[House Hearing, 114 Congress]
[From the U.S. Government Publishing Office]
RESOLVING ISSUES WITH CONFISCATED
PROPERTY IN CUBA, HAVANA CLUB RUM
AND OTHER PROPERTY
=======================================================================
HEARING
BEFORE THE
SUBCOMMITTEE ON
COURTS, INTELLECTUAL PROPERTY,
AND THE INTERNET
OF THE
COMMITTEE ON THE JUDICIARY
HOUSE OF REPRESENTATIVES
ONE HUNDRED FOURTEENTH CONGRESS
SECOND SESSION
__________
FEBRUARY 11, 2016
__________
Serial No. 114-62
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Printed for the use of the Committee on the Judiciary
[GRAPHIC NOT AVAILABLE IN TIFF FORMAT]
Available via the World Wide Web: http://judiciary.house.gov
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COMMITTEE ON THE JUDICIARY
BOB GOODLATTE, Virginia, Chairman
F. JAMES SENSENBRENNER, Jr., JOHN CONYERS, Jr., Michigan
Wisconsin JERROLD NADLER, New York
LAMAR S. SMITH, Texas ZOE LOFGREN, California
STEVE CHABOT, Ohio SHEILA JACKSON LEE, Texas
DARRELL E. ISSA, California STEVE COHEN, Tennessee
J. RANDY FORBES, Virginia HENRY C. ``HANK'' JOHNSON, Jr.,
STEVE KING, Iowa Georgia
TRENT FRANKS, Arizona PEDRO R. PIERLUISI, Puerto Rico
LOUIE GOHMERT, Texas JUDY CHU, California
JIM JORDAN, Ohio TED DEUTCH, Florida
TED POE, Texas LUIS V. GUTIERREZ, Illinois
JASON CHAFFETZ, Utah KAREN BASS, California
TOM MARINO, Pennsylvania CEDRIC RICHMOND, Louisiana
TREY GOWDY, South Carolina SUZAN DelBENE, Washington
RAUL LABRADOR, Idaho HAKEEM JEFFRIES, New York
BLAKE FARENTHOLD, Texas DAVID N. CICILLINE, Rhode Island
DOUG COLLINS, Georgia SCOTT PETERS, California
RON DeSANTIS, Florida
MIMI WALTERS, California
KEN BUCK, Colorado
JOHN RATCLIFFE, Texas
DAVE TROTT, Michigan
MIKE BISHOP, Michigan
Shelley Husband, Chief of Staff & General Counsel
Perry Apelbaum, Minority Staff Director & Chief Counsel
------
Subcommittee on Courts, Intellectual Property, and the Internet
DARRELL E. ISSA, California, Chairman
DOUG COLLINS, Georgia, Vice-Chairman
F. JAMES SENSENBRENNER, Jr., JERROLD NADLER, New York
Wisconsin JUDY CHU, California
LAMAR S. SMITH, Texas TED DEUTCH, Florida
STEVE CHABOT, Ohio KAREN BASS, California
J. RANDY FORBES, Virginia CEDRIC RICHMOND, Louisiana
TRENT FRANKS, Arizona SUZAN DelBENE, Washington
JIM JORDAN, Ohio HAKEEM JEFFRIES, New York
TED POE, Texas DAVID N. CICILLINE, Rhode Island
JASON CHAFFETZ, Utah SCOTT PETERS, California
TOM MARINO, Pennsylvania ZOE LOFGREN, California
BLAKE FARENTHOLD, Texas STEVE COHEN, Tennessee
RON DeSANTIS, Florida HENRY C. ``HANK'' JOHNSON, Jr.,
MIMI WALTERS, California Georgia
Joe Keeley, Chief Counsel
Jason Everett, Minority Counsel
C O N T E N T S
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FEBRUARY 11, 2016
Page
OPENING STATEMENTS
The Honorable Darrell E. Issa, a Representative in Congress from
the State of California, and Chairman, Subcommittee on Courts,
Intellectual Property, and the Internet........................ 1
The Honorable Karen Bass, a Representative in Congress from the
State of California, and Member, Subcommittee on Courts,
Intellectual Property, and the Internet........................ 3
WITNESSES
The Honorable Kurt Tong, Principal Deputy Assistant Secretary,
Bureau of Economic and Business Affairs, U.S. Department of
State
Oral Testimony................................................. 3
Prepared Statement............................................. 6
Mary Boney Denison, Commissioner for Trademarks, U.S. Patent and
Trademark Office
Oral Testimony................................................. 10
Prepared Statement............................................. 12
Rick Wilson, Senior Vice President, Bacardi-Martini, Inc.
Oral Testimony................................................. 47
Prepared Statement............................................. 50
William A. Reinsch, President, National Foreign Trade Council
Oral Testimony................................................. 55
Prepared Statement............................................. 58
Mauricio J. Tamargo, Poblete Tamargo LLP, former Chairman,
Foreign Claims Settlement Commission of the United States,
Department of Justice
Oral Testimony................................................. 65
Prepared Statement............................................. 68
Lilliam Escasena, Cuban Property Claimant, Miami, FL
Oral Testimony................................................. 78
Prepared Statement............................................. 80
LETTERS, STATEMENTS, ETC., SUBMITTED FOR THE HEARING
Material submitted by the Honorable Darrell E. Issa, a
Representative in Congress from the State of California, and
Chairman, Subcommittee on Courts, Intellectual Property, and
the Internet................................................... 15
Prepared statement of the Honorable Bob Goodlatte, a
Representative in Congress from the State of Virginia, and
Chairman, Committee on the Judiciary........................... 29
APPENDIX
Material Submitted for the Hearing Record
Material submitted by Jaime Suchlicki, Emilio Bacadi Moeau
Distinguished Professor and Director, Institute for Cuban and
Cuban-American Studies, University of Miami; and Jose Azel,
Senior Research Associate, Institute for Cuban and Cuban-
American Studies, University of Miami.......................... 94
Response to Questions for the Record from the Honorable Kurt
Tong, Principal Deputy Assistant Secretary, Bureau of Economic
and Business Affairs, U.S. Department of State................. 99
Questions for the Record submitted to Mary Boney Denison,
Commissioner for Trademarks, U.S. Patent and Trademark Office.. 106
Response to Questions for the Record from William A. Reinsch,
President, National Foreign Trade Council................109
deg.OFFICIAL HEARING RECORD
Unprinted Material Submitted for the Hearing Record
Material submitted by the Honorable Darrell E. Issa, a Representative
in Congress from the State of California, and Chairman,
Subcommittee on Courts, Intellectual Property, and the Internet.
This material is available at the Subcommittee and can also be
accessed at:
http://docs.house.gov/Committee/Calendar/
ByEvent.aspx?EventID=104453
RESOLVING ISSUES WITH CONFISCATED PROPERTY IN CUBA, HAVANA CLUB RUM AND
OTHER PROPERTY
----------
THURSDAY, FEBRUARY 11, 2016
House of Representatives
Subcommittee on Courts, Intellectual Property,
and the Internet
Committee on the Judiciary
Washington, DC.
The Subcommittee met, pursuant to call, at 5:06 p.m., in
room 2141, Rayburn House Office Building, the Honorable Darrell
E. Issa (Chairman of the Subcommittee) presiding.
Present: Representatives Issa, Goodlatte, Jordan, Poe,
Chaffetz, Marino, DeSantis, Deutch, Bass, Richmond, and
DelBene.
Staff Present: (Majority) Joe Keeley, Chief Counsel; Eric
Bagwell, Clerk; and (Minority) Jason Everett, Minority Counsel.
Mr. Issa. The Committee will come to order.
Today's hearing of the Subcommittee on Courts, Intellectual
Property, and the Internet will be dealing with resolving
issues with confiscated property in Cuba, which will include
Havana Club rum and other property.
The Subcommittee Ranking Member may be able to join us but
has a conflict of interest, as will others. If they do attend--
if they are able to be here, we will take their openings
statements at that point.
I would like to welcome everyone here today and ask
unanimous consent that the Chair be authorized to declare
recesses of the Subcommittee at any time.
Today we have two distinguished panels, and I would ask--I
guess we'll swear them in, each panel.
The witnesses have opening statements which will be entered
into the record in their entirety. And I would ask, please,
that during your 5-minute period that you summarize and stay
within the 5-minute period. As you know, the red lights, green
lights, and yellow lights will indicate go, hurry up, and stop.
Before I introduce the witnesses, Committee rules require
that all witnesses be sworn. So what I'd ask, that you please
rise to take the oath and raise your right hands.
Do you solemnly swear or affirm that the testimony you are
about to give will be the truth, the whole truth, and nothing
but the truth?
Please be seated.
Let the record reflect that all witnesses answered in the
affirmative.
Our first panel of witnesses will be the Honorable Kurt
Tong, Principal Deputy Assistant Secretary of the Bureau of
Economic and Business Affairs, United States Department of
State; and Ms. Mary Denison, Commissioner for Trademarks for
the United States Patent and Trademark Office.
I'll now recognize myself for an opening statement.
Today's hearing is on the integrity of the patent and
trademark system.
Over 50 years ago, the people of Cuba entered into an era
of religious persecution, property seizures, and political
oppression. Families who had worked for years to build a future
for they and their families lost everything and were forced to
flee the country or, worse than that, be imprisoned in Cuban
jails.
In response to Cuba's alliance with the then-Soviet Union,
its totalitarian dictatorship under communism, America began a
trade embargo to deny Castro and his allies the benefits of
free trade.
In 1999, American policy further prevented the recognition
by the United States Government of trademarks seized by Cuba. A
drafting error in section 211, or what has come to be known as
a drafting error, made the legislation subject to a challenge
by those who want to do nothing more than, in fact, trade with
a dictator.
To fix the drafting error, I have become an original
cosponsor of the No Stolen Trademarks Honored in America Act of
2015. The law simply would--the change in the law would simply
take out references to a single country but, in fact, still
cover the category that would include the wrongful taking of
these trademarks.
In the case of the Havana Club example, a family business
was seized at gunpoint with no compensation. Forced into exile,
the family was unable to restart their business on their own
and chose to partner with Bacardi, another company. The Ricard
business of France chose to partner with the Communist regime
in Cuba and purchase and agree to distribute under the name
``Havana Club'' throughout the rest of the world.
The United States--and, I must say, the United States
alone--chose not to allow the sale and, thus, the profiteering
by the Cuban Government based on their theft. And let us
understand clearly that we are still dealing with a Cuban-made
product in which the people of Cuba work for maybe $20 a month
to produce rum so the Cuban Government can sell it at a price
that benefits their regime.
So the technicality that, in fact, we have a French
Government-owned, partially owned, enterprise that will testify
indirectly today that they bought it and of course they're
simply entering into business is, in fact, inaccurate. In the
case of the trademark in dispute, it was not a French company
partially owned by the country of France but, in fact, the
Cuban Government that applied for the trademark--the very Cuban
Government that had seized it illegally.
With the passage of time, Cuban Americans also have sought
to be repaid for stolen homes and businesses. On our second
panel, we will have a former member of the claims board and a
personal testimony of someone who is still trying to recoup
that which was stolen from her family by this dictatorship.
I'll now recognize the Ranking Member for her opening
statement.
Ms. Bass. Why, thank you, Mr. Chair.
I thank our witnesses for coming today.
And I will say--excuse me, let me take a minute here to
wrestle with the microphone--I was pleased when the President
announced that he was working to normalize relations with Cuba.
This shift in policy is really long overdue for a country that
is 90 miles away. And we've denied American businesses. This is
an issue that has been big in California, frankly, because
there's a lot of California businesses across many different
categories that are willing and ready to be involved in this
important market.
I want to take the opportunity here to say what I think is
at stake here. There are hundreds of U.S. companies with
thousands of trademarks that are registered in Cuba. So I'm
worried that American businesses rely on the validity of the
treaties that we sign to protect their interests abroad. The
General Inter-American Convention for Trade Mark and Commercial
Protection, the IAC, is such a treaty, and it's been signed by
10 countries, including the United States. And so I'm concerned
that our actions will impact U.S. interests not only in Cuba
but in eight other countries who could subsequently choose not
to honor the IAC.
With regard to some of the issues that have come up--that I
know will come up, like expanding section 211, I agree that we
risk doing more harm than good. I'm worried that when an entity
as reputable as the National Foreign Trade Council tells me
that we're about to violate a treaty that protects U.S.
businesses--especially when considering that Cuba has
consistently honored the IAC in favor of U.S. companies.
So, for example, there's the Olin Corporation who sought to
protect its famous rifle trademark, Winchester. And based on
the IAC convention, Cuba ruled in favor of Olin over a non-U.S.
company.
So I'm concerned that by looking at this issue, really,
when it's already in the judicial branch, that we run the risk
of looking like we're trying to improperly influence an ongoing
case. So those are my concerns, and I am hoping that through
the testimony of the panelists that they can clarify this.
Thank you. And I yield back.
Mr. Issa. Thank you.
And we now go to our panel of witnesses.
Mr. Tong, you have an opening statement? The gentleman is
recognized.
TESTIMONY OF THE HONORABLE KURT TONG, PRINCIPAL DEPUTY
ASSISTANT SECRETARY, BUREAU OF ECONOMIC AND BUSINESS AFFAIRS,
U.S. DEPARTMENT OF STATE
Mr. Tong. Well, thank you, Chairman Issa, and thank you,
Members of the Committee. And good evening. I appreciate the
opportunity to testify today on topics related to confiscated
property in Cuba, Havana Club rum, and other property.
The protection of intellectual and real property rights is
an important issue for American innovators, entrepreneurs, and
businesses and deserves the close attention and vigorous
efforts of multiple branches of the U.S. Government.
In my testimony today, I will first describe briefly the
role of the Department of State and, in particular, my bureau,
the Bureau of Economic and Business Affairs, with respect to
intellectual property enforcement and protection and
international claims and disputes. I'll also provide an
overview of the recent claims discussions with the Cuban
Government. And then, finally, I'll discuss the State
Department's role in the Havana Club matter.
The Department of State's Economic Bureau uses economic
diplomacy to advance the prosperity and security of all
Americans by working hand-in-hand with other U.S. Government
agencies and partners around the world to promote good economic
policies as well as to negotiate and implement agreements that
shape the rules of global commerce.
One of the Department's foremost priorities is the
promotion of innovation in the United States and around the
world. We do this, in part, by advocating for effective
protection and enforcement of intellectual property rights.
