Blame it on Mojitos

Janet Babin Nov 30, 2006

KAI RYSSDAL: We’re not quite in the right season for ’em anymore, but Mojitos have set rum sales in the U.S. on fire. It’s second only to vodka in popularity. Which raises the stakes in a dispute between two companies over the trademark of a legendary Cuban rum. From the Marketplace Innovations Desk at North Carolina Public Radio, Janet Babin reports:


JANET BABIN: To understand the Cuban trademark war between two rum makers, it helps to have experience with the stuff. Preferably, the good stuff.

NICK ROBINS: OK, let’s see what we got here. . . . All right.”

Duke visiting scholar Nick Robins got this aged Cuban sipping rum in Cuba, during one of his many visits. It’s caramel colored with an inviting taste, even for someone not used to hard liquor in the afternoon.

ROBINS:“That’s smooth, huh? And as they say, there’s more where that came from.

But not much more, if you’re an American. The U.S. imposed an embargo against Cuban goods decades ago, and Florida recently announced plans to strengthen enforcement against offenders. And Robins says that’s part of Cuban rum’s popularity — its forbidden taste is steeped in the island’s culture:

ROBINS: The way we are into our beer or our football, the Cubans are into their rum and their baseball. It is part of the identity.

Just who owns the real identity of Havana Club Rum in the U.S. market is what’s behind the battle between France-based Pernod-Ricard, its Cuban partner Cubaexport and Bacardi USA. Pernod has made Havana Club Rum in Cuba for more than a decade, and sells it throughout the world.

Bacardi USA began selling its own version of Havana Club Rum in Florida in August, after the U.S. Patent and Trademark Office refused to renew Pernod’s Havana Club trademark. Bacardi spokesman John Gomez says Bacardi bought the real Havana Club recipe and should get the trademark:

JOHN GOMEZ: Bacardi does own the rights to Havana Club. Bacardi purchased the rights in the mid-90s from the Arechabalas family.

That family made the rum in Cuba from the 1930s to the 1960s, when it fled Fidel Castro’s regime. Intellectual property attorney Robert Muse has worked with Pernod in the past. He says the Patent Office decision about Havana Club’s trademark was based on a congressional provision passed in 1998. It prevents the U.S. from honoring trademarks of businesses confiscated by the Cuban government.

Muse calls it the Bacardi law:

ROBERT MUSE: It has no support. It’s an egregious example of special-interest legislation by a non-U.S. company to procure an anticompetitive benefit in a rum competition.

Muse says the Patent Office decision could threaten the trademark stability of hundreds of U.S. products sold overseas. Despite the embargo, some 300 U.S. brands have the right to sell products in Cuba, from Tyson Chicken to Wrigley’s gum. Muse says this could weaken brand enforcement for those companies.

MUSE: Cuba under international law is now free to invalidate, cease registering, or take any other actions against U.S. trademarks.

Bacardi doesn’t have and doesn’t need a trademark to sell Havana Club in the U.S. But it could run into another kind of legal trouble. While Pernod’s rum is made in Cuba. Gomez says Bacardi’s . . .

GOMEZ: . . . It’s, uh, made in Puerto Rico.

But it’s called Havana Club. That could lead consumers to believe they’re buying Cuban rum. Cardozo law professor Justin Hughes says it’s illegal to market a product that’s geographically misleading:

JUSTIN HUGHES: Havana Club on a product that is rum not from Cuba, rum from the Dominican Republic, or rum from Jamaica might be deceptive.

But Bacardi spokesman Gomez says consumers are smarter than that:

GOMEZ: We really give our consumers a lot of credit for being able to read the label and see that it’s very obvious that it comes from Puerto Rico.

Pernod has filed a federal lawsuit against Bacardi for allegedly misleading consumers about where its rum is made.

According to the Distilled Spirits Council, rum brought in almost $1.8 billion in 2005, up 5.5 percent over the year before. Bacardi continues to sell Havana Club in Florida, and is considering selling it in other states too.

In Durham, North Carolina, I’m Janet Babin for Marketplace.

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