Intellectual Property

Pernod Ricard USA LLC v. Bacardi U.S.A., Inc.: More on the the HAVANA CLUB saga

            Issued April 6, 2010, this opinion is the latest installment of the HAVANA CLUB saga.  Here, Pernod Ricard USA brought a false advertising claim against Bacardi U.S.A., alleging that Bacardi's use of the HAVANA CLUB trademark on its rum bottle deceives consumers into believing that Bacardi's rum is made in Cuba, when in fact it is not. Pernod Ricard USA LLC v. Bacardi U.S.A., Inc., 2010 U.S. Dist. LEXIS 34424 (D. Del. 2010). The court held a bench trial and granted judgment to defendant Bacardi.

            Users can view Pernod Ricard USA LLC v. Bacardi's full opinion and order. subscribers can view Pernod Ricard USA LLC v. Bacardi's enhanced opinion.

            Anyone shall be liable who "on or in connection with any goods or services. . . uses in commerce any . . . false or misleading description of fact, or false or misleading representation of fact, which . . . misrepresents the nature, characteristics, qualities, or geographic origin of his or her. . . goods . . . ."  15 U.S.C. § 1125(a)(1)(B).  This opinion focuses on one element of the plaintiff's false advertising claim:  whether Bacardi's use of its trademark misrepresented the geographic origin of its rum.  The court describes Bacardi's Cuban-themed marketing materials in detail but goes on to discuss solely its product labeling.

            The opinion in this case struggles with the meaning of "geographic origin" under the statute.  Citing the lack of case law interpreting "geographic origin" in 15 U.S.C. § 1125(a)(1)(B), the court turns to lengthy interpretations of the word "origin" in 15 U.S.C. § 1125(a)(1)(A).  This unnecessary move muddies the waters and even the court is forced to conclude that the authority interpreting subsection (A) "is not particularly instructive" in interpreting subsection (B).

            The court ultimately concludes that "geographical origin" could mean either the product's physical place of manufacture or, oddly, the product's "heritage" or "history."  It finds that Bacardi's labeling was accurate on both fronts.  First, defendant's bottle includes a prominent notice that the product is a "Puerto Rican rum," eliminating any possible deception from the mark HAVANA CLUB and clarifying that the rum is not made in Cuba.  Second, the court found that HAVANA CLUB rum does have a Cuban heritage and the defendant's use of that mark accurately represents that heritage.  On that point, the court noted that defendant Bacardi was originally a Cuban company and HAVANA CLUB rum was originally made in Cuba, though it fails to mention the fact that HAVANA CLUB rum is still made in Cuba by another party.

            Finally, the court concludes tersely that the defendant "has a First Amendment right to accurately portray where its product was historically made."  False advertising is a form of commercial speech that courts can clearly prohibit under the Lanham Act without impinging on the First Amendment.  See, e.g., Central Hudson Gas & Electric Corp. v. Public Service Comm'n of New York, 447 U.S. 557, 562-63 (1980).  Without the prominent disclaimer that the product is a "Puerto Rican rum," it is quite doubtful that the defendant's use of the HAVANA CLUB mark alone should have been protected by the First Amendment, as it would have misrepresented the "geographic origin," or place of manufacture, of defendant's product.