After bouncing from the Patent and Trademark Office to federal courts to Congress to the World Trade Organization, the bitter fight over the Havana Club trademark has finally shifted back to the courtroom.

The combatants are Havana Club Holdings (HCH)--a 50-50 venture between the Cuban

Federal district courts in Washington and Delaware are considering lawsuits that could determine which party in this battle will ultimately control the name of one of the world's most famous rums: Havana Club.

But there's more to the battle over Havana Club than the lure of potentially billions of dollars in U.S. rum sales. The more than decade-long fight has also become a feud of principle and politics between the powerful Bacardi exile family and the Castro government, which has a willing ally in Pernod Ricard.

"I'm certain there is some long-term animosity between the Bacardi family and the Cuban regime. They have long memories and understandably so," said Mark Orr, vice-president of Pernod Ricard North America. "But I've also seen that the French are stubborn and have long memories, too."

Huge amounts of money have been spent on legal fees over the Havana Club name and there is no indication that spending on lawsuits will stop anytime soon.

Pernod has good reason to fight alongside the Cuban government for Havana Club. HCH has resulted in untold hundreds of millions of dollars in revenues and profits following a widespread global marketing effort.

Last year, the venture sold over 2.6 million nine-liter cases of rum, primarily in Spain, Italy

and Canada. That's up from 1.5 million cases in 2001, and 300,000 cases when the venture began in 1994.

Business is so good that a $66 million distillery has opened at San Jose de las Lajas, 20 miles east of Havana. Manuel Arias, the venture's chief of domestic sales, says exports of Havana Club might reach 5.0 million cases by 2013 (see CubaNews, February 2007, page 4).

Havana Club rum is now 79th on the Impact list of the world's 100 top-selling spirits brands. That's still way behind Bacardi, which is No. 6, with 2006 sales of 19.3 million cases.

But Bacardi's overall sales are dropping, while Havana Club has seen average annual growth of 11.6% over the last five years. That makes Havana Club the 13th fastest-growing spirits brand in the world.

OFAC AT CENTER OF TRADEMARK CONTROVERSY

One of the latest court fights over the Havana Club name was filed last September by Cubaexport--the Cuban partner of Pernod--against the Treasury Department's Office of Foreign Assets Control.

Orr said the venture's registration was due to be renewed on July 28, 2006, and that Cubaexport duly filed an application with the PTO. But OFAC advised the PTO it could not accept the fee for doing so.

The Pernod suit said OFAC had improperly denied Cubaexport's request for a license. To date, the court has not decided whether to hear Cuba's lawsuit over its right to pay fees to renew the trademark.

"If OFAC has actually done its homework, it would have concluded ... that issuing a license is what it should do," Orr said.

Bacardi has had an application at the PTO to license the Havana Club name for over a decade. The company claims Castro illegally seized the property of the Arechabala family, the original producers of Havana Club rum.

Bacardi also says it paid the Arechabala family for the rights to the name of the famous rum in 1997.

But the Cuban government and HCH say the trademark was abandoned by the Arechabalas when they failed to renew it in 1973. The Havana Club trademark lapsed in the United States that year.

"The Arechabalas never abandoned the trademark," Bacardi spokeswoman Patricia Neal told CubaNews. "They had no means to be reunited with their product."

Most of the Arechabala family left Cuba in 1959. On Jan. 1, 1960, the company was nationalized and its private assets seized.

BACARDI LAUNCHES ITS OWN HAVANA CLUB

Days after the PTO declined to renew Cubaexport's Havana Club registration, Bacardi announced it would launched its own brand of Havana Club in Florida "with stunning packaging that combines elegant 1930s details with a contemporary silhouette," Bacardi's announcement said.

"Havana Club transports consumers back to the time it was created: sultry nights, swanky nightclubs and pulsating Latin music in a place that socialites frequented to experience an exotic landscape," said Bacardi.

The company also issued a release quoting Ramon Arechabala on the rum's qualities.

"It is great, unbelievable," Arechabala said. "It's based on the secret recipe that we gave to Bacardi so they could make it the same way we used to in Cuba."

Bacardi tried to market a Havana Club brand in 1995. But it removed that product from the shelves after HCH sued the company for trademark infringement.

SPANISH COURT REJECTS BACARDI CLAIM

The trademark battle has had reverberations across the Atlantic as well. Earlier this year, the Provincial Court of Madrid rejected Bacardi's claim over ownership of the Havana Club brand in Spain.

"The court ruled that Bacardi's claims over the brand's ownership in Spain were unfounded, as the trademark had never been used by the previous owner and wasn't renewed when it expired," according to a Pernod statement.

Bacardi's latest production of Havana Club rum is limited to the state of Florida, with bottles retailing for $20 each. Neal and other Bacardi officials refused to disclose how many bottles have been sold, though she insisted that "we're very pleased with our sales."

Bacardi's marketing of a rum with the Havana Club name, even if it's limited to Florida, prompted another lawsuit.

