CQ WEEKLY – VANTAGE POINT
March 7, 2009 – 2:30 p.m.
Cuba’s Smoldering Brand Wars
By Shawn Zeller, CQ Staff
American businesses by and large hope that President Obama and Democrats in Congress will loosen the American embargo on trade with Cuba, which they see as a potentially lucrative market for their goods. But for U.S. companies that have trademark disputes with Cuban business rivals, the issue isn’t so simple.
Consider the case of the General Cigar Co. Inc. of Richmond, Va., which since the late 1990s has sold Cohiba brand cigars in the United States.
Cohiba, of course, is also Cuba’s premier brand and was reportedly a favorite of Fidel Castro before he stopped smoking in the mid-1980s. But Habanos S.A., the state-owned tobacco company, never registered Cohiba — the word Christopher Columbus says he was taught for “tobacco” by the native Cubans he met in 1492 — as the trademark in the United States. Even so, when General Cigar rolled out its own Cohiba brand in 1997, Habanos sued. After a nine-year court battle, the U.S. Supreme Court ruled in 2006 that the now 47-year-old U.S. trade embargo against Cuba barred such a trademark challenge.
Granted, both companies use different logos. The Cuban brand features a black and white checkerboard above an orange stripe with the word Cohiba in block type in between. The Virginia brand’s label features Cohiba in black, gold or silver block type with the center of the “O” in red.
Even so, “the lifting of the embargo would potentially create turmoil over who owns those rights,” says Ignacio E. Sanchez, a lobbyist with DLA Piper who represents General Cigar.
The issue is serious business. General Cigar has spent nearly $3.5 million on Washington lobbying in the past decade, much of it on the Cuba debate. And the company isn’t alone. Sanchez estimates that there are $2 billion worth of claims against the Cuban government over property seized after the island’s revolution 50 years ago.
One of the most famous disputes pits rum distiller Bacardi U.S.A. Inc. against French distiller Pernod Ricard over the rights to the renowned Havana Club brand. Pernod Ricard entered into a joint venture in 1993 with the Cuban government to sell Havana Club outside the United States, but Bacardi claims to own the name.
In 1998, Congress included language in a catchall spending bill barring Pernod Ricard from registering the trademark in the United States, something that would enable the Paris-based company to sell Havana Club here if the embargo were lifted.
Both companies have maintained big lobbying operations in recent years to try to protect that provision, in Bacardi’s case, or repeal it, in Pernod Ricard’s.
Though there seems to be little momentum in Congress to lift the embargo, Democrats are pushing to loosen it. The $410 billion omnibus spending bill for the rest of this fiscal year, which is on course to clear this week, would lift Bush-era travel restrictions on Cuban-Americans who want to visit relatives on the island and lift restrictions on U.S. exporters who want to sell food and medicine to Cuba. Under a 2000 law, U.S. companies may sell such products, though regulations imposed by President George W. Bush have curtailed the trade.