History
The Sixties were a time of social and political upheaval across the globe, perhaps no more so than in Cuba, when Fidel Castro overthrew the U.S.-backed government and installed his own revolutionary regime. As part of the Communist takeover, Castro seized privately-owned assets, including that of the thriving Cuban cigar industry, and made them state property. In doing so, the new government also claimed the trademarks owned by several cigar families — trademarks that can be traced back to the 1800‘s. The most famous trademarks confiscated were those from the Menendez family, known for Montecristo and H. Upmann cigars, and the Cifuentes family, which produced the Partagas brand. State tobacco monopoly, first run by Cubatobaco and then by Habanos S.A., has handled the production and distribution of Cuban cigars and tobacco products to world markets — except to the U.S. — ever since.
Over the years, many of the exiled Cuban cigar families sold their trademark rights to companies outside of Cuba. Habanos S.A., however, also claims to hold in Cuba and in numerous other countries title to those same trademarks. Now, with talk of the U.S. possibly ending the trade embargo against Cuba, issues surrounding fair compensation to the original Cuban trademark owners must return to the forefront.
As part of their agreement to sell their trademarks, many of the Cuban cigar families stipulated that once the U.S. could resume selling Cuban versions of their brands, they will be due additional fair compensation. (Cuban-origin cigars now sold in the U.S. are largely manufactured in the Dominican Republic and Honduras.) For this to be a reality, Cuba must transition to a more free and open market economy, and allow U.S. cigar manufacturers fair access to Cuban tobacco leaf. If this is not a key provision in normalization, it will have the effect of depriving, for a second time, the exile families of the value of their trademarks.
As it is now, state trading enterprises such as Habanos S.A. do not have to answer to the market, and have the ability to “distort” trade because of unfair advantages and the financial support of the government. Fundamental reform of Cuba’s tobacco industry is the best way to permanently assure that U.S. producers can fairly compete on the world market once the embargo is lifted.
In recent years, a bi-partisan group of lawmakers have supported several bills that seek to loosen restrictions or terminate the Cuban embargo altogether: H.R.624, H.R. 2272, and H.R. 1737, to name a few. Other bills, however, would undermine fair treatment of the exiled Cuban tobacco families, including S. 749 and H.R. 1306, which are aimed at repealing Section 211 of the Department of Commerce and Related Agencies Appropriations Act of 1999. Both would in effect deprive trademark holders of their intellectual property rights.
In April 2009, President Obama lifted some travel and telecommunications restrictions against Cuba. It is still unclear though what kind of access the U.S. will have to Cuban markets if the embargo is completely ended. The President has said he will not lift the embargo until the Cuban government signals democratic reforms, including holding free elections and improving its human rights record. How ever U.S.-Cuba trade relations play out, any legislation aimed at normalizing commerce must produce a level playing field for both countries, and above all, pave the way for fair restitution to the exiled Cuban tobacco families.