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DOMESTIC AND INTERNATIONAL TRADEMARK IMPLICATIONS OF HAVANA CLUB AND SECTION 

211 OF THE OMNIBUS APPROPRIATIONS ACT 

OF 1999 

HEARING 

BEFORE THE

COMMITTEE ON THE JUDICIARY 

HOUSE OF REPRESENTATIVES 

ONE HUNDRED ELEVENTH CONGRESS 

SECOND SESSION 

MARCH 3, 2010 

Serial No. 111–69 

Printed for the use of the Committee on the Judiciary 

( 

Available via the World Wide Web: http://judiciary.house.gov 

(II) 

COMMITTEE ON THE JUDICIARY 

JOHN CONYERS, JR., Michigan, Chairman 

HOWARD L. BERMAN, California 

RICK BOUCHER, Virginia 

JERROLD NADLER, New York 

ROBERT C. ‘‘BOBBY’’ SCOTT, Virginia 

MELVIN L. WATT, North Carolina 

ZOE LOFGREN, California 

SHEILA JACKSON LEE, Texas 

MAXINE WATERS, California 

WILLIAM D. DELAHUNT, Massachusetts 

STEVE COHEN, Tennessee 

HENRY C. ‘‘HANK’’ JOHNSON, JR., 

Georgia 

PEDRO PIERLUISI, Puerto Rico 

MIKE QUIGLEY, Illinois 

JUDY CHU, California 

LUIS V. GUTIERREZ, Illinois 

TAMMY BALDWIN, Wisconsin 

CHARLES A. GONZALEZ, Texas 

ANTHONY D. WEINER, New York 

ADAM B. SCHIFF, California 

LINDA T. SA ́ NCHEZ, California 

DEBBIE WASSERMAN SCHULTZ, Florida 

DANIEL MAFFEI, New York 

[Vacant] 

LAMAR SMITH, Texas 

F. JAMES SENSENBRENNER, JR., 

Wisconsin 

HOWARD COBLE, North Carolina 

ELTON GALLEGLY, California 

BOB GOODLATTE, Virginia 

DANIEL E. LUNGREN, California 

DARRELL E. ISSA, California 

J. RANDY FORBES, Virginia 

STEVE KING, Iowa 

TRENT FRANKS, Arizona 

LOUIE GOHMERT, Texas 

JIM JORDAN, Ohio 

TED POE, Texas 

JASON CHAFFETZ, Utah 

TOM ROONEY, Florida 

GREGG HARPER, Mississippi 

PERRY APELBAUM, Majority Staff Director and Chief Counsel 

SEAN MCLAUGHLIN, Minority Chief of Staff and General Counsel 

(III) 

C O N T E N T S 

MARCH 3, 2010 

Page 

OPENING STATEMENTS 

The Honorable John Conyers, Jr., a Representative in Congress from the 

State of Michigan, and Chairman, Committee on the Judiciary ..................... 1 

The Honorable Bob Goodlatte, a Representative in Congress from the State 

of Virginia, and acting Ranking Member, Committee on the Judiciary .......... 2 

The Honorable Debbie Wasserman Schultz, a Representative in Congress 

from the State of Florida, and Member, Committee on the Judiciary ............ 4 

The Honorable Darrell E. Issa, a Representative in Congress from the State 

of California, and Member, Committee on the Judiciary ................................. 9 

WITNESSES 

Mr. Mark Z. Orr, Vice President of North American Affairs, Pernod Ricard 

Oral Testimony ..................................................................................................... 10 

Prepared Statement ............................................................................................. 12 

Mr. Bruce A. Lehman, former Assistant Secretary of Commerce and Expert 

Counsel for Bacardi, USA 

Oral Testimony ..................................................................................................... 17 

Prepared Statement ............................................................................................. 19 

Mr. Mark T. Esper, Executive Vice President, Global Intellectual Property 

Center, U.S. Chamber of Commerce 

Oral Testimony ..................................................................................................... 25 

Prepared Statement ............................................................................................. 27 

Mr. William A. Reinsch, President, National Foreign Trade Council 

Oral Testimony ..................................................................................................... 32 

Prepared Statement ............................................................................................. 35 

Mr. John K. Veroneau, Partner, Covington & Burling, LLP 

Oral Testimony ..................................................................................................... 43 

Prepared Statement ............................................................................................. 45 

LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING 

Prepared Statement of Ramon Arechabala submitted by the Honorable Debbie 

Wasserman Schultz, a Representative in Congress from the State of Florida, and Member, Committee on the Judiciary ................................................. 5 

Letter from Jaime Suchlicki, Professor and Director, United of Miami, submitted by the Honorable Bob Goodlatte, a Representative in Congress from 

the State of Virginia, and acting Ranking Member, Committee on the 

Judiciary ............................................................................................................... 65 

(1) 

DOMESTIC AND INTERNATIONAL TRADEMARK 

IMPLICATIONS OF HAVANA CLUB AND SECTION 211 OF THE OMNIBUS APPROPRIATIONS ACT OF 1999 

WEDNESDAY, MARCH 3, 2010 

HOUSE OF REPRESENTATIVES, 

COMMITTEE ON THE JUDICIARY, 

Washington, DC. 

The Committee met, pursuant to notice, at 10:26 a.m., in room 

2141, Rayburn House Office Building, the Honorable John Conyers, 

Jr. (Chairman of the Committee) presiding. 

Present: Representatives Conyers, Watt, Wasserman Schultz, 

Quigley, Coble, Goodlatte, Issa, Jordan, and Nye. 

Staff present: (Majority) Perry Apelbaum, Staff Director and 

Chief Counsel; Christal Sheppard, Counsel; Eric Garduno, Counsel; 

(Minority) Sean McLaughlin, Chief of Staff and General Counsel; 

and Blaine Merritt, Counsel. 

Mr. CONYERS. The Committee will come to order. Good morning. 

The hearing is on the ‘‘Domestic and International Trademark 

Implications of Havana Club and Section 211 of the Omnibus Appropriations Act of 1999.’’ And our purpose is to examine Section 

211 and consider what changes, if any, should be made to that section. 

This is a fascinating subject that brings the Judiciary Committee 

together. It goes back into our recent history dealing with a number of issues back through the days of our former colleague, Tom 

DeLay, as the majority leader, the Elian Gonzalez case, Fidel Castro, and the special law for the Bacardi trademark. 

Whether or not the Congress should make trademark decisions 

or the Court there are at least two measures introduced into the 

Congress in connection with this subject. One is by Chairman of 

Ways and Means, Charles Rangel; the other is by Debbie 

Wasserman Schultz, formerly introduced previously by our former 

Member, Mr. Wexler. 

One method deals with the repeal of the law—the repeal of Section 211—and the other is one that attempts to modify the existing 

law. You remember that Mr. Castro sold the Bacardi trademark to 

a French company, Pernod. The World Trade Organization, 

through its international property—their court, in effect, held that 

the United States violated international rights. 

And so we have found to be in violation of international obligations from one point of view. The United States takes its treaty obVerDate Aug 31 2005 15:42 Apr 20, 2010 Jkt 000000 PO 00000 Frm 00005 Fmt 6633 Sfmt 6601 H:\WORK\FULL\030310\55221.000 HJUD1 PsN: DOUGA
2 

ligations, of course, seriously, and there has been agreement to 

take corrective action. 

The question that brings us here is what corrective action we 

should take. The European Union court, in effect, has held off taking any action on their part as they wait to determine what it is 

that we are going to do. 

So I am left with these further observations, and then I will yield 

to Bob Goodlatte. The seizure of property by Castro was unjust, obviously, and no one should be able to profit from that wrongdoing. 

And what we are trying to focus on is how the Judiciary Committee 

should recommend to the House how we should move forward. 

We have treaty obligations, and the one thing that hangs over all 

of our heads is the fact that if we don’t uphold these obligations 

there could be some grave implications of what will happen around 

the world with our own trademarks if we don’t resolve this in the 

effective and fair manner. 

And I welcome our witnesses. They have a great deal of experience. And I thank them, of course, for appearing with us today. 

On that note I will recognize the acting Ranking Member from 

Virginia, Bob Goodlatte. 

Mr. GOODLATTE. Mr. Chairman, thank you, and I appreciate you 

calling this hearing on an obscure and rummy but important issue. 

The United States is the leader in property rights protections of all 

stripes, including intellectual property rights. The founders realized that the protection of private property rights would be crucial 

to building a prosperous country. 

It is through this lens that we are examining today the issues 

surrounding Section 211 of the 1998 Omnibus Appropriations Act 

and its effect on trademark rights. In 1960 the communist state in 

Cuba formally seized numerous industrial facilities and assets on 

the island, including a rum factory and other property belonging to 

the Arechabala family. 

The Arechabalas founded their business in the late 19th century 

and marketed much of their product under the name Havana Club, 

which as registered as a U.S. trademark in 1935. Their business 

was seized at gunpoint by the Castro regime and its owners were 

forced out of the business and the country. 

Due to circumstances caused by the communist takeover of their 

business, the family didn’t renew their U.S. registration for Havana Club in 1973 because they were not able to use the trademark 

in commerce by producing and selling rum, and thus the U.S. 

trademark became abandoned. Then the Cuban government, which 

had seized all of the family’s corporate assets without compensating them, applied for the Havana Club trademark in the U.S. 

through a state-sponsored enterprise called Cuba Export. 

Three years later the Patent and Trademark Office granted the 

Havana Club registration to Cuba Export. In 1993 Cuba Export 

joined with Pernod Ricard, the French distillery, to form Havana 

Club Holdings for the purpose of marketing rum using the contested trademark. Tellingly, Pernod attempted 1 year earlier to 

purchase the trademark from the Arechabalas but failed. Instead, 

the Arechabala family sold their rights to the Bacardi distillery in 

1994. 

3 

In 1998 Congress attempted to settle the ownership dispute by 

passing an omnibus appropriations bill that includes a provision 

commonly cited as Section 211. This statute withholds U.S. protection for any trademark that is identical or substantially similar to 

another trademark used in connection with a confiscated business 

or asset without the consent of the original owner. 

Havana Club Holding brought suit against Bacardi the following 

year and the new statute prevented any recourse in the U.S., as 

designed. The district court dismissed the claims against Bacardi 

and the Second Circuit affirmed, stating that Pernod had no enforceable U.S. rights to the Havana Club trademark. 

At the behest of Pernod, the European Union challenged the Section 211 before the World Trade Organization. The WTO ruled 

against Pernod on 13 claims. As a technical matter, however, the 

panel also determined that the wording of Section 211 violated our 

obligations under TRIPS, the intellectual property component of 

the GATT Agreement. 

The problem is that Section 211 is directed at designated nationals and their successors in interest, meaning Cubans. TRIPS and 

other international obligations require U.S. law to treat all holders 

of U.S. trademarks equally. This means Cubans and any other nonAmerican nationals can’t have fewer rights than U.S. citizens even 

if the rationale behind the disparate treatment is otherwise understandable. 

The WTO ruling was issued about 8 years ago. Today we are examining ways to correct Section 211 to demonstrate our commitment to the rule of law as well as private property rights, including 

intellectual property rights. 

