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S. HRG. 108–919

AN EXAMINATION OF SECTION 211 OF THE

OMNIBUS APPROPRIATIONS ACT OF 1998

HEARING

BEFORE THE

COMMITTEE ON THE JUDICIARY 

UNITED STATES SENATE

ONE HUNDRED EIGHTH CONGRESS

SECOND SESSION

JULY 13, 2004

Serial No. J–108–88

Printed for the use of the Committee on the Judiciary

(

(II)

COMMITTEE ON THE JUDICIARY 

ORRIN G. HATCH, Utah, Chairman 

CHARLES E. GRASSLEY, Iowa 

ARLEN SPECTER, Pennsylvania 

JON KYL, Arizona 

MIKE DEWINE, Ohio 

JEFF SESSIONS, Alabama 

LINDSEY O. GRAHAM, South Carolina 

LARRY E. CRAIG, Idaho 

SAXBY CHAMBLISS, Georgia 

JOHN CORNYN, Texas 

PATRICK J. LEAHY, Vermont 

EDWARD M. KENNEDY, Massachusetts 

JOSEPH R. BIDEN, JR., Delaware 

HERBERT KOHL, Wisconsin 

DIANNE FEINSTEIN, California 

RUSSELL D. FEINGOLD, Wisconsin 

CHARLES E. SCHUMER, New York 

RICHARD J. DURBIN, Illinois 

JOHN EDWARDS, North Carolina 

BRUCE ARTIM, Chief Counsel and Staff Director 

BRUCE A. COHEN, Democratic Chief Counsel and Staff Director 

(III)

C O N T E N T S 

STATEMENTS OF COMMITTEE MEMBERS 

Page

Craig, Hon. Larry E., a U.S. Senator from the State of Idaho ............................ 2

prepared statement .......................................................................................... 58

Graham, Hon. Lindsey O., a U.S. Senator from the State of South Carolina .... 3

Leahy, Hon. Patrick J., a U.S. Senator from the State of Vermont, prepared 

statement .............................................................................................................. 92

WITNESSES 

Arechabala, Ramon, Miami, Florida ...................................................................... 8

Germain, Kenneth B., Adjunct Professor of Law, University of Cincinnati, 

Cincinnati, Ohio ................................................................................................... 9

Lehman, Bruce A., former Assistant Secretary of Commerce and Commissioner of Patents and Trademarks, Washington, D.C. ...................................... 11

Marzulla, Nancie G., President, Defenders of Property Rights, Washington, 

D.C. ........................................................................................................................ 4

Nelson, Hon. Bill, a U.S. Senator from the State of Florida ................................ 1

Reinsch, William R., President, National Foreign Trade Council, Washington, 

D.C. ........................................................................................................................ 5

QUESTIONS AND ANSWERS 

Responses of Kenneth B. Germain to questions submitted by Senator Leahy .. 23

Responses of Bruce Lehman to questions submitted by Senator Leahy ............. 31

Responses of Nancie G. Marzulla to questions submitted by Senator Leahy ..... 36

Responses of William A. Reinsch to questions submitted by Senator Leahy ..... 38

SUBMISSIONS FOR THE RECORD 

Arechabala, Ramon, Miami, Florida, statements .................................................. 45

Baucus, Hon. Max, a U.S. Senator from the State of Montana, statement 

and attachment .................................................................................................... 52

Coalition for Property Rights, Doug Doudney, President, Orlando, Florida, 

statement .............................................................................................................. 56

Dinan, Donald R., Hall, Estill, Hardwick, Gable, Golden & Nelson, Washington, D.C., letter ............................................................................................... 63

Florida Crystals Corporation, Parks Shackelford, Vice President, Palm Beach, 

Florida, letter ....................................................................................................... 66

Germain, Kenneth B., Adjunct Professor of Law, University of Cincinnati, 

Cincinnati, Ohio, prepared statement ................................................................ 67

Golden, William R., Jr., Kelley Drye & Warren LLP, New York, New York, 

letter ...................................................................................................................... 78

The Hill, Jack Kemp, April 29, 2004, article ......................................................... 91

Lehman, Bruce A., former Assistant Secretary of Commerce and Commissioner of Patents and Trademarks, Washington, D.C., statements and letter .......................................................................................................................... 94

Marzulla, Nancie G., President, Defenders of Property Rights, Washington, 

D.C., statement .................................................................................................... 103

New York Sun, Mark Falcoff, article ..................................................................... 109

Reinsch, William R., President, National Foreign Trade Council, Washington, 

D.C. ........................................................................................................................ 110

Suchlicki, Jaime, Professor, University of Miami, Coral Gables, Florida, letter .......................................................................................................................... 120

sunherald.com, James E. Rogan, June 9, 2004, article ........................................ 121

Page

IV

Trinidad, Diego, Trinidad U.S.A. Corporation, Miami, Florida, letter ................ 122

United States Business and Industry Council, Washington, D.C. ...................... 124

Veroneau, John K., General Counsel, Executive Office of the President, Office 

of the Trade Representative, Washington, D.C., letter ..................................... 125

(1)

AN EXAMINATION OF SECTION 211 OF THE 

OMNIBUS APPROPRIATIONS ACT OF 1998 

TUESDAY, JULY 13, 2004 

UNITED STATES SENATE, COMMITTEE ON THE JUDICIARY, Washington, DC. 

The Committee met, pursuant to notice, at 2:03 p.m., in room 

SD–226, Dirksen Senate Office Building, Hon. Lindsey Graham, 

presiding. 

Present: Senators Graham, Kyl, Craig, and Leahy. 

Senator GRAHAM. The hearing will come to order. Thank you all 

for coming and attending today, and if it is okay with you, Senator 

Nelson, I will just delay my opening statement and allow you to 

make any remarks you would like and introduce anyone you would 

like. So with great pleasure, I recognize Senator Bill Nelson from 

Florida. 

STATEMENT OF HON. BILL NELSON, A U.S. SENATOR FROM 

THE STATE OF FLORIDA 

Senator NELSON. Thank you, Mr. Chairman. And I see I have 5 

minutes, but I will make it very quick. 

Senator GRAHAM. You can run over if you like. 

Senator NELSON. I will just get right to the point on the question 

of Section 211 and trying to make the fix that has been necessitated as a result of groups on the international stage having 

made certain interpretations. 

The fix is basically so that if Castro had confiscated a trademark, 

that confiscated trademark would not be allowed to be used and 

sold in the United States. And that is the bottom line. And, of 

course, what we have is a series of personal experiences that will 

be told to the Committee where that has occurred. It is going to 

my pleasure—and it will be up to you as to the order that folks 

proceed, but at your pleasure, Mr. Chairman, Mr. Ramon 

Arechabala from Miami is going to tell you the personal and very 

sad story about when he and his family were forced to leave Cuba 

in 1960 and how they were forced to leave everything that his family had built over the years because they confiscated and claimed 

ownership of his family’s business. 

Unfortunately, there are too many of those sad kind of tales, and 

now there are those who want to profit from that by taking those 

confiscated trademarks and using them in the sale of items in the 

United States. And I am here to tell you that this Senator, representing a lot of constituents who have, in fact, had their property 

confiscated, this is a property rights issue, Mr. Chairman. This 

2

technical fix that we need to make in Section 211 ought to be done. 

That is my position. 

Now, Senator Craig and I have a different position with regard 

to the embargo of Cuba. He is in favor of lifting the embargo. I am 

not. But that is not what this is. This is a property rights issue of 

confiscating property and who is the rightful owner of that property, in this case trademarks. 

So that is what I am here to speak on, and I thank you for letting me come and make my statement. 

Senator GRAHAM. Thank you very much, Senator Nelson. 

Senator NELSON. I am going to enter, if you do not mind, a series 

of letters from various Florida interests, in addition to Mr. 

Arechabala and his testimony. If I may enter this into the record, 

I sure would be appreciative. 

Senator GRAHAM. Absolutely, without objection. 

Senator NELSON. Thank you, Mr. Chairman. 

