Friday, September 22, 2006

A Rum Business

AMERICAN business, at least the section closest to George W.Bush's heart, is hotting up the competition in the world chutzpah stakes. What do you do when you come up against a successful competing product? Simple - pinch the competitor's brand name.
It helps if you have an understanding legislature. On October 21, 1998 at the request of the Senator Connie Mack of Florida, the US Congress passed a federal budget bill with a little amendment tagged on, known as Section 211.
It is also being called the Bacardi Law.

What it says is that the US authorities can deny the right to renew a trade mark in the United States. So any US company would theoretically be free to appropriate a brand name that has proved a winner and use for its own inferior product. That sounds to me like the counterfeiting we hear about, when trading standards officers descend on Delboy down the market selling dubious designer-label gear and Brut after-shave just before Christmas. Only this time, it's all legal, officer.

The World Trade Organisation(WTO) has a Dispute Settlement Board which decided a few years ago that Section 211 was incompatible with WTO principles. But it seems it's one thing laying down the law to poor countries turning out cheapo goods or otherwise infringing WTO rules, another when a poor nation protests at what American business is doing. Cuba's UN ambassador has complained to the WTO's Dispute Settlement Board over the actions of the Bacardi company.

On July 28 the US Office of Foreign Assets Control denied a request for a specific license to renew the registration of the trademark Havana Club at the US Patent and Trademark Office. Havana Club is the Cuban rum which has been doing well in European and other markets.

Bacardi likes to use its Latin image in sales here, but even before the Cuban revolution it had transferred its distillery operations from Havana to Puerto Rico, in order to secure tariff benefits on US territory. The move allowed the firm to obtain a ruling in its favor to maintain the brand name when it left Cuba, registering its headquarters first in the Bermuda tax haven and then Miami.

Cuba had started to produce Bacardi rum again, but had to comply with international rules and stop using the name. Then about ten years ago, Havana Club overtook Bacardi sales in Italy, and became a serious competitor elsewhere. Claiming it had paid the Arechabala family for the rights to the Havana Club brand name, Bacardi began selling rum produced in the Bahamas by Galleon SA under the Havana Club name. Cubans say the Arechabalas went out of business long before and hadn't the name to sell. The company ceased production when Havana Club International, a joint venture between the Cuban Havana Ron y Licores company and Pernod Ricard of France took legal action to prevent the false use of its name.

I'm no connoisseur of rum. I rarely drink the stuff. But back in 1972 I spent a season working in what must be one of the country's biggest fish and chip restaurants, on the seafront at Morecambe. (Those familiar with my political background and the dramatis personae of post-war Trotskyism will be amused to hear it was the branch of the Blackpool-based Pablo's). Towards the end of the season as nights drew in and queues dwindled the manager would shut up shop and pour the Bacardi, in paper cups that we topped up with Coke or Limeade from the taps on the counter. Bacardi and Coke I found too sickly, so I preferred it with Lime. Even so, it didn't become my tipple of choice, but since it was buckshee, I wasn't complaining.

In 1992 I went on holiday with friends in the Czech Republic. Our little hotel in the sticks of Moravia had a limited range of bevvies, but Plazdroz (that's Pilsner Urquell to you, and what British pubs call a "Premium Lager") on draught at something like 20p a pint was fine. Only after my evening meal I fancied a "short" with my black coffee, and took to the local dark Tuczinska rum, which was cheap and cheerful, a bit like the sort of flavour you used to get in rum-and-butter toffee and similar confectionary.

"That is very bad", a relief barmaid called Renate said one evening when I was on my fourth or so. "Oh, it's not that bad," I assured her, feeling she was being unduly critical of her nation's product "No, all that coffee you are drinking, it is not good for you," Renate explained. At this I ventured to suggest she might like to accompany me back to England as a personal health carer, but she frowned that she did not understand my English and turned to another customer. My drunken leer has been known to have this sudden effect on comprehension.

Anyway, by way of a change, my drinking companions suggested we try the more expensive Havana Club which had pride of place on the top shelf. It was a clear, white rum. I can tell you it is definitely not confectioners' rum, and definitely not Bacardi. I'd say it was for the serious drinker. Even though, if I had to choose a rum it would be Cockspur, which I sampled at a party once, a friend having brought some back from Barbados (unfortunately, or perhaps fortunately, he had only brought along one bottle, or I could have developed a taste for the stuff). But like I say, I'm no rum expert.

In the case of Budweiser, the US company kept the Czech Budweiser-Budvar beer from being sold under its name for years (well, since 1939, which was a conveniant date for stopping Czechs doing business. Hitler had taken his prize from Munich, and the Bank of England was about to hand over the Czech gold reserve entrusted to its safe keeping to the Germans). After the fall of "communism" the US Budweiser company tried to buy the Czech breweries, but alerted by the Campaign for Real Ale the Czechs resisted, and now Czech Budweis-Budvar is sold in the US and Canada - but as "Czechvar".

