We should be wary of something called “common-good” or “stakeholder” capitalism. It is a theory that some national conservatives are promoting to revitalize Republican ideas on economic growth — something we shouldn’t need after three years of “See, I told you so” on Biden’s failed policies.
These so-called conservatives make believe they can improve capitalism by imposing their own preferred economic and social policies, but it’s really just crony capitalism — where the government picks winners and losers — by another name.
An example of government picking winners and loser is a current effort by the Bermuda-based rum-maker Bacardi to use political influence to gain market advantage over competitors. For more than 25 years, Bacardi has been engaged in a relentless effort to manipulate U.S. lawmakers and government policy to stifle competition and gain market advantage.
In a classic case of currying favor with political donations, lobbying and backroom deals, in 1998, Bacardi was able to get Congress to add something known as “Section 211” to an unrelated appropriations bill designed to block competitors, like France-based Pernod Richard, from using its rightfully-owned trademark in Havana Club rum.
The 1998 effort was only partially successful, so Bacardi is now engaged in a new effort, cloaked in election year anti-Cuba rhetoric. The ironically named “No Stolen Trademarks Honored in America Act” passed the House of Representatives last November.
The bill prohibits U.S. courts and agencies from enforcing or validating confiscated trademarks if the mark has been used in connection with a confiscated business or asset. Currently, the prohibition applies only if the confiscated trademark is being asserted by a Cuban national. The Senate sponsor is Robert Menendez, D-N.J., who is notable as both one of the Senate’s most Cuban and most corrupt members.
There is no dispute that the U.S. government should respect the property right from stolen trademarks, yet there is a case of a trademark abandoned by the original owner.
The trademark dispute over Havana Club traces its history to before the Cuban revolution in 1959. Havana Club was originally produced and trademarked by the Arechebala family in Cuba. After the revolution, the family left Cuba and by 1962 had abandoned its trademark on the product in the U.S. and other countries. Years later, in 1974, Cuban company Cubaexport applied for and was granted a valid trademark for Havana Club by the U.S. Patent and Trademark Office (USPTO). At no point did the Arechebala family raise any objections or try challenge Cubaexport’s trademark.
That changed in the 1990s after Pernod-Richard initiated a joint venture with Cubaexport and began producing and distributing Havana Club internationally, selling it abroad, but not in the United States, where it was and still is subject to the U.S. trade embargo on Cuba.
On February 1, 2002, the World Trade Organization (WTO) issued a ruling that Section 211 was in violation of international agreements. In 2004, the U.S. Patent and Trademark Office (USPTO) rejected a Bacardi request that the agency withdraw the Cubaexport trademark, noting that Bacardi had failed to state a legally sufficient claim.
The trademark was renewed in 2016 for another 10-year term and Bacardi lost another case in 2022 at the USPTO. Bacardi is now supporting the No Stolen Trademarks Act to gain market advantage through fiat rather than strategy.
Like Section 211, this bill is specifically designed to block Pernod and Cubaexport from enforcing its Havana Club trademark.
Hatred of communist Cuba is no reason to support crony capitalism. Free markets and the respect for intellectual property rights is a centerpiece of American economic theory.
It would be wrong to shift over to a crony, or “common-good,” capitalism where politicians get to make the choice as to what companies get favored status and those that do not.
Jared Whitley is a longtime politico who has worked in the U.S. Congress, White House and defense industry. He is an award-winning writer, having won best blogger in the state from the Utah Society of Professional Journalists (2018) and best columnist from Best of the West (2016). He earned his MBA from Hult International Business School in Dubai. Read Jared Whitley's reports — More Here.