Senator GRAHAM. Thank you, Senator Nelson. 

Senator Craig, would you like to make a statement at this time? 

STATEMENT OF HON. LARRY E. CRAIG, A U.S. SENATOR FROM 

THE STATE OF IDAHO 

Senator CRAIG. I will make it briefly because I want to hear from 

those who are giving testimony. 

Bill, before you leave the room, Senator, I must tell you I totally 

agree with you. This is a property rights issue. It is nothing to do 

with lifting embargoes, and that is what we are here to discern. 

I voted for S. 211. I was here at the time of the happening, and 

I heard one side of the story. I have now reviewed international 

law and a failure to file a trademark and the trademark to expire 

and somebody else filing for it. And I do believe there is a legitimate argument to be made on a property rights issue. And that is 

what I hope we can hear from today. 

I totally agree with you and the passion you expressed about confiscation of property by Fidel Castro. That, in my opinion, is no 

longer the issue here. Clearly, he confiscated the physical properties of Havana Club. But the property right trademark resided 

in this country, not in Cuba. It was registered here. And it appears 

that the ability to re-register that with a $25 check did not happen. 

And years after that failure, the Cuban Government picked it up, 

some 3 or 4 years later. 

So our question is: How do we resolve this issue and still protect 

the hundreds of U.S.-based companies that have a legitimate concern about their trademark? Do we tweak this? And if we do, are 

we in compliance with WTO, or as my legislation does, simply abolishes 211? Because it now appears that I have fully examined the 

issue after having once voted for it. Some Senators find themselves 

in those positions over time when they look at the whole scope of 

the history, the issue and the law, to determine that my vote might 

have been ill-cast and that the legitimate position is the responsibility of going forth with refiling and keeping your trademarks current, and when they lapse they become anyone else’s property who 

wishes to pick them up. And, in fact, can you then reclaim legitimacy to a property right that you lost by what appears to be a legitimate failure to act and a property right gained by someone else? 

3

It is a property rights issue, and I am not sure whether we can 

clearly demonstrate that all today. But hopefully with our witnesses and with testimony, we can move ourselves toward determining whether we can tweak 211 or, in fact, eliminate it altogether. 

Thank you. 

STATEMENT OF HON. LINDSEY O. GRAHAM, A U.S. SENATOR 

FROM THE STATE OF SOUTH CAROLINA 

Senator GRAHAM. Thank you, Senator Craig. 

Ladies and gentlemen, I would like to welcome you to an examination of Section 211—that is a good lead-in—of the Omnibus Appropriations Act of 1998. Today, we will examine the complex 

issues surrounding Cuban trademarks and their continued viability 

in the United States and international commerce. 

As most of you know, Congress enacted Section 211 of the Omnibus Appropriations Act of 1998 to effectively prohibit Cuban nationals or their successors in interest from protecting certain trademarks or trade names in the United States. Under Section 211, unless the original owners have expressly consented, the United 

States Patent and Trademark Office is prohibited from accepting or 

renewing the registration of a trademark, trade name, or commercial name confiscated by Fidel Castro’s regime during or after the 

1959 revolution. U.S. courts are also prohibited from considering or 

enforcing claims involving such trademarks. 

Section 211 was challenged by the European Community and the 

WTO as being inconsistent with U.S. obligations under WTO agreements. A WTO panel issued a decision finding that Section 211 was 

inconsistent with certain WTO requirements in some respects, but 

was either not consistent in other respects or not proven to be inconsistent in other respects by the European Community. I think 

that is what Senator Craig was trying to tell us. 

The European Community appealed the panel’s ruling, and the 

appellate body issued a decision which reversed the lower panel’s 

ruling in some respects. Essentially, the appellate body held that 

certain sections of Section 211 concerning court recognition or enforcement of trademark rights were inconsistent with U.S. responsibilities regarding the national treatment of trademarks and other 

commercial registry information, which brings us to where we are 

today. 

There are currently two different approaches to bringing the laws 

into compliance. Senator Craig has described one. Senator Nelson 

has described the other. And with that said, I would like to introduce our panelists now, and I will try not to butcher your names. 

Ms. Nancie Marzulla, please come forward. She is the president 

of Defenders of Property Rights, a national public interest legal 

foundation based here in D.C. 

Mr. William Reinsch—come forward, William—is the president of 

the National Foreign Trade Council based here in D.C. 

Mr. Arechabala—did I say it right, sir? Okay. Come forward. 

Thank you, sir. I think you have already been introduced. 

And Mr. Kenneth Germain and Mr. Bruce Lehman. 

Thank you all for coming and giving your time to the Committee, 

and if it is okay with Senator Craig, we will try to do 5-minute 

4

statements to the Committee, and we will start with Ms. Marzulla 

and work our way—oh, I am sorry. I have got to swear you in. 

Would you please stand up and raise your right hand? Do you solemnly swear that the testimony you are about to give to the Committee is the truth, the whole truth, and nothing but the truth, so 

help you God? 

Ms. MARZULLA. I do. 

Mr. REINSCH. I do. 

Mr. ARECHABALA. I do. 

Mr. GERMAIN. I do. 

Mr. LEHMAN. I do. 

Senator GRAHAM. Please take a seat. 

Now, with that being done, we will start with Ms. Marzulla. 

TESTIMONY OF NANCIE G. MARZULLA, PRESIDENT, 

DEFENDERS OF PROPERTY RIGHTS, WASHINGTON, D.C. 

Ms. MARZULLA. Well, thank you very much. It’s my pleasure to 

be here, and I am going to speak generally to the issue of the proposed technical correction to Section 211 of the 1998 Omnibus Appropriations Act. And from our perspective, these corrections, while 

they are small and very technical, are crucial because they give 

tangible expressions to this country’s unwavering support of individual rights and liberty or property rights. And, therefore, to the 

extent that there’s any question in anyone’s mind as to which side 

Congress should err on, obviously it should be in support of property rights. 

I’m here testifying as president of Defenders of Property Rights 

on behalf of the public interest. And Defenders was founded in 

1991, and we actively work to protect individual rights in the form 

of tangible and intangible property in the courts, in the marketplace of ideas, and, of course, here in Congress. 

And I’m especially pleased to be here testifying once again before 

the Senate Judiciary in support of the legislative proposal which, 

in our mind, will strengthen and enhance property rights protection. I have two points to make. 

First, S. 2373, which will amend Section 211 to comply with the 

World Trade Organization’s ruling, will forbid, as we heard earlier, 

recognition in the United States of trademarks unlawfully seized 

by Cuban officials. And that proposal is supported by a long and 

rich body of law. Federal courts have emphatically supported the 

notion that our courts will not give extraterritorial effect to a confiscatory decree of a foreign state against its own citizens. Federal 

courts have refused to join in partnership with foreign tyrants who 

seize property ‘‘actuated by coercion and fear of political reprisals.’’ 

There’s a wonderful case out of the Second Circuit in which the 

Federal court reviewed the taking of a trademark following the 

communist takeover of Hungary, in which a company was nationalized. And the Second Circuit said Hungary could not give its decree 

extraterritorial effect and thereby emasculate the public policy of 

the United States against confiscation. 

Likewise, Judge Wisdom of the Fifth Circuit in a case involving, 

again, Cuban seizure of trademarks associated with a brewery, 

said, ‘‘We hold that it is our duty to assess, as a matter of Federal 

law, the compatibility with the laws and policies of this country of 

5

depriving the original owners of the Malta Cristal trademark of 

that property without compensating them for it. We conclude that 

such a deprivation without compensation would violate bedrock 

principles of this forum, embodied in the Fifth Amendment to the 

Constitution.’’ 

My second point is that although Federal courts have refused to 

recognize the validity of trademarks unlawfully seized in foreign 

countries, Section 211 is still needed. This is because—and we have 

seen this repeatedly—that reliance on litigation in Federal courts 

as the sole means to protect one’s property rights is unsatisfactory. 

