Washington, Feb. 10 (Bloomberg) -- Pernod Ricard SA will ask the U.S. Supreme Court to decide whether the French liquor maker and its Cuban partner can stop another company from selling rum in the U.S. under a label the venture has registered in more than 160 countries.
The decision came after Hamilton, Bermuda-based Bacardi Ltd., the world's biggest rum producer, won the latest round in a battle over trademark rights to the Havana Club rum brand. The victory came last week when the U.S. Court of Appeals for the Second Circuit unanimously affirmed a decision by
the U.S. District Court in New York that backed Bacardi.
``We're going to take the matter before the Supreme Court,'' said Philippe Mouton, Pernod's vice president and an adviser to the chairman of the company. ``The issue has not in our view been properly answered by the court of appeals.''
How the battle plays out could shape competition beyond the liquor industry. The dispute, already the subject of a World Trade Organization complaint, could further fray trade relations between the U.S. and EU and possibly threaten U.S. trademarks registered in Europe.
``If the Europeans want to make an issue of it, the implications are vast,'' said Pamela Falk, professor of international trade policy at the City University of New York's Queens College. ``They could start a trademark war and refuse to acknowledge some of the U.S. trademarks registered in
Europe.''
The latest ruling confirmed that the U.S. courts see no grounds for protecting the Havana Club trademark claimed in the U.S. by the venture between a Cuban government-owned company and Paris-based Pernod. Unless the Supreme Court overturns the ruling, Bacardi will move to have that trademark
eliminated so it can acquire the rights to the brand name and sell rum with that label.
Trade Disputes
The case ``joins a growing list of trade disputes between the U.S. and EU that can only hurt an enormous and mutually beneficial economic relationship,'' said Willard Berry, president of the European-American Business Council, which represents companies on both sides of the Atlantic. The U.S.
and EU are also sparring over trade in bananas and beef as well as other issues.
``We strongly urge the two sides to work together to settle these disputes and devote more of their energies to a positive agenda,'' such as launching a new round of WTO talks, Berry said.
Pernod said it is fighting to keep up the sales momentum of its product. Havana Club sales last year rose 25 percent, with a 35 percent increase in Europe, according to Pernod. The rum is now the leader in Italy, where sales have quadrupled in two years, the company said.
The Pernod rum is the ``fastest-growing brand in the world,'' Mouton said. ``We believe when the embargo is lifted there is enormous potential in the U.S. It's worth the energy and money we've spent on this.''
For almost 40 years, the U.S. has barred most trade with Cuba to pressure Fidel Castro's communist government.
Bacardi is waiting for full resolution by the courts before trying to gain the right to sell its Havana Club brand rum in the U.S., said Doug Gibson, the company's vice president and general counsel. If the court decides to take the case, which isn't certain, justices might hear the dispute
later this year and make a decision by June 2001.
``We would be somewhat surprised if the Supreme Court were to accept the case,'' Gibson said. The company isn't awaiting a WTO confrontation either. ``We don't expect that this is going to be a major issue between the EU and the U.S.,'' he said.
Yet if the Supreme Court refuses to hear the case, some observers expect the issue to flare up at the WTO, where the EU filed a complaint last July. The EU and U.S. are already engaging in consultations, a necessary step before dispute resolution by a panel of experts.
U.S., EU and Cuban officials were unavailable for comment.
Feb/10/2000 16:03
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