Specifically, the Department uses diplomatic outreach and
programs and bilateral and multilateral negotiations to ensure
the interests of American rights-holders as well as to
highlight the critical role of intellectual property rights
protections in supporting economic growth and stability.
We also devote substantial resources to supporting the
development of a satisfactory climate for U.S. investment
overseas, which includes assisting U.S. investors involved in
investment disputes with foreign governments. In this regard,
we work closely with the Department's Office of the Legal
Adviser, which represents the United States and coordinates
activities with respect to claims and international disputes.
In the case of Cuba, the Department is continuing to
advocate for the resolution of all outstanding U.S. claims and
disputes in our bilateral relations. We launched government-to-
government claims talks in Havana on December 8th last year,
and through these claims talks we are seeking compensation or
some other form of appropriate redress from the Cuban
Government for these longstanding U.S. claims.
The U.S. delegation at the talks provided an overview of
the U.S. claims against the Government of Cuba. These include
almost 6,000 claims of U.S. nationals related to confiscated
property that were certified by the Foreign Claims Settlement
Commission as well as claims related to unsatisfied U.S. court
judgments against Cuba, in addition to the claims of the U.S.
Government.
The meeting in Havana was the first step in what is
expected to be a complex process, but the United States views
the resolution of outstanding claims as a top priority.
With this in mind, I would like to finally address the
specific case of Havana Club, which is quite a different sort
of matter than the unresolved U.S. claims issues that I just
mentioned.
As you may know, this case concerns a dispute between
foreign actors--on one side, the Cuban state-owned enterprise,
Cubaexport, which is in a joint venture with a French company,
Pernod Ricard; and, on the other side, Bacardi and Company
Limited, a company headquartered in Bermuda. These foreign
companies are involved in pending Federal court proceedings in
the United States with regard to their dispute over ownership
of the Havana Club trademark in the United States.
The Department of State's role in the Havana Club matter
was to respond to a request from Treasury's Office of Foreign
Assets Control, or OFAC, for foreign policy guidance. To be
clear, our role in the Havana Club matter was not to adjudicate
the ownership of the disputed trademark rights, which is a
matter still before our Federal courts, and the Department took
no position on that issue in its foreign policy guidance.
To be a bit more specific, in November 2015, OFAC requested
foreign policy guidance from the State Department with respect
to an application from Cubaexport for a specific license
authorizing all transactions with the U.S. Patent and Trademark
Office related to Cubaexport's renewal and maintenance of the
Havana Club trademark registration, including payment of
necessary fees.
The Department evaluated this referral in light of a number
of factors, including: the particular facts of the case; the
recent shift in United States policy toward Cuba; United States
foreign policy with respect to key allies in Europe; and the
U.S. approach with respect to trademark rights associated with
confiscated property. After weighing these factors, the
Department recommended issuance of the requested specific
license.
It is in the foreign policy interest of the United States
that the relevant parties be able to reach a resolution in this
longstanding dispute. As I mentioned, there are pending Federal
court proceedings, and the denial of a license and the
resulting expiration of the trademark registration may have
rendered those proceedings moot, whereas granting the license
will allow the parties to proceed toward adjudication of their
respective legal claims in U.S. courts of law.
In closing, I wish to reaffirm that the Department of State
will continue to advocate for the effective protection and
enforcement of intellectual property rights around the world,
including and especially in Cuba. This effort is squarely in
line with our enduring objective of the emergence of a
peaceful, prosperous, and democratic Cuba.
The Administration's approach to Cuba allows us to
effectively engage with Cuba on seeking redress for U.S.
claims, for protection of intellectual property rights, and a
number of other matters in the national interest.
Thank you, Mr. Chairman, and I welcome your questions.
[The prepared statement of Mr. Tong follows:]
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Mr. Issa. Thank you.
Commissioner?
TESTIMONY OF MARY BONEY DENISON, COMMISSIONER FOR TRADEMARKS,
U.S. PATENT AND TRADEMARK OFFICE
Ms. Denison. Chairman Issa and Members of the Committee----
Mr. Issa. If you could pull it slightly closer. Your voice
doesn't carry as well as the Secretary's.
Ms. Denison. How's this? Is that better?
Mr. Issa. Better.
Ms. Denison. Thank you so much.
I appreciate the opportunity to describe the U.S. Patent
and Trademark Office's role with respect to the renewal of the
Havana Club trademark registration today.
The USPTO is charged with carrying out the trademark
registration process consistent with the law so as to provide a
stable marketplace for the sale of goods or services identified
by the registered mark for the benefit of both consumers and
owners.
The USPTO receives more than 300,000 applications for
trademark registration each year and administers a trademark
register of more than 2 million active registrations.
As a general matter, U.S. trademark law requires the
submission of certain documents and the payment of appropriate
fees to maintain and renew a trademark registration. The
actions we took at the USPTO in this case were straightforward
and consistent with the law.
In 1974, Cubaexport applied for registration of the Havana
Club trademark at the USPTO. The USPTO approved the
registration in 1976 and renewed it in 1996. The transactions
were authorized under an existing general license pursuant to
the Cuban Assets Control Regulations.
In October 1998, however, Congress included section 211 as
part of the Omnibus Appropriations Act, which rendered that
general license unavailable for transactions or payments for
certain trademarks. As a result, when Cubaexport attempted to
renew the Havana Club trademark registration in 2005, the
Treasury Department's Office of Foreign Assets Control, known
as OFAC, advised the USPTO and Cubaexport that a specific
license would be required to authorize the payment of renewal
fees. Cubaexport could not legally pay the required fees
without an OFAC-specific license authorizing the transaction.
Cubaexport applied for a specific license from OFAC, and
OFAC denied the application. Because the requirements of
trademark law could not be met without an OFAC specific license
authorizing the fee payment, the USPTO was unable to renew the
registration.
Cubaexport then sought review of the USPTO's refusal by
filing a petition with the USPTO, the same petition that we
acted on in January. Because Cubaexport also sued OFAC over its
decision not to issue Cubaexport a specific license authorizing
the fee payment, the USPTO suspended action on the petition
until that litigation was over. Cubaexport's challenges in
Federal court were ultimately unsuccessful.
In November of 2015, Cubaexport submitted a new specific
license application to OFAC, and OFAC issued the requested
license on January 11, 2016. On January 12, 2016, Cubaexport
supplemented its USPTO petition to include an OFAC-specific
license authorizing the 2005 payment of fees and all other
transactions necessary to renew and maintain the Havana Club
registration.
Because Cubaexport had satisfied the requirements of the
Trademark Act, the USPTO took action to accept the now-
authorized fee, to grant the petition, and to update the
USPTO's records to reflect the renewed status of the Havana
Club registration. This action does not, however, decide the
Havana Club trademark dispute. The rights of all interested
parties remain the same as they were before the action was
taken.
That concludes my statement, Mr. Chairman, and I would be
happy to answer any questions. Thank you very much.
[The prepared statement of Ms. Denison follows:]
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Mr. Issa. Excellent.
I now ask unanimous consent that the entire list of the
6,000 certified recipients under the Foreign Claims Settlement
Act be placed in the record.*
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*Note: The material referred to is not printed in this hearing
record but is on file with the Subcommittee. Also, see Issa submission
at:
http://docs.house.gov/Committee/Calendar/
ByEvent.aspx?EventID=104453
Additionally, I ask unanimous consent that the June 11,
1974, complete set of documents applying for the trademark by
the country of Cuba entered by the law firm of Haseltine, Lake
& Walters be placed in the record; the testimony of Ramon--and
I apologize in advance for how I'm going to get this--
Arechabala, that Ramon's testimony of 2004 be placed in the
record; The Washington Post article of February 1, 2016,
``Failure in Cuba,'' be placed in the record. It is an
editorial; and lastly, 0my letter yesterday to the Secretary
Kerry and Lew, along with attached signatures of a number of
other Congressmen, be placed in the record.
Without objection, so ordered.
[The information referred to follows:]
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Mr. Issa. And I'd like to make sure the record indicates
that the Ranking Member is not here as a result of a conflict
of schedule--the interest being the schedule, not a conflict of
interest.
And, with that, I'd ask unanimous consent that all Members'
opening statements be placed in the record.
But, Mr. Chairman, would you like to ask a round of
questions?
Okay. In that case, I will go first and ask my list of
questions.
And, Commissioner, I probably only have one question--a
couple of questions for you, fairly briefly. But one of them
is--you didn't mention 2012. That was when all the cases were
resolved. And the Commission could have vacated all the
documents, correct?
In other words, 2012, when the cases were decided, in the
ordinary course, this application would have been gone, the
trademark would have been available under common law and
registration law. Isn't that true?
You said you had held up--suspended this case while other
cases were pending. But those cases were resolved, what, 2
years ago?
Ms. Denison. There was litigation that was pending----
Mr. Issa. Just, when did the last piece of litigation end,
to your knowledge?
Ms. Denison. In 2012.
Mr. Issa. Thank you. So litigation ended in 2012. Your
excuse for holding up and keeping this in limbo so that the
Administration could act ended in 2012. Isn't that true? You
had no valid reason to leave this file open as it was, did you?
Ms. Denison. Mr. Chairman, let me explain a little bit
about the petition process.
Mr. Issa. No, ma'am. I appreciate the petition process, but
I only have 5 minutes.
On what basis--there was a conflict known. There was a
competing company that had purchased the rights from the
family, was sharing the profits in those sales with the family.
And they, in fact, also had valid applications, and they had
been selling the product in common law since 1994.
So, in 2012, on what basis did you keep this open so that
could you could retroactively go back to 2005?
Ms. Denison. Well, first of all, there is no set timeframe
for us to issue a decision on a petition.
Mr. Issa. Okay.
Ms. Denison. We receive thousands of petitions every year,
and some of them are acted on very----
Mr. Issa. Well, I know you acted on this one in 3 days.
Ms. Denison. And some of them are acted on in a matter of
years.
Mr. Issa. Okay. So let me just make one thing clear for the
record. From 2012, any statement that you were waiting on a
court case to end ended. And from 2012 until 2015, the case
simply sat open, waiting for OFAC or somebody else to do
something, because there was no--your basis for suspending had
ended. Isn't that true?
Ms. Denison. Actually, after the litigation ended, there
was an extended period where there was back-and-forth between
our office and OFAC before we could have acted. And----
Mr. Issa. Yeah, but that wasn't the question, Commissioner.
The question was--you said in your testimony that you held this
in suspense because of a case. Now, that case went to the U.S.
Supreme Court. Ultimately, they, by not granting cert, affirmed
the lower court case, and it was over. The Supreme Court had
spoken and essentially allowed the lower court. So there were
no court issues left.
So the fact that you were going back and forth with OFAC,
all of that is a political question and answer, so to speak, to
do what the current Administration--and, Mr. Secretary, I think
you said it very well. You were trying to reach out to deal
with Cuba, the relationship. So this became a tool, I would
gather, in that negotiation. Isn't that correct, Mr. Secretary,
that this was on the table as part of negotiations?
Mr. Tong. The issue of Havana Club, to my knowledge, was
not discussed in our conversations with Cuba regarding the
normalization of diplomatic relations.
Mr. Issa. Okay. So it was never on the table, you're
saying, as far as you know.
Mr. Tong. As far as I know.
Mr. Issa. Okay.
Commissioner, would you provide us with written
communications and memos related to correspondence with other
agencies outside the Patent and Trademark Office for purposes
of the decision process related to the delay until 2015?
Ms. Denison. Yes, I can. I'm not sure there is any.
Mr. Issa. So it was just oral conversations, just chatter?
Ms. Denison. To my knowledge, there is no written
communication.
Mr. Issa. Okay. Well, if you would check, I would
appreciate it.
Mr. Secretary, I've got a question for you. You said in
your statement that your goal, the Administration's goal, of
course, is to restore people, to strengthen personal property
and the like.
I'm going to use a little bit of demonstration. Here's two
tangible bottles. This one is Cuban-made; it's empty. This one
is American-made; it's full--or half-full, not by my
consumption. These are tangible products.
This one is made in Puerto Rico, where there are about
1,400 workers, American workers, earning $40,000 or so a year.
This is made in Cuba by people making about $20 a month. Now,
under your decision, people making $20 a month are going to be
shipping this to the U.S. and people in Puerto Rico making
$40,000 a year are going to be laid off.
If I take it to its logical conclusion, I could hold up
bottles of Bacardi, which the Cubans have the exact same claim
on, that they seized it, it was theirs, and they asserted
around the world that it was there. Would you have the $100
million that the Puerto Rican Government gets from Bacardi tax
revenues every year and the 1,000-plus jobs eliminated by
giving Bacardi back to Cuba as a question of renewing our
policies? Is that on the table? And is there any real
difference, from a foreign policy, of whether or not you give
away one family's rights or another's?
Mr. Tong. Thank you, Mr. Chairman.
My understanding is that the economic impact of the patent
or the trademark registration has not yet played out, that the
ownership of the Havana Club trademark continues to be a matter
before U.S. Federal courts and that that matter will be settled
in U.S. Federal courts.
Mr. Issa. Well, you know, the man who it was taken from has
died. So I'm not sure that there will ever be justice in that
economic impact. And the son is working for a company and not
able to produce the product his family had produced since the
thirties.
But my time has expired. I have to be sensitive to all
here. The gentlelady from California, Ms. Bass, is recognized.
Ms. Bass. Thank you, Mr. Chair.
I wanted to know if either witness could talk a little bit
more about section 211 and the impact of that.
You know, as I'm reading some of the material here, the
Cuban Government has threatened to violate the trademark rights
of U.S. companies because we haven't repealed section 211. And
I guess there's some consideration about expanding it.
So I'm wondering if you can talk a little bit more about
that and, also, within the context of that, discussing the
possible implications for U.S. business interests in the eight
other countries who are part of the IAC. So I know, in some
instances, it's viewed that we might be violating the
international treaty or it will weaken our ability to protect
U.S. intellectual property interests in the eight other
countries.
So perhaps you could comment about 211 and explain.
Either one. Whichever.
Mr. Tong. I guess I can start, and my colleague may want to
amplify.
Section 211 is a statute which is under--the interpretation
of which comes to OFAC. So I can't speak on their behalf with
regard to that interpretation. But my understanding is that a
specific license can be granted regardless of the existence of
section 211.