It places an unfair burden on the property owner. Litigation to protect one’s property right is slow, arduous, and extremely expensive. 

Take, for example, the Fifth Circuit decision I just mentioned, 

the case I quoted from Judge Wisdom. In that case, the original 

owner of the trademark was forced to litigate for over a decade to 

protect his rights in this country. He eventually prevailed, but it 

took over a decade to accomplish this. He went up to the Fifth Circuit over three times litigating procedural issues and technical defenses, all in an effort to protect his property rights. 

Likewise, I might underscore for this Committee that the same 

is true for property owners today who seek compensation for the 

unlawful taking of their property rights by their own government. 

Congress needs, this Committee needs to step up to the plate, 

enact laws that clearly direct Federal agencies—here it is the 

Trademark Office—to protect property rights and to protect the 

constitutional rights of our citizens. 

Thank you. 

[The prepared statement of Ms. Marzulla appears as a submission for the record.] 

Senator GRAHAM. Mr. Reinsch? 

TESTIMONY OF WILLIAM R. REINSCH, PRESIDENT, NATIONAL 

FOREIGN TRADE COUNCIL, WASHINGTON, D.C. 

Mr. REINSCH. Yes, thank you, Mr. Chairman. It is a pleasure to 

be here. I would like to ask, in addition to my full written statement, if I could also insert a letter that a number of our members 

have written on this subject. 

Senator GRAHAM. Without objection. 

Mr. REINSCH. And one of a number of law review articles critical 

to Section 211. Not the whole book, Mr. Chairman. 

Senator GRAHAM. Without objection. 

Mr. REINSCH. Thank you for the opportunity to be here. I am 

here on behalf of the National Foreign Trade Council representing 

300 American companies who work and trade globally. Today, you 

are going to hear a story about the Havana Club trademark, and 

it is going to be a sad one, as Senator Nelson said, and it is going 

to tug at our emotions. 

My task is to try to take you beyond the politics and the emotion 

that surround this dispute between two companies and suggest 

that there are more fundamental issues that affect all of us here, 

both in the United States and around the globe. Those are: How 

do we protect the interests of thousands of American trademarks 

currently registered in Cuba? How do we ensure that the U.S. complies with all of its international obligations? And most importantly 

6

for this Committee, how do we ensure that our U.S. court system 

has the full authority to settle trademark disputes? 

That is why the NFTC supports S. 2002. It is the only way both 

to comply with WTO rules and to protect the interests of the more 

than 400 U.S. companies holding 5,000 trademarks in Cuba. In 

supporting S. 2002, which is Senator Craig’s bill, I want to make 

clear that the NFTC does not take a position on the specific trademark dispute that underlies this issue. We believe it should be left 

to the courts and PTO to decide trademark disputes, and S. 2002, 

if enacted, would do precisely that, in contrast to the alternative 

proposal. 

The Committee is no doubt familiar with the history of Section 

211. Previously, both Senators have alluded to it, and I will not repeat it here. We believe that only full repeat of Section 211 will address both the WTO violation that is at issue as well as remove any 

pretext for the Castro regime to retaliate against American companies because of our breach of obligations under the General InterAmerican Convention for Trademarks and Commercial Protection. 

S. 2002 would also ensure continued U.S. leadership on intellectual 

property issues through the establishment of heightened standards, 

while bringing the U.S. into compliance with all existing treaty obligations. 

S. 2373, in contrast, for the benefit of a single company, asks the 

Congress to make it more difficult for U.S. companies to enforce 

their trademarks and trade names, to keep U.S. companies exposed 

to the risk of retaliation, and to continue putting U.S. law at crosspurposes with longstanding principles of U.S. trademark law and 

important intellectual property and trade policy objectives. 

The key point of our argument is that Section 211 violates the 

Inter-American Convention because it denies trademark registration and renewal on grounds other than those permitted by Article 

3 and because it also violates Articles 8, 9, 18, 29, and 30, and my 

written statement has a more detailed description of those problems. 

In the face of those violations of the Convention, customary international law permits a party to suspend the operation of the agreement in whole or in part. U.S. Federal courts have recognized the 

Inter-American Convention as governing trademarks and trade 

name relations between the U.S. and Cuba. Its suspension will result in great uncertainty regarding the legal status of U.S. company trademarks in Cuba and, we believe, retaliation. Castro and 

his officials have on several occasions threatened to retaliate 

against the trademark rights of U.S. companies in Cuba. Whether 

he will do so is anyone’s guess. But given our members’ experience 

in South Africa and our country’s experience with Cuba over the 

past 40 years, we are reluctant to bet that Castro will simply 

choose to be nice to American companies. Indeed, why should we 

even consider taking that risk? 

The South Africa case is instructive. During the U.S. embargo 

there, U.S. companies were prohibited from paying the fees necessary to file trademark applications. When the embargo ended, a 

number of companies, including Burger King, Toys R Us, 7–Eleven, 

and Victoria’s Secret, among others, discovered that their trademarks had been appropriated by unauthorized persons. Recovering 

7

the rights to their trademarks necessitated lengthy and expensive 

litigation and attempts to encourage the South African Government 

to amend its law. 

Had we maintained consistent and predictable IP relations with 

South Africa during the embargo, which is what we are proposing 

to do with S. 2002 with respect to Cuba, it would have saved many 

companies a lot of money and a lot of time and a lot of loss of good 

will. 

The current administration’s Commission for Assistance to a 

Free Cuba has recognized exactly this problem, Mr. Chairman. In 

its May 6th report, the Commission recommended, ‘‘The U.S. Government should encourage a Cuban transition government to provide assurances that it will continue to uphold its obligations under 

intellectual property agreements. Doing so early in the process 

would be an incentive to foreign investment and thereby facilitate 

Cuba’s move to a free-market economy.’’ 

‘‘In the area of trademarks and patents, the U.S. Government 

should be prepared to assist a free Cuba to develop a modern 

trademark and patent registration mechanism and appropriate 

legal protections.’’ 

S. 2002 would do precisely that, and, Mr. Chairman, my full 

statement contains a description of the various provisions of the 

bill that would meet that standard. 

Finally, with respect to the larger point of U.S. intellectual property leadership, let me simply say the United States has long been 

a leader in securing intellectual property rights globally, in part because we have the most to lose if they are poorly protected. Section 

211, in effect, we believe, tells the world that it is okay to limit 

trademark protection in certain obviously political circumstances. 

There are no doubt a lot of other countries who would welcome that 

message and would be happy to use it as an excuse to remove 

trademarks in situations that are politically important to them. 

That is not a message that we should be sending. 

Instead, I would urge the Committee to demonstrate its bedrock 

interest in secure protection of intellectual property rights by ensuring the rule of law here at home and keeping inviolate access 

by all parties to a fair hearing in our courts. 

To conclude, Mr. Chairman, I would argue that the Committee 

has two clear choices before it: You can support S. 2373, which advances the commercial interests of a single Bermuda-based company, or you can support S. 2002, which will repeal Section 211 

and will protect the interests of thousands of American trademarks 

registered in Cuba, will restore the full authority of the U.S. court 

system to settle trademark disputes—which is where we believe it 

belongs—will bring the U.S. into compliance with all of its international treaty obligations, not only the WTO, and will, finally, 

preserve the U.S. leadership in the global protection of property 

rights. 

Thank you. 

[The prepared statement of Mr. Reinsch appears as a submission 

for the record.] 

Senator GRAHAM. Mr. Arechabala? 

8

TESTIMONY OF RAMON ARECHABALA, MIAMI, FLORIDA 

Mr. ARECHABALA. Mr. Chairman, good afternoon. My name is 

Ramon Arechabala. I am here today to testify in support of Senate 

bill 2373. 

My great-grandfather, Jose Arechabala, was the founder of my 

company in Cuba in 1878, which made Arechabala and Havana 

Club rum. Castro, on December 31, 1959, at gunpoint, took all my 

assets and threw us out of the company and removed us from being 

able to go to work at the company. After a little while, I was doing 

some work in Havana, and every single time I was successful, he 

cut me down and took over. Finally, he threw me into jail, and I 

was released from jail on two conditions. He told me, ‘‘You do not 

belong to this society. Either you get the hell out of this country, 

or you are going to stay in jail with some cause that we will find 

for you.’’ 