PERNOD: BACARDI IS 'DUPING THE CONSUMER'

In August, Pernod sued Bacardi in Delaware, where the distilling giant is incorporated, claiming that Bacardi's brand ownership is false and that its product misleads consumers. At issue is the label on Bacardi's product, which says Havana Club and--underneath the name--mentions the rum is made in Puerto Rico.

Orr claims use of the Havana Club name on a rum that's not produced in Cuba is a scam. "What we're saying is 'you're not selling the genuine article and you're duping the consumer.'"

But Neal insists the rum's Puerto Rican origin is printed in clear letters on the label.

"Consumers are very savvy people and they can read the label," she noted.

The company also says the rum was once made by the Arechabalas at a distillery in Catano, Puerto Rico, as well as Cuba during World War II in order to ensure a continuous supply to the U.S. mainland and escape a higher wartime tax on exports from Cuba.

SECTION 211 MAY BE AMENDED

While most of the rum war's battlegrounds are in federal courts, Congress is also involved in the bitter dispute.

In 2000, the WTO ruled on a European Union complaint about Section 211--a provision in a 1998 congressional spending bill that prohibits the PTO and the courts from recognizing recognition of trademarks confiscated without compensation from Cuba.

The WTO determined that Section 211's exclusive focus on confiscated property in Cuba violated international law. It said the law must be changed to pertain to illegally confiscated property everywhere or penalties would be imposed.

In the last three Congresses, lawmakers have introduced legislation that would amend Section 211 but not repeal it, as HCH wants.

The latest attempt to amend Section 211 was introduced by Sen. Bill Nelson (D-FL) in March.

Nelson's bill deletes "designated national"--a term the U.S. government uses in its embargo against Cuba--and replaces it with the following phrase:

"Used in connection with a business or assets that were confiscated unless the original owner of the mark, trade name, or commercial name, or the bona fide successor-in-interest has expressly consented."

An identical bill was sponsored in the House by Rep. Robert Wexler, a Democrat who represents Florida's 19th Congressional District.

It's unclear whether the legislation will win approval in Congress, which failed to act in the last two attempts to win approval of similar legislation. Neal is confident the legislation will move forward. Orr is not.

If the legislation is not approved in this Congress, there many be new pressures from the WTO on the U.S. government to repeal Section 211.

Meanwhile the battle over who has the rights to Havana Club rum could go on for years in the federal courts.

Declared Bacardi spokeswoman Amy Federman: "Bacardi will defend any Havana Club-related suits vigorously and is confident Bacardi will ultimately prevail."

THE HAVANA CLUB RUM SAGA: A TIMELINE

1959--The Cuban Revolution takes place. The Arechabala family, with the exception of one member who is imprisoned, leaves Cuba.

1960--The assets of the Arechabalas are nationalized.

1966--The Cuban government--through a company called Cubaexport--registers the Havana Club name in 80 countries, but not in the United States, where it is prohibited by the embargo from selling the rum.

1973--The Arechabala trademark registration in the United States lapses.

1976--The U.S. registers the Havana Club trademark with the U.S. Patent and Trademark Office (PTO).

1993--The Cuban government enters into a 50-50 joint venture with French drinks conglomerate Pernod Ricard, forming Havana Club Holdings (HCH).

1995--The Treasury Department's Office of Foreign Assets Control grants a license to transfer the Havana Club trademark from Cubaexport to HCH. Bacardi petitions the Patent and Trademark Office to cancel the registration.

1995--Bacardi begins to sell a Bahamas-made rum called Havana Club in the United States.

1996--HCH sues Bacardi for trademark infringement. Bacardi stops production of Havana Club rum.

1997--Bacardi buys the Havana Club mark from the Arechabalas for an undisclosed amount of money.

1998--Before a federal court can rule on HCH's trademark infringement case, a law called Section 211 comes into effect. It prevents recognition of trademarks confiscated without compensation by Cuba.

1999--HCH's lawsuit against Bacardi is dismissed. The judge rules that Section 211 prevents the court from ruling on the case. An appeal is rejected and the Supreme Court says it won't review the rejection.

2000--The European Union files a complaint about Section 211 with the World Trade Organization.

2002--The WTO rules that the United States can make its own trademark laws, but must apply equally to everyone. It recommends the United States amend Section 211 so that it applies to confiscated property everywhere.

2006--In August, the PTO denies the Cuban government's renewal of the Havana Club registration. A few days later, Bacardi announces it will relaunch its Havana Club brand. About a week later, Pernod Ricard sues Bacardi, saying its claim to brand ownership is false and its product misleads consumers into thinking the Bacardi rum is made in Cuba. In September, Cubaexport sues OFAC, saying it improperly denied the license that would allow Cuba to pay a fee to renew the trademark. Cubaexport also petitions the PTO to reverse its decision to not renew its Havana Club trademark.

2007--Sen. Bill Nelson and Rep. Robert Wexler--both Florida Democrats--introduce legislation that would make Section 211 compliant with WTO ruling.