark owner has abandoned the mark. Based on the Panel report, Pernod-Ricard could enforce the trademark in U.S. courts, and challenge Bermuda-based Bacardi over use of the Havana Club brand name.

Both the EU and the U.S. appealed. The Appellate Body essentially upholds the 1998 U.S. law which bars American courts from enforcing Cuban brand names for products of companies that were seized by the Cuban government after Fidel Castro took power.

In particular, the Appellate Body: (1) upholds the Panel's findings that Sections 211(a)(1), 211(a)(2), and 211(b) are not inconsistent with TRIPS; (2) finds that Section 211(b) is not inconsistent with Article 42 of TRIPS; (3) rules that Section...