So I left with my wife and my son for Spain. After I was in Spain 

for a little while, I came to Miami. I became an American citizen, 

and I have lived in Miami since 1967. 

My cousin, who was a lawyer of the company, was thrown in jail 

in Cuba, and he is still in Cuba right now, and he was the corporate lawyer of the company, and he was the one that knew all 

about the assets and all about the registration of trademarks and 

about the whole thing. 

I attempted to raise money to make Havana Club rum in this 

country again, but I was unable to do it. I tried joint ventures. I 

went all over the place, and there was no way to do it. I even went 

to see Orfilio Pelaez at Bacardi in Nassau, Bahamas, and I told 

him about what I needed, and he says, ‘‘Well, let me think about 

it. I will let you know. I will get back to you.’’ A little while later, 

he did not get back to me, and I learned that he had got sick and 

he had died. 

So I tried some other joint ventures with some people from Santa 

Domingo, but they told me, ‘‘Ramon, no dice. We do not have 

enough money for that.’’ 

I talked to a lawyer in Miami, and he told me—I asked him, 

‘‘Can I renew the registration of Havana Club rum in the United 

States?’’ He said, ‘‘No way, unless you make the rum, you cannot 

register the brand.’’ I said, ‘‘Okay, forget it.’’ I was not going to deceive the country saying, yes, I want to register the mark because 

I am making rum. It was not true. 

So I went back to Bacardi and talked to Juan Prado, and I told 

him what the situation was, and he helped me out. At the time I 

found out before then that Pernod-Ricard—I read it in the paper—

had signed a deal with Fidel Castro. I wrote a letter to Mr. Patrick 

Ricard and stated to him that Rum Havana Club belonged to my 

family, only to my family and myself, and we had never sold it to 

the Cuban Government, that he was doing something illegal from 

my point of view. No matter what, some days later, he made an 

offer to my family in Spain to buy the rights to distribute Havana 

Club rum all over the world. But it was ridiculously low, so they 

turned it down. 

When I was talking to Juan Prado, I told him, ‘‘Look, Juan, what 

we need is to make Havana Club rum in Miami, to promote it and 

sell it in the United States.’’ And he says, ‘‘Well, let me see what 

9

we can do about this.’’ Finally, we made an agreement, and we 

hopefully would try to make some rum pretty soon. But the reason 

that—what happened to my family was wrong. We wanted to keep 

selling Havana Club rum, but we were prevented from doing so because of this confiscation of the distillery, this robbery of my distillery, my business in Cuba. Castro’s wrong to me and my family 

continues today because the Cuban/Pernod venture continues to 

trade off Havana Club’s reputation with a product that can never 

be the same Havana Club rum that we used to make. The government stole my assets, my family heritage, and much of my children’s future. Section 211 prevents that wrong from spreading into 

the United States, and its protection should not be denied because 

of the veiled threats made by Pernod on behalf of its partner, Cuba. 

Section 211 will protect my rights and the rights of other Cubans 

that are in the same situation. 

[The prepared statement of Mr. Arechabala appears as a submission for the record.] 

Senator GRAHAM. Thank you, sir. Thank you very much. 

Mr. Germain? 

TESTIMONY OF KENNETH B. GERMAIN, ADJUNCT PROFESSOR 

OF LAW, UNIVERSITY OF CINCINNATI, CINCINNATI, OHIO 

Mr. GERMAIN. Mr. Chairman and members of the Committee, my 

name is Kenneth Germain. I live in Cincinnati, Ohio, and I am a 

partner in the law firm of Thompson Hine LLP and an adjunct professor at the University of Cincinnati College of Law. Thank you 

for the invitation to testify today at this hearing on Section 211. 

I have submitted a written statement and exhibits and ask that 

these be made part of the record. 

Since my first appearance before this Committee some 20 years 

ago, when I testified on the Trademark Clarification Act, my practice has focused on all aspects of trademark rights and on fair competition. I publish and speak extensively, having been invited on 

more than a dozen occasions to speak to the U.S. Patent and 

Trademark Office and to the administrative law judges of the 

Trademark Trial and Appeal Board. I also have served in an expert 

witness capacity in civil cases involving a wide variety of trademark and unfair competition issues. My qualifications and honors 

are further detailed in my resume, which is attached as Exhibit 1 

to my written statement. 

Very recently, I was retained by Collier Shannon Scott, PLLC, on 

behalf of Pernod-Ricard to serve in a neutral capacity, according to 

my typical practice as an expert witness in court cases. Aside from 

my usual compensation for work of this type, which is not dependent in any way upon the outcome of the controversy, neither my 

law firm nor I have any other financial interest in this matter. I 

have never previously been retained by Collier Shannon Scott, 

PLLC, Pernod-Ricard, or any other company that, to my knowledge, has taken a position on Section 211. 

I have listened attentively to the other presentations given today. 

I find myself moved by the injustices of the Cuban confiscation and 

concerned about some of the continuing international consequences 

and complexities. Although I am not here today to comment on the 

merits of the Havana Club trademark case now pending in the 

10

courts, I am very concerned about the anomalous effects of Section 

211 on established policies and doctrines of U.S. trademark law 

pertaining to trademark abandonment. I have concluded that U.S. 

courts should not be foreclosed from assessing and applying the full 

range of U.S. trademark law, policies, and doctrines relating to 

abandonment. Therefore, I believe that Congress should repeal Section 211, which S. 2002 would do. I also believe that Congress 

should not enact S. 2373 because it would leave Section 211 in 

place, albeit in amended form. Let me explain why. 

Under U.S. trademark law, marks can be abandoned. An abandoned mark no longer enjoys either substantive or procedural 

rights because, by definition, it is no longer a mark. Therefore, an 

abandoned mark is available for adoption and use by anyone else 

and for any purpose, even for use on the identical goods in connection with which it previously was used by the abandoning party. 

Courts considering abandonment typically take into account a 

wide range of factors which can include the intent of the purported 

owner and its acts and omissions with respect to the mark, as well 

as recognition of the mark by consumers in the marketplace. The 

effect of Section 211, as interpreted by the Second Circuit in its 

2000 Havana Club case was and is to oust abandonment in the 

specific context of U.S. rights purportedly held by Cuban entities 

from the normal critical role it has long played in U.S. trademark 

law. The Second Circuit reached this result by vaulting the term 

‘‘was used,’’ found in Section 211, over pre-existing and normal understandings of the term ‘‘is used,’’ as found in various places in 

American trademark law. 

Section 211 is inconsistent with the central requirement of bona 

fide commercial use for trademark protection. Specifically, Section 

211 precludes courts from considering whether a mark has been 

abandoned and thus no longer is eligible to be asserted to prevent 

third parties from acquiring rights in the mark. This gives rise to 

the anomaly of Section 211—deadwood marks interfering with the 

otherwise lawful adoption and use of similar or identical marks by 

others. Moreover, Section 211 runs counter to the longstanding 

trademark policy of permitting the courts to consider wide-ranging 

facts and circumstances in determining which party has superior 

rights to a mark. 

Repealing Section 211, as S. 2002 would do, would return to the 

courts the full authority to consider trademark abandonment in all 

disputes in which the issue arises. Because doing so would be consistent with longstanding U.S. trademark law and related policy, I 

support repeal of Section 211. On the other hand, I oppose S. 2373 

because, by leaving Section 211 in place, albeit in amended form, 

S. 2373 would not return this authority to the courts. 

In closing, I would like to make clear that repeal of Section 211 

would not decide the question of who owns any particular mark, including the Havana Club mark at issue in the Federal courts. 

Rather, repeal of Section 211 simply would enable the courts to 

consider the full range of legal and factual issues typically considered in determining which party has superior rights to a mark. 

