Brussels / Geneva, 03/01/2002 (Agence Europe) - The World Trade Organisation has confirmed that the American law preventing Pernod-Ricard from using its rights over the brand of rum "Havana Club" in the United States is discriminatory and contrary to the "most favoured nation" rule, but has not ruled on the right to ban "confiscated" brands. In a report published this week, the WTO Appellate Body thereby partially agreed with the European Union in the dispute between it and the United States over Section 211 of American finance legislation.
Adopted in 1998, this legislative provision prohibits American courts from recognising trade brands or names that used to belong to expropriated Cubans after the Cuban revolution of 1959. In practice, Section 211 prohibits the French firm Pernod-Ricard from using its rights over the brand of rum "Havana Club" in the United States, faced with the company established in Bermuda, Bacardi, which also claims this brand name. In the framework of the "Havana Club Holding", held jointly with the Cuban firm Havana Rhum & Liquor, Pernod-Ricard has deposited the brand "Havana Club" in 183 countries.
In July 2001, a panel of the WTO Dispute Settlement Body agreed with the EU, in the sense that Section 211 does not allow companies to enjoy their intellectual property rights in American law. The EU, however, appealed so as to clarify issues it qualified as "systematic" over intellectual property rights (see EUROPE of 7 July).
Contrary to what the EU would have hoped for, the appeals report confirmed that trade names are not covered by the Agreement on Trade-Related Aspects of Intellectual Property (TRIPS) and that WTO member States may freely determine the ownership rights of a brand. Stressing that their decision "is not a judgement on the confiscation as that term is defined in Section 211", the experts state that they do not "express any view, or are required to express any view in this appeal, on whether a member of the WTO should, or should not, recognise in its territory trademarks, trade names, or any other rights relating to any intellectual or other property rights that may have been expropriated or otherwise confiscated in other territories". According to Fabian Delcros, expert in trade issues at the Commission, the EU did not win on this issue of "systematic", as the report confirms that: 1) Section 211 does not determine who is the owner of the brand; 2) the TRIPS agreement does not contain precise obligations enshrining the power of a State to allocate the ownership of a brand.
The WTO appeals report does, however, agree with the EU on two other issues in its appeal, deciding that Section 211 is contrary: 1) to the rule of non-discrimination between nationals and foreigners, as it does not apply in the same way to American companies and other members of the WTO; 2) the principle of most favoured nation, in the sense that it only applies to Cuba and not other nations where expropriations could take place.
In their final conclusions, the experts write that where "a WTO member chooses not to recognise intellectual property rights in its own territory relating to a confiscation of rights in another territory (….),that WTO member must accord 'no less favourable treatment' to the nationals of all other WTO members than it accords to its own nationals, and must grant to the nationals of all other WTO members 'any advantage, favour, privilege or immunity' granted to any other WTO member. In such a measure, a WTO member may not discriminate in a way that does not respect the obligations of national treatment and most-favoured nation treatment that are fundamental to the TRIPS Agreement".
According to the Commission expert, Fabian Delcros, "it is difficult for the United States to continue implementing Section 211 without amending it" if we want to ensure that European companies are treated on an equal footing with American firms. The Director for European Affairs at Pernod-Ricard, for his part, declared in a press release that "this decision strengthens the position of Havana Club International before the American courts, that will no longer be able to base themselves on the existence of Section 211 to refuse to rule in any litigation on the ownership of the brand Havana Club in the United States". The report will be formally adopted by the WTO Dispute Settlement Body in a month. The United States will then have to specify whether or not it wants time to comply with the conclusions of the report.