WTO panel rules on EU appeal to Cuban rum decision.

WASHINGTON -- An appellate panel of the World Trade Organization ruled a US law that prohibited a Cuban-French rum joint venture from protecting its US trademark must be amended.

But the Jan. 2 ruling on an appeal of an earlier decision by the WTO did not give either party in the dispute a clear victory. Even though both sides had sought a review.

Havana Club Holdings, a joint venture between the Cuban government and Pernod Ricard that produces premium Havana Club Rum, was hoping that the European Union's challenge to a US law known as Section 211 would result in its repeal. The 1998 law prohibits US courts from recognizing the rights of Cuban-origin trademarks that have been nationalized by Fidel Castro's government.

The WTO appellate body ruled the law was inconsistent under the WTO Agreement of Trade-Related Aspects of Intellectual Property right, known as TRIPS, because it treated Cuba differently from Americans and nationals of other WTO-member nations. It did not rule that nationalized trademarks had a right to protection, as Havana Club Holdings had hoped, but said the law must be broadened to include expropriated trademarks from all countries and that the law must apply to Americans as well.

An EU statement issued in Brussels called the appellate decision favorable because it reversed the Aug. 6 decision of a three-judge WTO panel that trade names are not covered under TRIPS.

Bacardi-Martin I also hailed the ruling because it did not say Section 211, in its entirety, violated international law.

Meanwhile, Havana Club Holdings, and its European Union partner in the dispute, hope the United States will find broadening of the law impractical and decide to scrap it altogether. But it seems more likely that the United States will try to ignore the ruling as for long as it can, even though it must agree with the EU on a period for Washington to make the changes needed to meet WTO rules.

The appellate decision--which is final--also dealt Havana Club Holdings a blow by overturning the first WTO panels finding that Section 211 violated international trade law because it denied trademark owners access to courts to enforce their intellectual property rights.

Promoted by Bacardi-Martini, Section 211 was aimed only at the Havana Club name, which Bacardi-Martini claims was "stolen" from the Arechabala family that once produced a rum under the same name in Cuba.

Havana Club Holdings, however, maintains the Arechabalas allowed the trademark to lapse in the United States and other countries and that it legally registered the name in the United States. The joint venture hoped to be able to sell its rum in the United States when the embargo is lifted.