Thank you for the opportunity to talk with you today. I would 

be happy to take any questions you may have about my testimony. 

11

[The prepared statement of Mr. Germain appears as a submission for the record.] 

Senator GRAHAM. Thank you. 

Mr. Lehman? 

TESTIMONY OF BRUCE A. LEHMAN, FORMER ASSISTANT SECRETARY OF COMMERCE AND COMMISSIONER OF PATENTS 

AND TRADEMARKS, WASHINGTON, D.C. 

Mr. LEHMAN. Thank you very much, Mr. Chairman, Members of 

the Committee. Thank you for the invitation to appear here today. 

I am Bruce Lehman, and I have been before this Committee on 

many occasions in an official capacity when I was actually serving 

in the same administration as Mr. Reinsch. But this is the second 

time that I have been actually asked to appear as a private citizen. 

The first was several years ago, actually before I went into my last 

round in Government, when Senator DeConcini was Chairman of 

the Intellectual Property Subcommittee and asked me to offer testimony somewhat like this as an expert on an issue involving legislative patent term extensions. 

The views that I am expressing today are my own. They do not 

necessarily reflect those of any other member of the board of directors or any other person associated with the International Intellectual Property Institute, of which I am chairman. The institute does 

not take positions on legislation. Further, I am not being and have 

not been compensated by any party for this testimony, nor am I 

representing any party in interest as an attorney or lobbyist or, for 

that matter, as an expert witness in a case, in this case or a related case. 

Now, during my tenure as President Clinton’s Commissioner of 

Patents and Trademarks from 1993 through 1998, I was often the 

U.S. Government’s point person on international negotiations on 

intellectual property rights. The United States’ negotiating position 

always was clear—and this carried through all the administration 

in modern times that I am familiar with—that piracy and confiscation of intellectual property rights should be outlawed. And, indeed, 

that was the great accomplishment of the TRIPs Agreement, which 

was probably the greatest accomplishment of my life to be involved 

in negotiating that treaty. And so I believe to the core of my soul 

that intellectual property rights need to be respected, and it is very 

much in the interest of the United States. 

Now, we are dealing here with a situation, of course, in which 

the mark involved, the Havana Club mark, originally was confiscated; it was taken without compensation by the Cuban Government. And then we have a whole lot of litigation and various activities that have followed that, and you have heard something about 

that. But the point that I would like to make to you here first is 

why are we sitting here today. 

Well, we are sitting here because we have a WTO decision in a 

case brought by the European Union that challenged whether or 

not Section 211 of the Appropriations Act of 1998 was consistent 

with the TRIPs Agreement. 

Now, the interesting thing to me about the WTO decision was, 

for the most part—and, by the way, that is a 100-page-plus decision; I do not know if you have read it—that the WTO appellate 

12

body did not disagree or find in noncompliance the fundamental 

thrust of Section 211. They really did not take exception to the policy of Section 211, which was to give non-recognition to these confiscated marks. 

The WTO decision very narrowly suggested that the flaw in Section 211 was that it violated the principle of national treatment because non-Cuban nationals were treated differently under Section 

211 than Cuban nationals. And that is an understandable thing, by 

the way, because if you read Section 211, it incorporates or references back to our embargo law and regulations, and they are obviously addressed to Cuba. So it was just really a drafting mistake. 

Now, if we do not pass any legislation to correct this, the U.S. 

will be in violation of the TRIPs Agreement and there will be retaliation. So Congress must act to correct this. But, clearly, the best 

way to act to correct it will be to make the very modest changes 

that are proposed in the Domenici bill, which really go to this National treatment issue. It is as simple as that. 

Now, I have looked at the other bill, and I would want to, you 

know, indicate my respect for Senator Craig. But I really think 

that if that is the route that Congress wants to go, we have a very 

serious problem because I think that it is rife with many difficulties and, indeed, might even in itself violate the TRIPs Agreement. 

Just one aspect, for example, of that bill that I am very troubled 

by is that it requires that we would create a registry of well-known 

marks in the United States that would have to be submitted in 

Cuba. Now, you know, this is an issue that came up in the negotiation of the TRIPs Agreement and has come up since, because the 

TRIPs Agreement, one of the nice things about it is that it grants 

rights to well-known marks that we did not have before. And many 

countries, many developing countries particularly, have wanted us 

to say which marks are well-known marks, we have to have a registry. And we have generally resisted that because we want that 

to be determined on a case-by-case basis. So that is just one example of the flaws—and I could go into others—in Section 211. 

So I really think, Mr. Chairman, that we really need to focus on 

why we are here. It is that we have a problem with the WTO panel 

decision that has to be corrected. The bill before you, Senator Domenici’s bill, corrects that. The other approaches would, I think, 

just get us into a lot more trouble. 

[The prepared statement of Mr. Lehman appears as a submission 

for the record.] 

Senator GRAHAM. Thank you very much. Thank you all for your 

testimony. 

Senator Kyl, would you like to make a statement at all? 

Senator KYL. No, Mr. Chairman. I came here to learn. 

Senator GRAHAM. Okay. Well, so did I. 

Our Ranking Member, Senator Leahy, would you like to make a 

statement or would you want to lead off in questions? 

Senator LEAHY. I will insert a statement, Mr. Chairman, and basically in that statement, I want to make sure that we are handling 

this issue carefully. The Section 211 provision we are examining 

did not go through the normal process. Usually, if things go 

through the normal process, it may look slow at first, but they 

come out better and you do not have to keep going back to them. 

13

This provision was put in an appropriations bill under the radar. 

Most of us never got to see it. And I am afraid of what it might 

do, especially after WTO found that it violated the Agreement on 

Trade-Related Aspects of Intellectual Property Rights, it may have 

even further problems. That is why I objected when even more 

wanted to be done, I think it was the defense appropriations bill. 

So I am glad you are doing this. I am glad we are having a full 

hearing. If I am unable to stay, I will put my questions in the 

record because I do not see any provision moving until we have had 

a chance to actually get a lot of questions answered. And then we 

may well have legislation that should move. 

Senator GRAHAM. We will introduce your statement, without objection. 

[The prepared statement of Senator Leahy appears as a submission for the record.] 

Senator GRAHAM. Would you like to ask any questions now? 

Senator LEAHY. Well, Mr. Chairman, did you want to inquire? 

Senator GRAHAM. I will defer to you. 

Senator LEAHY. Well, I appreciate that. I appreciate that very 

much. 

My first question would be for Ms. Marzulla. In today’s edition 

of The Hill, your husband, who is also, as you know better than 

anybody else, general counsel to Defenders of Property Rights, stated that your organization has no knowledge of whom this bill helps 

or hurts. Would your opinion that you have already stated of S. 

2373 change if it turned out from study of this that U.S. trademarks in Cuba are put at risk? I believe there are about 5,000 U.S. 

trademarks in Cuba. Would your opinion change at all if it turned 

out that was the case? 

Ms. MARZULLA. Well, thank you, Senator Leahy. I have not 

read—I guess there was an article that was published this morning. I have not read it, so I do not know what it says. Based on 

your statement as to what he allegedly said, I guess that we are 

not aware of who the bill either protects or who it is designed to 

protect— 

Senator LEAHY. But my question was—let’s assume that it was 

a statement given by anybody. 

Ms. MARZULLA. Okay. 

Senator LEAHY. Would that statement be a valid one if it turned 

out that 5,000 U.S. trademarks in Cuba were put at risk? 

Ms. MARZULLA. Well, let me clarify, Senator, what our support 

is of this bill and what it means when I say we support this proposal. 

I have read the portion of the WTO’s decision regarding Section 

211, and I understand what this proposal is designed to do, which 

is a very narrow, technical fix for a provision which purports to 

codify a principle which is well established in Federal law, and that 

principle is that Federal courts will not enforce the validity of a 

trademark that is in the United States that was confiscated by a 

tyrant abroad. 

