With U.S.-Cuba detente, a battle over trademarks looms
Nov 25, 2015 10:08 PM EST
When Julio Manzini decided two years ago to name his small restaurant McDonald's after the famous fast-food chain (MCD.N), he had no idea it could cause any trouble. He has since been frightened into removing the name.
"I don't even know what McDonald's tastes like, I just thought the name was striking, like Shakira or something," he said at the lunch counter of what used to be "Cafeteria La McDonald's Camagueyana" in the Cuban city of Camaguey, about 300 miles (500 km) east of Havana.This month, Manzini stripped "McDonald's" and the famous golden arches from his handcrafted sign as a precaution after he claimed his establishment was visited by a lawyer sent by the company.
The place is now simply called "Cafeteria La Camagueyana."
His counterfeit McDonald's illustrates a potential battlefront between Cuba and the United States over trademark and intellectual property rights as Cuba's economy opens up to more private enterprise and closer ties with the United States.
The two countries restored diplomatic relations this year after half a century of Cold War hostility and are now working to improve ties. Trademark and intellectual property issues will be on the negotiating table, both sides have said.
Both have grievances. The United States has denied Cuban companies the same trademark protection enjoyed by brands from everywhere else, forcing marquee names such as Havana Club rum and Cohiba cigars into long, expensive court battles.
And while Cuba protects trademarks registered with the government, it also tolerates or officially sanctions the resale of unlicensed music, software and entertainment. State television routinely pirates American movies and shows for broadcast.
In a socialist economy that only in recent years has allowed small-scale private businesses, knowledge of trademark law is poor. Manzini said he never thought to check with the Cuban Office of Industrial Property (OCPI) to see if the McDonald's name was available. It is not: McDonald's has registered trademarks in Cuba since at least 1985.
Despite the United States' 53-year-old trade embargo against Cuba, companies from both countries have continued registering trademarks and patents in the other.
Since 1966 about 1,500 U.S. businesses have filed nearly 6,000 trademarks in Cuba, including renewals, according to data from Saegis, the online trademark database from Thomson Reuters.
Another 1,355 trademarks of U.S. origin, including Walmart (WMT.N) and Google (GOOGL.O), are protected under an international treaty known as the Madrid Protocol, according to World Intellectual Property Organization data.
Aside from the "special hamburgers" and "American coffee" on offer, there is little that separates Manzini's hole-in-the-wall operation from hundreds of other snack bars tucked in doorways across the island.
But he was likely violating trademark protections by using the McDonald's name and the golden arches on his sign. He said he only fully understood he could be in trouble after the lawyer visited the restaurant recently while he was away.
"I'm really afraid. I don't even pull in 1,000 pesos ($40) a day," Manzini said.
McDonald's would have to complain to the OCPI to legally stop Manzini and others, such as the "McDunald" cafe in the city of Santa Clara, which also uses the golden arches on its sign.
A spokeswoman for McDonald's declined to comment except to say that "we are committed to vigorously protecting our intellectual property."
EXPLOSION OF INTEREST
More companies have registered their brands in Cuba since U.S. President Barack Obama and Cuban President Raul Castro announced detente last December, among them Twitter (TWTR.N), Uber [UBER.UL] and Segway.
"There has been an explosion of interest from U.S. companies," said Jaime Angeles, an intellectual property lawyer and partner at Dominican law firm Angeles & Lugo Lovaton who represents firms fighting for their trademark rights in Cuba.
Some 192 U.S. trademarks were filed in Cuba in the first four months of 2015, compared to 78 in all of 2014, according to Saegis data.
A few U.S. companies have seen their brand names pursued by others in Cuba.
Some companies are contesting those rights, including JetBlue Airways Corp (JBLU.O), which announced plans for a New York-to-Havana charter five months after Fuentes asked for the name JetBlue.
"We will vigorously protect our brand in Cuba," spokesman Doug McGraw said.
Fuentes declined to comment. The OCPI has yet to grant him any trademarks, according to its public records.
Angeles, who represents eight of the U.S. companies, including restaurant chain IHOP [DIN.UL] and pharmaceutical company Hospira, said he was confident they would win the rights to their brands in Cuba.
"The Cuban system has all the legal tools to protect trademarks of any country," he said, adding that companies should claim their trademarks before someone else does. "Filing first is the cheapest protection you can get."
Cuba has long struggled to protect its marquee brands under U.S. law, including one statute that aims to protect owners of Cuban companies nationalized after the 1959 revolution that brought Fidel Castro to power.
Bacardi, the former Cuban distiller that now makes rum in Puerto Rico, controls Havana Club in the United States after acquiring the name from its original pre-revolutionary owner. Everywhere else, Cuba and its French joint venture partner, Pernod Ricard (PERP.PA), control the rights to Havana Club.
"That is a restriction we put on trademarks only with respect to Cuba," said Jeremy Sheff, a law professor at St. John's University in New York. "The U.S. treatment of Cuba is unique in all of international property law."
Cuba's famed Cohiba cigar brand has been fighting for its trademark for 19 years against a rival that won a major U.S. court case by citing the embargo.