Pernod files against Bacardi
for Havana Club sales

BY GABRIEL MOLINA

ONE week alter Bacardi began to sell Havana Club rum in Florida, Pernod Ricard has filed another suit to prevent the company selling the product in U.S. stores.

The lawsuit, filed before the Federal Court of Delaware on Tuesday by the Pernod Ricard subsidiary in the United States, is in response to maneuvers by the George W. Bush government to favor Bacardi, a firm charged with buying Congress members and officials to achieve its aims.

The Pernod-Ricard lawsuit alleged that Bacardi Ltd is deceiving consumers by making them think that its Havana Club rum is made in Cuba. It accuses Bacardi of violating the Lanham Act, and also maintains that the company does not have rights to the use of the Havana Club trademark in the United States, according to an article in the Nuevo Herald daily.

"They are implying that this is a Cuban product, despite the fact that they know that it isn’t," stated Mark Orr, vice president of U.S. Affairs for Pernod Ricard. "An informed consumer will expect Havana Club to be made in Cuba, from Cuban sugar cane."

Patricia Neal, Bacardi spokesperson, refuted the Pernod representative and said that "the company intends to maintain its trademark."

Neal is taking refuge behind the decision of the discredited George W. Bush administration that allows Bacardi to use the famous Havana Club trademark in the United States. The maneuver coincided with an ex-official from the government being accused of having illegally accepted funds from that powerful company of Cuban origin.

Citizens for Responsibility and Ethics in Washington (CREW), a U.S. political corruption watchdog group, filed a complaint with the Federal Elections Commission (FEC) on August 7 against Bush’s former housing secretary and current Senator, Cuban-American Mel Martínez, of having illegally accepted more than $60,000 from the Bacardi beverage and rum company, which controls a good share of the world market for alcoholic beverages, for his 2004 Senate election campaign.

CREW fights against corruption in the U.S. government via creative litigation. It has recently stood out for exposing a corruption network in the U.S. Congress, created by Jack Abramoff, whose connections led to the resignation of Tom DeLay, majority leader in the House of Representatives and an ally of Cuban-American legislators who were also affected by the scandal.

The watchdog group is accusing Bacardi of violating FEC regulations by soliciting contributions from a list of the corporation’s distributors for Martínez’ Senate campaign, and for using corporate funds to pay for food and beverages at a May 11, 2004 campaign event.

The complaint says that employees of at least three of Bacardi’s distributors — Hunton & Williams, Chesapeake Enterprises and the MWW Group — made contributions to Martínez’ Senate campaign, responding to an appeal by the company.

Bacardi has already admitted to the FEC that it broke the law by using corporate funds to pay for an election campaign event, and was fined $750 for "failing to report in a timely manner on campaign contributions."

The CREW group said that Martínez violated election law by failing to identify the employer of Bacardi executives, including Eduardo Sardiña, chief executive officer of Bacardi USA, and Frederick Wilson, general counsel to Bacardi USA, who together contributed $5,000 to the Senate campaign. Likewise, CREW demanded that the FEC carry out an investigation and audit of Martínez’ 2003-2004 campaign for the Senate.

Melanie Sloan, CREW executive director, noted that the situation was "an archetypal example of how special interests use corporate money to buy influence in Washington."

In an apparent coincidence, the complaint was filed 24 hours before the Wall Street Journal published an article August 8 saying that Bacardi was about to re-launch the Havana Club rum brand in the U.S. market.

The U.S. Treasury Department cleared the way for Bacardi by denying the necessary license to renew trademark rights with the U.S. Patent and Trademark office to Havana Club International, a joint enterprise between French company Pernod Ricard and Cuban enterprise Havana Rum and Liquors. Havana Club International (HCI) distributes Havana Club rum all over the world except in the United States, where, in spite of owning the rights to the trademark since 1974, sale of the rum is prohibited by the U.S. blockade against Cuba – known in the United States as the embargo.

The long history of disregard for brand and patent laws came to a peak in 1996 when Bacardi introduced onto the U.S. market a rum called Havana Club produced in the Bahamas. Havana Club International filed a lawsuit, given that Cuba has owned the rights to the brand since 1974, transferred to HCI.

However, an April 13, 1999 ruling by Judge Shira Scheindling of a New York district court threw out the lawsuit, and Havana Club Holding (HCH) decided to appeal.

Scheindling’s ruling was based on Section 211 of the Budget Law approved by the U.S. Congress a few months earlier, in October 1998, described by analysts as a legislative move to benefit Bacardi.

The Cuban/French company decided to appeal to the Patents Office. At the request of the vice president of Bacardi, Jorge Rodríguez Márquez, Governor Jeb Bush James Rogan, president of the Office.

But although HCI won the appeal, the pressure continued and the Treasury Department maneuver to deny the license to prolong the right, allowed the Office to declare it extinguished. The Bush government’s decision this month is over and above the law.

Mel Martínez, who was Secretary of Housing and Urban Development at the time, together with fellow Cuban-American Congress members Ileana Ros-Lehtinen and the Díaz-Balart brothers, financed by Bacardi, were the architects of that legal freak (Section 211), which has been criticized by business organizations like the National Foreign Trade Council (NFTC). Bill Reinshi, its president, warned that there are currently more than 5,000 U.S. trademarks in Cuba vulnerable to being infringement, thanks to that private interest legislation. The business sector is concerned about the future of trademark rights being infringed on, with incalculable consequences.