Bacardi have mounted numerous court actions to get their hands on the Havana Club trademark, before taking advantage of the "Bacardi Bill". Meanwhile the European Union, which might conceivably have some brand names of its own to protect has let the United States keep setting new dates to comply with the DSB recommendations and regulations.
In 1999 Bacardi’s lawyers won a case in New York state using Section 211, but in in January 2004, the Trademark Trial and Appeal Board (TTAB) of the U.S. Patent and Trademark decided in favor of Havana Club International, which now sells its well-known rum in 80 countries., and against Bacardi-Martini's efforts to sell its own, non-Cuban version of Havana Club in the United States.

Meanwhile the Washington Post reported in 2002 how Florida Governor Jeb Bush was taking up Bacardi's case with the Patent and Trademark Office. The rum producer reportedly donated huge sums of money to the Republican Party. Senator Mel Martinez has been accused by the CREW anti-corruption group in Washington of accepting over $60,000 from Bacardi. The Post also reported on December 4 that Rodríguez-Marquez belatedly presented the necessary federal report showing that he had spent $500 million on "lobbying" since 1998. Besides that, Bacardi spent another $2.2 million contracting "lobbyists".

The president’s brother then wrote to James Rogan, director of the Patent and Trademark Office on Bacardi-Martini's behalf. asking that the expired patent (from Cubaexport) should be cancelled immediately." Rogan, appointed by President George W. Bush, met secretly with individuals from the governor’s office. Rodríguez-Márquez himself has acknowledged that he met with State Department authorities, contacts of Vice President Dick Cheney and White House political advisors.
HCI demonstrated that Havana Club was not confiscated, but the Arechabala family simply failed to renew the trademark and gave up the business when it faced financial difficulties in 1955. The Cuban firm took control of a company that was bankrupt.

The TTAB ruled last January that Bacardi’s attempt to invalidate HCI’s registration of the trademark had no legal basis because Cubaexport had registered the trademark in the correct way in Cuba and had transferred registration to the United States in 1976, three years after the Arechabala family had permitted its expiration. In 1993, Cubaexport and Pernod-Ricard formed HCI and renewed the trademark name.

Democrat Charles Rangel – who together with 14 other Congress members from both parties endorsed the bill – stated at the time how "Cuba and the United States have respected one another’s trademarks for the last 75 years. It is shameful to think that Congress can liquidate this area of cooperation in order to benefit one particular interest (that of Bacardi), at the expense of hundreds of U.S. citizens with trademark names."

The U.S.-based National Foreign Trade Council (NFTC), founded in 1914 by a group of US companies, and serving some 350 firms, is concerned that the Bacardi privilege could boomerang. NFTC president, Bill Reinshi has stated that more than 5,000 U.S. trademarks that have been registered in Cuba since 1918 and a further 400 registered since 1959 were at risk thanks to Section 211, "which infringes on the commitments reached with Cuba."

He added that U.S. trademarks that are registered in Cuba — including McDonalds, Pepsi, Coca-Cola and Nike — and global recognition of the same "are vitally important for the economy of the United States." For the first time in 40 years, these trademarks are appearing in Cuban warehouses, he said, but they are at risk because of 211, given that it gives the Cuban government the option of not respecting international treaties that protect trademarks registered by the Untied States in Cuba. President Fidel Castro said in 2001 that Cuba could sell Coca-Cola, Bacardi rum and Cuban anti-AIDS medicines patented by U.S. companies.

But the Bush administration is looking after Bacardi. Under orders from the State Department, J. Robert McBrien, director of its Patent Office, refused the Havana Club International joint venture the necessary license to renew ownership of the trademark on its patent and trademarks register, despite the fact that the company has owned the right to do so since 1974, when it paid the $500 fee required on time. The decision was based on laws surrounding the so-called "embargo" of Cuba. In this way, last August 8 the rum manufacturer was then able to announce that it would once again bring a rum called Havana Club onto the U.S. market.

And now for some more on the authentic Cuban product. With sound:

Labels: , , ,


At 12:34 PM, Blogger Dave said...

I got through a fair bit of the stuff this summer, because I was in Cuba for four weeks. It only cost £3 a bottle, and was clearly preferable to the not-very-nice local beer.

You can visit the historic old distillery in Havana, which is now a museum. There you can purchase a special overproof variety, at a premium hard currency price. And it is good, but will never replace aged single malt.

Anyway, bloody yanks. What a cheek, eh?

At 12:52 AM, Blogger AN said...

Most significnatly (for the Cuban economy), nearly all the major Cuban cigar brands have been copyrighted by non-Cuban companies, often selling cigars from Honduras in the USA with the same brands names as Cuban cigars sold in the rest of the world.

Should sanctions ever end, there will be a feeding fenzy for copyright lawyers sorting out the mess before cuban tobacco can again be sold in thr USA.


Post a Comment

<< Home