Category Archives: wine and spirits

Trademarks: Why “Havana Club” Rum is Okay But “Old Havana” Rum is Not.

A recent USPTO decision highlights a curious distinction between two rum brands that reference “Havana” in their names.  Both rums are made outside of Cuba but only one was allowed to have a registered trademark that includes “Havana.”

On February 9, 2011, the U.S. Court of Appeals for the Third Circuit had the final word on the lengthy dispute between Pernod Ricard USA, LLC and Bacardi U.S.A., Inc. over use of “Havana Club” to sell rum in the United States.   “Havana Club” was the name of a popular rum from Cuba produced by the Arechabala family that was exported to the U.S.   In 1960, after the Communist revolution, the Cuban government expropriated their family business without compensation.  Ultimately, the Cuban government sold certain U.S. trademark rights in the “Havana Club” name to Pernod notwithstanding the U.S. trade embargo on Cuban goods.  In 1997, however, the government agency that oversees the trade embargo retroactively revoked its permission for the transfer and the U.S. trademark registration subsequently expired.  Notably, Pernod was selling, and continues to sell, “Havana Club” rum outside the United States.

During this same time period, Bacardi purchased from the Arechabala family any remaining rights they might have had to the “Havana Club” mark and the related goodwill of the business, along with any rum business assets the family owned.   In August 2006, just days after the old trademark registration for “Havana Club” expired, Bacardi began selling rum in Florida under the “Havana Club” brand name. The rum was distilled in Puerto Rico and was made using the Arechabala family recipe.

Shortly thereafter, Pernod filed a false advertising suit under Section 43(a)(1)(B) of the Lanham Act, asserting that the labeling of Bacardi’s bottle, particularly the use of the words “Havana Club,” misleads consumers to believe that the rum is produced in Cuba.   Ultimately, the Third Circuit rejected those allegations: “[W]e conclude … that the Havana Club label, taken as a whole, could not mislead any reasonable consumer about where Bacardi’s rum is made” because “[t]he label clearly states on the front that the liquor is “Puerto Rican Rum.”   Use of the word “Havana” was thus not geographically misdescriptive according to the Third Circuit which further stressed that this “was not a trademark case, and certainly not one addressing trademark registration, no matter how much Pernod may wish it were.”   Accordingly, Bacardi continues to sell “Havana Club” rum in the U.S. that is made in Puerto Rico, although it has yet to seek federal trademark registration for that mark.   See the complete opinion here.

Given the unique facts of the “Havana Club” case and the law under which it was brought, a ruling by the Trademark Trial and Appeal Board (TTAB) on  March 3, 2012 — holding that the mark “Old Havana” for rum was geographically misdescriptive because it was not produced in Cuba — is not that surprising.  The trademark application argued that “Old Havana” was not primarily geographic in meaning, and thus qualified for registration, because (1) it suggests a certain special method for producing rum, and (2) it “possesses a certain prestige, evoking a place in time or a historical era, rather than a geographic city.”

The TTAB rejected those arguments, noting that “Havana is the focal point of Cuban commerce, with rum distilleries among its principal industries” and the “addition of ‘OLD’ to ‘HAVANA’ does not diminish the primary geographic significance when the mark OLD HAVANA is considered as a whole.”

Applicant also argued that its labeling (above) included the word “brand” after “Old Havana” to indicate that this term is a trademark and not a geographic indicator, along with the phrases “Cuban style rum” and “Product of USA.”  The Board was not swayed, however, because it was solely concerned with the “Old Havana” mark in isolation.  See complete ruling here.

These cases highlight two key points.  First, that using a geographic term in a brand name for a product produced outside that region creates a signficant risk that the product will be attacked as being “geographically deceptively misdescriptive.”  Second, that there is a significant distinction between the mark-specific and less robust proceedings of the USPTO and fact intensive litigation that focuses on consumers’ overall perception of a product.