With regard to the broader diplomatic elements of
intellectual property rights protection, this is something that
we obviously work on very, very hard with a lot of countries.
And we're looking forward to the opportunity, as I said
earlier, to pursuing the protection of intellectual property
rights in a vigorous fashion in Cuba now that we have a better
opportunity to pursue those protections.
The question of section 211 has come up in the World Trade
Organization, and the United States was, if you will, taken to
dispute by--dispute settlement by the European Union some years
ago with respect to section 211. And that was a longstanding
point of disagreement between the United States and the
European Union.
Since the granting of the specific license and then the
trademark to Havana Club, there has been a noticeable lessening
of the European Union's level of interest in that issue. So, in
a sense, we have made some progress in the overall strategy of
intellectual property rights protection and cooperation with
Europe as a result of this one specific case.
Ms. Bass. Should it be repealed, that section?
Mr. Tong. I don't have an Administration position to convey
to you on that matter.
Ms. Bass. Do you know of any instances in which Cuba has
failed to honor its obligations under the IAC in relation to
U.S. companies?
Mr. Tong. I'm going to have to get back to you on that
because that's a rather specific question and I'm not
researched on it.
Ms. Bass. Do you have any concern over the thousands of
trademarks that are registered in Cuba from U.S. companies?
Mr. Tong. Absolutely. My understanding is that there's
somewhere in the range of 5,000 U.S. trademarks that are active
in Cuba. And the protection of those trademarks is of great
interest to the United States, and we need to pursue it
vigorously.
Ms. Bass. So one of the questions is, if we move toward
closer and better relations with Cuba, are we in a better
position to protect those trademarks than if we were to roll
back the direction that the Administration is pursuing now?
Mr. Tong. In the Administration's estimation, yes, we are
in a better position to pursue this entire topic of
intellectual property rights protection with Cuba based upon
our recent approach. In fact, we've gotten some positive
feedback from the Cuban Government with regard to their
openness toward having detailed and specific conversations
about intellectual property rights protection.
Ms. Bass. Thank you.
Would you like to add anything, Ms. Denison?
Ms. Denison. I think he did a great job.
Ms. Bass. Okay. I yield back my time.
Mr. Issa. The gentlelady yields back.
The Chairman of the full Committee, Mr. Goodlatte.
Mr. Goodlatte. Thank you, Mr. Chairman. I appreciate your
holding this hearing. I submit my opening statement for the
record. And I'm happy to yield to you so you can continue your
excellent line of questioning.
[The prepared statement of Mr. Goodlatte follows:]
Prepared Statement of the Honorable Bob Goodlatte, a Representative in
Congress from the State of Virginia, and Chairman, Committee on the
Judiciary
At the core of the House Judiciary Committee priorities are the
fundamental constitutional rights guaranteed to Americans such as
freedom of speech, freedom of the press, freedom of religion, and
freedom from having the government confiscate your property without
compensation. Although the United States was initially one of only a
few countries with such explicit guarantees for its citizens, more
countries began to recognize such basic rights for their citizens as
well. Decades after Soviet aggression created an Iron Curtain across
Europe, Eastern Europeans rose up to reclaim their rights from
governments that had long oppressed them.
Cuba's version of the Iron Curtain arrived in the 1960s, bringing
property seizures of churches, homes, and businesses while locking up
and even executing those who objected. Many were forced into exile in
America. Some of the property seizures were for properties and assets
that were owned in whole or in part by Americans including homes,
businesses, and financial investments. No one--American, Cuban, or
otherwise--was compensated for the seizures of their property.
In 1964, Congress directed the International Claims Commission, now
known as the Foreign Claims Settlement Commission at the Department of
Justice, to undertake a process to enable American citizens and
businesses to submit evidence to prove their property seizure claims.
Almost 6,000 claims submitted by Americans were certified with an
estimated value in 1970's dollars of close to $2 billion dollars. No
money has ever been paid by Cuba to settle these or other claims.
Although these claims are grounded in numbers and paperwork, they
reflect personal and direct losses to individuals and their families
whether they were:
Businesses whose shipments of merchandise were never
paid for
Family homes of those forced into exile in America
Family businesses such as the Arechabalas
Retirees who were counting on their investments in
Cuban businesses to provide for their income
Reflecting the direct personal impact upon families, one of our
witnesses here today is from a family that was forced into exile,
leaving everything they had worked for behind in order to live in exile
in Florida.
The Administration has long been interested in restoring diplomatic
relations with Cuba, believing that reopening relations would lead to
greater freedoms for Cubans. However, its tactics have been nothing
short of bizarre. Just one year ago tomorrow, Congresswoman Ileana Ros-
Lehtinen and I sent a letter to the Bureau of Prisons demanding answers
to the Administration's efforts in facilitating the artificial
insemination of the wife of a convicted Cuban spy, Gerardo Hernandez,
even though he was convicted on 13 counts, including conspiracy to
commit murder. The answer from the Bureau of Prisons was less than
illuminating. Only a few months ago, Gerardo Hernandez's sentence was
commuted by President Obama after which he returned home to a
triumphant meeting with Fidel Castro where he was unrepentant for his
crimes.
Since the reopening of U.S.-Cuban diplomatic relations last summer,
it appears little has changed for Cubans not favored by the regime. In
September, members of a dissident group known as the Ladies in White
were arrested as they traveled to see the Pope to advocate for human
rights. In December, they were arrested again as they protested in
support of basic human rights on the day known as United Nations Human
Rights day.
This Administration has failed to aggressively seek compensation
for property seized by Castro's regime and failed to stop the
persecution of Cubans advocating for basic human rights. Meanwhile it
has assisted a convicted Cuban spy to artificially inseminate his wife
from a U.S. prison, something no other federal prisoner has been
allowed to do.
Today's hearing will help shed light on the Administration's
response, or lack thereof, to the confiscation of property, including
trademarks, by the Castro regime. I look forward to the witnesses'
testimony.
__________
Mr. Issa. Well, I'm going to continue somewhat, but I'm
going to change a little bit.
Commissioner, H.R. 1627, you've seen the legislation that
proposes changes to 211, correct? And it does eliminate any
specific reference to Cuba. And it makes 211 essentially an
impediment to those who would steal somebody's property and
then try to--in another country and then gain use of it here.
Do you have any questions or doubts about its validity
under WTO?
Ms. Denison. I'm sorry, could you----
Mr. Issa. H.R. 1627, you can implement it if it's passed by
the Congress, right? The Trademark Office hasn't issued any
objections or anything that would cause us to think you have a
problem----
Ms. Denison. I understand there are a number of proposals
pending, and there is no Administration position on any of
them, to my knowledge.
Mr. Issa. Well, that's why you're a Commissioner. Have you
read it, and do you have any problem with it?
Ms. Denison. I am not authorized to state a position
without the Administration position being----
Mr. Issa. I'll remember that when we talk about the
independence of commissions.
Mr. Secretary, since they've sent you here, you mentioned
that you were concerned about 211. You mentioned that
essentially giving this trademark back to Cuba ameliorated
friction between us and our French partners and so on.
Where does the family get compensation for your benefit?
You got the benefit. You've improved relationships. The
original owners got screwed, right? Are you planning to make
them whole in return for the benefit you got?
Mr. Tong. Well, my understanding is that the trademark----
Mr. Issa. You traded real property that belonged to
somebody.
Mr. Tong. Thank you, Mr. Chairman.
The trademark in question is being litigated in U.S. courts
as of this date.
Mr. Issa. Okay.
Well, let me go through a question. Commissioner, I hope
you can answer this without going back. And I'm not sure you
can. But, in 1974, the Cuban Government applied for a
trademark, and it was granted. There was an embargo at that
time. They could not legally give you $35. Where did they get
permission to give you the $35?
And I understand that some law firm submitted it and
somebody in Luxembourg did it. But the mark went to Cuba;
therefore, it was clearly Cuban money.
On what basis did you grant them the trademark, to your
knowledge? What was your legal authority to take that $35 then?
Ms. Denison. Thank you for the question.
When Cubaexport applied for the trademark application in
1974, they were allowed to proceed under the general license
provision of the Cuban Asset Control Regulations. So there was
no problem accepting money.
Mr. Issa. You had no problem accepting their $35.
Ms. Denison. That is correct.
Mr. Issa. Okay. Well, we'll check into that. That's not
what we're told.
Additionally, instead of an intent to use, they filed based
on having a trademark in Cuba. They simply submitted an
attached trademark from Cuba and said, ``This is our
application for the same,'' correct?
Ms. Denison. Yes.
Mr. Issa. Okay.
Now, interesting thing about trademarks, if anybody other
than Cuba applied for a trademark, let's say Darrell Issa, and
then went more than a decade of not selling one single drop,
one single bottle, would their trademark still be valid and
enforceable?
Ms. Denison. It might be if they could show--there's a
section of the statute that is called excusable non-use. And,
in certain situations, use is not required. So, for example, if
there's an embargo----
Mr. Issa. Well, let me go through that, because embargo was
exactly what was in place. At the time of the application,
there was an embargo. So they filed saying they were going to
do something that they couldn't do legally and can't do today.
Isn't that true?
Ms. Denison. No, that's not correct.
Mr. Issa. Can they ship to the United States today, madam?
Ms. Denison. No, they cannot, but----
Mr. Issa. Could they ship to the United Stats in 1974?
Ms. Denison. No.
Mr. Issa. Has there been any period of time between 1974
and today in which they could ship to the United States?
Ms. Denison. No.
Mr. Issa. Do you ordinarily accept and provide trademarks
excluding others when, in fact, they're not entering commerce?
Ms. Denison. We have to honor our treaty obligations. And
this was filed under a treaty obligation----
Mr. Issa. Okay.
Now, the family----
Ms. Denison [continuing]. Known as section 44(e).
Mr. Issa. Right. The family, through Bacardi, has tried to
renew their activity and, in fact, has an application pending.
And the only thing working against them is that, when they had
no money, extenuating circumstances, they were unable to file
their renewal, and they were poor and destitute because all of
their assets had been seized.
Isn't there a provision in the law that would have allowed
the family to be able to renew their trademark in 1974, 1975,
1976 and, in fact, say that these circumstances prevented it,
and that circumstances was, in fact, the confiscation of our
assets and so on? Isn't it within the power of the Trademark
Office? You could have made a decision to renew their trademark
too, Couldn't you?
Ms. Denison. Are you referring to the trademarks previously
owned by the Arechabala family?
Mr. Issa. Yes.
Ms. Denison. They could have claimed excusable non-use.
Mr. Issa. So, my last quick point. In 1974, the trademark
was not codified, right?
Ms. Denison. In 1974, the Arechabala family did not have
any registrations on the U.S. Register. Is that your question?
Mr. Issa. No. In 1974, they entered into what had been a
latent--never mind. You know what? I'll wait for additional
time. I don't want to take from other Members. The gentlelady
from Washington has been patiently waiting.
Ms. DelBene. Thank you, Mr. Chair.
And thanks to both of you for being with us today.
Commissioner Denison, in your testimony, you note that the
PTO's decision to accept the authorized fee payment and the
most recent Havana Club petition in no way decides the Havana
Club trademark dispute. So I wondered if you could elaborate on
why this is and comment on the distinct roles that the PTO and
the courts have in resolving such a dispute.
Ms. Denison. Thank you very much. And, by the way, we
appreciate your participation in the Trademark Caucus.
Ms. DelBene. Thank you.
Ms. Denison. So when the Trademark Office is presented with
documents for renewal, we look at the documents; we do not
examine ownership at that point in time because of treaty
obligations that we have which restrict our ability to examine
ownership in the post-registration renewal period. And we only
look at the ownership if, in fact, there is someone who sends
the documents in does not match the name in our records. So we
don't have resources to investigate the ownership, and people
are required to declare under penalty of perjury that they own
it.
So what happens is, if there is a dispute, people file
cancellations. And so, in fact, that is what has happened here.
Bacardi has filed a cancellation proceeding, and that is now in
Federal court. So we are not the ultimate arbiter of ownership.
That is where we hope the ownership dispute will be resolved,
in the Federal court case that is now pending between Bacardi
and Cubaexport.
When you get a registration, you just get a presumption of
ownership. And then, when it's challenged in court, that can be
rebutted.
Ms. DelBene. Thank you.
Secretary Tong, in your view, has the Administration's
decision in any way dictated an outcome in the trademark
dispute?
Mr. Tong. Thank you for your question.
No. In our view, this trademark dispute will be settled in
Federal court.
Ms. DelBene. And in terms of any intervention that Congress
might do, what are your concerns about that at this point in
time? If either of you have concerns.
Mr. Tong. Well, I'm not sure I have any particular concerns
to express beyond the fact that--to once again express the
really strong determination of the Administration to make the
protection of intellectual property rights and the pursuit of
the legitimate claims of U.S. nationals who have had their
property confiscated by Cuba--our, you know, very vigorous
pursuit of both of those initiatives going forward. And we
believe that, you know, recent circumstances and events have
strengthened our capability to do so.
Ms. DelBene. Commissioner, do you have any additional
comments on that either?
Ms. Denison. No.
Ms. DelBene. Okay.
Thank you both for your time.
And I yield back, Mr. Chairman.
Mr. Issa. Would the gentlelady yield just to a clarifying
question you had?
Ms. DelBene. Yes, I yield.
Mr. Issa. Thank you.
When you said U.S. nationals, would those include people
only at the time of the seizure in 1960, or would it include
all of the Americans who exist today who fled afterwards and
whose assets were seized while they were still Cuban nationals?
Mr. Tong. Yeah, thank you for that question. I think it's
an important point of clarification.
Our claims talks that began last December are pursuing
three areas. The first and most important is the claims of some
6,000 U.S. nationals, the total value of approaching $2
billion, a very significant amount. The second is claims of the
U.S. Government. And the third--I'm afraid I've forgotten right
now, but I'm sure it's also very important.
But the----
Mr. Issa. It could be Cuban nationals who are now
Americans.
Mr. Tong. But the Foreign Claims Settlement Commission, Mr.
Chairman--I think this is an important point--has, under
statute, only been able to accept the petitions of people who
were U.S. nationals at the time of the property being taken.
Mr. Issa. So the Bacardi family and all the other families
involved who fled Cuba after a dictatorship seized their assets
are not covered by anything you're doing today is what you're
saying.
