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WT/DS176: The Havana Club Case. Michael Gray Jae Hoon Kang Fernando Malonado Emad Masumi Kun Zhang. Havana Club Case: Four Principle Parties. • Havana’s Arechabala Family : first family to begin making Havana club rum
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WT/DS176:The Havana Club Case Michael Gray Jae Hoon Kang Fernando Malonado Emad Masumi Kun Zhang
Havana Club Case: Four Principle Parties • Havana’s Arechabala Family : first family to begin making Havana club rum • State-owned Cuban company : after Cuban revolution, they re-launched Havana club • Pernod Ricard : French liquor company – later built a joint venture with the state-owned Cuban company • Bacardi Company : Cuban-American owned company - the world’s biggest rum producer
History Behind Havana Club Case • During the first half of the twentieth century, the Arechabala family had produced Havana Club rum. This brand came to symbolize good quality. • In the 1950s, the rum suffered serious setbacks. • Gradually, the Arechabala family relinquished its trademark on the domestic market and the foreign countries where it was registered. For instance, the Havana Club brand name fell into the public domain in Spain and the Dominican Republic in 1955. • In 1960, the family’s distillery was nationalized. The Arechabala family emigrated to the U.S. and Spain.
History Behind Havana Club Case • In the U.S., the family failed to renew the trademark registration. Therefore, Havana Club fell into the public domain in 1973. • In Cuba, however, the state-owned company relaunched Havana Club. They registered the trademark in 80 countries. • In 1993, the state-owned Cuban company and Pernod Ricard signed to reach partnership agreement that resulted in boosting the Cuban brand’s sales.
History Behind Havana Club Case • The joint venture alarmed Bacardi Co., which until then enjoyed a virtual monopoly in the rum market. • Bacardi purchased the right to use the trademark Havana Club in the U.S. from the Arechabala family in the middle of 1990s. • Bacardi sold rum from the Bahamas in the U.S. under the Havana Club brand name.
Havana Club Dispute:Timeline • 15 July 1999 – Request for consultations by the European Community • 7 July 2000 – Request for the establishment of a panel by the EC • 30 November 2000 – First Written Submission of the EC • 15 February 2001 – Rebuttal Submission of the EC • 6 August 2001 – Report of the Panel • 4 October 2001 – Notification of an Appeal by the EC • 15 October 2001 – Appellant’s Submission of the EC and their Member States
Havana Club Dispute:Timeline • 2 February 2002 – Report of the Appellate Body • 9 December 2002 – Status report by the US • 20 December 2002 – Modification of the agreement under Article 21 3(b) • 30 June 2003 – Second Modification of the agreement under Article 21 3(b)
Section 211of the 1998 U.S. Omnibus Consolidated and Emergency Supplemental Appropriations Act. • Prohibits the enforcement of, and transactions related to, the registration and renewal of trademarks that are the same or substantially similar to those used in connection with a business that was confiscated by the Cuban government. • Section 211 was designed to protect trademarks belonging to businesses confiscated by the Cuban government after the 1959 Communist revolution. Source: Ladas & Parry Intellectual Property Law
The TRIPS Agreement • Trade Related Aspects of Intellectual Property (TRIPS) • Negotiated in the 1986-94 Uruguay Round • Essentially introduced intellectual property rules into the multilateral trading system for the first time. Source: Word Trade Organization
EC’s Original Complaint:Why was the United States in violation of the TRIPS Agreement? According to the European Communities’ Original Complaint, Section 211 United States Omnibus Appropriations Act (Pub. Law. 105-277 (1998)), was not in conformity to the United States of America’s obligations under TRIPS Agreement notably: a) Article 2 in conjunction with the Paris Convention b) Article 3 c) Article 4 d) Articles 15 to 21 e) Articles 41 and 42 f) Article 62 Source: Word Trade Organization
Havana Club Case: Resolutions • Jan 3 2002, WTO appellate body confirmed that section 211violates WTO rules. • Section 211(a)(2) and (b) are inconsistent with articles of TRIPS agreements. • The DSB recommended that legislative action by the U.S. Congress occur no later than January 3, 2003.
Havana Club Case: Resolutions • WTO rules - Decisions by the AB are final • The US informed WTO to implement the recommendations from DSB • Call for legislative action by US congress • The reasonable implementation period • U.S. and EU agree to extend to December 31, 2003
Havana Club Case: Resolutions • June 2003, U.S.-Cuba Trademark Protection Act of 2003. • Awaiting further action in the House Judiciary Committee's Subcommittee on Courts, the Internet and Intellectual Property. • The prospects for passage of the bill are hazy. • "Bacardi has important friends on the Hill."
Havana Club Case: Resolutions • Supporters of the Act: • 11 Representatives • National Foreign Trade Council • Grocery Manufacturers of America • GM, Ford, D-C, DuPont etc. • Microsoft, AOL, AT&T etc. • Opposition Parties: • Cuban-American congressional delegation • The presidential election gets involved
Havana Club Case: Reactions • EU’s reaction if the bill is not passed • Impose sanctions, including tariffs or limiting exports against U.S. • Cuba’s reaction if the bill is not passed • Might cancel U.S. trademarks in Cuba • Allow others to re-register those marks for use on local products or internationally on counterfeit products
Havana Club Case:Implications For The WTO • Appellate Body • future implementation and usage • Will the limited usage continue? • Political constraints in the system • WTO as a dispute settlement system
Havana Club Case:Implications For The WTO • From Washington to Brussels -European Implications -trade -politically -U.S. Implications -politically -WTO status: present and future
Havana Club Case:Implications For The WTO • Potential U.S. – E.U. Problems -Loss of U.S. Sovereignty • Legitimacy of WTO At Hand • How The Rest of the World Might Interpret