Another aspect of this issue, and about which there appears to 

be considerable disagreement among our witnesses today, is whether Section 211 and some proposed legislative fixes also violate the 

1929 General Inter-American Convention for Trademark and Commercial Protection. I look forward to hearing more about the legal 

arguments surrounding compliance with that treaty this morning. 

Some have argued that Section 211 must be repealed entirely. 

Many U.S. businesses own trademarks in Cuba and fear retaliation 

by the Castro regime. For example, he could start selling the 

Cuban version of Coca-Cola using that company’s trademarks. 

Others have argued that legislation like H.R. 1103, Representative Wexler and now, I think, Wasserman Schultz’s bill, that narrowly conformed Section 211 to the WTO ruling by expanding its 

restrictions to nationals of all countries, should be enacted. Today 

we will hear from expert witnesses who will help us determine 

whether there is a way to maintain our international treaty obligations while also protecting U.S. trademarks in Cuba and not rewarding Castro’s totalitarian regime for confiscating private property at gunpoint. 

Mr. Chairman, this should be one rum-good hearing today, and 

I look forward to hearing from our witnesses. 

Mr. CONYERS. Very funny. I mean, thank you for your statement 

and your humor. 

The Chair recognizes Debbie Wasserman Schultz, a distinguished 

and effective Member of the Committee. 

4 

Ms. WASSERMAN SCHULTZ. Thank you so much, Mr. Chairman, 

and thank you for holding this hearing today. 

I welcome the opportunity to discuss the very important intellectual property principles implicated by the Havana Club trademark 

issue with this balanced panel of esteemed witnesses. In my view, 

this hearing boils down to one issue: whether our Nation will continue to uphold the principle that trademarks stolen in another 

country will not be recognized in the United States. 

And, Mr. Chairman, I thank you for recognizing that this is a 

question that boils down to theft of a stolen trademark. 

Way back in 1878 the Arechabala family established a rum company in Cuba. They coined the Havana Club trademark and registered the mark with the United States Patent and Trademark Office in 1935. 

In 1960 armed communist insurgents swept into power in Cuba 

and seized control of all private companies. Like a lot of business 

owners, the Arechabalas had their distillery and all of their property stolen from them, in their case literally at gunpoint. 

Mr. Chairman, I seek unanimous consent to enter into the record 

the 2004 Senate testimony of Ramon Arechabala, who wanted to be 

here today. 

Mr. CONYERS. Without objection, so ordered. 

[The information referred to follows:] 

5 

PREPARED STATEMENT OF RAMON ARECHABALA


RA-1.eps
6 


RA-2.eps
7 

Ms. WASSERMAN SCHULTZ. Thank you. 

Sadly, Ramon passed away 2 weeks ago. He was present at the 

distillery that fateful day in 1960 when the company was taken by 

force. His memory continues to represent—represents the 


RA-3.eps
8 

Arechabala’s struggle over many decades to maintain the Havana 

Club trademark. 

Even after the confiscation Ramon continued to work at the distillery. He was promised compensation from the Castro regime but 

never received a penny. 

Eventually he was forced to leave the country and, like many 

Cuban nationals persecuted by the Cuban regime, found his way 

to South Florida and to Miami. It was only after he learned that 

the Cuban regime intended to sell his family’s stolen rights to the 

Havana Club rights to the French company Pernod Ricard that he 

and his family turned to Bacardi for help in regaining the Havana 

Club brand. 

In 1998 Congress enacted Section 211 to protect U.S. trademarks 

and their legitimate owners from the effects of the confiscations decreed by the Cuban government. Congress acted on a relatively 

noncontroversial principle, that while America cannot impose respect for intellectual property on Communist dictators who seize 

power by force, the United States can and must ensure that U.S. 

law will never be forced to recognize this theft as applied to U.S. 

property. To be clear, Section 211 prohibits enforcement of U.S. 

rights to trademarks confiscated by the Cuban government unless 

one has the consent of the legitimate owner. 

Furthermore, neither the Arechabala family nor any legitimate 

successor has ever consented to the assertion of rights to the Havana Club trademark by the joint venture between the Cuban government and Pernod Ricard. In fact, the Arechabalas refused to sell 

their interest in the Havana Club mark to Pernod Ricard in 1993 

when Pernod approached them about purchasing that interest. 

Section 211 was challenged in the WTO by the European Union. 

The WTO appellate body resolved that challenge by finding in favor 

of the United States on all points except one. The appellate body 

made a narrow finding that because Section 211, on its face, does 

not apply to U.S. nationals as well as Cuban nationals it is inconsistent with the national treatment and most favored nation principles under the TRIPS Agreement, as Mr. Goodlatte asserted. 

The appellate body fully supported the equitable principles embodied in Section 211, specifically that the United States need not 

recognize uncompensated confiscation or protect stolen intellectual 

property rights. Instead, Congress need only broaden its application of Section 211 to include U.S. nationals. This amounts to no 

more than a minor technical fix. 

H.R. 1103, originally introduced this session by my friend and 

Florida colleague, former Representative Robert Wexler and for 

which I substituted in as the bill’s first sponsor last week, provides 

this narrow technical fix. It clarifies that these well-founded principles of equity in Section 211 apply to all parties claiming rights 

in confiscated Cuban trademarks regardless of nationality. 

H.R. 1103 will bring Section 211 into compliance with the WTO 

ruling. It will protect the original owners of confiscated Cuban 

trademarks. It will apply to all people, regardless of nationality. 

And most importantly, it will clarify that trademarks and trade 

names confiscated by the Cuban government will not be recognized 

in the United States when the assertion is being made by someone, 

like the joint venture between the Cuban government and Pernod 

9 

*At thie time of the printing of this hearing, the Committee had not received the opening 

statement of Mr. Issa. 

Ricard, who knew or had reason to know that the mark was confiscated. 

Some believe the time has come to fully repeal Section 211. Repeal is not the answer. 

Repeal would put intellectual property at much greater risk. 

Whether we are talking about pirated movies, music, computer 

software, pharmaceuticals, or yes, even rum, we must never forget 

that our intellectual property laws are our engines for innovation 

and prosperity. 

That is why our founding fathers insisted upon including intellectual property rights in our Constitution, because they knew 

America could never become the world leader in technology we are 

today without it. I believe that property rights must be respected 

and that it is wrong for governments to take property from individuals or companies, whether nationals or foreigners, without payment of prompt, adequate, and effective compensation. 

It is hard to understand how anyone could think otherwise. Foreign confiscatory measures have never been given effect on properties situated in the United States and they must never be. 

Thank you, Mr. Chairman. I yield back the balance of my time. 

Mr. CONYERS. Thank you very much. 

We welcome our witnesses, John Veroneau, of Covington & Burling; Bill Reinsch, president of the National Foreign Trade Council—— 

Mr. ISSA. I am sorry, Mr. Chairman. I was shaking yes when you 

asked. 

Mr. CONYERS. Oh, I am sorry. The gentleman from California is 

recognized. 

Mr. ISSA. I thank you, Mr. Chairman. I ask unanimous consent 

to have my entire opening statement put in the record——* 

Mr. CONYERS. Without objection. 

Mr. ISSA [continuing]. And briefly, I look forward to working with 

the gentlelady from Florida, having worked with the gentleman 

from Florida previously. Former Member Wexler and I felt that 

this was the narrowest fix, not necessarily a fix for all the problems 

of Cuban theft in the 1960’s, and we did so for a reason. This is 

one of the few successful programs that has existed throughout the 

past. 

As you can imagine, Mr. Chairman, the assets seized in the 1960 

uprising in fact have all depreciated. They are gone. Tangible assets have become worth little or nothing in Cuba. Even the land, 

without investments in infrastructure, are worth very little—the 

factories. The Coca-Cola factory would be of no value to Coca-Cola 

today. 

And yet, the intellectual property that was not abandoned, but 

stolen, is in fact the one place in which the pressure for the Cuban 

government to find a reasonable way to unravel what in fact no 

longer exists in Russia, no longer exists anywhere in the former Soviet Union, and even does not exist in China today—Cuba remains 

virtually isolated as a country that does not respect the property 

10 

which it seized at gunpoint which still has significant value to the 

now descendants of those it was taken from. 

So, Mr. Chairman, I believe that H.R. 1103 was crafted to do the 

right thing for the right reason in the right way. It is a minimalist 

fix, as Representative Wasserman Schultz said. I think that we will 

find today that some will not agree with the premise of withholding 

anything that Cuba believes that it has as a result of its violent 

takeover outside of any legitimacy after Castro was elected—he 

seized power and he seized assets. 

So, Mr. Chairman, I do believe that there are those who will say 

there is a better technical fix. I know that the gentlelady from Florida and myself would happily listen to it. But I believe that when 

Rob Wexler originally envisioned this he did so because it was the 

simplest, narrowest, and most guaranteed to succeed to restore 

what this Congress has already voted for and the people on both 

sides of the aisle—the vast majority—agree with. 

So, Mr. Chairman, I thank you, look forward to our witnesses, 

and yield back. 

Mr. CONYERS. Thank you, Mr. Issa. 

Our witnesses are John Veroneau, of Covington & Burling; Bill 

Reinsch, president of the National Foreign Trade Council; Mr. 

Mark Esper, executive vice president, Global Intellectual Property 

Center at the Chamber of Commerce; Bruce Lehman, well-known 

to this Committee as former counsel and works in the—a former 

assistant in the Commerce and the Trademark and Patent Office. 

And our first witness is Mark Orr, vice president of North American affairs for Pernod Ricard. Mr. Orr handles issues ranging from 

public policy and regulatory matters to trade and industry affairs. 

All your statements will be introduced into the record, and we 

welcome you all and invite Mr. Orr to begin our testimony. 

TESTIMONY OF MARK Z. ORR, VICE PRESIDENT OF 

NORTH AMERICAN AFFAIRS, PERNOD RICARD 

Mr. ORR. Thank you very much, Mr. Chairman. 

I am Mark Orr, vice president for North American affairs with 

Pernod Ricard. I want to commend you and the Members of the 

Committee for holding this hearing. 

It is the first time this Committee or any other Committee of the 

House of Representatives has examined the merits of Section 211. 

No such opportunity was presented prior to Section 211’s enactment. 

Mr. Chairman, I have listened very carefully to the opening 

statements of Members of the Committee. You would not be surprised that we have a different recollection of the events that have 

been described. 

Pernod Ricard’s joint venture, Havana Club Holding, sells Havana Club rum in more than 120 countries around the world. Havana Club is an authentic Cuban rum made only in Cuba from 

Cuban sugar cane, not available in the United States at the 

present time due to the U.S. embargo on Cuban products. 

We are most interested in having the opportunity to sell Havana 

Club rum in the U.S. market when the U.S. embargo eventually is 

lifted, but one of our principal competitors, our good friends at Bacardi, the world’s leading rum company and the dominant rum supVerDate Aug 31 2005 15:42 Apr 20, 2010 Jkt 000000 PO 00000 Frm 00014 Fmt 6633 Sfmt 6601 H:\WORK\FULL\030310\55221.000 HJUD1 PsN: DOUGA
11 

plier to the U.S. market, is equally interested in denying this opportunity to us. For the past 15 years they have pursued a concerted strategy to gain control over the rights to the U.S. Havana 

Club trademark and eliminate the prospect of having to compete 

against genuine Havana Club rum in the U.S. market. 

