O pening n ight h avana c lub
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O pening N ight H avana C lub. Performed by: Colleen Dyble – Piano Nancy Bryan – Guitar Diana Grigoriev – Vocals. C ontent. History and Context of the Case Main WTO dispute TRIPS and other legal issues Panel & Appellate Body Reports Ruling of the DSB Effects of the ruling Solutions

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O pening n ight h avana c lub

Opening NightHavanaClub

Performed by:

Colleen Dyble – Piano

Nancy Bryan – Guitar

Diana Grigoriev – Vocals


C ontent

Content

  • History and Context of the Case

  • Main WTO dispute

  • TRIPS and other legal issues

  • Panel & Appellate Body Reports

  • Ruling of the DSB

  • Effects of the ruling

  • Solutions

  • Proposals and Concluding remarks


R ecipes

Recipes

CubaLibre

2 ounces Havana Club® rum

3/4 ounce Lime Juice

5 ounces Cola

Put lime juice and a twist of lime into highball glass.

Add rum and fill with cola.

FidelCastro

4 cl Havana Club® dark rum

Juice of 1/2 limes

Fill with ginger ale

Fill the glass with ice. Add the rum and lime juice. Fill with ginger ale.

Serve in Collins Glass


T ime l ine

Time Line

US implementation of DSB recommendations

Havana Club Holdings registers the trademark

WTO Case opened

(EU vs. US)

Expropriation by the Cuban Government

US Law negotiations

Birth of Bacardi Rum

1995-98

2000

2005

1860s

1960

1976

1995

1999

2002

1934

1973

Bacardi registers Havana Club in the US

Omnibus Appropriations Act (Section 211) passed

DSB Report

Registration of Havana Club lapses in the US

Creation of Havana Club by Arechabala family


H istory c ontext of the c ase

History & Context of the Case

  • 1860s: Bacardi rum was first produced in Cuba

  • 1934: Havana Club was created by Arechabala family

  • 1959/1960: The Havana Club distilleries were seized by Castro from the Arechabala family

  • 1973: Havana Club trademark lapsed in the U.S.

  • 1976: Havana Club trademark was re-registered in the U.S. to Havana Club Holdings

  • 1995: Bacardi registered the Havana Club name in the US after buying rights from the original Cuban owner, the Arechabala family.

  • 1995-1999:Fighting between Bacardi and Havana Club Holding over the Havana Club trademark began.


H istory c ontext of the c ase cont

History & Context of the Case - cont.

  • April 1999: Bacardi won a string of lawsuits in against Havana Club Holding in a New York court thanks to Section 211 of the U.S. Dept of Commerce Appropriations Act

  • Section 211 (signed into law on Oct 21, 1998) prohibits the U.S. from honoring trademarks of Cuban origin that were used in connection with businesses that were nationalized by the Cuban government, even if marks were subsequently abandoned by the original owners.


M ain wto i ssues

MainWTOIssues

  • July 8, 1999: On behalf of Havana Club Holding, the European Community requested consultations with the US in respect of Section 211.

  • The EC contended that 211 violated WTO rules because it “effectively denies trademark owners access to courts to enforce their intellectual property rights.”

  • Section 211 US Omnibus Appropriations Act was not in conformity with the US’ obligations under the TRIPS Agreement, notably: Article 2, 3, 4, 15-21, 41, 42, 62 and the General Inter-American Convention for Trade Mark and Commercial Protection (IAC).


Trips i mplications

TRIPSImplications

  • TRIPS: (originated from the Uruguay Round Negotiations), a tool for the protection and enforcement of intellectual property rights on an international scale.

  • ARTICLE 2: Intellectual Property Conventions

  • ARTICLE 3: National treatment

  • ARTICLE 4: Most Favored Nation Treatment

  • ARTICLE 16: a state may not condition the transfer of a trademark upon the consent of a former owner that abandoned the mark


Trips i mplications cont

TRIPSImplications - cont.

  • ARTICLE 21: WTO member countries have the right to determine conditions for licensing and assigning of trademarks

  • -ARTICLE 22, 23: the geographic origin of the product, especially wine or spirits, may not be misidentified

  • -ARTICLE 42: Fair and Equitable Procedures

  • General Inter-American Convention for Trade Mark and Commercial Protection (IAC):

    Under the IAC, “every mark duly registered or legally protected in one of the Contracting States”- including both the US and Cuba- “shall be admitted to registration or deposit and legally protected in the other Contracting States, upon compliance with the formal provisions of the domestic law of such states.”


M ain wto d ispute

Main WTODispute

Havana Club Holding filed a compliant to the WTO that the U.S. was violating the TRIPS Agreement, but not recognizing its “Havana Club” trademark.

Other U.S. Laws Involved:

  • US Embargo: dictates strict restrictions on trade and business associations between the U.S. and Cuba.