So to the extent that you are suggesting that a tyrant in Cuba, 

Castro, is going to retaliate against American companies if we enforce our constitutional principles here, I would say that would be 

horrible, that would be terrible, it would be unfortunate. But we in 

14

this country must stand firm on the constitutional underpinnings 

upon which this country was founded. 

Senator LEAHY. Have we had any situations where a confiscated 

U.S. trademark was upheld by the courts prior to the passage of 

Section 211? 

Ms. MARZULLA. I do not know the answer to that question. 

Senator LEAHY. I was not able to find any. That is why I asked 

the question. 

Ms. MARZULLA. Are you saying are there cases before this decision? 

Senator LEAHY. Yes. 

Ms. MARZULLA. I am sorry. I misunderstood your question. There 

are cases throughout the century in which courts have upheld the 

validity of trademarks—or, excuse me, have not upheld the validity 

of trademarks that were confiscated elsewhere. 

Senator LEAHY. I am asking if you can think of any where they 

were upheld. In other words, you have a confiscated U.S. trademark. Are there any situations that you are aware of prior to Section 211 where that was upheld, that trademark was upheld by a 

U.S. court? 

Ms. MARZULLA. Yes. There are district courts that have upheld 

them. They have been reversed on appeal. Now, if there are district 

courts that have not been reversed on appeal, I do not know. I have 

not done that exhaustive of a survey. 

Senator LEAHY. So the appellate law, which, of course, would 

then control all the district courts within that circuit, has not 

upheld them? 

Ms. MARZULLA. Correct, but I will underscore the fact that I have 

not done an exhaustive survey of every decision. 

Senator LEAHY. I just could not find any, and so I just wanted 

to know if you have more expertise in this than I have. And as I 

said, I could not find any, but I just wanted to check. 

Mr. Reinsch, you say that Section 211 in S. 2373 violates the IAC 

and puts U.S. trademarks in danger of retaliatory action by Cuba. 

Some have said such a claim is inaccurate, that S. 2373 has been 

extensively vetted within the administration. Is the administration 

wrong to conclude S. 2373 would comply with the Inter-American 

Convention, in your opinion? 

Mr. REINSCH. My understanding is that they have not concluded 

that, Senator Leahy. I know in my conversations with the administration, they have indicated that both bills would adequately deal 

with the WTO problem. Obviously repeal deals with it. And they 

have taken the position that S. 2373 would deal with the WTO 

problem. 

I am not aware that the administration has made a statement 

about compliance with the Inter-American Convention. 

Senator LEAHY. Mr. Chairman, I will just submit for the record 

one of the questions I will submit for everybody: Would a simple 

repeal of Section 211 solve the problem of WTO sanctions and potential violations of IAC? And does S. 2372 solve the WTO problem? I would be delighted to have your answers because, like everybody else, I figure I am wrestling with this issue. 

Thank you. 

15

Senator GRAHAM. Without objection, that question will be submitted, and everyone will have a chance to answer it. 

Senator LEAHY. Thank you for the courtesy. 

Senator GRAHAM. Senator Craig? 

Senator CRAIG. Mr. Chairman, thank you very much. 

In the process of all of this, probably Ramon Arechabala and I 

are the non-attorneys in the room and know less about this issue 

than most of you who have at least held yourselves out to be experts in the field, and we trust and respect that. But because I, like 

Senator Leahy, once voted one way—did you vote for 211, do you 

recall, Pat? 

Senator LEAHY. I did. 

Senator CRAIG. He did. I did. And as I began to examine the 

issue, it is very difficult for those of us who vote one way to look 

at something and decide maybe we voted wrong and ought to look 

at it a different way. And I have tried to do that to understand the 

issue. 

So, Nancie, what I would like to do, and Bill and Ramon and 

Kenneth and Bruce, is walk us through a timeline of events. That 

is how I think I can better understand this issue. And please feel 

free to interject as it relates to my misinterpretation or misunderstanding of this issue. 

I also, in the art of full disclosure, will tell you that Nancie and 

her husband’s Defenders of Property Rights group, I have served 

as an adviser to, have worked very closely with them in the past, 

and as someone who is a staunch defender of property rights, I do 

not take second place to that. I probably do not take second place 

to the anger and the emotion of a dictator and revolution and a 

confiscation of private property, as I am sure my colleagues both 

to my right and left do and agree with me on. 

So what I would like to do to try to understand this—and, again, 

we are talking about fine-tuning versus repealing and what best 

fits the protection of property rights, not only universally, but I 

have to be a bit parochial and say U.S. company property rights 

in compliance with the WTO and other international trade organizations and/or conventions. 

It is 1959, and Castro takes over Cuba under a revolution, and 

Mr. Arechabala has just expressed that by December 31 of 1959— 

Mr. ARECHABALA. That is correct, sir. 

Senator CRAIG. —he was kicked out of his company, thrown out, 

taken over by a communist government. That is 1959. In 1960, officially, the Cuban Government takes over Havana Club. 

In 1973, 14 years later, the Arechabala family fails to renew 

claim to Havana Club trademark with the U.S. Patent and Trademark Office, as required, and that is a letter of intent and a $25 

check to re-register. That did not occur, 14 years later. To our 

knowledge, Castro had not tried at that time to lay claim or any 

time during that 14-year period to the trademark. He had confiscated the property, the production unit, but he had not gone 

after the trademark. He had confiscated the property, the production unit, but he had not gone after the trademark. In fact, it was 

not until 17 years later, 3 years after the abandonment—and that 

is what it has to be called because that is what is called inside the 

system and legally. In 1976, the Havana Club trademark registered 

16

with the Patent and Trademark Office by Cuba Export, a Cuban 

state enterprise, 17 years after the taking of the property, does 

Cuba go after the trademark that had been abandoned and claims 

it. And then part of the rest of it is history, but in 1993, you have 

got a French company who develops a relationship with the Cuban 

enterprise, works its way down through it, and then you have got 

the Bacardi family attempting to market the U.S. rum made in Bahamas under the Havana Club label. And then it gets into the 

courts, and while it is in the court, the Senators from Florida introduce 211 into an appropriation bill, and I vote for it. And that 

stopped the court action at that time because the Congress has spoken specifically and only to this entity. To our knowledge, it had 

no impact on any other U.S. company. In fact, this was not even 

a U.S. company. Bacardi is registered in the Bahamas. We are not 

dealing with a U.S. company here. To our knowledge, S. 211 does 

nothing for any U.S.-based company. 

Now, if I am wrong, please feel free to interject when I have finalized here. To our knowledge today, we are speaking of an entity, 

not U.S. companies. In fact, that is why U.S. companies are coming 

out and saying, wait a moment, here, protect us, make sure we are 

in compliance so that our trademarks and rights are protected. 

And, of course, I think you, Mr. Lehman, mentioned that in 1990, 

2000, a U.S. district court judge rules that Section 211 prevents 

her ruling in the French and Havana Club joint venture, and Bacardi wins the lawsuit in that instance. And you were mentioning 

how the law was tweaked with ‘‘was used’’ versus ‘‘is used.’’ 

Am I right in my assumption that obviously a dastardly deed 

was done to this family? No question about it. Confiscation of property in revolution. But I also am told and my research reflects—

and here I get a little critical of your family, sir—its failure to 

honor and register and keep current trademarks. I am told that 

Havana Club, the trademark registrations for Havana Club in 

Spain and the Dominican Republic were allowed to expire in 1955. 

That is 5 years before the Cuban Government nationalized the 

company in Cuba. There was an appearance of a failure to do due 

diligence all the way through here, and now we have 14 years after 

the confiscation of property an abandonment, and 17 years later 

the non-entity, if you will, the new entity coming in and registering 

and claiming the trademark. In other words, here, Nancie, we are 

talking property rights. And while none of us here will agree that 

Fidel Castro should have done what he did and all of us are angered, and for 40 years we have been angered by the fact that he 

confiscated or stole property under the name of a Cuban communist government, the record demonstrates to me that he did not 

come after the property rights that we control or claim on behalf 

of a company until well after they were abandoned and, therefore, 

it appears legitimately claimed them with a $25 check. 