Section 211 is and has been the lynchpin to their strategy. It was 

designed with a specific purpose of interfering in a pending trademark infringement suit brought by our joint venture against them 

and it stripped the Federal judge of all authority to decide the case 

under longstanding rules of trademark law. The effect has been to 

prevent our joint venture from using the U.S. courts to stop infringing sales of imitation Havana Club by our Bacardi friends on 

two separate occasions. It has also prevented our Cuban partners, 

who have owned the U.S. registration for the Havana Club trademark since 1976, from renewing their registration for an additional 

10-year term, an otherwise very routine procedure. 

The dispute between Pernod Ricard and Bacardi over ownership 

of the Havana Club trademark in the United States is extremely 

complex, involving difficult and arcane elements of trademark law, 

but one point is very clear: Unless Congress repeals Section 211 it 

will have decided the dispute in Bacardi’s favor and no Federal 

judge anywhere or at any time will have ruled on the merits of the 

two parties’ competing claims to ownership of the Havana Club 

trademark in the United States. 

Now, Mr. Chairman, defenders of Section 211 assert that it is 

necessary to give full effect to longstanding U.S. policy not to recognize the uncompensated confiscation of property by foreign governments, yet the property at the heart of this dispute, the U.S. registration for the Havana Club trademark, is property created here 

in the United States—cannot be and never was confiscated by the 

Castro government. Instead, it was abandoned by the previous 

owners in 1973, a fact confirmed by the U.S. Patent and Trademark Office in 2004. 

Defenders also assert that it is a necessary element of U.S. sanctions policy. Yet, genuine Havana Club cannot be sold in the 

United States due to the embargo, and under U.S. law the Castro 

regime must cede power before the embargo can be lifted. So there 

is no benefit today from the U.S. registration to the Castro regime 

and no chance of future benefit to the Castro regime from sales of 

genuine Havana Club. 

U.S. policy with regard to confiscations has been quite clear for 

many years. The enactment of Section 211, frankly, in 1998 was a 

superfluous and necessary—unnecessary addition. The only beneficiary was Bacardi. 

Mr. Chairman, Congress should repeal Section 211 in its entirety 

and as soon as possible. Repeal would restore the full authority of 

the courts to resolving the competing claims of Pernod Ricard and 

Bacardi to the Havana Club trademark in the United States. Repeal would not benefit one party over the other; rather, it would 

leave the courts free to determine fairly on the merits which party’s claim to the mark is superior, just as they could have done before Section 211 was enacted. 

Courts have compiled a long and outstanding record of resolving 

complex disputes over trademark rights in accordance with longVerDate Aug 31 2005 15:42 Apr 20, 2010 Jkt 000000 PO 00000 Frm 00015 Fmt 6633 Sfmt 6601 H:\WORK\FULL\030310\55221.000 HJUD1 PsN: DOUGA
12 

standing rules of law and equity. We should not fear the result of 

such consideration in the present dispute. 

Mr. Chairman, thank you very much for the opportunity to 

present our views on this issue today. 

[The prepared statement of Mr. Orr follows:] 

PREPARED STATEMENT OF MARK Z. ORR


Orr-1.eps
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Orr-2.eps
14 


Orr-3.eps
15 


Orr-4.eps
16 


Orr-5.eps
17 

Mr. CONYERS. Thank you. 

Our next witness is Bruce Lehman, former assistant secretary of 

commerce and director of the United States Patent and Trademark 

Office. Today he is representing Bacardi as an expert counsel. 

We welcome him for his many years being in and out of this 

Committee hearing room. 

TESTIMONY OF BRUCE A. LEHMAN, FORMER ASSISTANT SECRETARY OF COMMERCE AND EXPERT COUNSEL FOR BACARDI, USA 

Mr. LEHMAN. Thank you very much, Mr. Chairman. It is very 

nice for you to invite me to be here, and I really appreciate it. 

I think it is an understatement to say that this matter has an 

extremely complicated history involving Treasury Department investigations, trademark infringement lawsuits, registration disputes at the USPTO and international trade disputes. And I have 

submitted a written statement that I hope brings some light to all 

of that history and will help the Committee, when you look at it, 

understand this very complicated issue. 

So in my oral statement I would like to just address some of the 

most important points. First, proponents of the repeal of Section 

211 assert that it violates existing U.S. treaty commitments, particularly the 1929 Inter-American Convention for Trademark Protection. In fact, both the Paris Convention and the Inter-American 

treaty give signatory states a great deal of discretion to refuse to 

recognize trademarks when they find those trademarks either contrary to morality or public order or unfair competition. And I think 

the United States is very much within its rights to make that finding here as it has in Section 211. 

Opponents of Section 211 also argue that it exposes large U.S. 

multinational companies—I think you will hear that later—such as 

those represented by my colleague here from the Chamber of Commerce, to potential retaliation by the communist government of 

Cuba, and that it will disadvantage them in a method similar to 

the embargo of South Africa during the apartheid period. Well, Mr. 

Chairman, I think if there was ever a reasonable request of U.S. 

corporate citizens to forego for a short period of time the freedom 

to exploit a foreign market it was apartheid South Africa. 

However, the situation in apartheid South Africa was quite different from that of Cuba. While Cuba admirably does not condone 

state-sponsored racism, it is not a market economy. In apartheid 

South Africa loss of a trademark might have been given an opening 

to a competitor that wasn’t encumbered by the embargo, but that 

competitor would not have enjoyed the monopoly right to substitute 

its products for those of the embargoed trademark owner. 

In contrast, trademark law is almost meaningless in Cuba since 

no one can sell anything, whether identified by a particular trademark or not, without the permission of the Cuban state. And this 

permission is often granted by a monopoly concession. Indeed that 

is the case here. The Cuban state has given a monopoly concession 

for international distribution to one company, Pernod Ricard, which 

because of its joint venture virtually has a lock on the international 

market for the sale of rum labeled as Havana Club by Cuba. 

18 

Opponents of Section 211 argue that it would create zombie 

Cuban trademarks that would haunt the use of these trademarks 

in the future. Mr. Chairman, I think that is just not correct. That 

is based on a reading of a Second Circuit Court of Appeals opinion, 

which, by the way, affirmed the dismissal of a trademark suit 

against Bacardi and its use of Havana Club. 

Opponents of Section 211 argue that it only benefits one company. Well, Mr. Chairman, I think that in fact the current situation in Cuba, the monopoly concession granted to one company, 

benefits one company, and that is largely what this issue is all 

about here today and why U.S. policy under Section 211 needs to 

be maintained. 

Finally, opponents of Section 211 argue that it abrogates U.S. 

leadership in intellectual property matters. I think the exact opposite is the case. The very essence of U.S. intellectual property policy under Administrations of both parties has been that the use of 

intellectual property rights without permission of the rights-holder 

is contrary to the national interest. 

Any act of Congress that would repeal legislation based on this 

principle would send a very strong message to the world that U.S. 

opposition to confiscation of patents, trademarks, and copyrights is 

country-specific. We would be broadcasting to the world the message made clear in statements to this Committee today that if you 

interfere with the nationalization of companies and the confiscation 

of their trademarks the U.S. can be held hostage by the threat that 

others will meet the same fate if a single agrieved party complains. 

Thank you, Mr. Chairman, and I am happy to answer any questions about this complicated matter if you wish. 

[The prepared statement of Mr. Lehman follows:] 

19 

PREPARED STATEMENT OF BRUCE A. LEHMAN


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Mr. CONYERS. Thank you very much, Mr. Lehman. 

Our next witness is Dr. Mark Esper, executive vice president of 

Global Intellectual Property Center at the Chamber of Commerce. 

Before joining the Chamber Mr. Esper was on Capitol Hill working 

for the Senate majority leader then, Bill Frist, and as Committee 

staff. 


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Welcome back to your old digs. 

TESTIMONY OF MARK T. ESPER, EXECUTIVE VICE PRESIDENT, 

GLOBAL INTELLECTUAL PROPERTY CENTER, U.S. CHAMBER 

OF COMMERCE 

Mr. ESPER. Thank you, Mr. Chairman. I also worked in the 

House too, so it was a very, very good time. But thank you, and 

I want to thank the Members of the Committee. 

I appreciate the opportunity to testify today on behalf of the U.S. 

Chamber of Commerce’s Global Intellectual Property Center. The 

GIPC, as we call it, and its members believe that strong intellectual property rights are essential to driving the innovation and creativity necessary to create jobs, save lives, advance economic 

growth, and generate breakthrough solutions. 

There is little question that America has led the international 

community in developing the laws and norms that have defined the 

global system of I.P. rights as well as today’s rules-based global 

trading system, which includes the World Trade Organization. This 

system has benefited us greatly in many ways. In order to live up 

to our treaty obligations, honor our history of leadership when it 

comes to defending I.P. rights and the rule of law, and to protect 

American trademark-holders, the Global I.P. Center recommends 

full repeal of Section 211. 

The United States is party to many multilateral and bilateral 

trade agreements that require our laws to meet certain standards 

with respect to the treatment of I.P. rights, regardless of whether 

they are owned by United States citizens or foreign nationals. The 

Global I.P. Center works hard every day to protect these rights because we believe it is in America’s best interests to do so. 

Unfortunately, Section 211 has put the United States in violation 

of its international treaty obligations. The WTO has ruled that Section 211 violates two basic principles of the Trade Related Aspects 

of Intellectual Property Agreement: national treatment and mostfavored nation status. The WTO has also noted that Section 211 invites arbitrary treatment of U.S. trademarks overseas. 

Section 211 also puts the United States in breach of its obligations under the General Inter-American Convention for Trademark 

and Commercial Protection, a reciprocal I.P. agreement signed in 

1929 that governs trademark protection between the United States 

and Cuba to this day and which gives Cuba the legal opportunity 

to withdraw the protections it currently provides U.S. trademarks. 

The Cuban government has threatened in the past to retaliate 

against American companies with interests in Cuba, jeopardizing 

trademark protection for over 5,000 U.S. marks currently registered in Cuba by more than 400 American companies. 

Few realize that the United States is the largest supplier of food 

and agricultural products to the Cuban people, with American companies exporting approximately $500 million in food and agricultural goods each year. For U.S. companies exporting branded foods 

to the Cuban people, a threat by the Cuban government to retaliate 

over this issue remains a concern. Any retaliation would, of course, 

endanger their trademarks as well as the status of other U.S. 

brand-owners’ marks currently registered in Cuba. 

26 

Some have proposed amending Section 211 to achieve only WTO 

compliance by applying it to both U.S. national and foreign trademark-holders. However, this is an incomplete solution as it does 

not solve our noncompliance with the Inter-American Convention 

because Section 211 denies trademark registration and renewal on 

grounds other than those permitted under this treaty. 

Finally, it is important to note that by calling for full repeal of 

Section 211 the Global I.P. Center is in no way taking a position 

on the case between the two private parties engaged in the Havana 

Club trademark dispute, nor are we questioning the United States 

foreign policy with regard to Cuba, and we certainly are not 

condoning the actions taken by Fidel Castro to confiscate the property of Americans and others. 