  • 1996 Helms-Burton Act: aims to strengthen the embargo.

    Position of Parties Involved in Dispute:

  • Castro/Cuban government

  • Bacardi

  • Havana Club Holding


M ain l egal issues

Main legal issues

  • Does TRIPS cover trade names?

  • Does Section 211 restrict property owner’s right to file and protect the trademark?

  • Does Section 211 restrict access to fair and equitable judicial procedure (article 42 of TRIPS)?

  • Does Section 211 restrict rights of intellectual property owners (article 16 of TRIPS)?

  • Does Section 211 violate the National Treatment or Most Favored nation principles?


D oes trips cover trade names

Does TRIPS cover trade names?

  • Article 2.1 of TRIPS states that Members shall comply with Articles 1 through 12 of the Paris Convention.

  • Article 8 of the Paris Convention:

    “A trade name shall be protected without the obligation of filing forms part of a trademark.”


Ruling d oes trips cover trade names

RULING -Does TRIPS cover trade names?

  • The Panel applied a narrow interpretation of TRIPS and determined that trade names are NOT covered.

  • The Appellate Panel found that:

    “An interpreter is not free to adopt a reading that would result in reducing whole clauses or paragraphs of a treaty to redundancy or inutility.”

  • Therefore, the Appellate Body found that WTO Members DO have an obligation under the TRIPS Agreementto provide protection to trade names.


D oes s ection 211 restrict a property owner s right to file and protect a trademark

Does Section 211 restrict a property owner’s right to file and protect a trademark?

  • Article 6 of the Paris Convention requires that trademarks registered in the country of origin be accepted for filing “as is”.

  • The EC argued that Section 211 prevents the payment of fees to a foreign registrant under certain circumstances, preventing the foreign owner from protecting the trademark “as is.”

  • Both the preliminary Panel and the Appellate Panel found that Section 211(a)(1) deals with ownership. Article 6 DOES NOT deal with ownership and is therefore not violated by Section 211.


D oes s ection 211 restrict access to fair and equitable procedures

Does Section 211 restrict access to fair and equitable procedures?

  • Article 42 of TRIPS:

    “Members shall make available to right holders civil judicial procedures concerning the enforcement of any intellectual property right covered by this Agreement.

  • Section 211 (a)(2):

    “No. U.S. court shall recognize or enforce any assertion of rights by a designated national based on registration of a confiscated mark or trade name…”

  • Does Section 211 deal with restricted access to procedures or does this deal with ownership (i.e., defining who a legitimate intellectual property right owner is)?


Ruling d oes s ection 211 restrict access to fair and equitable procedures

Ruling - Does Section 211 restrict access to fair and equitable procedures?

  • The Panel found that Section 211 DOESrestrict access to fair and equitable procedures.

  • The Appellate Body pointed out that while Article 42 deals with procedural rights, Section 211 deals with the substantive requirements of ownership.

  • The Appellate Body found Section 211(a)(2) does NOT restrict access to procedures, reversing the panel decision.


D oes s ection 211 restrict rights of intellectual property owners

DoesSection211 restrict rights of intellectual property owners?

  • The United States argued that Section 211 relates to whether an individual was an owner.

  • Both the preliminary Panel and the Appellate Panel found that neither Article 16 nor any other part of TRIPS determines who owns a trademark. This is a matter for national law.


N ational t reatment m ost f avored n ation p rinciples

National Treatment & Most Favored Nation Principles

  • Section 211 (a)(2):

    “No. U.S. court shall recognize or enforce any assertion of rights by a designated national based on registration of a confiscated mark or trade name…”

  • Code of Federal Regulations (Title 515.305):

    “For the purposes of this part, the term designated national shall mean Cuba and any national thereof…”


Ruling n ational t reatment m ost f avored n ation p rinciples

Ruling: National Treatment & Most Favored Nation Principles

  • The United States argued that U.S. nationals would not even be permitted to hold the relevant type of property.

  • The Panel found that the U.S. had failed to prove that a U.S. national would not be treated differently than a delegated national.

  • The Appellate Panel found that, with respect to original ownership rights, the targeting of Cuban nationals in Sections 211(a)(2) and (b) IS DISCRIMINATORY.

  • However, the Appellate Panel agreed with the preliminary Panel in that the reference to a “successor-of-interest” of any origin does not violate the National Treatment principle.


E xample

Example

Suppose a U.S. company currently owned a trade name that had originally been owned in pre-Castro Cuba (before 1959) and was confiscated when Castro came into power.

Would that U.S. company be subject to Section 211?

What if the successor-of-interest was Cuban?


A ppellate p anel concluding remarks

Appellate Panel concluding remarks:

“We wish to emphasize that this ruling is not a judgment on confiscation as that term is defined in Section 211…Nor do we express any view, nor are we required to express any view in this appeal, on whether a Member of the WTO should, or should not, recognize in its own territory…intellectual or other property rights that may have been…confiscated in other territories.”