Mr. Tong. Under the current laws and statutes that we have
to work with, the Foreign Claims Settlement Commission is----
Mr. Issa. No, no. I apologize. I'm on the gentlelady's
time. But the question was are you pursuing on their behalf,
not something about the claims. You certainly have the right to
bring up a whole host of families, including, to be honest, the
Bacardi family, who can't sell Bacardi rum in Cuba, not just
Havana Club and their family.
So the question--I just want to make sure the gentlelady's
question, which you answered, was answered, that, if I
understand correctly, no, you are not dealing with those who
came to America escaping persecution. We have, you know, a
person on the next panel that fits that description. That's why
I asked.
Mr. Tong. So I will take your question and concern back to
the State Department. I think it's--my understanding is that,
again, we are pursuing, first and foremost and at this point
exclusively, the property of the people who were U.S. nationals
at the time of confiscation.
Mr. Issa. Thank you.
Mr. Marino?
Mr. Marino. Thank you, Chairman.
The question I'm going to ask I would like each of you to
respond to, if you would, please.
Has anyone from the Administration, the Obama
administration, whether it's the White House, whether it's
State, anyone that you work for, anyone you work with, has
anyone said to you that this issue cannot be part of or get in
the way of the reinstating of diplomatic ties between the U.S.
and Cuba?
Secretary?
Ms. Denison. No.
Mr. Marino. Or Commissioner. Go ahead.
Ms. Denison. Sorry I answered first.
Mr. Marino. That's all right.
Ms. Denison. The answer's no.
Mr. Marino. No?
Mr. Secretary?
Mr. Tong. Again, to my knowledge, in the course of the
conversations that the U.S. Government had with the Cuban
Government about the resumption of diplomatic relations, as far
as I'm aware, the matter of Havana Club did not come up.
Mr. Marino. Do you know if there were any communications
with anyone else in the White House pursuing this matter within
any other department or agency in the U.S. Government?
Mr. Tong. Again, to my knowledge, there was no quid pro
quo, and this was not a question of negotiation, that the
Havana Club matter is a matter of U.S. regulatory action and
then now, after that regulatory action, now it's a matter
before the U.S. courts.
Mr. Marino. Commissioner?
Ms. Denison. I'm sorry, could you repeat the question?
Mr. Marino. Do you know of any communication, if there
exists, between the White House and any other department or
agency concerning the issue with this patent?
Ms. Denison. Yes. There were communications from the White
House to the USPTO staff at some point regarding what the
procedure was for the petition.
Mr. Marino. And do you know where that communication went
and what was the intent behind it?
Ms. Denison. I don't know what you mean by where it went
or----
Mr. Marino. Well, the White House communicates to staff at
USPTO, right?
Ms. Denison. Yes.
Mr. Marino. What was their request, or what were their
instructions?
Ms. Denison. To the best of my knowledge, there were no
instructions. It was an inquiry, and we provided information.
Mr. Tong. Mr. Marino, can I provide a clarification?
Mr. Marino. Please.
Mr. Tong. I don't want to leave you with the impression
that the Cuban Government has never raised the Havana Club
issue with us, because they have raised it with us.
Mr. Marino. I'm sure.
Mr. Tong. But it was--and that won't surprise any of us.
But it was not, to my knowledge, a matter of negotiation or of
any quid pro quo in the discussions with Cuba.
Mr. Marino. Now, Mr. Secretary, you said that State is
seeking claims. For whom is State seeking claims, specifically?
Mr. Tong. We're seeking compensation from the Cuban
Government.
Mr. Marino. For whom?
Mr. Tong. On behalf of 6,000-odd U.S. nationals who were
U.S. nationals at the time that their property was confiscated.
Mr. Marino. And how is that going?
Mr. Tong. Well, it just got started, and obviously it's
going to be a complex process. I know we were, at the initial
meeting, able to lay out the full scope of our claims and the
rationale behind them and have that initial discussion. But
we're asking for compensation, so it will be a--I don't want to
handicap the process for you, sir.
Mr. Marino. When you say you're asking for it, is there
going to be some restrictions concerning Cuba if they do not
agree to compensate these people? Is there going to be any
retaliation from the U.S. Government that you know of?
Mr. Tong. I don't want to comment on the negotiations per
se, and perhaps we can follow up and have a--the people that
are directly involved in those negotiations could have a
conversation with your staff----
Mr. Marino. Okay.
Mr. Tong [continuing]. To explain more about the course and
the strategy of those negotiations.
Mr. Marino. Now, a question for the two of you I have, in
34 seconds: Do you think either State or USPTO or you
personally have the responsibility of raising the issue with
the Administration pursuant to the Administration's move to
begin diplomatic ties again with Cuba and raise the issue with
the White House over this issue concerning the patent?
Ms. Denison. I did not think I had any obligation to raise
it with the White House, no.
Mr. Marino. You knew of the existing complications in this
case? People claiming to have ownership and then----
Ms. Denison. I am aware that there are a number of people
claiming ownership in the Havana Club mark. We have pending
applications not just from Bacardi. There is also--and I
apologize if I mispronounce it--the Arechabala family. There is
a pending application from them. There was a pending
application filed last year by somebody named Mr. Solar. I
think he abandoned recently. But, anyway, there are multiple
parties claiming ownership.
Mr. Marino. All right.
My time has expired. Thank you.
Mr. Issa. Just to follow up very--just one thing. You did
mention to the gentleman from Pennsylvania communications with
the White House. But then, earlier, you said there was no
document. Is this all oral communication?
Ms. Denison. Yes.
Mr. Issa. Okay.
Ms. Denison. To the best of my knowledge.
Mr. Issa. Okay. Can you be provide us memos and any other
information that may exist related to the--you know, in your
business, everyone does a memo for the record. Could we have
any of that that exists so we could understand the context?
Ms. Denison. Yes, Mr. Chairman, if it exists.
Mr. Issa. Thank you.
We now go to the gentleman from New York, Mr. Jeffries.
Mr. Jeffries. Thank you.
And I thank the witnesses for their presence here today.
Commissioner Denison, I want to go over some issues related
to the excusable non-use doctrine, some of which you may have
already covered, and then build upon that to the extent time
permits.
Just so that I'm clear, to obtain and maintain a trademark
registration, the mark owner has to show use. Is that correct?
Ms. Denison. In order to get a registration to begin with,
most people have to show use in commerce. There are certain
exceptions, though, to honor our treaty obligations. And so, in
those cases, those people would not have to show use in
commerce to obtain a registration.
However, everyone has to show use in commerce, as a general
rule, between the fifth and sixth year of the registration
date. The exception is if you can prove excusable non-use,
which is provided for in the statute. And we did talk about it
a bit earlier.
Mr. Jeffries. Now, let me ask about that. In the case of
excusable non-use, am I correct that it's a temporary doctrine
in its application?
Ms. Denison. There's no restriction on it in the statute.
Mr. Jeffries. Okay. Now, under U.S. trademark law, non-use
of a trademark for 3 consecutive years, as I understand it,
creates a rebuttable presumption of non-use. Is that right?
Ms. Denison. That's a different concept. That is rebuttable
presumption of abandonment.
Mr. Jeffries. Right. But that relates to non-use, correct?
Ms. Denison. It does. It's sort of a complicated legal
interpretation, though.
Mr. Jeffries. Okay. And it's 3 years, which is what creates
the rebuttable presumption, true?
Ms. Denison. Yes.
Mr. Jeffries. Okay.
Now, how does that legal concept work in the context of a
trademark that's been registered since 1976 but has never
actually been used in the context of U.S. commerce?
Ms. Denison. Well, the excusable non-use part of the
statute--I'm going to have to ask my legal team for an opinion
on this, but I think that the excusable non-use can trump any
claim of abandonment.
Mr. Jeffries. Okay. I'd be interested----
Ms. Denison. I can get back to you on that, though. I'd
like to consult.
Mr. Jeffries [continuing]. In some clarification.
Ms. Denison. That's a complicated legal question you asked
me.
Mr. Jeffries. Okay. No, thank you. Well, I should thank my
staff for that complicated legal question, actually.
Let me----
Mr. Issa. It was a good one.
Mr. Jeffries. Let me explore a different concept. Now, it's
my understanding that there's a principle under law which I
guess technically is referred to as geographically deceptively
misdescriptive goods. Is that correct? It's kind of an awkward
phrase, but that's the concept, correct?
Ms. Denison. Yes, there is such a concept.
Mr. Jeffries. Now, in terms of that concept, could you just
elaborate on--I believe there are four factors connected to
that principle in the statute, one of which--I think the one
that grabs my attention is--or the two that grab my attention
are: one, the primary significance of the mark is geographic;
and, two, purchasers would likely believe that the goods or
services originated in the place named in the mark.
Is that correct, in terms of two of the factors, two of the
four factors connected to this principle?
Ms. Denison. That sounds right. I don't have the statute in
front of me, but that sounds generally correct.
Mr. Jeffries. I'd be interested, you know, sort of, in your
opinion, as it relates to the Havana Club mark--and this was an
issue that some of us explored when we were in Europe as the
Judiciary Committee related to the concept of champagne in
France and understanding what's the difference between
champagne and sparkling wine.
In the context of the Havana Club mark, is it your
understanding--I believe it's correct--that the Havana Club rum
was actually made in either Puerto Rico or the Bahamas. Is that
right?
Ms. Denison. Excuse me. Whose Havana Club are you----
Mr. Jeffries. The Bacardi rum.
Ms. Denison. My understanding is it is not made in Cuba.
Mr. Jeffries. Correct, that it was made in Puerto Rico or
the Bahamas. And----
Ms. Denison. I honestly don't know where it's made. I think
it may have been made in Puerto Rico, but I did not know it was
made in the Bahamas.
Mr. Jeffries. Okay. Right. We might be able to clarify that
if time permits with the second panel. But what I'd be
interested in----
Mr. Issa. The gentleman, for the record, it says ``San
Juan, Puerto Rico'' on the bottle.
Mr. Jeffries. Okay.
Mr. Issa. The bottle's open if you want to inspect.
Mr. Jeffries. It's tempting.
And so my time has expired, but if the Chair would permit,
I'd be interested in your thoughts on the--your views as it
relates to this particular concept of geographic deception as
it relates to a Havana-related mark put onto the market by
Bacardi with the rum actually being made in San Juan, Puerto
Rico.
Ms. Denison. Thank you for your question.
I believe that when we were examining the Bacardi
application many years ago that that was raised as an issue in
the Bacardi application, the fact that it could possibly be
geographically misdescriptive, deceptively misdescriptive, if
the rum was not, in fact, being made in Havana.
Mr. Jeffries. And, as far as you know, that's an open legal
question?
Ms. Denison. Well, the application is still pending.
Mr. Jeffries. Okay. Thank you.
Thank you, Mr. Chair.
Mr. Issa. Thank you.
We now go to the gentleman from Texas, Mr. Poe, for his
round of questioning.
Mr. Poe. Thank you, Mr. Chairman. I think you cut my mike
off. Maybe you did that on purpose.
Mr. Issa. Well, mine is working, but I really didn't touch
yours. See if maybe the--try the next one down. We haven't done
anything.
Ron, does your work?
Mr. DeSantis. Yep.
Mr. Issa. It's just you, Ted.
Mr. Poe. I'm sure it is. It always is.
This issue--as maybe some of you know, I used to be a
judge. And the more I hear about this specific case, the more
I'm glad that I tried criminal cases, you know, bank robberies,
kidnappings, murder cases.
Be that as it may, let me see if I can look at this from a
big-picture situation. Cubaexport is the Cuban Government. Is
that correct?
Ms. Denison. Yes.
Mr. Poe. And it's really the military portion of the Cuban
Government that runs a company. And if you want to export
something out of Cuba, you work through Cubaexport, which is a
government military-run corporation that sometimes partners
with other people throughout the world, like the French in this
particular case, to sell a product abroad. Is that a fair
statement?
Ms. Denison. I'm not prepared to opine on Cubaexport.
Mr. Poe. Well, this whole thing is about Cubaexport. You
don't know anything about Cubaexport?
Neither one of you know anything about Cubaexport?
This isn't a gotcha question. I'm just trying to lay the
foundation of who the people are we're talking about in this
case.
Mr. Tong. Yeah. Thank you, sir.
Cubaexport is a state-owned corporation. So it is owned and
managed by the Cuban Government.
Mr. Poe. Cuban Government, primarily the military.
So what happened? When the revolution happened, the Cuban
Government swoops in and steals property from Cuban nationals
and foreign nationals, foreign corporations, and nationalizes
the property, makes it theirs. Then they set up another
corporation, called Cubaexport, to run these companies like
Bacardi and sell stuff abroad. They partnered with the French
in this particular case.
And this dispute is whether or not the United States, the
trademark, and they should still be allowed to sell or not sell
and whether Bacardi and Puerto Rico can sell or not sell. I
mean, is that a generally rough statement of what's going on in
this particular case?
Mr. Tong. I mean----
Mr. Poe. Or not?
Mr. Tong. The case is certainly a matter--the trademark
dispute is definitely one between--and you'll be hearing from
them in your next panel, I believe--Cubaexport, which is a
state-owned Cuban corporation, and Bacardi, which is not.
Mr. Poe. Okay.
And so we're in a position where Congress is considering
under legislation to weigh in on this particular case, and we
make a verdict, we'll make a verdict based upon the legislation
filed by the Chairman, or we let it play out in the judicial
system, in the courts, the Federal courts, where this
particular case is now.
I mean, is that right? The case is in Federal court?
Mr. Tong. The case certainly is in Federal court.
And, sir, if I can make one observation on that, as someone
who is charged with the promotion of intellectual property
rights overseas, it's a matter of pride in explaining the
strength of the United States intellectual property rights
system that we do have a court system that operates well and
considers the merits of each case in a proper fashion.
Mr. Poe. All right.
Mr. Tong. And I must say that I'm confident that our court
system will provide the most high-quality judgment in this case
compared to those of any other country.
Mr. Poe. And I generally have the belief and feeling that
if something is in the court system the court system ought to
settle the issue, and Congress should really stay out of it, as
a general rule. I'm not talking about this particular case.
But we are dealing with the Cuban Government now and trying
to open it up and be more--let's see--have a better
relationship with Cuba nationally. And my concern is similar to
one that Mr. Marino, who used to be a Federal prosecutor, said.
We're dealing with Cuba, and my belief is we do a lousy job
when it comes to dealing with someone that's an adversary. The
Iranian deal is a perfect example, in my opinion. I think that
was a bad deal for the United States.
