Updated 5:33 p.m.
A divided appeals court in Washington today ruled in favor of the U.S. Treasury Department's refusal to renew a Cuba company's trademark for "Havana Club" rum, marking the latest chapter in a long fight between Pernod Ricard and rival Bacardi Ltd. over use of the mark.
In a 2-1 decision, a panel of the U.S. Court of Appeals for the D.C. Circuit said a change in the law in 1998 prohibited both new registration of trademarks and renewal of previously registered marks connected to certain Cuban companies. The U.S. Patent and Trademark Office in 1976 first approved Cubaexport's application for the the Havana Club trademark.
Judge Brett Kavanaugh and Senior Judge Harry Edwards said today in the appeals court ruling that Cubaexport had no perpetual right to renew the mark. Any right to renew the Havana Club trademark, the judges said, was “expressly revocable at any time” because of federal regulations involving certain transactions with Cuba.
“In our judgment, the government’s express and longstanding revocation authority devastates Cubaexport’s argument that it somehow had a ‘vested right’ to perpetual renewal of the trademark,” Kavanaugh said in the opinion for the majority.
Writing in dissent, Senior Judge Laurence Silberman said “it seems clear that the Patent and Trademark Office must renew a trademark when requested, so long as the holder pays the usual fee and submits an affidavit describing the mark’s use or explaining its non-use.”
The majority opinion, Silberman said, is “unsound doctrinally, both with regard to principles of statutory interpretation and to basic tenets of administrative law.”
Lawyers for Cubaexport, represented in the appeals court by Debevoise & Plimpton, argued the 1998 legislation that is the centerpiece of the dispute bars only new registration of trademarks and that the law cannot be applied retroactively. The U.S. Chamber of Commerce has questioned the legitimacy of the law, saying it threatens the intellectual property rights of American companies in other countries.
Debevoise litigation partner David Bernstein in New York argued for Cubaexport in the D.C. Circuit in September, going up against the Justice Department’s Jonathan Levy, a Civil Division appellate lawyer.
Pernod Ricard Group and the Cuban company Corporation Cuba Ron S.A. entered a joint venture, Havana Club International, in 1993 to sell Havana Club rum. Cubaexport, a state-owned company in Cuba, is the Havana Club trademark registrant in the United States.
In a statement (PDF) this afternoon, Pernod Ricard general counsel Ian FitzSimons said the company “strongly disagrees" with the court’s decision but is encouraged by Silberman’s dissent. “It is surprising that a U.S. court would allow an intellectual property right to be destroyed retroactively by refusing to allow renewal of this trademark registration,” FitzSimons said.
Bernstein, a member of Debevoise's intellectual property and international dispute resolution groups, said Cubaexport will seek a rehearing before the full D.C. Circuit. Beyond the legal issues in the ruling, which Bernstein called "bad law," he said the decision is bad policy.
"It is particularly distressing that the United States, a country that has long stood for the protection of intellectual property in global commerce, would be the country in this story that is taking steps to retroactively destroy property rights," Bernstein said in an interview.
A Bacardi U.S.A. spokeswoman, Patricia Neal, said in a statement that the company applauds the D.C. Circuit decision.
"With this ruling, the United States reaffirms the traditional principle that confiscation of trademarks in one country has no effect on another," Neal said. "Cuban confiscation of trademarks without compensation to the original owners does not extend to U.S. trademarks."
Neal said Bacardi is "thrilled with the decision of the U.S. Court of Appeals. As we have maintained all along, Bacardi is the legitimate owner of the brand.”