Rather, we are recommending, Mr. Chairman, that the United 

States abide by its international obligations and follow the rule of 

law. Repealing Section 211 and allowing U.S. courts to decide the 

merits of the Havana Club case will do this. 

In conclusion, the Chamber’s Global I.P. Center recommends the 

Committee advance legislation to repeal fully Section 211. Doing so 

will ensure the United States complies with its various treaty obligations and will protect the trademarks and interests of hundreds 

of U.S. companies. 

Full repeal of Section 211 will also help preserve the global I.P. 

system—the global system of I.P. rights, laws, and norms, and 

America’s standing in it, for which we have long been both a strong 

proponent and a major benefactor. 

Thank you, Mr. Chairman. 

[The prepared statement of Mr. Esper follows:] 

27 

PREPARED STATEMENT OF MARK T. ESPER


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Mr. CONYERS. Thank you very much, Dr. Esper. 

The Committee will stand in recess briefly because Jack Murtha 

is being memorialized here on the Hill. And so we will resume very 

shortly afterward. Committee stands in recess. 

[Recess.] 

Mr. CONYERS. Committee will come to order. Thank you, gentlemen, for your forbearance. 


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We are now pleased to recognize Bill Reinsch, president of the 

National Foreign Trade Council, representing some 400 companies 

on focuses—and focuses on trade policy issues, a member of the 

U.S.-China Economic and Security Review Commission. 

We have your testimony. You may proceed, sir. 

TESTIMONY OF WILLIAM A. REINSCH, PRESIDENT, 

NATIONAL FOREIGN TRADE COUNCIL 

Mr. REINSCH. Thank you, Mr. Chairman. Pleasure to be here. 

I am testifying today in support of repealing Section 211 and 

against proposals such as H.R. 1103, which purports to address 

this problem in a different way, but in our view would only exacerbate it. Repeal of Section 211 would remedy the U.S. breach of obligations under the General Inter-American Convention for Trademarks and Commercial Protection as well as WTO rules and remove any pretext for the Castro regime to retaliate against trademarks currently registered in Cuba by U.S. companies. 

Repeal would ensure continued U.S. leadership on intellectual 

property issues by bringing the U.S. into compliance with all existing treaty obligations and by exemplifying high standards for intellectual property protection, including our commitment not to assign 

trademarks based on political criteria. It would also reaffirm that 

trademarks decisions properly are the responsibility of the Patent 

and Trademark Office and the courts. 

Section 211 was enacted solely to help one of the litigants in a 

particular dispute before the U.S. courts by preempting the courts’ 

right to make a judgment. Repeal will restore this matter to the 

courts where it belongs. 

Alternatively, if the provision is maintained in law, its long-term 

impact will be to jeopardize U.S. standing in the global intellectual 

property debate and to invite retaliation by Cuba, which could jeopardize trademark protection for over 5,000 U.S. trademarks currently registered in Cuba by more than 400 American companies, 

many of them my members. Despite the nearly 50-year long embargo on trade with Cuba both countries have reciprocally recognized 

trademark and trade name rights since 1929 as signatories to the 

General Inter-American Convention. 

Section 211 violates that convention because it denies registration and renewal of trademarks on grounds other than those permitted by Article 3. By prohibiting U.S. courts from recognizing 

rights arising from prior use of a trademark in another treaty 

country or from determining whether an earlier U.S. trademark 

has been abandoned, Section 211 expressly violates Articles 8 and 

Article—Articles 8 and 9. 

By prohibiting U.S. courts from recognizing certain trade name 

rights Section 211 violates Article 18. And by depriving U.S. courts 

of the authority to issue injunctions and other equitable relief 

against trademark or trade name infringement Section 211 violates 

Articles 29 and 30. Because Section 211 specifically denies U.S. 

courts the authority to enforce the treaty rights otherwise available 

to a party it obviates Article 32, which provides for national courts 

to resolve questions of interpretation. 

Let me just say also, if one accepts the interpretation of the public order clause articulated by Mr. Lehman, and I suspect also by 

33 

Mr. Veroneau in a few minutes, you create an exception that is so 

large that it swallows the treaty and would permit governments to 

do virtually anything they wanted. We don’t believe that clause is 

an adequate defense, in this case. 

Section 211, because of these violations—particularly because of 

the last one I mentioned—compels any dispute against the United 

States alleging violation of the terms of the Convention to be resolved through customary international law. Customary international law permits a party specifically affected by the breach to 

invoke it as a ground for suspending the operation of the agreement in whole or in part. If suspension of the operation of the convention were to occur it would result in substantial uncertainty regarding the legal status in Cuba of the trademarks and trade 

names of U.S. companies. 

Castro and his foreign relations officials have, on several occasions, threatened to withdraw the protections afforded by the InterAmerican Convention. Withdrawing those protections would put in 

doubt the trademark and trade name rights of U.S. companies in 

Cuba. 

Should Congress fail to repeal Section 211 the United States will 

have handed the Castro regime the legal grounds for withdrawing 

these protections. Whether he would do that is anyone’s guess. 

But given the experience of NFTC members in a comparable situation in South Africa we are reluctant to take that risk. And the 

issue with South Africa is not what happened while companies 

were barred there but what happened afterwards. 

It is an important precedent because it demonstrates the problems that result when trade embargoes inhibit reciprocal trademark recognition. Under the trade embargo of South Africa U.S. 

companies were prohibited from paying the fees necessary to either 

file trademark applications or maintain existing trademark registrations in South Africa. 

When the embargo ended and companies returned with internationally-recognized trademarks, including Burger King, Toys ’R’ 

Us, 7-Eleven, and Victoria’s Secret, they discovered that their 

trademarks in South Africa had been appropriated by unauthorized 

persons during the apartheid era. Recovering the rights of their 

trademarks necessitated a lengthy and expensive litigation and attempts to encourage the South African government to amend its 

laws. 

Repealing 211 would deny the Castro regime any rationale for retaliating against trademarks of U.S. companies and thereby increase the likelihood that the Cuban government will continue to 

uphold its obligations under international intellectual property 

agreements. H.R. 1103, in contrast, would seek to apply Section 

211 to both U.S. nationals and foreign trademark holders. However 

such an amendment has significant drawbacks compared to repeal, 

the main one being that it would not address any of the inconsistencies of Section 211 with the Inter-American Convention. 

It would also lead to increased litigation and legal uncertainty at 

home, which I detail in—at some length in my written statement, 

Mr. Chairman, including the discussion of the zombies that Mr. 

Lehman referred to. 

34 

Finally, Mr. Chairman, Section 211 and H.R. 1103 benefit only 

a single a company and promise no benefits for U.S. business. 

Rather, they will make it more difficult for U.S. companies to enforce their trademarks and trade names in U.S. courts against 

counterfeiters and infringers, keep U.S. companies exposed to the 

risk of legal uncertainty and retaliation abroad, and continue putting U.S. law to cross-purposes with longstanding principles of intellectual property protection and trade policy objectives of the U.S. 

government and the business community. 

Repeal is the only action that will provide full compliance with 

all current U.S. trade obligations and deny other governments any 

rationale for retaliation. In addition, it is important to point out, 

as Mr. Orr did, repeal would not take sides in the underlying dispute over the Havana Club trademark and it would not settle that 

question. Rather, it would return that question to the Patent and 

Trademark Office and to the courts where it belongs. 

Thank you. 

[The prepared statement of Mr. Reinsch follows:] 

35 

PREPARED STATEMENT OF WILLIAM A. REINSCH


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Mr. CONYERS. Thank you, Bill Reinsch. 

And now, John Veroneau, Covington and Burling, United States 

trade rep deputy and general counsel, we welcome your testimony 

here this afternoon. 

TESTIMONY OF JOHN K. VERONEAU, PARTNER, 

COVINGTON & BURLING, LLP 

Mr. VERONEAU. Thank you, Mr. Chairman, Mr. Goodlatte, and 

Mr. Coble. 

I think there are three issues here that continue to get pushed 

together and make this issue more complicated than it really is. 

The first issue I would submit is there is a food fight between some 

litigants and there are many court cases ongoing that will continue, and the issues there will be sorted out in the courts. 

The second issue is the substantive merits of Section 211, and 

the substantive merits of 211 I have not heard challenged. And the 

substance of 211 is that it codifies a court rule that has been in 

place since the Supreme Court ruled in 1911, and that rule is quite 

straightforward. It says we cannot stop foreign governments from 

confiscating property, but we in the United States have the right 

not to recognize that confiscation of U.S. property in the U.S. So 

211 simply codifies, as Congress often does, court law in this area. 

The real issue, it seems to me, is the prerogatives of the Congress. When I met, Mr. Chairman, you and Mr. Goodlatte in the 

past in my capacity as general counsel and deputy USTR your message to me was often, ‘‘In the WTO negotiations, in the DOHA negotiations don’t fence me in. Don’t limit the prerogatives of Congress to legislate.’’ 

That really is the issue that is at play here today. The question 

before the WTO several years ago was whether the WTO prohibits 

the Congress from legislating as it did in Section 211. The WTO 

answered that question. It did not say that Congress cannot legislate in the way that it did with 211. It did say that 211 didn’t go 

far enough. It didn’t apply broadly to all nationals. 

And in that sense, the WTO, while it rejected 13 out of the 14 

claims that were made, it did find that national treatment and 

most-favored nation requirements were not met. Those can be met 

quite simply by amending Section 211 by making it applicable to 

all nationals. 

As general counsel I was asked by Senator Leahy in 2004 whether, from our perspective at USTR, repeal of 211 was necessary to 

comply with that ruling, and I answered in a letter that it did not 

require repeal, that it could be amended and preserved. I stand by 

that testimony. I obviously no longer speak for the government, but 

I have heard no compelling arguments that that legal opinion has 

changed, and to my knowledge the USTR has not changed its position on that matter. 

Typically when the WTO rules against the U.S. we try to preserve the U.S. law to every extent as possible. This Committee is 

familiar with Section 337, which allows the U.S. to block imports 

that infringe U.S. patents; 337 was challenged in the WTO. 

The response of the Congress and the Administration at the time 

was not to repeal Section 337 but rather to make changes that 

were necessary to comply, but to go no further. My message on the 

44 

WTO matter is simple: There is a clear path to compliance, and we 

should adopt it. 

The second argument that has emerged has been that Congress’ 

ability to legislate in this space is restricted by the Inter-America 

Convention. I submit that that cannot be true. 

If the WTO agreements ever purported to restrain Congress’ ability to establish ownership rules of trademark, I am certain that 

any USTR would be thrown out of the room for even suggesting it. 

The Inter-America Convention, which has been in play since 1929, 

simply has a mutual recognition of registration. Registration is not 

the same as ownership, and there is a public exception to the Convention. 

Congress, in 1998, chose to codify a rule that has been in place 

since 1911. That rule seems sensible, namely that we should not 

give effect in the U.S. to foreign confiscation. It would be remarkable, I think, for any tribunal to find that that is not a legitimate 

public interest of the United States. It is an interest that is shared 

by many other countries. 