Now we're dealing with Cuba. Are we dealing with them
through strength or through weakness in our political dealings
with Cuba?
Of the 6,000 claims--you know, the Cubans, they don't take
back convicted criminals that are ordered deported back to
their country. They don't take them back. You know, China
doesn't take them back either. And it's very difficult to deal
with the Cuban Government on a level playing field.
So are we giving up our strength in dealing with Cuba
diplomatically over these claims, over this case, over the
other cases that include Americans, that don't include
Americans, that include Cubans, in your opinion? Or are we
fighting for, you know, what we want to be fair in the outcome
of our relationship with Cuba and what they have done in the
past to steal everybody's property?
Mr. Tong. I think you've raised an important matter here,
sir. And, yes, the U.S. Government is pursuing the claims of
U.S. nationals against the Cuban Government with great vigor
and, we believe, in an intelligent fashion, which is by
creating an environment where we can actually engage with the
Cuban Government and seek resolution of those claims across the
table, presenting our case clearly and scientifically to the
Cuban side.
And I must say that, in the estimation of the
Administration, the fact that we have faith in the fairness of
our own court system to adjudicate this trademark dispute
actually adds to our legitimacy and strength in pursuing that
conversation with Cuba. We don't agree with Cuba on everything,
by any means, but a demonstration of confidence in our
democratic system adds to our strength in pursuing these
claims.
Mr. Poe. I would agree with your comment about our judicial
system. It is the absolute best in the world.
But I yield back to the Chairman.
Mr. Issa. Mr. Poe, where would you put the Cuban judicial
system in that hierarchy of best to worst?
Mr. Poe. Well, first of all, it's a misnomer. It's not a
Cuban judicial system; it's just a system. So it's not much of
a justice system, but it's just a system.
Mr. Issa. Thank you.
And, with that, we go to the gentleman from Florida, Mr.
DeSantis.
Mr. DeSantis. Thank you, Mr. Chairman.
Mr. Tong, you were talking about trying to create
conditions to get results here, but the President's policy
change was announced, I believe, in December of 2014. So, since
that point, how many certified claims have been paid by the
Cuban Government to U.S. citizens?
Mr. Tong. None yet, sir.
Mr. DeSantis. That's what I thought.
And when you have discussed the issue--I think in your
testimony you said that they have been provided an overview of
nearly 6,000 certified claims--how did the Cuban Government
officials respond to that?
Mr. Tong. I was not a participant to those negotiations, so
I don't think----
Mr. DeSantis. Do you know if any commitments were made?
Mr. Tong. They listened to the presentation of the U.S.
claims, and we're beginning a complex process of pursuing them
with great vigor.
Mr. DeSantis. So that's a way to say ``no,'' I think, that
there were no commitments made, correct?
Mr. Tong. We're still just getting started in this
conversation.
Mr. DeSantis. Well, I get that. I just think that when
you're dealing with a regime of this nature, from their
perspective, they've received all these concessions, I mean, a
lot of cash they're going to end up getting, and they really
haven't done anything for us. And I think that they're just
gonna keep doing this and try to pocket concessions. So I think
that this has been a mistake in approach.
Now, let me ask you this, Commissioner. As a general
matter, seized trademarks, should those be registered to those
who seized them or to their rightful owners?
Ms. Denison. The situation with Havana Club is that we
registered it because they were permitted to pay under the----
Mr. DeSantis. I understand. But I'm just saying, as a
general matter, when you have a trademark that's seized, is it
better that the person who seized it is recognized or is it
better that the person who originated it is recognized? Will it
be better policy?
Ms. Denison. It's not my job to opine on the law that you
have put into place. Congress has put into place section 211.
So if there were another situation and another special license
were issued, I would be in a situation where I had to take the
money.
Mr. DeSantis. Well, I'm glad you mentioned 211. What type
of legal analysis, if any, did the Patent and Trademark Office
undertake before departing from the precedent, the longstanding
precedent, following the language of 211 with respect to this
issue?
Ms. Denison. I think it's important for you to understand
that section 211 is administered by OFAC. And so, once we
received the specific license--we were not involved with the
OFAC decision to issue a specific license. But once we received
the specific license, the law had been complied with, and we
didn't have an option, we had to issue the renewal.
Mr. DeSantis. So you did not do any separate legal analysis
for that reason. Is that what you're saying?
Ms. Denison. Correct.
Mr. DeSantis. Okay.
Well, Mr. Chairman, I appreciate you calling this hearing.
I think it's something that's very frustrating to see, you
know, the Cuban Government seizing all this property. This has
been going on for decades. And it seems like they're going to
get away with a lot of this stuff, and, you know, I think
that's a real tragedy. But I know we have the next panel coming
up, and so I will yield back.
Mr. Issa. Will the gentleman yield for just 1 second?
Mr. DeSantis. For 1 second.
Mr. Issa. Mr. Secretary, did you do a legal analysis? They
asked the Commissioner, but since you folks--you and OFAC--was
there a legal analysis done by State, who effectively made this
happen while tying the hands of the PTO? Ms. Denison has made
it clear she had no choice. You had a choice. What was your
legal analysis for it?
Mr. Tong. We also followed the guidance of OFAC in the
interpretation of----
Mr. Issa. So I need to get OFAC here to find out if they
did a legal analysis?
Mr. Tong. Yes, sir.
Mr. Issa. Okay. Well, I guess that's what the empty chair
is for.
Thank you, Mr. DeSantis.
We now go to Mr. Deutch, another gentleman from Florida.
Mr. Deutch. Thank you, Mr. Chairman.
I apologize. I had another meeting. But I'd just like to
walk through a couple of points.
Secretary Tong, as the Administration moves toward
normalization, there's been broad recognition, widely
discussed, that confiscated and disputed property claims have
to be resolved, and I absolutely agree with that.
What I am confused about is, how was it that we decided
before any of the many claims, many claims that are out there
that have been the focus of much discussion, before any of
those claims are resolved, that we would toss aside this
heavily disputed trademark? Why was Havana Club marked first on
the list?
Mr. Tong. Our handling of the Havana Club registration--the
State Department's role, to be very specific, was to provide
foreign policy guidance to OFAC in its decision about whether
to grant a specific license that provided Cubaexport the
ability to pay a fee, which would allow them to register a
trademark.
Mr. Deutch. Right.
Mr. Tong. It----
Mr. Deutch. And you had said--I'm sorry. But you had said
earlier, or you said in your testimony that--specifically,
you'd said that State's role was not to adjudicate the
ownership of the disputed trademark rights and the Department
took no position on that issue.
Mr. Tong. Correct.
Mr. Deutch. But how is it that granting of an OFAC license
is not taking a position on the issue?
And here's the question. Here's why I rushed back here as
quickly as I could. Shouldn't we clearly bar the recognition of
any sort if the mark was used--if the mark that's used was used
in connection with a confiscated business and the original
owner hasn't consented? And aren't we just legitimizing the
confiscation and then telling the original owners to take their
objections to court?
And I hope that it's not going to be a broader reversal of
what has been U.S. policy, to not recognize any interest in
confiscated property. And I also hope that it's not a
foreshadowing of the process that might be used in future Cuban
confiscated property claims resolution.
Mr. Tong. So there was a lot in what you said.
Mr. Deutch. There was. I realize that.
Mr. Tong. Our action, the State Department action, again,
was to issue foreign policy guidance that then informed the
decision to allow a trademark registration. That trademark
registration is now a matter of dispute in U.S. Federal court.
So the U.S. administration action, in particular the State
Department action, in this regard, as I said, was not to
adjudicate this claim, but, rather, it creates a situation
where it will be adjudicated----
Mr. Deutch. Right, but----
Mr. Tong. If I could----
Mr. Deutch. No, but I just want to follow up on that point.
But that gets to the question I asked. Isn't that just
essentially legitimizing the confiscation and then telling the
original owners just simply take your case to court?
Mr. Tong. Well, in the question of broader claims of U.S.
nationals against the Cuban Government, I've stated several
times this evening that we are pursuing those with great vigor
and, we believe, with an astute strategy, sitting down directly
with the Cuban Government to address these claims of 6,000
people, worth close to $2 billion. And we will pursue those
claims with great energy and vigor and determination.
That is a separate matter in a different channel and an
entirely different matter than the question of a trademark
registration for a disputed trademark.
Mr. Deutch. But how is the--ultimately, we're talking about
these claims, and, in all cases, we're talking about the
confiscation of property, right? So, I mean, in those cases
where we're talking about the confiscation of property, why is
it different in this case with the confiscation of a trademark
versus the others?
Mr. Tong. One of the differences in this case--and there
are several in terms of the type of matter to be decided,
again, not by the State Department. But one of the difference
is that, in this case, the property which was confiscated that
this trademark is associated with was that held by a U.S
national at the time of confiscation. So, under the law that
we're operating under, it doesn't become a matter for us to be
pursuing through the claims discussions. So that is one of the
differences.
I just would encourage Members of Congress to consider the
broader game here, which is the pursuit of the claims of U.S.
nationals, worth in the billions of dollars, against a
government that will not necessarily go easily into recognizing
these claims. So we are going to go after those with great
energy, and we should.
Mr. Deutch. I do--and my time is up, but I do--I appreciate
the suggestion and your urging that I consider those. I
consider those very seriously. That's why I am concerned about
the possible precedential value--the possible precedent that's
being set in the way this claim was handled, almost with the
appearance that this one will cast aside to perhaps give us
some greater leverage as we discuss these others. That's my
concern.
But I yield back, Mr. Chairman.
Mr. Issa. Thank you.
And I'll be brief, because I know we have a second panel.
One, isn't the $2 billion the original value? Isn't it $7
billion or $8 billion? Isn't there interest----
Mr. Tong. On the----
Mr. Issa. You may not be claiming it, but the value of
money over a lifetime plus.
Mr. Tong. I'm not certain of the facts of that to answer--
--
Mr. Issa. Well, aren't the 6,000 claims----
Mr. Tong [continuing]. Question. We'll get back to you on
that.
Mr. Issa. The 6,000 claims were about $2 billion at the
time that they were certified. So we're going to assume that
they're a multiple of that at some point.
But let me just--I have to, to be honest, call you out on
something that I'm--I'm concerned, the way you said it. You
said ``the broader game.''
Now, this country welcomed tens of thousands of Cuban
refugees to our shores. Those tens of thousands of Cuban
refugees, including those who spent time in prisons and fled,
those who died--some of them died on the boats, and some made
it here. Those Americans, you've said repeatedly, are not part
of your calculation. Isn't that true?
And, please, don't tell me about international law. I just
want the straight answer.
Those tens of thousands of Cubans who fled to our shores,
who we granted asylum and citizenship from a totalitarian
dictatorship that oppressed them, that had no rule of law, they
are not part of the current negotiations that you are trying to
work with the Cubans. And yet you used the word ``broader
game.''
Isn't that the broader game? Isn't the broader game justice
for the tens of thousands here and the hundreds of thousands
still in Cuba, that they get their rights? Isn't that the
broader game for America?
Mr. Tong. Well, Mr. Chairman, as I've stated previously,
the Foreign Claims Settlement Commission has recognized the
claims of people who were U.S. nationals at the time of
confiscation, and we're pursuing those claims vigorously
through the negotiations.
Mr. Issa. Well, doesn't your responsibility, your position,
Secretary, include taking steps to eliminate trafficking in
stolen U.S. property?
Mr. Tong. Yes, sir.
Mr. Issa. So U.S. property is sitting there, perhaps a home
that--a U.S. citizen in 1960, and certainly homes and
businesses of U.S. citizens today. That's where rum is being
produced. It's where Coca-Cola copy is being produced. It's
where cigars are being produced.
So anything that we allow to come, including Havana Club
rum, very, very possibly is coming from assets seized
illegally, held by Americans. And your responsibility is to see
that that doesn't get trafficked, isn't it?
Mr. Tong. Our responsibility is to uphold and implement
U.S. law on all these matters.
Mr. Issa. So, again, I'll go to the Commissioner.
And, please, this is within your jurisdiction. And I would
ask that you use the level of career professionalism and not
tell me that somebody I haven't yet brought before this
Committee is the person to ask.
We talked earlier, and the round of questioning was rather
interesting. The first question: There's abandonment, and then
there's an inability to ship the goods, to in fact use your
trademark, correct? Okay.
The original trademark holder, who's one of the still
applicants, that family, their assets--and they're American
citizens today--their assets were seized in Cuba. Their
product, if their assets were lawfully returned to them, could
be made in Cuba and shipped from Cuba, couldn't it?
Well, I won't ask you to hypothecate that.
Ms. Denison. I can't.
Mr. Issa. Right. But the fact is they have a factory, or
had a factory, in Cuba. If they didn't have to flee as refugees
recognized by us, for asylum recognized by us, after a
totalitarian dictatorship jailed them unlawfully, oppressed
them, if they hadn't fled here, they could still be there. If
they could be there, then they could ship from Cuba.
So in the question about Havana Club and origin, once Cuba
returns to rule of law, once it returns to where the family can
regain what was taken by it in no different matter than the
Nazis took things--this government nationalized. They took
assets. They gave no compensation. So the fact is Havana Club
has a factory in Cuba, except it belongs to someone who is an
American citizen.
So is there, within your recognition, a circumstance in
which--as long as a military junta holds on to the asset that
makes the alcohol, that family is unable to secure the money
for their trademark or to ship from their native country of
Cuba because their factory is being held by a military
dictatorship. Isn't that every bit as valid a reason for the
family not to be able to ship product and, thus, reclaim their
trademark?
You know, the Cubans say we can't ship--the Cuban
Government says we can't ship because we have an embargo. But
this family can't ship because the Cuban Government took their
factory, their distillery, and still holds it today.
Ms. Denison. I believe I stated earlier that they could
have preserved their registrations by claiming excusable non-
use back in the fifties.
Mr. Issa. But you have the right to waive any limit to go
back and find those circumstances. You don't have--you
mentioned you didn't have time limits. If the family came to
you today and said, we want to reclaim it because we have been
unable to ship from our country of Cuba, from our factory,
because a dictatorship has taken it and seized it, you have the
ability to grant that today. There's no time limit on that, is
there?
Ms. Denison. I don't have the ability to do that today
because there is a blocking registration.
