Wednesday, August 10, 2011

Labeling Puerto Rican Rum as “Havana Club” Not False Advertising

This posting was written by William Zale, Editor of CCH Advertising Law Guide.

A liquor distributor (Bacardi U.S.A.) did not engage in false advertising under the Lanham Act by labeling a rum not produced in Cuba as “Havana Club,” the U.S. Court of Appeals in Philadelphia has ruled.

Pernod Ricard USA filed a false advertising suit under Section 43(a)(1)(B) of the Lanham Act, asserting that the labeling of Bacardi’s bottle, particularly the use of the words “Havana Club,” misleads consumers to believe that the rum is produced in Cuba. In a three-day trial, Pernod presented unrebutted survey evidence that approximately 18 percent of consumers who looked at the Havana Club rum bottle were left thinking that the rum was made in Cuba or from Cuban ingredients.

The trial court ruled in favor of Bacardi (CCH Advertising Law Guide ¶63,805).

Geographic Origin

The phrase “Havana Club™” appears in large letters on the front of the rum bottle at issue, the court noted. Below that, in letters of prominent though smaller size and in a different font, the words “PUERTO RICAN RUM” appear. “Havana Club™” appears elsewhere on the bottle, including a statement that the product “is a premium rum distilled and crafted in Puerto Rico using the original Arechabala family recipe … [d]eveloped in Cuba …”

In order to determine whether advertising was false or misleading, the court looked at the words “Havana Club” in the context of the entire advertisement—the label of the rum. Viewed in that context, any thought a consumer might have that the words “Havana Club” indicate the geographic origin of the rum must certainly be dispelled by the plain and explicit statements of geographic origin on the label, according to the court.

Survey Evidence

The trial court properly disregarded the survey evidence as immaterial, because the Lanham Act does not forbid language that reasonable people would have to acknowledge is not false or misleading, the court concluded.

The August 4 opinion in Pernod Ricard USA, LLC v. Bacardi U.S.A.,LLC will be reported in CCH Advertising Law Guide.

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