Appeals court: 'Havana Club' doesn't mean 'made in Cuba'

Appeals court: 'Havana Club' doesn't mean 'made in Cuba'
South Florida Business Journal - by Paul Brinkmann
Date: Thursday, August 4, 2011, 4:30pm EDT

A federal appeals court in Philadelphia has ruled that Bacardi USA's use
of Havana Club labels for rum made in Puerto Rico does not represent
false advertising.

The U.S. Court of Appeals for the 3rd Circuit in Philadelphia ruled
Thursday that the label is not false advertising because it clearly says
the rum is made in Puerto Rico and, "taken as a whole, the label could
not mislead any reasonable consumer."

The court upheld previous rulings against Pernod Ricard USA LLCbizWatch
, which is trying to enforce licenses to the Havana Club name that were
granted to it by the Cuban government. Pernod Ricard sells Havana Club
rum outside the U.S.

Fidel Castro's revolutionary government seized the former Havana Club
distilleries and assets, without compensation, from the Arechabala
family in 1960. The government eventually sold or granted the use of the
name and family recipes to Pernod Ricard.

But, decades later, Bacardi paid the Arechabala family, in exile, for
the name and recipes. Bacardi began selling Havana Club rum, made in
Puerto Rico, in 2006.

Pernod Ricard alleged false advertising, and provided a survey that said
13 percent of consumers who viewed the label believed the rum was made
in Havana or Cuba.

But the Philadelphia court, and other courts, ruled that the phrase
"Havana Club" is not a misleading statement of geographic origin, under
the U.S. Lanham Act, when considered in the context of Bacardi's label.

"It appears that this false advertising dispute is a proxy for the real
fight the parties want to have, which is over the right to the exclusive
use of 'Havana Club' as a trademark," said the opinion released Wednesday.

The courts have ruled that "reasonable consumers" would not necessarily
conclude that the rum was made in Cuba, despite Pernod Ricard's survey
evidence.

In March, another appeals court ruled that the U.S. Office of Foreign
Assets Control acted lawfully in denying Pernod Richard's Cuban business
partner, Cubaexport, a license for renewal of the trademark.

"We disagree with the court's decision, which is unfair to consumers in
the United States who are being deceived by a product labeled "Havana,"
which has no connection whatsoever with Cuba," Pernod Ricard attorney
Ian FitzSimons said in a statement Thursday. "It is important to note
that this decision does not grant any right in the 'Havana Club'
trademark to Bacardi"

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