So in conclusion, Mr. Chairman, I would say that there is no 

international treaty or trade obligation that restricts the ability of 

the Congress to codify this longstanding practice in the way that 

Congress did in 1998. 

Thank you. 

[The prepared statement of Mr. Veroneau follows:] 

45 

PREPARED STATEMENT OF JOHN K. VERONEAU


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Mr. CONYERS. Thank you very much, all of you. 

Dr. Esper, you are the only one on this panel that isn’t a lawyer. 

You don’t feel isolated or uncomfortable at all up here this afternoon, do you? 

Mr. ESPER. Well, I guess that is true. I am not a lawyer. I think 

this matter is one that comes down to the jurisprudence of the 

courts, which is why at the end of the day the position we have 

taken is that, in order to comply with our international trade and 

treaty obligations and to resolve this in a way that doesn’t affect 

American businesses, the prudent way to go is to allow the courts 

to decide this; to weigh all the facts, all the arguments. You have 

heard several of those points of contention here amongst the witnesses at the table—but leave it to the courts and let the courts 

decide, consistent with precedent, with the law, with our treaty obligations, as has been done in the past. 

Mr. CONYERS. What have you heard here today with all your 

friendly legal fellow panelists that you would like to leave on the 

record or would like to tactfully correct or amend? 

Mr. ESPER. Well, I think we need to take a look at the big picture 

here, and the big picture is: what is the future of America’s credibility within the World Trade Organization and with the I.P. laws 

that undergird it and how do we want to approach intellectual 

property rights? How do we want to be treated—and our companies 

treated—vis-a-vis other nations and how they regard it? 

And again, I think there are some key facts in dispute. I know 

it was just mentioned that the Supreme Court made a decision 

with regard to confiscation of American property. My reading of the 

case here is that there was not a confiscation of property, but that 

the trademark was abandoned and it was legally reregistered by 

someone else; and secondly, that it was not American property, it 

was the property of foreign nationals. 

So to me those are two key parts—two key elements in dispute 

by all sides here that again, we should leave it to the courts to decide. Was the trademark owned or was it abandoned? What is the 

legal status of different parties involved? And let the courts decide 

it. 

Mr. CONYERS. You sound as much like a lawyer as anybody else 

here this afternoon. I can’t help but worry about what is going to 

happen to any reciprocity to our brands. If we start doing this I 

don’t know how we are going to tell everybody else that they have 

got to adhere to the WTO except in our case this is special, we are 

going to legislate. We don’t want to wait for the courts. 

Mr. ESPER. Right, Mr. Chairman. That is the concern of our 

members who have trademarks not only in Cuba but other countries around the world. 

The Chamber is constantly involved in debate and negotiations 

as an outside party in negotiations all around the world where we 

are trying to uphold I.P. laws and norms and defend them. Needless to say, our I.P.—our intellectual property—our rights are constantly under challenge from countries, governments, from activists 

involved in this issue. 

And so it is very important to us, as the Global I.P. Center, to 

constantly fight for strong I.P. laws, to defend them, and to make 

sure that we preserve those protections for America’s innovators, 

49 

for our creators, for all those people out there—our workers—who 

are creating this ingenuity, these innovations that are really driving our economic growth. And this is just—this Section 211 is just 

another example of something that chips away at our ability to 

credibly make those arguments in multilateral FORA. 

Mr. CONYERS. Well now, Mark Orr, Bob Goodlatte and Howard 

Coble are with the Chamber of Commerce. What is going on here 

this afternoon? Here more of my colleagues on this side of the aisle 

are with the Chamber. This afternoon I don’t know if that is the 

case or not. And of course, Bob will have the mike in a minute. 

How do you account for that? 

Mr. ORR. Well, that is a very difficult question for me to respond, 

Mr. Chairman. I do know, however, that both Mr. Goodlatte and 

Mr. Coble have a strong respect for the judiciary system and a long 

admiration for the ability of the courts to resolve conflicts, issues 

involving intellectual property. So frankly, it is somewhat puzzling 

to me but I am sure that they will illuminate—— 

Mr. GOODLATTE. Don’t let the Chairman put words in my mouth 

or yours. 

Mr. ORR. Over to you, sir. Perhaps you could enlighten me. 

Mr. CONYERS. Well, you are very diplomatic this afternoon, Mr. 

Orr. I will say that. 

Mr. Reinsch, what have you heard here this morning and afternoon that you would like to correct, you would like to diplomatically take an exception to? 

Mr. REINSCH. A couple things, Mr. Chairman—thank you for the 

question. I may have misheard, but I thought I heard Mr. 

Veroneau say that there is an underlying issue between the two 

companies here, which of course is correct, but that that was an 

issue that would eventually be settled in the courts. And of course, 

I think the point of our side is that it can’t be settled in the courts 

because Section 211 precludes the courts from addressing the issue 

on the merits. 

We would like to get back there to do precisely what I think he 

has recommended, which is to let the court settle it. The only way 

to get back there to allow the courts to address the issue on the 

merits is repeal. 

The other comment I would make is to pick up something that 

Dr. Esper said. I was distressed to hear Ms. Wasserman Schultz 

mention that Mr. Arechabala had passed away; I didn’t know that. 

I testified with him on this same subject 6 years ago and had the 

opportunity to meet him. We didn’t agree, but it was a real pleasure for me to meet him. 

I did sit right next to him in the hearing and listen to him testify 

that they had abandoned the trademark, that he said they got bad 

legal advice, which, you know, is an issue that he, I assume, took 

up with his lawyer at the appropriate time, but there wasn’t any 

question in the Senate hearing what had happened, what the fact 

surrounding the abandonment of the trademark by the Arechabala 

family and the subsequent assignment of the trademark to Cuba 

Export was. At the end of the day that will be settled by the courts 

but I think it is appropriate to get that on the record. 

Beyond that, Mr. Chairman, I—— 

50 

Mr. GOODLATTE. Objection, your honor. That is hearsay. [Laughter.] 

Mr. REINSCH. I think Dr. Esper made the larger point about the 

U.S. role in the world, as did you, better than I could, and I will 

stop at this point. 

Mr. CONYERS. Bob Goodlatte, the floor is yours. 

Mr. GOODLATTE. Well, thank you, Mr. Chairman. This has been 

very interesting and I think it is a quandary for the courts but I 

also think it is a quandary for us. There are certainly extra legal 

measures that have been taken in looking at the whole history of 

what happened here when this was taken at gunpoint from the 

Arechabala family. 

You know, I guess, Mr. Orr, I would like to hear from you how 

we make that family whole from the standpoint of the fact that yes, 

we can talk about what happened here in the United States with 

that trademark, but it is very clear to me that if the whole incident 

had not taken place in Cuba that that family would have renewed 

their valuable U.S. trademark and we wouldn’t be here discussing 

it today. 

And the other concern I have about it, I think, relates to the fact 

that it was indeed the Cuban government that was allowed, notwithstanding the fact that they had seized this and had been the 

subject of an embargo in the United States because of exceptions 

in the law, been able to go ahead and grab that trademark in the 

United States under circumstances that I think most people looking at it objectively would say, ‘‘Well, that is the last thing in the 

world we would have thought was a fair thing to have resulted for 

them.’’ 

And I know Pernod Ricard came in to this whole situation after 

that, and you are relying upon certain decisions made in our 

courts, but I would like to ask all of the witnesses, are there people 

other than the Arechabalas that Section 211 could help who were 

either forced to abandon their marks or who were jailed by the 

Cuban government, thus effectively forcing them to abandon their 

rights to their trademarks? 

Mr. ORR. Mr. Goodlatte, if I might comment on your—of several—there is no doubt that the Arechabala family was not treated 

appropriately in Cuba. And yes, it is true—I don’t know if there 

were guns involved at the time. That seems to be, you know, lore 

that has become fact, but it makes for—what happened was 

not—— 

Mr. GOODLATTE. Either way, you would agree that the Cuban 

government should not have seized—— 

Mr. ORR. Absolutely. 

Mr. GOODLATTE [continuing]. Their business. 

Mr. ORR. Absolutely. Governments have the right to nationalize 

properties but they also have the obligation to provide compensation to the owners of those properties. That did not take place in 

this case. 

But there is quite a different thing here, and that is that the 

Arechabala family did maintain their trademark rights in the 

United States for another 13 years thereafter, and they easily could 

have continued to do that by simply filing a certificate of excusable 

nonuse, citing the embargo, and continued on to this very day to 

51 

maintain those trademark rights here in the United States irrespective of the loss of their properties in Cuba. For whatever reason they didn’t do that. 

In essence what is being asked here is to restore those rights 

that they, by their own actions took, to allow expire at some point 

far down the road, and in this particular instance award them to 

a very large competitor of ours who, quite frankly, can do just fine 

without having those rights. What have we accomplished here—— 

Mr. GOODLATTE. Let me interrupt you, and I want to give Mr. 

Lehman a chance. Do you know of any other entities of Cuban origin that would benefit from Section 211 or have benefited from Section 211 other than—— 

Mr. ORR. No, sir, not to our knowledge the—— 

Mr. GOODLATTE. Then let me turn to Mr. Lehman and say this: 

First of all, do you know of any other entities that benefit from Section 211? And secondly, if not, then Section 211 seems to be almost 

in the form a private bill, even though I am sure it doesn’t directly 

recognize the Arechabala family. 

But ordinarily when you have a private bill one of the things 

that this Committee looks at very closely is whether it was an action beyond the control of the individual receiving the benefit of it 

or is it, as Mr. Orr says, something that that family could have protected themselves against, even though obviously their circumstances were extremely adverse at the time, that they did not 

renew that. How would you respond to him, and do you know of 

anybody else who benefits from this? 

Mr. LEHMAN. You are asking me, Mr. Goodlatte? 

Mr. GOODLATTE. Right. 

Mr. LEHMAN. First of all, I would state that this Section 211 does 

apply to others, and—— 

Mr. GOODLATTE. Do you know of any others that it—— 

Mr. LEHMAN. There have been other situations, I believe, where 

it has applied, and, you know, I have got a stack like this, and I 

will get that to you. 

Mr. GOODLATTE. If you would submit that, because it would 

be—— 

Mr. LEHMAN. But I think what is more important than that, and 

you mentioned this is like a private bill. It is not even remotely like 

a private bill. 

Mr. GOODLATTE. It has been shown by counsel that the Trinidad 

U.S.A. Corporation that produces cigars and Jimmy Buffet, whose 

registered mark ‘‘Havanas and Bananas’’ was challenged by Havana Club Holdings as a dilution of the Havana Club mark, so 

there are others who have utilized Section 211. 

Mr. LEHMAN. That is what my colleagues here have just given 

me, and some of those—and those are situations and there are 

probably some others. And those can be documented and we will 

put them in the record. 

But I think I want to—my point was, that I wanted to make, 

when you said this is like a private bill, this isn’t remotely like a 

private bill. First of all, as you have just acknowledged, other people were affected and there have been—— 

Mr. GOODLATTE. That takes—— 

52 

Mr. LEHMAN [continuing]. But this is precisely the kind of situation, in my view, that calls for congressional policy, because the 

policy is the relationship between confiscation by force of arms and 

recognition of trademarks. That is not a private bill; that is an 

overall policy—— 

Mr. GOODLATTE. I understand, I understand. But what do you 

say to Mr. Orr’s contention that it is not about the confiscation, it 

is about the decision made in 1993—whatever that date was—to 

not seek to renew the trademark? 

