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Pernod Ricard Usa, LLC v. Bacardi U.S.A.

August 4, 2011

PERNOD RICARD USA, LLC, APPELLANT
v.
BACARDI U.S.A., INC.



On Appeal from the United States District Court for the District of Delaware (D.C. No. 06-cv-505) District Judge: Hon. Sue L. Robinson

The opinion of the court was delivered by: Jordan, Circuit Judge.

PRECEDENTIAL

Argued February 9, 2011

Before: JORDAN, GREENAWAY, JR., and WEIS, Circuit Judges.

OPINION OF THE COURT

Pernod Ricard USA, LLC ("Pernod") appeals the decision of the United States District Court for the District of Delaware that the label of "Havana Club" brand rum, a rum sold in the United States by Bacardi U.S.A., Inc. ("Bacardi"), is not a false advertisement of the rum's geographic origin under Section 43(a)(1)(B) of the Lanham Act, 15 U.S.C. § 1125(a)(1)(B). Because we agree with the District Court that no reasonable interpretation of the label as a whole could lead to the conclusion that it is false or misleading, we will affirm.

I. Background

A. The Original Havana Club Rum and Its Trademark

This case is the latest battle in a lengthy war between Pernod and Bacardi, two multinational distilleries, over the use of the words "Havana Club" to sell rum in the United States. Though the convoluted history of the conflict has been recounted at length elsewhere, a portion of it requires retelling.*fn1

Before the start of the Cuban Revolution, the Arechabala family produced "Havana Club" brand rum in Cuba, sold it locally, and exported it for sale in the United States. In 1960, following the Communist revolution in Cuba, the Cuban government expropriated the Arechabalas' business without compensation. Three years later, the United States began to enforce a trade embargo against Cuba. The embargo, which continues to this day, generally prevents the importation of Cuban goods and is administered by the Office of Foreign Assets Control ("OFAC"). Despite the embargo, the Cuban government in 1976, through a government-owned company called "Cubaexport,"*fn2 managed to register with the United States Patent and Trademark Office ("USPTO") the words "Havana Club" as a trademark for use in connection with rum. In 1994, through a series of transfers, the Cuban government assigned its claimed interests in the Arechabala family's old business to a joint venture (the "JV"), of which Pernod Ricard, S.A., Pernod's parent corporation, is a member.*fn3 That transfer included the USPTO registration for the "Havana Club" mark, and, in 1995, OFAC specifically approved the transfer of the trademark to the JV. However, in 1997, OFAC retroactively revoked its permission for that transfer. The mark then remained registered to Cubaexport until July 2006, when the registration expired after OFAC denied permission for renewal of the mark.

B. Bacardi's Sales of Havana Club Brand Rum

In 1994, Bacardi filed a federal trademark application for use of the "Havana Club" mark on rum in the United States,*fn4 and, for a short time in 1995, Bacardi imported from the Bahamas and sold in this country a nominal amount of rum labeled with that mark. Soon after those limited sales, the JV filed suit in the United States District Court for the Southern District of New York to enjoin Bacardi's use of the "Havana Club" trademark. While that action was pending, Bacardi purchased from the Arechabala family any remaining rights they might have had to the "Havana Club" mark and the related goodwill of the business, along with any rum business assets the family owned. Later, following OFAC's revocation of permission for the transfer of the "Havana Club" mark to the JV in 1997, the JV's case against Bacardi was dismissed. See Havana Club Holding, S.A. v. Galleon S.A., 203 F.3d 116, 121, 135 (2d Cir. 2000).

In August 2006, just days after Cubaexport's federal trademark registration of "Havana Club" expired, Bacardi began selling rum in Florida using "Havana Club" as the brand name. The rum was distilled in Puerto Rico and was made using the Arechabala family recipe.*fn5 Bacardi took three years to develop the product, due to regulatory and production requirements, and, according to a member of the Arechabala family, it turned out to be "almost identical" to the original Havana Club rum made by the family in Cuba. The bottle in which Bacardi's rum was sold appears below.

On the front of the bottle, the phrase "Havana Club" appears in large stylized letters, followed by the word "BRAND" in much smaller letters. Below that, in letters of prominent though slightly smaller size than those in the brand name and in a different font, the words "PUERTO RICAN RUM" appear. Beneath that, in smaller letters and different color ink, the label says "HAVANA CLUB RUM." The words "Havana Club" are also repeated several times around the neck of the bottle. The back of the bottle includes a statement in clearly legible type that reads as follows:

Havana Club Rum is a premium rum distilled and crafted in Puerto Rico using the original Arechabala family recipe. Developed in Cuba circa 1930, this finely crafted spirit uses black strap molasses, a slow fermentation process, five times distillation and white oak ...


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