Havana Club Rum Label Not False Advertisement

Booze. Exotic locations. Communism. This case has it all.

The Third Circuit Court of Appeals ruled last week that consumers are smart enough to figure out that Havana Club Rum is made in Puerto Rico, not Havana.

In a geographic battle for the ages, French liquor producer Pernod Ricard sued Bacardi, the Bermuda-based rum giant, alleging that Bacardi's Havana Club rum label was a false advertisement and misleading.

The court, however, said that the Havana Club bottles were “factually accurate” and “unambiguous” considering that the label reads Havana Club Puerto Rican Rum.

Pernod Ricard’s motivation behind the false advertisement lawsuit was not just the best interest of American rum consumers; Pernod has been fighting Bacardi in U.S. courts over the Havana Club rum brand since 1994. Bacardi sells Havana Club rum in the U.S., while Pernod is licensed to sell the brand outside of the U.S.

Confused? Don’t blame it on the alcohol. This kerfuffle is all Fidel Castro’s fault.

Cuba’s Arechabala family created the Havana Club rum recipe in the 1930s. The Cuban government seized the family’s assets in 1960, after Castro took power.

In the 1990s, Pernod began selling Havana Club internationally through a licensing agreement with the Cuban government, but Pernod could not sell Cuban-made Havana Club in the U.S. because of the trade embargo. (Yes, the only thing America likes more than rum is a good trade embargo.)

Bacardi, which claims it purchased rights to the Havana Club trademark and recipe from the Arechabala family in 1997, applied for a U.S. trademark for Havana Club in 1994.

Though the state-owned Cubaexport registered the Havana Club trademark in the U.S. in 1976 and assigned it to Pernod in 1993, Congress passed a law in 1998 making Cuban-government-confiscated trademarks unenforceable in the U.S. Bloomberg reports that the law has only been applied to the Havana Club trademark.

It’s probably not a coincidence.

Pernod challenged the law in the D.C. Circuit Court of Appeals. The D.C. Circuit ruled against Pernod earlier this year, finding that the U.S. Treasury has the right to refuse to allow a Cuban state-owned group to renew its trademark for Havana Club.

Pernod is considering whether to appeal the false advertisement decision; should the company receive a favorable ruling on appeal, it could mean greater access to a plum rum market. The U.S. accounts for 17 percent of the world’s rum purchases. Bacardi controls 40 percent of U.S. rum sales.

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