Mr. LEHMAN. Well, first of all, Mr. Orr’s company doesn’t own 

the trademark, doesn’t own the registration to the extent that 

there is a valid registration—and my testimony goes into that—to 

the Havana Club mark. In fact, they tried to assert that ownership 

right and were found not to have it because the transfer to their 

joint venture with the Cuban government was held by U.S. district 

court to violate an order of the Office of Foreign Assets Control of 

the Treasury Department. 

And by the way—for all this talk of litigation there has been one 

infringement lawsuit brought and one decision that has been made, 

that was appealed to the second circuit, cert denied at the Supreme 

Court, and that was the lawsuit that Mr. Orr’s company brought 

against Bacardi for their use of Havana Club. And they lost. 

So, I would have to say I have, myself, little doubt that if this 

tortured process continues that eventually Pernod Ricard will probably not be found to have valid trademark rights in the Havana 

Club mark in the United States. But the issue here is that Congress intervened to establish an overall policy, and that is exactly 

what Section 211 was. Now, maybe—— 

Mr. GOODLATTE. I know the history of Section 211—— 

Mr. LEHMAN. Yes. 

Mr. GOODLATTE [continuing]. And how it came about. It didn’t go 

through this Committee, and so this is our opportunity to review 

that. 

What recourse would Bacardi have in the U.S. courts if not for 

Section 211? Does the trademark law provide exceptions in special 

cases like this or are the rules cut and dry and if you don’t renew 

your mark you lose your mark? 

Mr. LEHMAN. Well, first of all, there continues to be ongoing litigation, including ongoing litigation about decisions made in the 

Patent and Trademark Office. You know, if I can maybe just go 

back and describe a little bit about how this mark—— 

Mr. GOODLATTE. I just want an answer. 

Mr. Veroneau, would you want to take a shot at that? 

Mr. VERONEAU. Yes, Mr. Goodlatte. I think it is important to understand that, as I said in my opening remarks, this principle that 

Section 211 embodies has been in U.S. law, albeit case law, since 

1911. So the notion that this is a new limit on Cuban expropriation 

is simply not true. There have been 13 cases where Federal courts 

have invoked this principle of not recognizing, here in the United 

States, foreign confiscations. Four of those 13 involved Cuban entities. 

So what I would submit, Mr. Goodlatte, is that Section 211 simply codifies U.S. law as it has existed since 1911. So in that regard, 

this isn’t special legislation for one company; this is just Congress, 

53 

in its—within its prerogatives—to codify what has been law for 

many a time, and there will unavoidably be other individuals who 

will benefit from this principle, whether it is codified by Congress 

or simply continued in the courts as it will be. 

Mr. GOODLATTE. And you think that Ms. Wasserman Schultz’s 

legislation would correct that as to the one WTO finding that went 

against Bacardi, or went in favor of Pernod Ricard. 

What about the discussion that several have mentioned about 

the General Inter-American Convention for Trademark and Commercial Protection? Would applying Section 211 restrictions to nationals of all countries solve those problems—the problems with 

that statute? 

Mr. VERONEAU. Well, I don’t believe there is an underlying problem and conflict with the Convention in the first place, so I don’t 

think we need to even discuss how to fix a potential problem. The 

Convention very simply says that there is a mutual obligation to 

register trademarks, but the Convention does not in any way limit 

Congress’ prerogatives to determine what the ownership standard 

should be in this country. That is your prerogative. 

And I would suggest that if the WTO encroached upon that you 

would not take a favorable view of that. I assure you the Convention doesn’t do that, because if it did the U.S. has been in violation 

since the Supreme Court decision that was in place when the Convention was signed in 1929. 

So in that sense, we are talking about Section 211 but the U.S. 

law, in terms of our case law, has been in place since 1911, and 

that is simply a recognition that we don’t recognize foreign 

confiscations. 

Mr. GOODLATTE. What do you say in response to Mr. Orr’s complaint that this is just about somebody who could have renewed 

their trademark and simply failed to do so, it is like any other case, 

leave Cuba aside? Guy is here in the United States; he has got a 

right to apply for a renewal; he fails to renew and he simply 

doesn’t do it. 

That obviously happens many times with just people who hold 

trademarks in this country. They abandon them for a variety of 

reasons. Does he have an argument? 

Mr. VERONEAU. That is a factual question that the courts have 

been sorting their way through. Part of the WTO challenge was 

that Section 211 prevents the defense of abandonment. The WTO 

agreed with the United States that Section 211, on its face, does 

not prevent a defense of abandonment. 

In this particular litigation that is being discussed today, there 

was a finding by the Second Circuit that the abandonment defense 

was not permissible in the facts of that case, but that is not—that 

is very different than saying that Section 211, as a general principle and on its face, prevents the defense of abandonment. It does 

not, and the WTO found so. 

Mr. LEHMAN. Mr. Goodlatte, I would like to try to answer your 

question again, and I just wanted to point out that—— 

Mr. GOODLATTE. It is up to the Chairman. I have exceeded my 

time. And I know Mr. Reinsch wants to jump in here too, so—— 

Mr. LEHMAN. There is a difference between registration and 

trademark ownership, and I would assert that the Arechabala’s 

54 

never abandoned their trademark ownership, that those rights 

have been transferred to Bacardi. Bacardi, indeed, is using those 

rights. Bacardi has registered those rights with state trademark offices; it has common law rights. The only issue is what goes on 

with regard to the registration. 

At the moment the registration, facially, belongs to Cuba Export. 

There is a big question—and that was a question in litigation—as 

to whether that registration has expired because there is a question whether or not it was renewed basically dishonestly by failing 

to permission to do so from the Treasury Department. And the 

Tresury Department denied that permission. The reason it did is 

because it found that money had changed hands for that registration that had gone to Cuba by Mr. Orr’s company in violation of 

the embargo. 

Mr. GOODLATTE. Thank you. 

Mr. Reinsch? 

Mr. REINSCH. I would like to comment on a couple things that 

Mr. Veroneau said, if I may. First, the question of abandonment or 

not is a question of fact, and the courts were sorting that out until 

Section 211 came along and took away their right to do so. Had 

Section 211 not been enacted the court would have ruled on that 

matter in 1999, I guess, or 1998, and we wouldn’t be here. So if 

you want to get back to that point, which we do, I think you have 

to undertake repeal. 

So now, with respect to the Inter-American Convention, its—Mr. 

Veroneau doesn’t think that we are in violation, I think—consideration is what the Cubans think, because they are the ones that 

have to act. And the Cubans have addressed that issue in writing 

in a letter to Senator Leahy prior to the last hearing—or I guess 

it was prior to the last hearing—in which they made clear that 

they believe the United States is in violation of its obligations 

under the Inter-American Convention. 

There is no dispute resolution mechanism within the Convention. 

The Cubans are in a position, if they believe that we violated it, 

to take appropriate action under international law. They have not 

chosen to do anything so far, but this is exactly what concerns the 

business community, what they might do, and it is really a matter 

of their call. The fact that the United States government—— 

Mr. GOODLATTE. It seems hardly fair, though, that the guy with 

the gun is going to write the rule that says that we don’t agree that 

this Convention, which has no mechanism for resolving itself, justifies our taking action in our country that could be to the detriment 

of—it seems like what we have got to do in this Committee is figure out what is fair and right and do that, and then defend that 

both with the Cubans and internationally. 

Mr. REINSCH. Well, with respect to fairness and rightness I also 

want to make one point about I think your initial question to Mr. 

Orr. One thing I would urge the Committee to keep in mind is that 

neither of the remedies on the table, as I understand them, are 

going to benefit the Arechabala family and the victims of the original injustice. To the extent that the Arechabala family had any 

rights they have given—they have sold those rights to Bacardi. 

55 

So the outcome of this issue is going to benefit one or the other 

of two large companies. The Arechabalas are out of luck either 

way. 

Mr. GOODLATTE. But one decision could also benefit the perpetrator of the original wrongful act. 

Mr. REINSCH. Well, not in—actually, no, because the product is 

embargoed and can’t be sold in the United States. 

Mr. GOODLATTE. Well then, the whole fight is moot unless somebody thinks at some point in time that embargo is going to get lifted—— 

Mr. REINSCH. Well, exactly. But if you will refer back to Helms 

Burton and the operative U.S. law in that question, that is not 

going to happen until Castro is not there anymore and there has 

been a change of government. So the perpetrators of the crime, if 

you will, unless Congress changes—you know, repeals Helms Burton, which is your matter not mine—but under that law, you know, 

the embargo is not going to go away until he and his regime are 

gone, at which point it will be a different government and presumably, you know, the circumstances will change, and you will have 

a different view about this trademark, and you will have a different 

view about Cuba export. 

Mr. GOODLATTE. Point taken. 

Thank you, Mr. Chairman. 

Mr. VERONEAU. Mr. Chairman, could I respond to the retaliation 

point, please? 

Mr. CONYERS. If Howard Coble consents, yes. 

Mr. COBLE. Well, I have got a 1:15 meeting, but go ahead, sir, 

and then I will—— 

Mr. VERONEAU. Thank you very much, Mr. Coble. I will be very 

brief. 

First of all, a country—a member who is party to the Inter-American Convention—does not have the right to decide for itself whether there has been a violation. It must be determined by a tribunal, 

and under the Convention the tribunals that are authorized to 

reach those conclusions are the tribunals in the country where the 

alleged violation occurs. So I don’t think we could allow a situation 

where we are permitting Cuba to determine, on its own, whether 

there is a violation. I don’t believe any tribunal could find substance to a claim of violation. 

Secondly, if the issue here really is would you, Congress, forgive 

and forfeit its prerogatives to legislate in this space simply because 

someone else thinks there might be a violation and do some horrible things. I find that, number one, doubtful—the U.S. and Cuba, 

despite the embargo, continue to register each other’s trademarks. 

There is great mutual interest despite the intense litigation among 

the parties involved in this case. 

Secondly, I don’t think it is appropriate for Congress to relinquish its authority to legislate in a way that it apparently determined was sensible, namely to codify that foreign confiscation 

shouldn’t be honored. You shouldn’t relinquish that simply because 

some other actor might take unlawful steps. 

Mr. CONYERS. Thanks for your forbearance, Howard. 

56 

Mr. COBLE. Thank you. I was wondering when the gentleman 

from Virginia was going to exhaust his time, but I am patient. I 

am a patient guy. 

Thank you, Mr. Chairman. 

Good to have you all with us. 

Mr. Goodlatte, the gentleman from Virginia, referred to this matter as obscure. Mr. Lehman referred to it as complicated. And they 

are both right—it is obscurely complicated. 

And we may get into some repetition here, but let me put a question to Mr. Veroneau and Mr. Lehman: Does it matter if the 

Arechabala legally abandoned their work given that their business 

and holdings were expropriated in 1960? 