Where am I wrong in that timeline and scenario as it relates to 

what this is and what it is not? I knew what it was told to me to 

be when I voted for 211. What I have read and researched is the 

rest of the story. Am I accurate or am I inaccurate? Kenneth? 

Mr. GERMAIN. Thank you, Senator. 

Senator CRAIG. Turn your mike on if you would, please. 

17

Mr. GERMAIN. Thank you, Senator. I do not think you are wrong, 

and I also do not think that the focus should be on the failure of 

the Arechabala family to file a document and pay a small U.S. PTO 

fee, although that was a significant non-action. 

Senator CRAIG. But doesn’t that determine abandonment versus 

non-abandonment? 

Mr. GERMAIN. It does determine whether the registration was 

abandoned, and, clearly, the registration was abandoned. It could 

have been continued on the basis of excusable non-use in the 

United States with a proper declaration and the payment of the appropriate fee, which was not very much. 

But the more important thing from my perspective is: Was there 

truly a mark in the United States, a Havana Club mark, at that 

time? And I answer that question in the negative. The reason for 

that is that trademark law fundamentally is common law. At bottom, it is based on use in a marketplace. 

Now, they had been using this mark in the marketplace, in the 

United States marketplace, before the confiscation occurred. Then 

it stopped. Now, when a mark no longer is in use, you lose it, especially if it goes on that way for many years such that the marketplace probably forgets that that mark is a mark, was a mark. It 

is not anymore. 

So what happened here is for many years this family allowed its 

registrations in various countries to lapse, made few, if any, efforts 

to bring this mark back into existence in the United States— 

Senator CRAIG. We did hear by Mr. Arechabala’s testimony that 

there was an effort personally on his part to get something going 

again. 

Mr. GERMAIN. Right, but the law of trademark use does not recognize back-door, back-seat, back-room efforts, deals that do not 

happen, that do not occur in the marketplace. It only recognizes 

what really happens in the marketplace. And after that registration lapsed, then the other company came forward and filed a perfectly legitimate application using Section 44 of the Lanham Act, 

not based on U.S. use but based on registrations elsewhere, received the registration; and although it could not sell Havana Club 

rum in the United States either, when it came time for that registration to have what we call the 6-year affidavit filed, it filed it 

on the basis of excusable non-use. It did things right. It did the 

most it could do to create a trademark or trademark rights in the 

United States at that time. 

Senator CRAIG. Okay. Mr. Lehman? 

Mr. LEHMAN. Senator, you asked about the timeline, and you 

specifically referred—I think a lot of your concerns went back to 

the 1976 registration by Cuba Export of the Havana Club mark in 

the U.S. PTO. 

Senator CRAIG. Well, my first concern was: Was there a legitimacy of the argument of abandonment of the mark? 

Mr. LEHMAN. Yes, there is a legitimacy of the argument of abandonment. 

Senator CRAIG. Then you talked about the need to demonstrate 

its activity and all of that in a market. 

Mr. LEHMAN. It is very clear that there was a problem with 

abandonment of the original Havana Club mark. But I think that 

18

you have to look at the circumstances there. I think the secretary 

of the company was in jail for 10 years under Mr. Castro. It was 

kind of hard to carry out some of the business activities. But I 

think the real issue here—I want to say something about the PTO 

here. The PTO did indeed register this mark in 1976 for Cuba Export. But when the PTO registers marks, it does not look into 

things like is the mark a confiscated mark, does it violate the embargo regulations, and so on and so forth. All it looks at is really 

the question of whether the trademark standards have been met. 

In other words, is this a mark that is not confusingly similar with 

another mark and so on and so forth? It does not make any judgments about the veracity of the ownership of the mark. And that 

is really what is at issue here. 

Senator CRAIG. Is it required to? 

Mr. LEHMAN. No, it is not. But that is—it is not, and that is really what is at issue here, and that is really what the policy of Section 211 was. Now, you know, maybe there is— 

Senator CRAIG. Well, let me ask this, then, Mr. Lehman: Is it important that they determine whether the mark is currently registered and/or abandoned before they would issue it to someone 

else? Did they have to do due diligence there? 

Mr. LEHMAN. Well, obviously, had the original Arechabala mark 

still been in effect, then they would not have been able to give the 

mark to Cuba Export, absolutely. The point is they did give it to 

Cuba Export, and the policy of Section 211 that we are dealing 

with is: Should Cuba Export or any Cuban company have a mark 

or be able to transfer the rights to a mark that was confiscated? 

And that is the policy of Section 211, and I happen personally to 

agree very strongly with that policy because that is the very central policy of U.S. intellectual property trade diplomacy for the last 

20 years, and it is embodied in the TRIPs Agreement. 

I want to just say a word here about—because it goes to this very 

question. Mr. Reinsch said we are here for one company. That is 

not true. There are two companies involved. There is Pernod-Ricard 

and there is Bacardi. Pernod-Ricard derives its rights from a 

Cuban confiscation, from a Cuban company, which, as we just 

heard Mr. Germain said, cannot even sell or use the mark in this 

country because we have a public policy against permitting them 

to do so. And so are we to let Pernod-Ricard do so? 

Now, the WTO looked at this. They looked at that policy, the 

very policy that I just described, and they said that policy is TRIPsconsistent. The only problem with Section 211, the only problem is 

that it treats Cuban nationals different from non-Cuban nationals, 

and that is the correction that is made in the legislation before you. 

Were you to adopt the position that Senator DeConcini just—I 

mean Senator Leahy. Sorry, I am still back in the old days—that 

Senator Leahy just enunciated and, that is, repeal Section 211, I 

am afraid you would send a terrible message to the TRIPs Council, 

to WTO, to everybody else, that, you know, a policy which they had 

approved of we are all of a sudden abandoning, and we are saying 

that it is okay to trade in confiscated stolen marks. 

Senator CRAIG. Well, Mr. Chairman, you have been very lenient 

with time here. Let me only comment. I appreciate the passion that 

Mr. Lehman brings 38 years after the fact, 14 years, 17 years after 

19

the fact. Now, there has to be a period of time of reasonableness 

here. You know, my passion and yours would be the same and is 

the same as it relates to confiscated properties, especially if the 

confiscating government comes immediately after the mark or attempts to immediately justify it. They clearly waited until it was 

well expired before they moved. 

Now, my point is, I guess, can I draw the same passion at that 

point? Does there need to be a consistency? Or are we, by repealing 

211, denying the very thing that Nancie spoke of earlier, that we 

go after tyrants, we do not recognize tyrants. Now we are 38 years 

later, and the question is at hand. That is what we have got to deal 

with here. 

Thank you, Mr. Chairman. Anyone else who wishes to comment, 

I will reserve my time and come back to them. 

Senator GRAHAM. Thank you. I am going to have to leave at 

about quarter after, and it is probably to be continued. 

Senator Craig, your knowledge of this far exceeds mine. It has 

nothing to do with going to law school. You obviously have done 

your homework. And I am a very novice lawyer when it comes to 

trademark law, so I have been trying to listen to this, and I have 

a bias, obviously. I am not a big fan of Fidel Castro. That is a bias. 

But I do respect the rule of law. 

It seems to me that the equities of the situation, you know, we 

are having a mini-trial about what abandonment is. The best place 

to probably have a trial is in court, not here. I think that is what 

you are trying to tell us. 

Mr. REINSCH. Exactly, Mr. Chairman. 

Senator GRAHAM. However, from a public policy point of view, 

there is an equitable scenario that has to be dealt with. Basically, 

does Fidel Castro deserve protection of the rule of law after he 

originally created a scenario where he could care less about the 

law? Because basically he is deriving benefit from the abandonment law, and the way that this all came about is that he took 

your property by the force of a gun. And I do not know as a judge 

how I would rule on that, but as a policymaker, I have a very hard 

time looking at the law of abandonment in this case as you would 

in any other case, simply because what got the Arechabala family 

into the situation was somebody who took the law into their own 

hands. 

