Bloomberg News

Pernod Dealt Setback by Top U.S. Court on Havana Club Rum

May 14, 2012

Pernod Ricard SA (RI), which sells Havana Club rum in every country except the U.S., was dealt a blow in efforts to sell the liquor in the American market after the U.S. Supreme Court decided not to intervene in a clash over rights to the name.

The justices today left intact a U.S. government agency’s rejection of a bid by Cuba’s state-owned Cubaexport to renew its U.S. trademark on the Havana Club name.

Pernod has an agreement with Cubaexport dating to 1993 under which it can sell Havana Club in countries other than in the U.S., where it is prevented from doing so by an embargo on goods produced in Cuba. Bacardi Ltd. has sold a Puerto Rican-made rum under the Havana Club name in Florida since 2006.

Pernod and Bacardi, based in Hamilton, Bermuda, have been fighting since 1994, when Bacardi applied for a U.S. trademark for its rum. Paris-based Pernod, which has been trying to position itself to sell rum in the U.S. under the Havana Club name should the American embargo on Cuban goods be lifted, said today in an e-mailed statement that it would instead start selling a new rum, Havanista, in the U.S. if the ban is revoked.

Havanista is “specifically aimed at the U.S. market” and will “benefit from the same high-level production processes and quality requirements as the Havana Club range,” Pernod said.

Trademarks Unenforceable

Pernod Ricard won’t speculate on “if and when the embargo will be lifted,” Chief Executive Officer Pierre Pringuet said today on a conference call.

The U.S. Treasury Department’s Office of Foreign Assets Control refused to renew Cubaexport’s trademark, relying on a 1998 law making trademarks confiscated by the Cuban government unenforceable. A federal appeals court in Washington upheld the decision. The law has been applied only to the Havana Club mark.

A different federal appeals court ruled against Pernod on a separate issue in August. It said consumers wouldn’t be confused into thinking Bacardi’s Havana Club rum was made in Cuba because the label says it is made in Puerto Rico.

Pernod said today it won’t pursue further appeals against the ruling, which has cost “several million dollars.”

Pernod sells the Havana Club brand in more than 120 markets outside the U.S., it said. The Supreme Court’s action doesn’t confer any right to the trademark on any third party.

Pernod shares fell 1.3 percent to 78.69 euros as of the 5:30 p.m. close of trading in Paris today.

The Supreme Court case is Empresa Cubana v. Department of the Treasury, 11-945.

To contact the reporters on this story: Greg Stohr in Washington at gstohr@bloomberg.net; Clementine Fletcher in London at cfletcher5@bloomberg.net

To contact the editor responsible for this story: Steven Komarow at skomarow1@bloomberg.net


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