Mr. Veroneau? 

Mr. VERONEAU. Whether there was an abandonment is a question of fact, and I would say that the case law on this question is 

that abandonment is an equitable defense. And at the risk of 

sounding overly lawyerish, when one wants to raise an equitable 

defense, one must come with clean hands. It is doubtful that in a 

U.S. court any defense of abandonment would be successful if 

brought by anyone where the chain of ownership involves a party 

who may not have acted with clean hands. And in 1960 it sounds 

like there is agreement among all panelists that there was inappropriate action by the Cuban government. 

Mr. COBLE. Mr. Lehman? 

Mr. LEHMAN. Well, first I would say that there is a difference— 

I would just reemphasize that there is a difference between having 

a trademark and registering a trademark, unlike patent law. 

Under patent law you only have a patent if the U.S. Patent and 

Trademark Office gives you one. 

That is not true with trademarks. You have a trademark because 

you are using the mark and it has come to identify the particular 

goods or services that you are offering the public. The U.S. Patent 

and Trademark Office’s role is to register that mark. 

The Arechabalas originally registered this mark because they 

were in business, and they were using it, and everyone understood 

that it described their product. Their business was confiscated, and 

then the product went for a period of time in the United States 

where it wasn’t used very much in the market. 

But the Cuban government chose, under an exception, by the 

way to the Embargo Act, chose to register that mark with title 

being in its state monopoly. And there have been a couple of registrations, and some of the litigation that is going on right now is 

whether or not those registrations were valid because of misrepresentations and fraud in those representations to the Patent Office. 

The fact is that whatever happens to the registrations, the 

Arechabala mark, in my view, is not abandoned, and it is not abandoned because they continued to try to use the mark and their 

rights were later sold to Bacardi. Now Bacardi has indeed revived 

the sale of the product in the United States. And so today the company that has the trademark in the United States by virtue of use 

is Bacardi. 

Now, what will happen eventually is if the Patent and Trademark Office decides that there is no effective registration, regardless of whoever is asking for it, Bacardi will be in a position to go 

57 

to the United States Patent and Trademark Office and register 

that mark based on their use. 

Mr. COBLE. Thank you, Mr. Lehman. 

And Mr. Veroneau, I think you responded to Mr. Goodlatte’s 

question regarding exceptions to the law of abandonment. I think 

you addressed that, did you not? You want to do it again briefly? 

Mr. VERONEAU. No, I am comfortable with the answer I provided, 

Mr. Coble. 

Mr. COBLE. Okay. 

Mr. VERONEAU. Thank you, though. 

Mr. COBLE. Mr. Orr, will the repeal of Section 211 enhance or diminish respect for intellectual property rights, in your opinion? 

Mr. ORR. Congressman—excuse me—Congressman, I think it 

will enhance respect for intellectual property rights in two respects: 

because it will restore the full authority of the courts to sort out 

competing claims to intellectual rights—and important intellectual 

property rights. 

And frankly, once again, from the standpoint of the United 

States it will reestablish our leadership in encouraging others to 

promote the stronger protection of intellectual property. Right now 

we are the laughingstock of the WTO membership. In Geneva there 

isn’t a month that goes by in the dispute settlement body in which 

such paradigms of intellectual property protection like India and 

China and Brazil draw attention to the fact that we have not complied with our obligations, and we have created, for narrow parochial purposes, an opening to protect the interests of one company 

over another. 

So yes, sir, I think repeal would certainly strengthen protection 

for intellectual property. 

Mr. COBLE. Thank you, Mr. Orr. 

Let me finally bring Dr. Esper and Mr. Reinsch on this question: 

How likely is it—strike that. Different question. What happens, 

gentlemen, if we don’t amend 211 or repeal it, and what will the 

WTO do, Doctor and Mr. Reinsch? 

Mr. REINSCH. In other words, if you do nothing and the status 

quo continues? 

Mr. COBLE. Yes. 

Mr. REINSCH. I think in terms of international reaction—Mr. Orr 

is probably in a better position to talk about what the WTO will 

do. There has been an informal truce, if you will, for the last several years. At some point the E.U. may run out of patience, and 

they will be in a position, as with other cases where a country 

doesn’t comply, to retaliate. They will have to make an initial judgment about how much that would be and in what form and then 

the United States would probably object, and it would be a, you 

know, a substantial period of arguing about it that would result in 

some E.U. action against us along with anybody else who wanted 

to climb aboard the train. 

The other piece, of course, is what the Cubans might do, which 

is, I think, far more significant, potentially, in dollar terms because 

of the U.S. trademarks that are registered there and the fact that 

because of TSRA, the Trade Sanctions Reform Act that Congress 

enacted in 2000 as I recall, there is now beginning on the agriculture side—you know, agricultural branded agricultural commodVerDate Aug 31 2005 15:42 Apr 20, 2010 Jkt 000000 PO 00000 Frm 00061 Fmt 6633 Sfmt 6601 H:\WORK\FULL\030310\55221.000 HJUD1 PsN: DOUGA
58 

ities are flowing to Cuba in small amounts, so this is actually an 

issue there. 

Nobody knows what they will do. My sense is that they are waiting for Congress to resolve this issue before they will act, and so 

if you—once you act definitively, I think they will do what they 

think is best. 

Mr. COBLE. Doctor, you want to weigh in? 

Mr. ESPER. I would agree. I think the issue with the WTO remains as it was in 2003, that we are still in noncompliance, that 

at some point there will be pressure to move forward if Congress 

doesn’t act one way or the other. I think with regard to the InterAmerican Convention there still remains that uncertainty as to 

what could or might be done and so there remains uncertainty for 

our companies who own trademarks and are doing business. 

And on the third point, the larger point I think is it continues 

to erode our ability to credibly make the case on other I.P. cases 

that come before the World Intellectual Property Organization, the 

WTO, or other FORA where we are trying to argue that we need 

to both strengthen and defend I.P. rights. 

Mr. COBLE. Well, gentlemen, I respect the private property 

rights, and I also respect the role of the courts. And I think you 

can do both without being inconsistent. 

And I appreciate you all being here. 

Thank you, Mr. Chairman. I yield back. 

Mr. CONYERS. The honorable Darrell Issa? 

Mr. ISSA. Thank you, Mr. Chairman. 

Mr. Orr, has your company ever sold Havana Club in the United 

States? 

Mr. ORR. No, sir. No, sir—— 

Mr. ISSA. So how can you have a valid mark or even an intent 

to use? How can you, in fact, file to ever own the mark if you neither had the ability to sell it nor did you sell it? 

Mr. ORR. Havana Club is a genuine Cuban product made only in 

Cuba as—— 

Mr. ISSA. No, it isn’t anything in the U.S. to your company, is 

it? 

Mr. ORR. No, actually it is quite valuable for the future opportunity of being to sell it—— 

Mr. ISSA. Does the Trademark Office, Mr. Lehman—does the 

Trademark Office recognize the intent to use someday far away in 

applications? 

Mr. LEHMAN. No, and that is not the basis for whatever registration was made. Cuba Export was permitted to register their mark 

even though they weren’t using it because of the excusable nonuse 

doctrine, the excuse being that there is an embargo and they 

can’t—— 

Mr. ISSA. So the Menendez brothers’ defense that they were orphans would have been just as valid, wouldn’t it? 

Mr. LEHMAN. Yes—— 

Mr. ISSA. You seized an asset that didn’t belong to your government; the government now has sold it to a third party with funds 

received that, in fact, no American company could pay. Whether 

there is an abandonment or not, the claim by Ricard that they had 

a right to go after it even though they couldn’t use it, but their deVerDate Aug 31 2005 15:42 Apr 20, 2010 Jkt 000000 PO 00000 Frm 00062 Fmt 6633 Sfmt 6601 H:\WORK\FULL\030310\55221.000 HJUD1 PsN: DOUGA
59 

fense was they couldn’t use it even though the abandonment clearly was because whether it was a valid abandonment or not, the 

abandonment was because another group couldn’t actually use it 

because their assets had been screened. 

So I think for the Chairman, I agree: This is incredibly complicated—until you look at it in the same light that you look at the 

murder of the Menendez brothers’ parents, and then suddenly it is 

not so hard. 

Castro stole an asset of another group of people. Your company, 

Mr. Orr, has purchased a stolen asset, and you are marketing it 

all around the world. The rest of the world is perfectly willing to 

let you do it, and you are sitting here today saying, why won’t you 

let us do it, too? The rest of the world is complaining that you 

won’t let us market the genuine Cuban brand that, in fact, was stolen from a group of individuals. 

Whether it was sold to Bacardi or not to me is sort of immaterial. 

They had a right to sell it to who they wanted if they owned it. 

You didn’t own it, and you didn’t buy it from a lawful owner under 

America’s interpretation of the seizure of these assets. Isn’t that 

true, Mr. Orr? 

Mr. ORR. No, it is not. 

Mr. ISSA. So on what basis do you think that you have clean title 

to the underlying rights? Where do you get clean title? From the 

Cuban government, is that correct? 

Mr. ORR. Once again, the U.S. registration—— 

Mr. ISSA. No, no. Excuse me, Mr. Orr. One of the things about 

sitting here this long and being a coauthor of this bill is I get to 

ask the questions and expect the answer. Where do you think you 

get clean title for this asset? 

Isn’t it true you got it from the Cuban government, which seized 

it in 1960, owned it, and gave you the rights to export their sugarcane-produced product, which is the rum, around the world under 

a name that they sold you? Isn’t that where you got the right— 

your company got the right? 

Mr. ORR. No, sir. 

Mr. ISSA. Where did you company get the right to sell in Great 

Britain? 

Mr. ORR. There were no existing trademark rights from the previous owner in any country outside of the United States—— 

Mr. ISSA. Okay, well let us switch this around. Where did you get 

the right to export rum from Cuba? 

Mr. ORR. We entered into a joint venture—sorry, sir—we entered 

into a joint venture with the Cuban company in—— 

Mr. ISSA. The Cuban company being a wholly-owned asset of the 

Cuban government, correct? 

Mr. ORR. It is a Cuban state trading entity, yes. 

Mr. ISSA. Okay, so you entered into—it doesn’t matter if you create a, quote, company. If it is 100 percent owned by the government you bought the right in a venture with the Cuban government to export Cuban product. You keep telling us—and I appreciate that—that Havana Club is only, quote, made from cane harvested in Cuba and distilled in Cuba, and then that rum is exported. That is the only way to get Havana Club. I appreciate that. 

60 

You know, in my district they make Blue Agave, and they can’t 

call it tequila. I appreciate people having these sort of discussions. 

But I have to get back to the question of whether this bill, if it 

seeks to do what it seeks to do, is doing it for the correct reason. 

The trademark which existed, the good will that existed, the past 

sales that existed in the United States prior to 1960, who did they 

belong to? 

Mr. ORR. Prior to 1960? 

Mr. ISSA. Yes, sir. 

Mr. ORR. They belonged to the Jose Arechabala company. 

Mr. ISSA. Okay. And did the owners of that company abandon 

willingly the pursuit of and the continuation of that good will, profit, and sales? 

Mr. ORR. Here in the United States, yes they did. 

