Disappointing month for foreign investment in Cuba

And in perhaps the most bitter news for Cuba, the US Supreme Court has rejected a petition over the US trademark rights to the Havana Club rum name.  Given that the US accounts for 40 percent of the worldwide rum market, CubaExport and its French distributor partner Pernod Ricard, which distribute Cuba’s flagship rum to more than 80 other countries around the world but not in the US yet, had hoped the US Patent and Trademark Office (USPTO) would hold their seat in the US market until the embargo is eventually lifted.  That’s  because CubaExport had registered the US rights to the name in 1976 (after the prior owner, who’s rum distillery was expropriated by the Cuban government, failed to renew the US trademark rights in 1973), and renewed its rights every ten years thereafter in order to keep its rights current.

Two decades and no US imports from Cuba later,  Pernod Ricard’s competitor (and reigning worldwide rum distributor) Bacardi started bottling its own Havana Club rum.  Pernod Ricard responded by suing Bacardi for the trademark infringement. Then, in 1998, Bacardi triumphed by getting allies in Congress to pass a rider, Section 211 of the 1999 Omnibus Appropriations Act, to block registration and renewal of trademark rights associated with expropriated Cuban properties  (without “consent” of the “original owner” of the trademark), and to even block a US court from hearing a complaint on their behalf.    

In pictures: Cuba's economy

Pernod would likely have argued in court that the new law didn’t apply because the original owner of the Havana Club label had failed to renew their trademark rights in the US and thus was no longer considered the original owner, but it never got the chance, since Section 211 forced a Florida court to throw out the pending suit by Pernod Ricard against Bacardi.  Then, when CubaExport tried to pay for the Havana Club rights renewal in 2006, as it had done for three decades, Section 211 now prevented the USPTO from accepting the payment.

The Havana Club rum dispute remains as obscure as ever to the larger American public. It’s simply too complicated, and there isn’t a big enough constituency to care.  And that’s the real shame.  Thanks to a backroom deal on a fast-moving, must-pass bill , the intended targets aren’t the only losers.  The United States’ sterling reputation for intellectual property rights protection has taken a hit, and if renewed threats of retaliation by Cuba bear out, US businesses that have nothing to do with the row and enjoy trademark protection in Cuba today could lose that protection.  Whatever one thinks of the Cuban government’s expropriation of businesses in the early days of the Revolution (and the American business community that overwhelmingly opposes Section 211 is surely no fan), it's hard to see how following Cuba’s usurping example is really the answer.

– Anya Landau French blogs for The Havana Note, a project of the "US-Cuba Policy Initiative,” directed by Ms. Landau French, at the New America Foundation/American Strategy Program.

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