Rum battle moves to WTO

Date: 01/07/1999

By Simon Taylor

THE EU is poised to take the US to the World Trade Organisation over special rules designed to stop companies exploiting property confiscated during the Cuban revolution.

The move will come as a boost to French drinks multinational Pernod Ricard, which is locked in a legal battle with Bahamas-based rum-maker Bacardi over use of the valuable Havana Club trade mark. Both sides are fighting for the right to use the trade mark in the US' massive €1.3 billion rum market if and when the US ban on imports from Cuba is lifted.

Sources have confirmed that the European Commission intends to take the first step towards settling the issue via the WTO's dispute settlement body in Geneva this week.

A letter will be sent to the WTO announcing that the EU is seeking consultations with Washington over a section of its trade-mark law which the Union believes violates the TRIPS intellectual property convention. If the consultations are fruitless, the EU will start the lengthy process of getting a dispute settlement panel ruling.

The Commission believes Section 211 of the US legislation, which is designed to prevent companies profiting from trade marks and other property illegally confiscated during the Cuban revolution, violates the US' international obligations under the TRIPS accord.

EU officials say the legislation fails to ensure non-discriminatory treatment of all parties as required by TRIPS because foreign companies which take over Cuban assets are prevented from asserting their trade-mark rights in a US court.

Bacardi, which has set up a joint venture with the original Cuban family which owned the brand, argues that Section 211 has no impact on foreign firms' rights because US citizens cannot exploit any advantage from the trade-mark rules. They claim US companies face prohibitive sanctions under other aspects of anti-Cuban laws, including a €1-million fine or up to ten years' imprisonment, if they try to use confiscated trade marks.

But Pernod Ricard argues the law has already been used in the US to prevent the French firm selling rum under the Havana Club label. The Commission's confidence that it would win a WTO case has been boosted by an internal US trade department memo dated 30 October 1998 which admits that the legislation "violates our obligations under the TRIPS agreement".

Keyword: TRIPS intellectual property convention.