Mr. Issa. Oh. Oh, that's right, because you were ordered by
the State Department to grant a registration to the Cuban
Government that seized their asset.
Ms. Denison. I was not----
Mr. Issa. The same State Department that's not going to
protect the rights of those refugees and asylumees and their
families, the tens and thousands of Cuban Americans who fled
Cuba or were imprisoned and then got out of Cuba on a boat.
They won't protect them. And you've granted a trademark to the
Cuban Government that did that, and that's going to block it
today? Is that your testimony?
Ms. Denison. I was not ordered by the State Department to
do anything.
Mr. Issa. Well, you provided the legal information
necessary to compel you to give it. Because you said you had no
choice once OFAC delivered that.
Ms. Denison. The Department of Treasury----
Mr. Issa. I'm sorry, Treasury.
Ms. Denison [continuing]. Is where OFAC is.
Mr. Issa. Treasury.
Ms. Denison. Yes. So once the OFAC----
Mr. Issa. I apologize for saying OFAC. Treasury. Thank you.
Ms. Denison. Once----
Mr. Issa. The problem is we have State here telling us that
this is the bigger game that we need to understand.
Ms. Denison. I understand that. I'm just a very small part
of it, and I got a license from OFAC, and so then I followed
the law.
Mr. Issa. Right. You had no choice but to provide a
trademark to a dictatorship that seized their assets and that
now blocks the original owners, who had it seized from them,
and whose children and grandchildren are fairly destitute today
comparatively because, of course, they don't have the assets to
make their distilled spirits.
Ms. Denison. Is there a question?
Mr. Issa. Well, ``yes'' would be fine.
Ms. Denison. I had no choice but to renew registration
number 1031651.
Mr. Issa. Well, thank you.
I think, although the record is not complete, it is
certainly complete as to what the broader game is by the State
Department and the fact that you had no choice but to grant an
injustice by renewing to a dictatorship that seized some of
these assets their trademark, which will now, I predict, be
used in Federal court for the presumption in favor of Cuba.
And that is what you have done here today, or have done.
You have changed the presumption in the court. I will tell you,
your testimony, Mr. Tong, that you don't think it's going to
change the presumption, I don't think you're right. I think it
will change the presumption. It shouldn't. And certainly I hope
Congress passes a resolution hoping that the courts will
recognize that your actions should in no way change the
presumption of who has the actual right and who has had the
right to that trademark since the 1930's.
Ms. Denison. Mr. Chairman, the presumption has been in
place since 1976. So we have maintained the status quo.
Mr. Issa. I hear you. But no one was shipping any product;
today, this product is being sold in at least 19 states. And
notwithstanding the renewal--there's certainly 19 states' worth
of common law rights, rights that in the ordinary course would
not be stopped. And I would presume that the Cuban Government
will seek to stop Bacardi in court. They will try to stop the
sale of this even while they cannot sell the product.
We'll see how it works out. The one thing I know is the
lawyers will get rich, the Administration will move on, and the
thousands and thousands of Americans whose parents and
grandparents fled Cuba will feel undercut if you're only
looking at 6,000 people who may have lost a stock or a bond but
were Americans sitting here. And I hope this Administration
will reconsider the broader game and understand that the
broader game includes all Americans, not just those who were
Americans in 1960.
If you have any closing comments, I certainly want to hear
them.
And, with that, this panel is dismissed, and we'll take a
5-minute recess while we set up the next panel.
Ms. Denison. Thank you.
[Recess.]
Mr. Issa. I want to welcome all of you back.
And I take pleasure in introducing our second distinguished
panel of witnesses. Once again, the witnesses' written
statements will be entered into the record in their entirety.
And I would ask that you summarize your testimony in 5
minutes or less. To help us stay within the time, you see the
lights. You know how the lights work. I will say no more.
Before I introduce the witnesses, pursuant to the
Committee's rule, I would ask you all to please rise to take
the oath and raise your right hand.
Do you solemnly swear or affirm that the testimony you're
about to give will be the truth, the whole truth, and nothing
but the truth?
Please be seated.
Let the record indicate that all witnesses answered in the
affirmative.
Our second panel of witnesses today includes Mr. Rick
Wilson, senior vice president at Bacardi-Martini, Incorporated;
Mr. William Reinsch, president of the National Foreign Trade
Council; Mr. Mauricio Tamargo, attorney at law of Tamargo LLP
and former chairman of the Foreign Claims Settlement
Commission, which certainly was talked about by the previous
panel; and Ms. Escasena, a Cuban property claimant from Miami,
Florida.
And, just for the record, are you one of the 6,000 that is
in that stack that was referenced earlier?
Ms. Escasena. No, I'm not.
Mr. Issa. Okay. So you are a claimant but not certified.
You lost property but are not recognized. I just want to make
that for the record.
And, with that, I will go down the list, starting with Mr.
Wilson.
TESTIMONY OF RICK WILSON, SENIOR VICE PRESIDENT, BACARDI-
MARTINI, INC.
Mr. Wilson. Thank you, Mr. Chairman, Committee Members.
Good afternoon--or good evening, I guess. My name is Rick
Wilson, and I'm senior vice president of external affairs for
Bacardi.
I'm here today to testify about the recent decisions of
OFAC and the PTO, which issued a license and a trademark
registration for the illegally obtained and now-expired Havana
Club mark 10 years after the statutory deadline. These
decisions are unprecedented and shocking because they undo
decades of U.S. law and policy by sanctioning Cuba's efforts to
capitalize on and traffic in stolen assets.
This dispute has a long history, and I will not go through
all the facts, and I ask the Committee to look at my written
comments.
I do have to say a few words a little bit about history.
You know, the Bacardi and the Arechabala families were both
very similar companies. They originated in Cuba in the mid-
1800's. We both created rums and operated in a similar fashion
until 1960, when armed forces of the Cuban Government, under
the leadership of Fidel Castro, forcibly seized the company's
assets in Cuba without compensation, throwing family members in
jail or forcing them to flee the country.
And I just have an example. And we have the original, by
the way, in our office. This is actually the front page of the
newspaper that talks about the confiscations. And on the last
page, actually, is the list, which have been circled, of the
Arechabala company and the Bacardi company, in case there's any
doubts.
Unlike the Arechabala family, the Bacardi had assets
outside of Cuba and successfully stopped Cuba from selling rum
under the Bacardi name around the world. We had to fight them
in a number of places. Unfortunately, the Arechabalas did not
have those assets outside of Cuba and were unable to continue
their business.
After losing the fight for the Bacardi brand, the Cuban
Government, they lied in wait. And in 1976, you heard earlier,
after the family's U.S. trademark registration understandably
lapsed, Cuba fraudulently registered the mark for itself.
Years later, then it sought an OFAC license, by the way, to
transfer that illegally obtained registration to that joint-
venture company you heard about earlier half-owned by Pernod
Ricard, a French liquor company that today is the second-
largest spirit company in the world. OFAC, back then, properly
denied that request.
However, the Cuban Government would be faced in 2006 with
another need to renew its illegally obtained registration. But,
this time, a very important law had been passed by Congress,
called section 211, which specifically requires confiscators
and their successors to seek a specific license to obtain or
renew a trademark registration for Cuban confiscated
trademarks.
Cuba applied for such special license, and OFAC refused to
grant it back then, stating, and I quote, ``We have received
guidance from the State Department informing us that it would
be inconsistent with U.S. policy to issue a specific license
authorizing transactions related to the renewal of the Havana
Club trademark.'' And indeed it was, and indeed it still should
be.
As a result of OFAC denying this license application, the
PTO denied the trademark renewal, stating that the registration
will be canceled expired. Again, this, as was stated earlier,
2012, all the litigation regarding that ended.
The Cuban Government sued the U.S. Government during this
timeframe, and OFAC specifically defended its decision to deny
the license application all the way to the Supreme Court, which
declined to hear the case.
That should have been the end to the matter. However, in
unprecedented fashion and for unknown reasons, the PTO refused
to remove the canceled mark from its register for years. And,
recently, on January 11, 2016, OFAC unbelievably reversed
course and granted Cuba a license which purports to authorize
payment of this long-overdue filing fee from 2006.
So, within 24 hours of learning about this decision, a
speed which is likely unmatched in the chronicles of
administrative law, the PTO granted Cuba's 2006 petition to
renew its trademark. Granting a specific license to renew
Cuba's invalid registration allows the Cuban Government to
illegally maintain its claim of title to United States property
which is acquired through the forcible confiscation of the
Arechabalas' assets and forced exile of its founders. Indeed,
intellectual property law is undermined, not strengthened, when
states recognize rights in confiscated marks.
Whether the Cuban embargo is strengthened or weakened, it
will always be important to ensure that the United States does
not become a party to Cuba's illegal confiscation of private
property. Recognizing Cuba's ownership of the U.S. Havana Club
registration, as OFAC and PTO have now done, will only serve to
legitimize Cuba's thievery.
What occurred was a forcible confiscation at gunpoint. For
decades, the U.S. has prevented Cuba and its business partners
from profiting off of the United States Havana Club
registration. It should continue to do so.
Well-settled U.S. law and policy, as reaffirmed by section
211, ensures that the U.S. will always protect the creators and
owners of intellectual property, like us, and not reward those
rogue states, like Cuba, which use force of arms to steal such
property and enrich itself at the expense of its citizens. The
sudden and unexplained decision of OFAC and the PTO to permit
Cuba's renewal of the Havana Club mark flies in the face of
these legal and policy principles, and this action should be
retroactively revoked.
Thank you very much.
[The prepared statement of Mr. Wilson follows:]
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__________
Mr. Issa. Thank you.
Mr. Reinsch.
TESTIMONY OF WILLIAM A. REINSCH, PRESIDENT,
NATIONAL FOREIGN TRADE COUNCIL
Mr. Reinsch. Thank you very much, Mr. Chairman.
My name is Bill Reinsch. I'm the president of the National
Foreign Trade Council, which represents 200 American companies
engaged in global commerce.
The NFTC strongly supports the Obama administration's
efforts to place relations between the United States and Cuba
on a more normal footing. Resolving satisfactorily the
legitimate claims of U.S. citizens who had their property in
Cuba confiscated by the Castro government is essential to
creating the conditions in which a normal relationship with
Cuba can thrive and endure. Constructing new impediments and
perpetuating those that already exist will only complicate this
process and make it more difficult to secure the recompense
that U.S. property holders have sought for decades.
Tonight, I want to focus my testimony on an important
intellectual property issue that, if not resolved correctly,
will adversely affect our country's standing in international
organizations, our ability to lead the global effort to protect
intellectual property rights, and our efforts to protect the
property of U.S. citizens and companies doing business in Cuba
in the years ahead. And that is section 211.
As the Committee is aware from its hearing on this subject
in March 2010, where I also had the honor of appearing, section
211 was found in 2002 to be in violation of U.S. WTO
obligations. Some 14 years later, the United States remains in
noncompliance. Section 211 also has put the United States in
violation of its obligations under the General Inter-American
Convention for Trade Mark and Commercial Protection.
On behalf of the NFTC, I want to express our support for
repeal of section 211, which is contained in--a provision for
which is contained in a number of different bills, which I
enumerate in my statement.
I also want to express my opposition, I'm sorry to say, Mr.
Chairman, to your bill, H.R. 1627, which purports to address
this problem in a different way but, in fact, would only
exacerbate it.
Repeal of section 211 would remedy the U.S. breach of its
WTO obligations and the Inter-American Convention--and my
written statement provides details about that--while it would
also remove any pretext for the Cuban Government to remove
protection of trademarks currently registered in Cuba by U.S.
companies.
At present, there are more than 5,000 U.S. trademarks
registered in Cuba by over 400 U.S. companies. Many of these
companies look forward to the opportunity to sell their
products in Cuba, and they will want to know with certainty
that their trademarks will be protected by Cuba as they build
their plans to develop that market.
Repeal of section 211 also would restore the traditional
U.S. leadership role on intellectual property issues which has
been compromised by our failure to comply with the WTO ruling.
This has provided over the past decade a convenient excuse for
other WTO member countries, such as China and India, to ignore
U.S. calls to improve their IP laws.
Repeal of section 211 would confirm the U.S. commitment to
providing high standards of IP protection, including our
commitment not to assign trademarks based on political
criteria. It would also reaffirm that resolving trademark
disputes are properly the responsibility of the Patent and
Trademark Office and the courts based on the merits and not on
political considerations.
Section 211 has no benefits for the U.S. business community
and is far more likely to cause significant damage. If it's
maintained in law, it could provide, as I said, a pretext for
Cuba to withdraw protection for U.S. trademarks currently
registered in Cuba by American companies. It could also become
one more roadblock to the efforts of the United States to reach
agreement with the Cuban Government on a satisfactory
resolution of the outstanding claims that will be the topic of
the next two witnesses.
H.R. 1627, another proposal short of full repeal, we
believe, will make things worse. For the benefit of a single
company, the proponents of section 211 and H.R. 1627, in
effect, are asking the Congress, one, to make it more difficult
for U.S. companies to enforce their trademarks and tradenames
in U.S. courts against claims of ownership; two, to keep U.S.
companies exposed to the risk of retaliation abroad and the
type of injury that they suffered in South Africa in a
comparable situation; and, three, to continue putting U.S. law
at cross-purposes with longstanding principles of U.S.
trademark law and important IP and trade policy objectives of
the U.S. business community and the U.S. Government. And my
written statement has further details on those points, as well.
H.R. 1627 would seek to apply section 211 to both U.S.
nationals and foreign trademark holders. However, such an
amendment has significant drawbacks when compared with repeal,
the main one being that it would not address any of the
inconsistencies of 211 with the Inter-American Convention. In
addition to the risk to U.S. companies abroad, such a partial
approach would also lead to increased litigation and legal
uncertainty at home.
In sum, section 211, even if amended by H.R. 1627, would
continue to benefit only a single company and provide no
benefits for U.S. business. Instead, it would make it more
difficult for U.S. companies to enforce their trademarks and
tradenames in U.S. courts against counterfeiters and infringers
and keep U.S. companies exposed to the risk of legal
uncertainty and retaliation abroad. For NFTC members, this is a
bad bargain that harms both U.S. business and U.S. national
interests.
Instead, we urge Congress to repeal section 211 in its
entirety. Repeal is the only action that will provide full
compliance with all current U.S. trade obligations and deny
other governments any rationale for suspending their treaty
obligations or retaliating against the trademark and tradename
rights of U.S. businesses. This is all the more important as
the United States moves to reestablish a normalized
relationship with Cuba. Repeal of section 211, we believe, is
an essential element of establishing that relationship.
