## Facts

- Pernod Ricard (a French company) entered a joint venture with Cubaexport (a Cuban government trading agency) to make and sell rum under the “Havana Club” label, and the venture obtained trademark rights for the product.
- After Fidel Castro came to power, Cuba seized operations and transferred assets to Cubaexport, including rights associated with the Havana Club mark.
- In 1974, Cubaexport obtained a U.S. trademark registration for Havana Club rum.
- In the 1990s, Bacardi sought to register Havana Club in the United States; the application was denied, but Bacardi began selling rum under the Havana Club name anyway.
- Cubaexport sued in U.S. federal court to stop Bacardi’s use of the mark.
- After lobbying by Bacardi, the U.S. Congress enacted Section 211 as part of the Omnibus Appropriations Act of 1998. Section 211 restricted the ability to register, renew, or enforce in U.S. courts certain trademarks and trade names connected to businesses confiscated by the Cuban government, absent consent of the original owner (or its successor).
- The European Communities challenged Section 211 at the WTO under the TRIPS Agreement and provisions of the Paris Convention (1967) incorporated into TRIPS, arguing that Section 211 discriminated in trademark and trade name protection and enforcement.
- A WTO panel rejected many of the European Communities’ claims but found a violation of TRIPS Article 42 (fair and equitable enforcement procedures). Both sides appealed parts of the panel report.

## Issues

1. Whether TRIPS and the Paris Convention (1967), as incorporated into TRIPS, limit a Member’s ability to set domestic rules on ownership or entitlement to trademarks and trade names tied to confiscated property.
2. Whether Section 211 accords “less favourable” treatment to nationals of other Members than to U.S. nationals in violation of TRIPS Article 3.1 (national treatment), including via Paris Convention Article 2(1).
3. Whether Section 211 grants different treatment among nationals of different WTO Members in violation of TRIPS Article 4 (most-favored-nation treatment).
4. Whether Section 211, by restricting access to U.S. court remedies for certain claimants, violates TRIPS Article 42’s requirement that Members make available fair and equitable enforcement procedures.

## Decision

- The Appellate Body upheld the central conclusion that WTO Members may set domestic criteria for trademark and trade name ownership/entitlement, and that TRIPS and the incorporated Paris Convention provisions do not require Members to recognize titles or claims derived from confiscations, as such.
- The Appellate Body found that certain features of Section 211 were inconsistent with TRIPS national treatment obligations (TRIPS Article 3.1, including through Paris Convention Article 2(1)) because the measure could result in less favourable treatment for foreign nationals in the ability to assert or enforce covered rights in the United States.
- The Appellate Body also found that certain features of Section 211 were inconsistent with TRIPS MFN obligations (TRIPS Article 4) because the measure could differentiate among foreign nationals in access to trademark/trade name protection and enforcement.
- The Appellate Body reversed the panel’s finding that Section 211 violated TRIPS Article 42, reasoning that Article 42 concerns the fairness of procedures made available to enforce rights recognized under domestic law and does not, by itself, require a Member to provide enforcement for claims the Member’s substantive law does not recognize.
- As adopted by the DSB on February 1, 2002, the rulings required the United States to bring Section 211 into conformity with TRIPS with respect to the national treatment and MFN inconsistencies.

## Legal Principles

- TRIPS sets baseline standards for intellectual property protection but does not unify Members’ rules on who owns a trademark or trade name; Members can define entitlement and transfer rules under domestic law.
- A Member’s ownership or entitlement rules must still comply with TRIPS non-discrimination disciplines:
  - National treatment (TRIPS Article 3.1; Paris Convention Article 2(1) as incorporated) requires treatment no less favourable for nationals of other Members in the protection of intellectual property, including access to enforcement tied to that protection.
  - MFN (TRIPS Article 4) requires equal treatment among nationals of all WTO Members for advantages related to intellectual property protection.
- TRIPS Article 42 addresses the fairness and equity of enforcement procedures that are made available; it does not create a requirement to provide remedies for a claimant who cannot establish entitlement to the asserted right under domestic law.
- In WTO dispute settlement, a panel’s reading of municipal law is examined as part of determining consistency with WTO obligations; appellate review may address whether the panel’s legal characterization of the measure supports its WTO-law conclusions.

## Conclusion

In *United States—Section 211 Omnibus Appropriations Act of 1998*, the WTO Appellate Body ruled that the United States could define domestic ownership and entitlement rules for trademarks and trade names connected to Cuban confiscations, but that aspects of Section 211 resulted in discrimination inconsistent with TRIPS national treatment and MFN obligations; it also reversed the panel’s separate finding that Section 211 violated TRIPS Article 42 on fair and equitable enforcement procedures.


United States—Section 211 Omnibus Appropriations Act of 1998, WT/DS176/AB/R (February 1, 2002)