SANTA BARBARA NEW-PRESS
Sunday, July 8, 2001
VOICES
Spirited conflict brings U.S. foreign policy to crossroads
A RUM DEAL
Comment By:
Kenneth Brown
Lurking in the shadows of recent and highly publicized foreign policy issues facing the United States is another potential pitfall, this one involving intellectual property rights and the defense thereof.
A World Trade Organization (WTO) panel issued a preliminary ruling recently on whether the U.S. violated a global agreement when Congress passed a provision inconsistent with the U.S.'s international trade commitments on protection of intellectual property.
The debate is particularly sensitive because it involves Cuba.
The U.S. embargo on trade with Cuba is well known and recognized, but in this case the anti-Cuban sentiment among American politicians has effectively stepped on the toes of other nations with whom we share better relations. A special interest provision slopped into a massive
appropriations bill did its best to bypass the U.S. Patent and Trademark Office (USPTO) and award a potentially lucrative trademark to the
Bermuda-based Bacardi beverage firm (major soft money contributor to U.S. political parties).
For many decades, before Fidel Castro seized power, the Arechabala family of Cardenas
manufactured and sold an exquisite rum called Havana Club. The Arechabalas;, however, failed to renew a U.S. trademark on the Havana Club name more than a decade after they left Cuba.
Cuba export, a Cuba-based company, was granted the trademark by the USPTO without opposition in 1976. And in 1993,
Cuba export formed a lucrative worldwide venture with the French distiller
Pernod Ricard to market Havana Club rum worldwide.
Bacardi claims to have acquired the Havana Club trademark directly from the Arechabala family - after the beverage giant announced it would market its own Havana Club rum in the U.S. The dispute between Pernod and Bacardi ended up in court, but, as the case progressed, along came Section 211.
Section 211 of the Omnibus Appropriations Act of 1999 (introduced by then Florida Sen. Connie Mack) effectively immunized Bacardi from being found guilty of trademark infringement, no matter how egregiously illegal its actions were before passage of the provision. The law nullifies any Cuban-owned U.S. trademark registrations without the consent of the original owners. In this case, the original owners of Havana Club allowed the trademark to lapse.
This precedent is dangerous because the U.S. has a history of publicly promoting the Agreement on Trade Related Aspects of Intellectual Property (TRIPs). TRIPs is an agreement by which all members of the WTO commit to abide by laws that protect intellectual property.
It appears to the naked eye that Section 211 was custom-tailored to secure the U.S. rights to Havana Club for Bacardi, especially since Bacardi used "backdoor" legislative maneuverings to render the
Cuba-Pernod trademark claim defenseless. It appears that most lawmakers were simply unaware of the global implications under TRIPs.
With Section 211 on the books, we also never would have known how the U.S.. courts would have ruled in the
Pernod/Bacardi case because the judicial system never got the chance. Once Congress adopted the provision, not even the U.S. Supreme Court would hear Pernod's case.
Recently, however, the WTO panel found that Section 211 denies trademark holders
accessed to the U.S. courts system and prevents them from defending their rights in court. This point is contrary to what is required under TRIPs and undermines the U.S.'s reputation as a global champion of intellectual property rights.
Section 211 will not just impact a few companies, it affects intellectual property owners worldwide. It also bodes ill for U.S. interests hoping to maintain established brand-name trademarks (i.e. McDonald's, Coca-Cola) in Cuba.
But now that the WTO has ruled that certain elements of Section 211 violate TRIPs, the U.S. Congress must affirm our
country's leadership on intellectual property and trade rights by repealing Section 211 immediately, and the U.S. government must
pledge to lead by example on these issues in the future.
Kenneth Brown is president of the Alexis de Tocqueville Institution, a non-partisan, nonprofit think tank based in Arlington, VA. The Alexis de Tocqueville Institution's policy research topics include international trade, immigration and economic policy.