I mplementation of dsb ruling

Implementation of DSB ruling

  • Reasonable time for implementation

    • Mutually agreed between the EC and the US

  • Final expiration date – 30th of June 2005

    • The US changed the implementation duration 5 times

  • Cuba concerned over lack of implementation by the US


E ffects of the wto ruling

Effects of the WTO ruling

  • Due to the inconsistency of Section 211 of 1999 Omnibus Appropriations Act with US intellectual property obligations, the US must review its legislation.

  • Despite the embargo, the US and Cuba have a long standing relationship on intellectual property governed by the 1931 General Inter- American Convention on Trademarks.

  • Possible solutions

    • Repeal of Section 211 – the S. 2002 Bill

    • Amendment of Section 211 – the S. 2373 Bill


S 2002 b ill r epeal of s ection 211

S. 2002Bill - Repeal of Section 211

  • Idaho Senator Larry Craig proposes S.2002 Bill, aimed at protecting the US companies with trademarks registered in Cuba

  • Scope of the new bill:

    • Immediate compliance with TRIPS

    • Protection of US businesses - 5,000 US trademarks registered in Cuba and the 400 US companies representing them

    • Avoidance of other possible litigations


E ffects of s 2002 b ill

Effects of S. 2002Bill

  • Ability of US corporations to invoke the Inter-American Convention for:

    • renewal of trademark registration

    • protection against infringers (e.g. Jello, Pizza Hut, Dupont)

  • Avoidance of retaliation by Cuba against US trademarks (based on the Vienna Convention)

  • The nature of an embargo is temporary

    • Ability to rapidly and efficiently resume trade relations with Cuba once the embargo is lifted


O pening n ight h avana c lub

S. 2373Bill - Amending Section 211

  • Scope – achieving partial compliance with TRIPS

  • It recommends applying Section 211 to U.S. and foreign trademark holders

    • Burden on US trademark holders to prove that their trademarks were not used by a Cuban entity in pre-Castro Cuba


E ffects of amending s ection 211

Effects of amending Section 211

  • Jeopardizes the US businesses registered in Cuba

  • Short term solution for the ongoing WTO case

    • Other possible disputes

  • Benefits only one company – Bacardi, Inc.

    • Section was enacted solely to help one litigant, Bacardi, Inc., in a particular trademark dispute.

  • No real benefit to US intellectual property holders

    • Possible retaliation by Cuba against US trademarks

    • Similar to the expropriation by the South African government after the apartheid – Burger King, Victoria’s Secret have been affected


N ational i nternational i nterests

National & International Interests

  • Madrid Protocol on trademark registration

  • Trade Sanction Reform Act of 2000 of U.S.D.A. recognizes the importance of sales of branded foods in Cuba and states that it: “highly recommend(s) that U.S. exporters make every effort to register their trademarks and brad names in Cuba.”

  • Undermines the US as a leader in promoting International Intellectual Property rights

    • Could encourage other countries to enact discriminative provisions against the US


P roposals c oncluding r emarks

Proposals & ConcludingRemarks

  • We support the S. 2002 Bill and the claims mentioned above

  • Maintain the US role as a fair leader and promoter of International Intellectual Property rights

  • Encourage good relations with Cuba for a hopeful future


T he e nd

TheEnd


R eferences

References:

World Intellectual Property Organization. “Madrid System for the International

Registration of Marks”. Retrieved on April 8, 2006 from http://www.wipo.int/madrid/en/

The World Trade Organization. “United States- Section 211 Omnibus Appropriations Act of 1998.” Retrieved on April 8, 2006 from http://www.wto.org/english/tratop_e/dispu_e/cases_e/ds176_e.htm

The World Trade Organization. “Overview: the TRIPS Agreement.” Retrieved on April 7, 2006 from http://www.wto.org/english/tratop_e/trips_e/intel2_e.htm

United States Senator Larry Craig. Retrieved on April 7, 2006 from http://www.senate.gov/~craig/releases/pr071304a.htm

Schweimier, Daniel. “Havana rum punch-up.” BBC News, March 21, 2001. Retrieved on April 9, 2006 from http://news.bbc.co.uk/1/hi/business/1233256.stm

The World Trade Organization. “TRIPS Agreement” http://www.wto.org/english/docs_e/legal_e/27-trips_01_e.htm

Electronic Code of Federal Regulations. Retrieved from http://ecfr.gpoaccess.gov/cgi/t/text/textidx?c=ecfr&sid=ba73ed3c524927a91348dd562fadab3e&rgn=div8&view=text&node=31:3.1.1.1.4.3.1.32&idno=31

Havana Club. Retrieved on April 7, 2006 from www.havana-club.com


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