Finally, Mr. Chairman, I want to reiterate what Secretary
Tong and Ms. Denison said, and that is to note that repeal
would not take sides in the underlying dispute over the Havana
Club trademark and it would not settle that question. Rather,
it would return that dispute to the Patent and Trademark Office
and the courts, where we believe it belongs. Experience shows
that the courts are more than capable of reaching a just and
equitable resolution of that dispute based on the merits.
Thank you for the opportunity.
[The prepared statement of Mr. Reinsch follows:]
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__________
Mr. Issa. Thank you. And just, as we go on, you do also--
one of the 200 companies you represent does, in fact, currently
hold the trademark, correct?
Mr. Reinsch. I'm sorry?
Mr. Issa. The maker of Havana Club is one of the 200
members of your consortium?
Mr. Reinsch. If you're asking me if Pernod Ricard is one
of----
Mr. Issa. Yes.
Mr. Reinsch [continuing]. Our members, the answer is yes.
Mr. Issa. Okay. I just want to make sure that, you know----
Mr. Reinsch. Yes.
Mr. Issa. It's not the 199 as much as it's the one.
Mr. Reinsch. Well, no. Our members are the U.S. subs, in
some cases.
Mr. Issa. Yes.
Mr. Reinsch. I would argue that there's 200 American
companies, but there are other companies as well.
Mr. Issa. We'll see.
Mr. Tamargo.
TESTIMONY OF MAURICIO J. TAMARGO, POBLETE TAMARGO LLP, FORMER
CHAIRMAN, FOREIGN CLAIMS SETTLEMENT COMMISSION OF THE UNITED
STATES, DEPARTMENT OF JUSTICE
Mr. Tamargo. Thank you, Mr. Chairman and Members of the
Subcommittee. It is an honor to appear before you today.
I commend this Subcommittee for convening this hearing and
for including certified claims against Cuba. I hope the
Subcommittee continues to play an active role in the long-
overdue settlement of these Americans claims.
Over 55 years ago, the Communist Government of Cuba
confiscated real and personal property of thousands of
Americans and others living and doing business in Cuba. To this
day, that chapter represents the largest confiscation of
American property in history, and there has been no progress in
settling the claims or addressing other potential Cuban debts,
as called for under U.S. law.
Caveat emptor, or buyer beware, is generally the rule in
international commerce but not when a foreign government
injures an American or confiscates his or her property. In
those cases, it is the responsibility and the expectation that
the U.S. Government will do all it can to achieve justice for
its own nationals. Under international law, all countries are
expected to do the same for their own nationals.
The confiscation of American property by Cuba was so
significant that the U.S. Government enacted certain trading
restrictions regarding Cuba, which have become known as the
Cuban embargo. The U.S. Congress has repeatedly declared that
this embargo will not be lifted until the American certified
claims are paid and settled by Cuba. That was the promise made
by the U.S. Government to the claimants. Unfortunately, both
Democratic and Republican administrations have weakened the
sanctions on Cuba without securing concessions or commitments
from Cuba regarding the claims.
I am encouraged but guarded by the ongoing negotiations
between the United States and Cuba regarding the possible
settlement of American claims and related issues. There are
5,913 certified claims against the Government of Cuba, the last
two of which the Commission certified under my chairmanship.
When all claims are certified, they are valued at $1.8 billion.
Today, they are valued at $7 billion to $8 billion. And I thank
the Chairman for that clarification question to the Secretary,
because, with interest, they were valued closer to $8 billion.
No American claims program has been left pending and unsettled
for this long.
Under international law, the Cuban Government can
confiscate property, but the U.S. has a right to fair
compensation for its citizens. I believe the U.S. should agree
to nothing less than full amount of value for their claims plus
100 percent of the interest. Cuba can and should pay this
price. Cuba should not get a free ride for stealing American
property, sometimes by force, and without compensation.
A few recommendations to the Congress.
First and foremost, these certified claims were the reason
the embargo was created in the first place, and Congress must
not pass any legislation which further eases the embargo unless
these claims are settled.
The U.S. gets only one shot at this. We have only two
things Cuba wants: access to credit and access to the U.S.
marketplace. If the Congress gives those away or allows them to
be given away without getting these claims paid, then the
Congress will have failed to stand up for these American
families and companies. It is also inviting other countries to
take more American property.
Second, I urge the Congress to enact legislation granting
limited authority to the Foreign Claims Settlement Commission
to update the certified claims with the current claim-holder of
interest for each claim.
As I explained, claims programs are not designed to go
unpaid for 55 years. Multiple generations of claim-holders have
come and gone, and it will possibly take years to ascertain the
identity of the current claimants. Not only is it good
governmental housekeeping with no additional cost to the
taxpayer, but it also sends a strong message to Cuba.
Thirdly, although I am optimistic that the certified claims
will get paid, you never know. We've been waiting for 55 years,
and we may get more of the same status quo. Therefore, I
propose the following.
We know the current American trade and travel business with
Cuba is trespassing on American property. We know this because
a runway expansion at Jose Marti Airport was built on land
subject to a certified claim. And the same is also true of most
other Cuban air and sea ports, including the Port of Mariel and
much of its infrastructure. They all are on land which is the
subject of an American claim. And there may be other debts by
other Americans and foreign nationals.
If these talks fizzle out, Congress should consider
enacting a trespass penalty of 10 percent on all transactions
with Cuba. That would be on all trade, travel, commerce,
remittances, toll calls, gifts, flyover fees, port duty,
everything.
The proceeds collected by this trespass penalty would go
into a fund which would pay all certified claimants their full
amount, including interest. This trespass penalty would not
release Cuba of its debt, but now the debt would be owed to the
U.S. Government instead of the individual claimants. Those
doing travel and trade with Cuba should consider this trespass
penalty as the cost of trafficking in stolen property.
The current and seemingly never-ending waiting by the
claimants is unacceptable and intolerable. It is the
responsibility of the Congress to end this embarrassing 55-year
wait by our fellow Americans.
Fourth, I recommend and urge all American families and
companies that are holding certified claims to become engaged
in this discussion. Write your Congressman, your Senator, the
President, the State Department, and continue writing and
calling until these claims are settled.
American taxpayers are owed compensation by Cuba. They need
to demand that their claims be settled. And if they're not
going to be settled, they should be paid by the trespass
penalty. It is wrong to continue to hold claimants hostage to
this seemingly never-ending battle over Cuba policy. It is
unfair to many American families who did nothing but
courageously go to Cuba to build a business or try to start a
new life.
Thank you, Mr. Chairman and Members of the Subcommittee.
[The prepared statement of Mr. Tamargo follows:]
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__________
Mr. Issa. Thank you.
Ms. Escasena.
TESTIMONY OF LILLIAM ESCASENA,
CUBAN PROPERTY CLAIMANT, MIAMI, FL
Ms. Escasena. Thank you, Mr. Chairman, and thank you to the
Members of the Committee.
Mr. Issa. I think maybe pull your mike a little closer.
Ms. Escasena. A little bit closer?
Mr. Issa. Yeah, please. Thank you.
Ms. Escasena. Thank you for giving me this wonderful
opportunity to tell my story.
I am a Cuban-born and American citizen. My family left Cuba
in 1960. They silently planned their exodus for fear of
persecution. They also had to plan financially how they would
survive this exile.
No matter how terrified they were of their immediate
future, their mentality was that this would not be permanent
and that they would return to their beautiful island once
again.
My grandfather, Federico, on my mother's side came from a
humble beginning. He was born in Caibarien las Villas, lost his
dad at the age of 9, and in order to help his mother provide
for him and his four siblings, he worked on the docks after
school every day. He would finish high school before he began
working full-time.
While his future looked promising, the financial crisis in
1929 left him jobless. He took all the savings he had, his
experience and contacts, and became a steamship agent, opening
his own office as a customhouse broker in Caibarien and some
years later in Havana. He would then open sub-agencies in every
key port in Cuba and an office on Wall Street.
In 1938, his success in Cuba would get him recognized by
the U.S. and make him a consular agent. My grandfather had
finally built a name for his family and their future
generations.
My father, Manolin, started at the age of 10 working
alongside his dad to help create and build the family business.
My grandfather, Manolo, started a company of explosives that
would later be contracted for mining and the creation of roads
throughout the entire island. Their growth and success would
soon move their main factory and operations to Havana. The
business continued to flourish, and my father continued making
large investments, aiding the growth and expansion.
Castro's regime of terror started by confiscating property
from big landowners, arresting and accusing innocent
individuals of being against the government, sending these
individuals to the firing squad without a trial. Castro would
stop at no cost.
The Cuban reality came knocking at my parents' front door,
literally, when Castro's men came searching for my father at
gunpoint. Their demands were simple. They would take my
father's business, his factory, equipment, and offices, and all
of the land.
My grandfather, Federico, was stripped of his four homes in
Miramar, his business, commercial property, and all other
equipment from which he ran his operation. Currently, my house
where I was born is an embassy, for the record. Not only did
Castro steal physical property that belonged to my family, but
also destroyed the legacy that they worked their whole lives to
build and someday pass on to the children and grandchildren.
And even though the Castro brothers and others said they would
pay the family for this, they never did.
My family was not the only one to suffer this fate.
Hundreds of thousands of Cuban families and Americans were
forced to leave their homeland and everything they built.
After over 55 years, the same Communist dictator continues
to destroy the beautiful island that more than a million Cuban
Americans used to call home. The time is long overdue for the
U.S. Government to acknowledge and demand restitution for all
the Cuban Americans and so many other victims of Cuban
communism.
We have pledged our allegiance to this beautiful country
and ask our country help us secure justice. While the
properties that were stripped from us may hold a monetary
value, the pain and suffering of my parents and my entire
generation is far greater than any dollar amount. My parents
longed to return to Cuba, the country that they adored, to
smell the ocean in Varadero, to walk El Malecon, to feel free
once again in their ancestral homeland. They passed never being
able to fulfill these dreams.
Although my parents couldn't fulfill these dreams, I am
here to see their dreams out for them and for every Cuban
American family. These dreams are not driven by money. They are
driven by the need for justice, the same kind of justice the
U.S. advocates to the people of this country.
Today, I feel you have offered our family and others like
it an opportunity to help start to right this wrong and begin
to heal very old wounds. You honor the memory and sacrifice of
our families, and for that, we thank you. Please, help all
victims of Cuban communism seek justice. Thank you.
[The prepared statement of Ms. Escasena follows:]
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__________
Mr. Issa. Thank you. That's a very compelling story.
We now go to the gentleman from Florida, Mr. DeSantis.
Mr. DeSantis. Thank you, Mr. Chairman. Thank you for the
testimony of the witnesses.
You know, this policy is frustrating because you have a
country and a regime that has been hostile to us since its
inception at the revolution. They confiscated all this
property. No one's ever been given recompense for that. They've
tortured people. They've imprisoned people for political
purposes. During the Cold War, they would export guerilla
fighters to do our enemies' bidding.
And so now we are, with this regime, they're harboring one
of the FBI's most wanted terrorists, Joanne Chesimard. And so
we do this change in policy and what are we getting? I think
Mr. Tamargo said we should not give them a free ride.
Unfortunately, I think the Administration is doing exactly
that.
All this property should have been paid as the price of
negotiation. And, yet, we're showing, basically, we're
providing Castro, the Castro brothers a road where they can get
away with this, because they're getting some of the cash and
credit they need. They're getting the lifeline that they need.
But we, you still have Joanne Chesimard there. You still have
all these claimants who had their property seized. And so I
think it's very, very frustrating. And you even have outlets
like The Washington Post editorializing, hey, this is not
working, the Castro brothers are not changing.
Let me ask you, Ms. Escasena, has the Administration
listened to your concerns?
Ms. Escasena. Not to my knowledge.
Mr. DeSantis. So do you feel a sense of betrayal that
they're not listening to you or doing anything for you?
Ms. Escasena. I feel that he has not reached out to any of
us, any of the Cuban Americans, and has not heard our stories.
Mr. DeSantis. Now, Mr. Wilson, the State Department
testified, you were here for that, and they basically said,
look, the courts are going to resolve this issue in terms of
the Havana Club Rum. But hasn't this issue already been
resolved?
Mr. Wilson. Yes, yes, Mr. Congressman DeSantis. There's
been tons of litigation already, and actually unfair
litigation, that we and the Arechabalas have had to endure for
years. And yes, with this action, we're going to end up having
to do more litigation and attempt to make sure that the wrong
is righted. But the problem is, and I think it was stated
earlier in the first panel, why should families like the
Arechabalas have to resort to litigation? Why?
And that's why Section 211 was passed, because there's a
bright line rule there not to recognize those confiscatory
measures. Look at the Arechabalas. They were put out of
business. Their family lawyer was put in jail for 18 years.
They didn't have advice. They didn't know how to do things in
America. And now they're going to be resorted to have to go
through expensive litigation? That's not fair.
And I'm concerned that our government starts their path
down to resolve these confiscations, and the first one they
start with is to recognize the rights to the confiscator who
took the rights from that family. My God.
Mr. DeSantis. It's not providing great incentives for
future behavior, I mean, that's for sure.
Mr. Tamargo, you mentioned, and I think this is a good
point, you're talking about expanding commerce with the Castro
regime. So someone pulls into a port. That port very well may
likely have been seized by a private property owner. Someone
staying in a hotel, that may very well have been seized
property.
So some people have this argument that, oh, you're opening
it up, you can create more market, and this is how economies
change and societies change. But free enterprise depends on the
rule of law, and this is basically conducting commerce on the
backs of confiscated property. So it's really undercutting the
rule of law because the regime is going to now profit even more
based on the actions they took. Do you agree with that?
Mr. Tamargo. I certainly do, Congressman. It's worth
pointing out that the licensing that Treasury is issuing for a
lot of this commerce and travel and trade and shipping is using
confiscated property that has not been compensated, and that's
contrary to U.S. law. And they simply issue the license, but
they don't inquire or drill down in the application enough to
bring that to light. And that's how they're able to issue this
license without having to admit that they're in violation of
the law.
Mr. DeSantis. Well, I appreciate the testimony. I mean, the
bottom line is this is a major change in policy. We've seen the
Cuban regime benefit.