My question to you, Mr. Reinsch, is: For 6 years, Section 211 was 

the law of the land here. Did Mr. Castro during that 6 years ever 

use it to retaliate against an American company? 

Mr. REINSCH. He has not yet. He has threatened to do so personally, as I recall on at least one occasion, and some other of his minions have done so on other occasions. Our belief is that he is waiting for the outcome of this issue. It has been apparent, as you probably know, Mr. Chairman, that when the WTO made its decision, 

it has regularly provided for 6-month periods for us to comply, and 

it has regularly extended those periods for the last several years. 

Each time there is a little debate at the WTO over the extension. 

It has been apparent each time that the Cuban Government is 

watching this process very closely and has been— 

Senator GRAHAM. Do you agree with the statement that Mr. Lehman made that the WTO and their ruling upheld the concept that 

20

it is lawful to not let a country or regime benefit from seizing property legally? 

Mr. REINSCH. Well, I have looked at the ruling. I am also not a 

lawyer, I should say to Senator Craig, so I am at a disadvantage 

vis-a-vis Bruce. My interpretation of the ruling has been to look at 

it from the other point of view. What they found was that we were 

in violation of the most fundamental WTO principle, which is the 

principle of national treatment. What they found was that we were 

discriminating against different classes of people. 

Senator GRAHAM. Right, but he has given a reason for that. 

Mr. Germain, you represent the French company—what is the 

name of the company? 

Mr. GERMAIN. I do not represent that company. Pernod-Ricard. 

Senator GRAHAM. Okay, I am sorry. I thought you did. Did you 

testify on their behalf? Did I miss something there? 

Mr. GERMAIN. Yes, there is a difference, Senator. 

Senator GRAHAM. Okay, truly a difference. I am not saying you— 

Mr. GERMAIN. Yes. I am testifying as an expert witness— 

Senator GRAHAM. I do not want to even associate you with a company if you are not. And it is okay to testify. I am a lawyer. I like 

people who give testimony. That is a good thing. 

Did the company try to buy anything from Mr. Arechabala? 

Mr. GERMAIN. I understand at one point from what he said that 

Pernod-Ricard did approach him and his company and tried to buy 

some rights. 

Senator GRAHAM. What rights were they trying to buy, if he had 

none? 

Mr. GERMAIN. Oh, it is not that unusual for a company that 

wants to have a trademark and have it free and clear and without 

problems to seek to buy whatever rights might possibly exist somewhere. 

Senator GRAHAM. Do you know how much they were going to pay 

for those rights? 

Mr. GERMAIN. No, I do not. 

Senator GRAHAM. Okay. Mr. Lehman, do you stand by your statement that the WTO’s ruling upholds the concept that it is legal to 

make sure a regime does not benefit from confiscating trademarks? 

Mr. LEHMAN. The WTO ruling is that the U.S. policy in that regard is consistent with the TRIPs Agreement, and Mr. Reinsch 

himself pointed out that the only defect in Section 211 is its different treatment of different nationals. It is a very technical, very 

narrow thing, and that is what is addressed in the legislation before you. 

Senator GRAHAM. Now to the issue of abandonment. 

Mr. REINSCH. May I say something about that, Mr. Chairman? 

Senator GRAHAM. Yes, you may. 

Mr. REINSCH. I would just encourage you to go back to something 

else I said. I think the real issue here is not how to solve the WTO 

problem. The real issue is how to solve the Inter-American Convention problem. The concern that my members have is retaliation 

pursuant to the Inter-American Convention. Either bill will solve 

the WTO— 

Senator GRAHAM. By Castro. 

Mr. REINSCH. Yes. 

21

Senator GRAHAM. Okay. What is your opinion of the abandonment argument here? 

Mr. LEHMAN. I think that the abandonment issue is virtually irrelevant to this, Mr. Chairman. The way I think you should look 

at it is—and I think, by the way, Mr. Reinsch did us a big favor 

by talking about companies. Let’s face it. There are two companies 

involved here. In a sense, this is almost like a litigation that is taking place before Congress—Bacardi and Pernod-Ricard. And the 

issue here is what is the chain of title for the rights that they assert, and I think it is unquestionable that the chain of title that 

Pernod-Ricard asserts is a defective chain of title because it goes 

back to the confiscation. 

Senator GRAHAM. Well, that was the equitable argument I was 

making, the unclean hands argument, that you cannot assert at a 

later point in time a legal right when you start in motion events 

that were based on illegal activity. I do not know if that is part of 

trademark law, but that is certainly part of equitable law. 

Mr. LEHMAN. We are dealing with a statute that Congress 

passed. 

Senator GRAHAM. Right. 

Mr. LEHMAN. And that statute, as I indicated, was consistent 

with longstanding U.S. policy regarding how intellectual property 

rights should be treated, a policy against confiscation, compulsory 

licensing, et cetera. And so I am sort of mystified at what the problem is to some degree. That is, the policy was very legitimate. It 

was approved by the WTO. We have a very minor defect in the way 

that was carried out that has been brought to our attention by the 

appellate panel at the WTO. And we have legislation to correct it. 

Senator GRAHAM. Well, with all due respect, what Senator Craig 

is saying, the problem is that many years later under the rule of 

law that exists of how you register and continue a trademark, nothing was done, and the Cuban Government legally—or the Cuban 

entity in question legally under our laws came in and took up the 

trademark. And— 

Mr. LEHMAN. Well, I would respectfully disagree with that assertion, Mr. Chairman. 

Senator GRAHAM. Why? 

Mr. LEHMAN. That went back to the 1976 registration and all of 

the activities that happened at the U.S. PTO. There are really two 

separate issues here. 

There is, one, the question of whether or not the Arechabalas, because they did not engage in certain filings at the U.S. PTO, abandoned their rights to the mark. That is an open question. 

The other is the way in which Pernod-Ricard gets its rights, 

which go originally back to the filings in the U.S. PTO, the original 

filing in 1976 from Cuba Export, an entity of the Cuban Government, which, under our law, could not actually exercise the right 

here. 

And the point I want to make very strongly is that the U.S. PTO, 

when it makes these registrations, and even more recently in the 

TTAB decision on the same case, does not really go into those 

issues. It simply is—if this were filed by anybody, does this trademark—does this mark meet the test of trademark-ability? 

Senator GRAHAM. I have got you. 

22

Anything else, Senator Craig? Then I will have to go. 

Senator CRAIG. Mr. Chairman, I have to go, too. I guess 2373 

modifies 211, but it keeps the courthouse door locked. So this trial 

that is now underway at this moment in the Judiciary Committee 

cannot go forward. And there are legitimate arguments out there. 

There are opinions. There are, if you will, judgments made by all 

of you. My legislation, S. 2002, unlocks the courthouse door and allows a legitimate legal pursuit of rights to go forward under law. 

I will agree S. 211 is the law of the land today, and you heard Senator Leahy speak to how it got there. I do not question its illegitimacy. I am going to work as hard as I can to defend the right of 

a company in my State when I am told, let me put it this way, half 

of the story. The question is: Is it the whole story and is it the right 

story? I would suggest that we open the courthouse door. 

My legislation does that, Mr. Chairman. 

Senator GRAHAM. Thank you, Senator Craig. 

We will hold open for a week any comments or statements that 

would like to be introduced into the record. And to conclude this 

matter—I am sure we will hear more about it—Mr. Arechabala, I 

am very sorry that your family went through the experience that 

it did. And what I will look at as a Senator is not only the rule 

of law aspects here about whether or not Cuba filed after you abandoned and whether or not I think the abandonment claim is appropriate, but the equitable nature of what is going on here. I do not 

believe it would be good public policy to have in any scenario a dictatorship at any time, anywhere, anyhow, benefit from stealing 

someone’s property unless the equities would require that result. 

Thank you all. 

[Whereupon, at 3:16 p.m., the Committee was adjourned.] 

[Questions and answers and submissions for the record follow.]

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