Industry Alerts

Bacardi and Congress Seek Answers from Administration

Following initial imposition of the United States embargo against Cuba in 1962, Congress passed a law known as the “Bacardi Act” in 1999 to protect trademarks related to companies that had their assets confiscated by the Cuban government. [F/N 1]

As reported last month, in an ironic turn of events, the Administration recently approved a license to allow Cubaexport, a Cuban government-owned company, to engage in transactions necessary to renew and maintain the Havana Club trademark registration with the U.S. Patent and Trademark Office (USPTO). [F/N 2] The Administration’s move was a serious slap in the face to Bacardi, the namesake of the Bacardi Act, which had its assets confiscated by the Cuban government in 1960.

Earlier this month, Bacardi announced that it filed a Freedom of Information Act (FOIA) request with the Treasury Department, seeking information on the Administration’s decision to allow the Cuban government to renew and maintain the Havana Club trademark. [F/N 3] The request reportedly seeks all documents, communications, and files created, used, or maintained by the President, his National Security Council, the State Department, Treasury Department, and others relating to the trademark registration.

Bacardi’s announcement included this statement from its vice president and general counsel:

“When the highest and most powerful government agencies are not transparent about critical changes in policy, the public has the right and the responsibility to use FOIA requests and other tools at their disposal to hold the government accountable for its actions.”

Various members of Congress apparently agree with Bacardi. Last week, the U.S. House of Representatives Judiciary Committee, Subcommittee on Courts, Intellectual Property, and the Internet held a hearing on “Resolving Issues with Confiscated Property in Cuba, Havana Club Rum and Other Property.” [F/N 4]

In his opening statement at the hearing, Subcommittee Chairman Darrell Issa noted:

“Integrity in our trademark system is fundamental to property rights in the United States. The decision to grant the Havana Club trademark to the Cuban government decades after it was effectively stolen during the revolution is an act that deserves scrutiny by the Committee.”

The hearing focused on the Administration’s decision to allow Cubaexport to renew and maintain the Havana Club trademark registration in the United States. A senior Bacardi executive was among those providing testimony, and he explained the history of how Bacardi acquired the rights to Havana Club rum from the Arechabala family, which founded the Havana Club brand in 1934 until its confiscation by the Castro regime in 1960.

In a prepared statement, a State Department representative advised that the Treasury Department requested guidance on how to handle Cubaexport’s application for a specific license authorizing transactions with the USPTO related to Cubaexport’s renewal and maintenance of the Havana Club trademark, and that the State Department recommended that the Treasury Department issue the license. [F/N 5]  

State Department testimony at the hearing also characterized the Havana Club trademark case as a dispute between two foreign parties, the resolution of which the State Department believes is somehow promoted by granting the registration at issue to Cuba. But this ignores the fact that Bacardi has a factory and other operations inside the United States, which employ well over 1,000 U.S. citizens in Puerto Rico and Florida, pays taxes to the U.S. Government, and makes other contributions to the U.S. economy. [F/N 6] The State Department’s position also ignores how the Administration effectively awarded the trademark registration to Cuba, who seized Bacardi assets, before a U.S. court can confirm the rightful owner of the mark.  It also fails to acknowledge how the Administration’s award of the trademark to Cuba legitimizes Cuba’s confiscation of Bacardi’s assets. 

Noticeably absent from the hearing was a representative from the Treasury Department.

Many questions remain unanswered following the hearing.  Did the USPTO hold the Havana Club trademark in suspense, well after Cubaexport was previously denied a license to renew the mark, to keep the trademark on the table for use in U.S. negotiations with Cuba? Was the Administration’s sudden volte-face and consent to Cuban control over the trademark part of a quid pro quo between the Administration and Castro Regime? And relatedly, what is the Administration’s plan to resolve the over five thousand claims by U.S. persons that remain pending against the Cuban government for confiscated property.

*   *   *

Front Page Photo Credit: Cropped image from “A small cab rides down the street in Havana, Cuba. Bacardi Rum Building is the tall building in the background.” The Library of Congress, Carol M. Highsmith Archive.

[1] See Section 211 to Omnibus Consolidated and Emergency Supplemental Appropriations Act, 1999, Pub. L. No. 105-277, § 211(a)(1), 112 Stat. 2681-88, as implemented at 31 C.F.R. § 515.527(a)(2) (“No transaction or payment is authorized or approved pursuant to paragraph (a)(1) of this section with respect to a mark, trade name, or commercial name that is the same as or substantially similar to a mark, trade name, or commercial name that was used in connection with a business or assets that were confiscated, as that term is defined in §515.336, unless the original owner of the mark, trade name, or commercial name, or the bona fide successor-in-interest has expressly consented.”).

[2] See https://defensetradelaw.com/2016/01/16/administration-slaps-bacardi-for-castro

[3] See “Bacardi seeks FOIA information from U.S. Department of Treasury in decision granting trademark registration of Havana Club to Cuban government,” available at http://www.bacardilimited.com/news/359

[4] See U.S. House of Representatives Judiciary Committee, Subcommittee on Courts, Intellectual Property, and the Internet Congressional held a hearing on “Resolving Issues with Confiscated Property in Cuba, Havana Club Rum and Other Property,” February 11, 2016, available at http://judiciary.house.gov/index.cfm/2016/2/resolving-issues-with-confiscated-property-in-cuba-havana-club-rum-and-other-property; See also “Bacardi executive takes the witness stand as part of the U.S. House of Representatives Subcommittee on Courts, Intellectual Property, and the Internet,” available at http://www.bacardilimited.com/news/360

[5] See prepared statement of Kurt Tong, Principal Deputy Assistant Secretary, Bureau of Economic and Business Affairs, Department of State, available at http://judiciary.house.gov/index.cfm/2016/2/resolving-issues-with-confiscated-property-in-cuba-havana-club-rum-and-other-property

[6] See e.g., www.visitcasabacardi.com, www.linkedin.com/company/bacardi/careers, www.bacardiusa.com/home/default.aspx

___________________

*The above is not intended as an exhaustive list of restrictions that may apply to a particular transaction nor advice for a specific transaction because the specifics of an individual case may implicate application of other U.S. laws as well as foreign laws that carry added or different requirements.  In addition, U.S. export control and sanctions laws are frequently subject to change.  Such changes can affect the continued validity of the information above, which is based on U.S. law existing as of February 16, 2016. For these reasons, assistance from a qualified attorney competent to advise on such matters is highly recommended. Matthew A. Goldstein is an International Trade Attorney in Washington D.C. licensed to practice in the District of Columbia.  He can be reached at (202) 550-0040 and Matthew@GoldsteinPLLC.com

Categories: Industry Alerts, OFAC

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