Mr. ISSA. And how did they abandon it? Did they ever manufacture in the U.S., or was it, in fact, only Cuban-made rum, which 

had to be made from the cane there in Cuba in order to be authentic? 

Mr. ORR. That is exactly why the reason that they could have 

continued to maintain their rights here in the United States even 

though it was not possible to sell a Cuban product here. 

Mr. ISSA. So they couldn’t sell the product but they could continue paying the Patent and Trademark Office—— 

Mr. ORR. Absolutely. 

Mr. ISSA [continuing]. And they could use a rather complicated 

request to the PTO to maintain their right even though they didn’t 

have continuous use? 

Mr. ORR. Not a complicated request at all, Congressman. It is a 

very simple application. You pay your renewal fee, file a certificate 

of nonuse, you are good for another 10 years—20 years at that 

time. 

Mr. ISSA. Okay. 

Mr. Lehman, isn’t it true that you can have an abandonment, 

and that abandonment can be permissible for any company as long 

as the PTO accepts that reason for abandonment? For example, 

your factor burns down and it take 4 years to rebuild—aren’t you 

allowed to say that even though I did not have on sale and use that 

I had a justified reason, and therefore the abandonment was not 

a deliberate abandonment? 

Mr. LEHMAN. I wouldn’t call that abandonment; I would call that 

excusable nonuse. 

Mr. ISSA. Okay, so going back—and I realize you are an expert 

witness for the now-owner, but—isn’t the fact that you can’t source 

the material, you can’t sell the product, you are literally kept from 

producing and selling the product that bears the name that your 

family invented and promoted—isn’t that an acceptable nonuse? 

Mr. LEHMAN. Well, yes, but that—keep in mind again, that only 

relates to the registration. I would assert that the Arechabalas 

never abandoned their trademark, and continued to have it, and 

properly conveyed their rights to Bacardi. Bacardi is using the 

mark in the United States right now. They were sued for infringement; they won the lawsuit, so they own the mark. 

The only question is the registration at the USPTO and the status of it, which is currently in the name of Cuba export—by the 

61 

way. There was an attempt to transfer that registration to HCH, 

the holding company half-owned by Mr. Orr’s company. That attempt failed because the U.S. district court held it invalid. The Foreign Assets Control agency at the Treasury Department held it invalid. And the U.S. Patent and Trademark held that transfer invalid. 

So to the extent that there is a registration on file now—a registration which, in my view, has a very clouded title—that is Cuba 

Exports’ registration. But the trademark, as it is used in the 

United States, is being used by Bacardi under a continuous chain 

of ownership from the Arechabala’s rights. 

Mr. ISSA. You know, I have to admit that I probably came to this 

Committee with some preconceived agenda. And, Mr. Orr, if that 

offends you I apologize. 

But what is amazing is that I have a hard time not seeing Raul 

and Fidel when you sit there, because I am looking and saying, 

‘‘You are, in fact, an economic legacy of this taking,’’ and I am trying to figure out how in the world, even though you have gained 

financial benefit around the world from what would otherwise belong to a family that created it, invented it, and undeniably had 

it taken wrongfully, that the one place you don’t have it you are 

trying to get it here. And I am befuddled. 

So let me ask a question to the rest of the panel—and I realize 

they are fairly diverse—but taking it completely away from rum 

and completely away from trademarks, let us just say that trademark—common law trademark rights are real property even 

though they are not—you can’t put your fingers on them. 

If in World War II a painting were taken from somebody’s home 

in occupied France, and it ended up being purchased by somebody 

who bought it from the German colonel who came home with it as 

a prize, and it was later discovered, what would—the rest of the 

panel, what would you have us do as to the ownership of that 

asset? Would you have us recognize that the person who paid for 

it paid for it with money, or would be just as much be bound to 

try to have that asset returned to the lawful owner that it was 

taken from even though an intervening party had paid good money 

for it? 

I would like to go down the panel. And like I say, let us—for a 

moment I have to put my hat on and say, ‘‘You know, the only way 

I can justify intellectual property is I consider it real property,’’ so 

I put it in the terms of real property. It is a painting taken from 

occupied France in World War II and bought by intervening parties. 

What do we do there, Doctor? 

Mr. ESPER. Well, it is hard to translate into the terms the scenario you have put forward because it is the difference between 

real property and intellectual property, per se. And the scenario 

you portray is complicated. I mean, that is why the position we 

take is, ‘‘Let the courts decide this, let the courts look at international law, let the courts look at our requirements, and let them 

decide, based on all the merits of the case’’—— 

Mr. ISSA. So your first thing is, let the U.S. courts make a decision based on foreign courts? 

Mr. ESPER. Again—— 

62 

Mr. ISSA. No, seriously, let us follow up on this. When does the 

U.S. court—and this is a pretty popular discussion up here on the 

dais—when did the U.S. courts look at international law for purposes of fairness in the U.S.? I know of no valid reason, and I think 

the Supreme Court has been torn on this but they have made it 

pretty clear that U.S. law governs U.S. courts. We do not read into 

U.S. law foreign law unless we adopt it. 

Mr. ESPER. No, no. To be clear, Congressman, I mean, the laws 

we are bound to by our treaty obligations. We are bound by our 

treaty obligations to do that. That is why in this case the—and you 

have heard this on the panel—the issues that—a key issue here 

that is the pivot point is whether or not the Arechabala family did 

or did not abandon its trademark. That decision can take us one 

way or the other. 

Mr. ISSA. Well, no. Mr. Lehman has said it pretty well. Let us 

assume they abandoned their registration. On what basis did they 

abandon their other rights? 

Mr. ESPER. Well, my understanding of simply reading it, not as 

a lawyer, as the Chairman has asserted, is that they simply failed 

to reregister, to fill out the forms, submit a check, and register, 

something they could have done. I think if you go back into the testimony from the Senate in 2004, Mr. Arechabala, who testified at 

the time, acknowledged as much. 

Mr. ISSA. Okay, I am going to yield back here. I guess I am going 

to close by saying, you know, whether it is my old company’s Viper 

trademark or any number of other products, when I was taught 

trademark law—and I was taught it one check at a time I had to 

write to attorneys as a businessman—it was very clear that my 

first use and sale gave me inherent rights, those common rights 

were in every state in which I had done business or sold, and that 

if I only sold in a couple of states I might only have common rights 

in the state. 

And the reason I went to the Federal trademark was, even if I 

was only selling in 35 states I wanted to be covered for the whole 

country because a uniform brand for my products were important. 

But I came to the Federal registration with some very strong common rights that I had designed, created unique or stylized marks, 

and that I brought those in saying, ‘‘I have already used these in 

commerce or intended to use them in commerce.’’ 

So I guess my whole problem is, here, I believe, what we are deciding is whether or not common rights existed. And we are probably to a great extent saying we don’t want the courts—and I believe the Chairman would agree that this thing will take it away 

from the courts perhaps because the issue is bigger than a registration or the outcome of registration arguments; it is about a basic 

common right that was taken away by force in 1960, has not been 

restored or paid for—and I appreciate the fact the original owners 

have been paid for at some diminished amount when they chose to 

sell to Bacardi compared to what it would have been had they continued to be able to make and sell their product around their 

world. 

So, Mr. Chairman, you have been very, very kind with your time. 

Hopefully I have been as balanced as you would expect me to be 

in this case, and I yield back. 

63 

Mr. CONYERS. Well, could I just ask this one question of you— 

and you are a past member of the Chamber of Commerce: Why 

aren’t you with them this time? 

Mr. ISSA. I am glad you asked me that question, Mr. Chairman. 

I believe the Chamber of Commerce, who has come to me over the 

years asking me to lift the embargo on Iran even though it would 

endanger Israel, it would endanger the United States, and they 

continue to try to produce a nuclear weapon—it is the same Chamber whose answer always is, ‘‘Please let our companies sell all over 

the world without any restraint.’’ 

No, I appreciate the Chamber does a great deal, and I was a 

board member of the San Diego chamber and an active participant, 

but at some point our obligation is to say to the companies who 

would like to sell bulldozers in Tehran or a myriad of products in 

Cuba that foreign policy, for valid reason, is something we have a 

constitutional obligation. So I respectfully disagree with the Chamber because I think they are consistent, and I would like to be consistent too. 

Mr. CONYERS. Well, I am not surprise that your independence 

would be reflected even with the Chamber of Commerce or anybody 

else. 

Mr. ISSA. Thank you, Mr. Chairman. 

Mr. CONYERS. Thank you very much. 

Mr. Reinsch, you get the last word. 

Mr. REINSCH. I get the last word. Well, I appreciate that—not a 

chance—— [Laughter.] 

I think I would come back to where Dr. Esper just finished. 

There are a lot of facts here that are circling around that are in 

dispute. There are a lot of rights being asserted, I think, in response to what—the direction that Mr. Issa was going down. Once 

can assert one’s rights but we are in a situation here where someone else has come in and said you don’t have those rights, or you 

ought not to have those rights, and there has to be a process for 

sorting that out. 

My organization’s view consistently has been the right place to 

sort those things out is first at PTO when they make a decision 

about registration, and second, in the courts. And we are—as with 

the Chamber, we don’t have a position on who owns this trademark. We are content to go along with whatever the courts decide. 

What we are supporting is getting back to the courts to let them 

make that decision. 

My view of the litigation history of all this—and there has been 

a lot of—there have been lots of pieces of it. I have got a file this 

high back in my office and they have got files that are even thicker 

than that—it has been that in the instant case was there was going 

to be a decision made on precisely that question on the merits and 

this section came along and trumped that. And we would simply 

like to restore the status colante, and I think the implications of 

not doing that end up being quite significant for all the reasons 

that Dr. Esper said. 

Thank you. 

Mr. CONYERS. Mr. Goodlatte? 

Mr. GOODLATTE. Thank you, Mr. Chairman. Mr. Chairman, the 

only thing I would add, if I get a word beyond the last word, would 

64 

be that I think the solution we should look for is one that does not 

give effect to—in the United States—to foreign confiscation. And I 

second what Mr. Veroneau said about that. How we get about 

doing that and who wins and who loses in this regard I am not 

completely clear. 

But I would like to, in furtherance of what the gentleman from 

California said, ask that a letter to you, Mr. Chairman, and to 

Ranking Member Smith, from Jaime Suchlicki, who is a professor 

at the University of Miami and the director of the Institute for 

Cuban American Studies and offers his opinion on what impact 

this might have in Cuba, with regard to any retaliation on the part 

of the Castro regime—I would ask that that be made a part of the 

record. 

Mr. CONYERS. Without objection, so ordered. 

[The information referred to follows:] 

65 

LETTER FROM JAIME SUCHLICKI, PROFESSOR AND DIRECTOR, UNITED OF MIAMI, SUBMITTED BY THE HONORABLE BOB GOODLATTE, A REPRESENTATIVE IN CONGRESS

FROM THE STATE OF VIRGINIA, AND ACTING RANKING MEMBER, COMMITTEE ON THE

JUDICIARY


JSLet.eps
66 

Mr. CONYERS. We thank you all very, very much. 

The Committee is adjourned. 

[Whereupon, at 1:51 p.m., the Committee was adjourned.] 

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