June 18, 2001
Rum war tests U.S. foreign policy
The Arechabala family manufactured in Cuba the exquisite Havana Club rum.
Concealed in the shadows of more-highly publicized foreign-policy issues is the defense of intellectual property rights and a recent World Trade Organization panels ruling that a provision n an appropriations bill is inconsistent with the United States's trade commitments to protect intellectual property.
The issue is particularly sensitive because it involves Cuba and the United States has been a global champion of protecting intellectual property.
The U.S. embargo on trade with Cuba is well-known and recognized, but in this case, the anti-Cuban sentiment among American politicians rolled over some nations with which we share better relations.
The provision involved was slipped into a massive appropriations bill. It bypasses the U.S. Patent and Trademark Office and courts to award a potentially lucrative trademark to the Bermuda-based Bacardi beverage firm (a major contributor of soft money to U.S. political parties).
For Many decades, before Fidel Castro seized power, Cuba's Arechabala family in Cardenas manufactured and sold an exquisite rum called Havana Club. However, after leaving Cuba, the family failed to renew its U.S. trademark on the Havana Club name. In 1976 the Patent and Trademark Office awarded the trademark to Cubaexport in Cuba. And in 1993, Cubaexport formed a lucrative worldwide venture without the consent of the original owners.
Bacardi insists that it acquired the Havana Club trademark directly from the Arechabala family -- after the beverage gain announced that it would market its own Havana Club rum in the United States. So the dispute between Pernod and Bacardi ended up in court. As the case progressed, along came Section 211.
Section 211 of the Omnibus Appropriations Act of 1999 (introduced by then-Florida Sen. Connie Mack) immunized Bacardi from being found guilty of trademark infringement, no matter how egregiously illegal its actions may have been. The law nullifies any Cuban-owned U.S. trademark registrations without the consent of the original owners.
This sets a dangerous precedent because of the U.S. history of publicly promoting the Agreement on Trade Related Aspects of Intellectual Property. That is the agreement by which members of the WTO commit to abide by laws protecting intellectual property.
To the naked eye, it appears that Section 211 was custom-tailored to secure the U.S. rights to Havana Club for Bacardi, especially because Bacardi maneuvered through a legislative "back-door" to render the Cuba-Pernod trademark claim defenseless. Most members of Congress, it appears, were simply unaware of the global implications.
With Section 211 on the books, we won't know how the U.S. courts would have ruled in the Pernod/Bacardi case. Once Congress acted, not even the U.S. Supreme Court would hear Pernod's case.
The WTO panel found that Section 211 denies trademark holders access to the U.S. courts, preventing them from defending their rights. That is contrary to what is required under the international agreement, and it undermines the U.S. position of championing intellectual property rights.
We are concerned that the panel did not find other elements of Section 211 to be inconsistent with the agreement. The ruling will impact not just a few companies; it affects intellectual property owners worldwide. It bodes ill for U.S. companies such as McDonald's and Coc-Cola trying to maintain established trademarks in Cuba.
The WTO process is far from over. We urge the European Union to appeal because we believe that many of the additional intellectual property issues can be resolved in the appeals process.
Now that the WTO panel has held that certain elements of Section 211 violate the international agreement. Congress immediately must repeal Section 211 and affirm U.S. leadership on intellectual property and trade rights. The U.S. government must lead by example on these issues.
Kenneth Brown is president of the Alexis de Tocqueville Institution in Arlington, VA.
