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Legal Fight Brews Over Sales of Havana Club Rum

  • Associated Press

FILE - A bartender pours Cuban Havana Club rum as he prepares a mojito at the Floridita bar in Havana, June 8, 2016. Two liquor giants are escalating a 20-year fight to secure the rights to sell Havana Club rum in the United States when the Cuban embargo finally ends.

FILE - A bartender pours Cuban Havana Club rum as he prepares a mojito at the Floridita bar in Havana, June 8, 2016. Two liquor giants are escalating a 20-year fight to secure the rights to sell Havana Club rum in the United States when the Cuban embargo finally ends.

Two liquor industry giants are escalating a 20-year fight to secure the rights to sell Havana Club rum in the U.S. when the half-century-old embargo on Cuban goods ends.

Bacardi is launching sales nationwide for the Havana Club it produces in Puerto Rico, while competitor Pernod Ricard is expanding the distillery it shares with Cuba's government to prepare for the day when their brand can be sold in the U.S.

Both brands hope that the fresh marketing campaigns would help them capitalise on consumers' growing appreciation for premium rums, as well as the excitement felt in the United States for easier travel to Cuba and its rum and cigars that were once banned in the country.

Similar corporate disputes are typically resolved by establishing who registered the brand first, but this case is more complicated and has been defined by bitterness between Cuban exiles, based mainly in the United States, and Cuba's government.

Bacardi

Bacardi, a drinks brand that is still privately held by its founding Cuban family, is seeking the rights to its own Cuban trademark that it lost when the company fled Fidel Castro's regime.

Bacardi had bought the name "Havana Club" and a distillation formula handwritten from memory by the Arechabala family, who created the brand in Cuba in 1935, but lost control to Castro's government in 1960.

Court records show Bacardi originally paid 1.25 million US dollars to the Arechabalas for the Havana Club rights.

The company's filings in multiple federal lawsuits and trademark board appeals bristle with indignation and describe Castro's troops forcibly confiscating the Arechabalas' office property, when they left the country.

When the Arechabala family let the trademark registration lapse after their company was taken over, the Cuban government filled the gap and registered its US trademark in 1976.

Cuba exported their Havana Club mostly to Eastern Europe until a 1993 joint venture with Paris-based Pernod Ricard brought it to the attention of the rest of the world.

Now it's sold in over 120 countries, except the United States - the world's biggest rum market.

Bacardi, on the other hand, has continued to sell its Havana Club in a handful of US states since the mid-1990s.

Trademark fight

This is by no means the first example of a lawsuit filed by Barcardi, who ultimately lost its claim to the Havana Club trademark in Spain after lengthy litigation there, adding to the confidence of those representing Pernod Ricard.

Ian Fitzsimmons, General Counsel for Pernod-Ricard said he was "very confident" they will secure the rights to sell the rum in the U.S., as they had "won everywhere else in the world."

U.S. courts generally have ruled against Cuba in this case, but the island's government has succesfully pursued renewal for its Havana Club registration, arguing the U.S. could neither renew nor cancel the trademark under the embargo.

In spite of decades of icy relations, the US Patent and Trademark Office appeals board regularly declined Bacardi's request to have Cuba's registration canceled, saying it lacked the authority to answer Bacardi's politically charged complaints.

In its response to Bacardi's latest legal challenge, Pernod Ricard and the Cuban government say the US trademark for Havana Club had been abandoned by its originators after Cuba "assumed managerial control" of the Arechabalas' company.

And as relations between the U.S. - the world's largest rum market -- and Cuba -- the world's traditional producer of the drink -- thaw, it seem likely that the battle will continue.

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