The Havana Club® trademark may be up for grabs after the US Treasury's Office of Foreign Assets Control denied a Cuban government agency the license needed to renew its U.S. trademark. At stake is participation in one of the fastest growing spirits markets in the US. This change of events will renew hostilities between Bacardi, the Cuban government, and Pernod-Ricard SA, who has an existing deal with the Cuban government to sell rum under the Havana Club® name.

The story begins when Fidel Castro took over the Cuban government in 1959 and seized the rum industry for governmental control, forcing the family-owned businesses of Bacardi and Havana Club to flee the island and start over. The Bacardi family had the means to rebuild its business in Puerto Rico but the family that owned Havana Club did not. This allowed the Cuban government to retain the Havana Club® name and continue to produce and distribute rum under that name. The family that originally owned and produced Havana Club rum did not renew its US trademark in 1973, opening the door for the Cuban government to legally obtain the rights to the Havana Club trademark in the US, even though it could not sell any product in the US because of the existing Cuban/US trade embargo.

After years of producing Havana Club rum, mainly for consumption in Cuba and Russia, the Cuban government made a deal with Pernod-Ricard in 1993 to distribute the branded rum worldwide, except for in the US. This partnership succeeded and the Havana Club branded rum has once again become popular around the world. This was advantageous as rum was the fastest growing spirit between 2000 and 2005 according to Adams Beverage Group statistics and updated statistics from Adams Beverage Group from 2004 show that rum continues to grow at a rate larger than the rest of the industry. The legal wrangling took a turn when Bacardi bought the rights to the brand from the descendants of its original owners, beating Pernod-Ricard to the punch. Then, Bacardi succeeded in having a trademark law changed in 1999 prohibiting the renewal of trademarks for brands seized by the Castro-led Cuban government.

Pernod-Ricard and the Cuban government fought Bacardi saying that its joint venture and its Havana Club brand still had rights in the US market. However, the US Supreme Court ruled that Pernod-Ricard and the Cuban government had no trademark rights to the brand. This ruling enabled Bacardi to apply for a new Havana Club trademark after the Cuban held trademark expired in the US on August 3, 2006. After gaining the proper trademark approval, Bacardi will begin selling Havana Club branded rum exclusively in the US. Bacardi may only sell the new Havana Club brand rum in the US market because the joint venture between Pernod-Ricard and Cuban government that uses the Havana Club brand is recognized throughout the rest of the world.

Bacardi has been planning this move for the past three years according to Pat Neal, a spokeswoman for Bacardi USA. It currently has a pending application with the USPTO to register the Havana Club as its own mark. Once the process is completed, Bacardi will begin to sell its rum under the Havana Club® brand name in the US market.

Pernod-Ricard has already threatened legal action against Bacardi regarding its branding of Havana Club rum. The rum will be produced in Puerto Rico and Pernod-Ricard argues that this is deceiving to the consumer because they will believe it is rum from Cuba based on the name. ''Bacardi is trying to put one over on the American consumer,'' said Mark Orr, vice president of North American affairs for Pernod Ricard. ``If they've got Havana Club on the label, the consumer is going to expect that it's a Cuban product.'' The case would rest on whether the label is false and misleading or merely mis-descriptive. Bacardi believes there is no deception because below the Havana Club name on the label it has printed "Puerto Rican Rum." Pernod-Ricard's argument is weak at best legally and will most likely not cause any problems for Bacardi in its efforts to relaunch Havana Club rum in the US.

Bacardi claims that it has full rights to the Havana Club brand because it was illegally seized by the Cuban government and Bacardi purchased the rights from the descendants or the family that originally owned the brand. This issue will not be raised until the end of the US-based trade embargo on Cuba at which time there will be trademark issues over the Havana Club® brand name in the US as Pernod-Ricard will fight that it has a right to the trademark in the US based on its existing business.