On August 6, the World Trade Organization (WTO) ruled in favour of the European Union in a dispute with the United States over a long-running legal battle between alcoholic beverage giants Bacardi and Pernod Ricard.
The WTO sided with EU objections to an American law, known as Section 211.
This law denies protection for trademarks linked to businesses confiscated by the Cuban government since the 1959 communist takeover.
Bacardi has used the 1998 Section 211 law in its strategy to keep control of American rights to the "Havana Club" rum trademark away from Havana Club Holding, a joint venture between French firm Pernod Ricard and the Cuban government.
According to the panel, the Section 211 violates WTO rules protecting intellectual property, because it prevents parties from accessing American courts to settle a trademark dispute, thereby stripping WTO members of rights set out under the WTO's Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS).
The European Commission welcomed the ruling, however, it will appeal part of decision because the WTO panel concluded that "trade names are not covered by the TRIPS discipline and that TRIPS doesn't regulate the question of the determination of the ownership of intellectual property rights."
"This very narrow interpretation of TRIPS could significantly reduce the level of trademark protection around the world by leaving each WTO member complete liberty on determining who is the owner of trademark as long as it respects the procedural requirements of TRIPS," the Commission said.
According to the Commission, the ruling paves the way for Pernod Ricard to take up the case in the US courts.
Section 211 prevents U.S. courts from recognising or enforcing trademarks similar to those used in connection with Cuban businesses or assets confiscated by Castro, unless the original owner has given consent.
The Havana Club trademark was confiscated by the Cuban revolutionary government in 1960 from its original owners, Jose Arechabala S.A.
The Arechabala family continued to own the US registration of the Havana Club trade name through 1973, when they allowed ownership to expire.
The Cuban-owned company that took over the Arechabala family's property in 1960 applied for the rights to the name in the United States and took possession in 1976.
In 1993, Pernod Ricard and the Cuban-owned company formed Havana Club Holding, a joint-venture to combine Pernod's distribution network with the Cuban company's rights to the Havana Club name and sell this brand of rum in all parts of the world except the US, where sales are prohibited by the American embargo against all Cuban imports.
Pernod Ricard wanted to hold onto US registration of the Havana Club name in case the embargo is ever lifted.
The United States and Cuba have agreed to recognise each other's intellectual property rights under the Inter-American Trademark Convention.
In 1994, Bacardi tried to register the Havana Club mark in the United States, but failed because of Havana Club Holding owned it.
However, in 1996, Bacardi began selling Havana Club rum, distilled outside of Cuba, prompting Havana Club Holding to file a lawsuit.
In 1997, Bacardi reached an agreement with the Arechabala family to pay them for the rights to the name, and argued that they are the rightful owners of the name.
Havana Club Holding disagreed, citing its own U.S. registration, and the dispute continued through the courts.