And here's the thing: They've been trading with all these
other countries for this whole time. Has that benefited the
people of Cuba? No, it doesn't, because the money goes to the
military, the intelligence services, and the regime. It doesn't
go to the Cuban people.
And so this is a benefit to the Castro brothers. And for us
not to get even one claim paid before we've gone down this
road, I obviously think it's bad policy.
But I really appreciate the Chairman calling the hearing,
and Congress needs to stay engaged in this issue. I yield back.
Mr. Issa. Thank you. And thank you for your insightful
questions.
I'll now recognize myself for a few questions.
Mr. Tamargo, you're an expert in the area of these claims,
and you worked on it, and I thank you for your efforts with the
Commission, for a very long time.
You proposed essentially Congress acting to reopen. Could
you elaborate a little bit more on that? I want to make sure I
understand it. Because it does seem like the only way to get
justice--and I'm going to take Mr. Reinsch a little bit to task
here. If I understood him correctly, he sort of called our
treatment of South Africa when it was an apartheid as a failed
policy that didn't work. And I'm old enough----
Mr. Reinsch. That was not what I said. But we can discuss
it later.
Mr. Issa. Well, when you referenced it as not going down
the road of South Africa, I must tell you, I'm very proud that
America and the world went down a road with South Africa and
forced a change.
So as we look at forcing a change, if this Administration
won't do it, or at least accounting for that change, would you
go through the benefits of reopening and properly assessing the
claims.
Mr. Tamargo. Yes, thank you, Mr. Chairman. This is a
proposal that we've been advocating for a while now. The
Commission, when it adjudicated these claims, it completed its
work in 1972, and by statute its authority ended over the
claims. And the claimant is the one responsible for keeping his
own records current. But that was 50--you know, 40 years ago.
Mr. Issa. So what you're saying is people die.
Mr. Tamargo. People die.
Mr. Issa. There's probate. The only way to really know that
the $7 billion or $8 billion, who is entitled to it, would be
to essentially allow the Commission to reopen and evaluate who
they are.
Mr. Tamargo. While I was there as chairman, we did try to
unofficially update the records as best we could. We did
research. We contacted claimants. We reached out with outreach
efforts. And we did a fraction of updating. But even that is
unofficial. And we don't have the authority to require
documentation that would prove their actual ownership. And I
suspect that many of the claimants of record have conflicting
interest in the same claim, because nobody knows for sure,
there is no authority to determine who was the actual claimant.
That normally gets sorted out by the Treasury Department
when it's distribution time. When the offending country pays
the settlement amount, then this distribution happens at
Treasury. But the claims programs don't go 55 years unpaid. So
we're in a new situation here.
And when and if there is a settlement with the government
of Cuba, it'll take quite a bit of effort for Treasury to find
out who are the appropriate recipients of these certified claim
amounts and it will just take too long. I mean, I believe this
is time being wasted.
The Commission has the expertise to do this updating of the
records. It's already budgeted. They have a staff. They could
be doing this under their own authority. And they could be,
with limited reopening of the program, not to revisit the
amounts or anything, but simply the identity of who the
certified claimant is supposed to be. And that would be what I
would propose.
Mr. Issa. So unless we want to go to Ancestry.com to find
out all of this, we must find a way to make sure that the
records stay current so that, if there's a disagreement, it can
be adjudicated by a family. Because, I mean, we all understand
that mom left everything to you but didn't name that asset.
When you die, who is to say that your siblings' children aren't
going to make the claim since it wasn't named in the will, just
as an example.
Mr. Tamargo. That's a very good example. These family
probate matters get very complicated. And Treasury normally
would sort through that, but they only do, like--they don't
have this many of them to do. I suspect there's going to be
5,000 of them or maybe 5,500 of them to do and it'll just be
quite an undertaking. The probate cases would have to be
probably opened in many cases to begin a probate process that
never was done because there were no assets at the time.
Mr. Issa. And, Ms. Escasena--I apologize, one of my worst
things is pronunciation of names. And with a name like Issa, go
figure. You mentioned, though, that your family home was large
enough that today it's an embassy. It's an embassy of whom?
Ms. Escasena. It's the Embassy of Belize.
Mr. Issa. Okay. Now, an embassy is sovereign land of the
country that occupies it. So if I'm to understand, the Cuban
Government at gunpoint took your family home and has sold it
and made it a sovereign asset of another country. So Belize
took, you as an American, they took your land, and they sold it
to another country that now occupies it and considers it their
embassy, their sovereign land. That's your testimony?
Ms. Escasena. Yes. That's what it appears. We found out
actually last year that it was an embassy.
Mr. Issa. And it's a small amount of the assets that were
taken, but meaningful.
Ms. Escasena. Correct.
Mr. Issa. Mr. Wilson, I'm going to ask you a little tougher
question. The Bacardi family at the time of the revolution were
Cubans. Is that correct?
Mr. Wilson. Yes, sir.
Mr. Issa. They were Cuban citizens?
Mr. Wilson. Yes.
Mr. Issa. They had assets outside of Cuba, but they resided
disproportionately in Cuba, correct?
Mr. Wilson. Yes, most, I'm sure most. It's a large family.
It's much larger now. But most, for sure.
Mr. Issa. Okay. So the corporation was based in Cuba,
correct?
Mr. Wilson. Correct.
Mr. Issa. So I just want to make sure I understand--I'm
holding up Havana Club, but I could be holding up a bottle of
Bacardi--I want to make sure I understand this as best you can
legally. If it was legal to take this from one family, then
whatever the legality of their already selling everywhere in
the world, 80 percent of the world's economy is not the United
States, they're already selling this in 80 percent, is there
any legal difference in your mind between what they did to one
family and what they would have, could have, and, if we're to
believe the State Department, essentially should have done to
the Bacardi family, which is they should have your company's
name and be selling it and reclaim it, at least in America,
based on the fact that they took it, therefore, they should
have it? Am I missing something in the understanding of
property rights?
Mr. Wilson. No, Mr. Chairman, you're not. And they
attempted very much to do that same thing to Bacardi. They very
much did. They tried to. They produced a product and called it
Bacardi and tried to sell it around the world.
Fortunately, Bacardi had assets outside of Cuba, and so it
could produce its Bacardi rum product and go to those same
countries and fight in litigation and within the governments.
And we won. Yes, we did. We were fortunate enough to be in that
position. But many other Cuban families, like the Arechabala,
were not in that position and are still not in that position.
Mr. Issa. And the Arechabala family, I want to understand
this, because I think it's important to make the record
complete. You did not wholly acquire the rights to Havana Club,
you have a license agreement effectively, don't you? They
receive a benefit from every bottle sold.
Mr. Wilson. We do have a--we have a Commission agreement
with them. I prefer not to go into the details.
Mr. Issa. No, and we don't need to know the details. The
point is, the Picard Company of France, they offered to buy it.
They knew that there was a right, and they offered to buy it
from the Arechabala family. But, apparently, they were only
willing to pay a de minimus amount and said, you know, we
already have the rest of the world, but we'll give you a little
something for the U.S., is my understanding.
Mr. Wilson. Yes. Or something similar to that, yes.
Mr. Issa. The late owner came to your company's principals
and negotiated a deal that he felt for his family was fair. Is
that correct?
Mr. Wilson. That is correct, sir.
Mr. Issa. And that arrangement continues today as the
Bacardi family expands the sales that you began in 1994.
How many States are you currently selling in?
Mr. Wilson. It goes up and down, but we've been, over the
last 10, 12 years, we've sold in roughly 18 different States.
But it goes up and down.
Mr. Issa. Okay. And you're unable to sell in the rest of
the world because Cuba, what they stole they got to keep by an
agreement with the French company to distribute it, right?
Mr. Wilson. Yes. The Cuban joint venture is selling that
product throughout the rest of the world, really off of the
unfair, illegal confiscations in Cuba, because that's obviously
where it started, as I mentioned earlier.
Mr. Issa. Right. They obviously get all the assets.
I did a little looking before this hearing, and Cuba
exports about $5 billion of goods, some sugar, obviously Cuban
cigars, and rum. They import about $15 billion. Now, the
arithmetic of that befuddled me a little, so I did a little
checking. Apparently, what they import is the value, but they
actually don't pay for it. A great deal of it comes from
countries, such as Venezuela, that essentially it's a subsidy.
So with 80 percent of the world's market available to this
totalitarian dictatorship, this last remaining bastion of
Stalinism other than North Korea, they basically have $5
billion of economy selling the whole rest of the world. So when
Mr. Reinsch, on behalf of 200-plus companies he represents,
talks about 4,000 trademarks that might be in peril, those
trademarks, U.S. company trademarks, how many dollars of sales
are there in Cuba by U.S. companies today, to your knowledge?
Mr. Wilson. I don't have that number. But my----
Mr. Issa. Would zero be a pretty round number, since
there's an outright embargo and we're not selling?
Mr. Wilson. I don't know specifically, Mr. Chairman. But
there are some very small AG or medical----
Mr. Issa. Right, I know there's a small amount of
exemptions. Which brings up the point of if you applied for a
license, since you have the worldwide rights for Bacardi, would
they recognize your trademark application in Cuba?
Mr. Wilson. Well, we do not own the Bacardi trademark
there. Cuba Rum Corporation owns our trademark in Cuba.
Mr. Issa. Oh, okay. So they only recognize American marks
unless, of course, they've already confiscated it.
To your knowledge, has Coca-Cola been able to sell there?
Didn't they seize all the Coca-Cola assets? Isn't that part of
the, Mr. Tamargo, isn't Coca-Cola a major claimant in those
6,000?
Mr. Tamargo. Yes, they are. That's one of the top 10 or 15
claims.
Mr. Issa. And the operation there was owned by the Coca-
Cola Company, right?
Mr. Tamargo. Yes, it is.
Mr. Issa. So it was a U.S. company. Had it been a franchise
or some other agreement, they wouldn't get a penny, right? They
wouldn't be on your list of 6,000?
Mr. Tamargo. Well, they wouldn't have been certified as an
American claim. It would have been not an American claim. But
it was an American company, so they were certified for, I
think, $27.5 million.
Mr. Issa. Okay.
Now, I'm just going to close with a question. And this is
not intended to conflate the two, to say that these things are
equal. But when you were dealing with these injustices, your
Commission, didn't it come out of basically the war crimes of
World War II.
Mr. Tamargo. Yes. The Commission is over 50 years old.
Before those years, it was comprised of two commissions, the
War Claims Commission and the International Settlement
Commission. And they were merged together to create the Foreign
Claims Settlement Commission.
Mr. Issa. Okay. So I want to go through the Commission,
because we are going to look at legislation that falls under
this Committee related to that. Essentially, your legacy is
that you are--your Commission is, in fact, the commission that
looked at the confiscation by the Nazis--the Japanese too--but
by the Nazis, the Italians, et cetera, in World War II.
Now, you weren't empowered to take care of victims of the
Holocaust unless it was an American family? How did that work?
Mr. Tamargo. The Commission did conduct a small Holocaust
program, and it was back in the 1990's. It was comprised of
mostly American POWs, when captured by the Germans, who were
put in Holocaust camps.
Mr. Issa. The work camps and so on.
Mr. Tamargo. Correct.
Mr. Issa. Okay.
Mr. Tamargo. Otherwise, the Holocaust----
Mr. Issa. Were separate.
Mr. Tamargo [continuing]. Were separate.
Mr. Issa. But you did work with essentially assets that
were stolen from Americans in that period of time in Italy, in
France, in Germany, in Japan?
Mr. Tamargo. Yes, sir.
Mr. Issa. Okay. So your recognition is that these countries
committed crimes, took money, took assets without any payment.
And, ultimately, we made whole, as you said earlier, in some
cases, by an appropriation from Congress, but we made whole the
victims or we didn't quit with those countries. In other words,
we didn't let Germany off the hook or Japan off the hook unless
there was a resolution agreed and an agreement of who paid
what, correct?
Mr. Tamargo. That's absolutely correct, Mr. Chairman. All
claims programs were settled. The American claimants were
compensated. And it was a condition of the offending country
having normalized trade relations with us.
Mr. Issa. So this Administration is ignoring the history of
your Commission, the history of it, by normalizing relations
with absolutely no agreement other than we've agreed that we're
going to begin talking. They have no agreement whatsoever to
take care of those 6,000 people that you represent in some ways
here today and the perhaps tens of thousands of Cuban Americans
who were not Americans in 1960.
Mr. Tamargo. It is possible that they are working toward a
negotiated settlement which would result in the compensation of
the claimants. That is my hope. But what really I suspect holds
them to that effort is the Congress needs to--the embargo, for
the most part, cannot be lifted, the remaining parts of the
embargo won't be lifted without congressional action. And the
Congress won't accept, I would hope, a bad deal that does not
give justice to the certified claimants.
Mr. Issa. So presuming the President with the stroke of a
pen and a phone call doesn't somehow do it, there is one and
only one tool left to force the Castros to properly compensate
for what they did, at least as to American persons, 55 years
ago, and that's the embargo.
Mr. Tamargo. Yes, sir. That is what I believe is the only
thing that would bring them--that has actually brought them to
the table right now. Because their other, their subsidized
trading partner of Venezuela is faltering, as is their other
trading commerce is faltering, and they would need this embargo
to be lifted.
Mr. Issa. Well, I'm not a businessman the way I once was,
but when I was a full-time businessman and I looked at--if I
looked at $5 billion out and $15 billion in, I would, as you
say, be looking to change an arrangement. The one amazing thing
I think that we all recognize is, unless Cuba changes and
allows their people to be empowered, even with access to an
additional 20 percent of the world's market, I don't believe
they can ever compete globally or even feed their people
properly.
I want to thank all of you for your testimony. As in the
last panel, we will leave the record open for 5 days. There may
be additional questions from Members who could not make it here
this evening.
This was a reschedule, and I appreciate all of you being
able to meet the reschedule. But it wasn't at an ideal time for
a hearing.
Additionally, I would welcome any supplemental remarks you
may have or information you want to put in, including matters
for the record.
And with that, you have my thanks. And we are adjourned.
[Whereupon, at 7:33 p.m., the Subcommittee was adjourned.]
A P P E N D I X
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Material Submitted for the Hearing Record
Material submitted by Jaime Suchlicki, Emilio Bacadi Moeau
Distinguished Professor and Director, Institute for Cuban and Cuban-
American Studies, University of Miami; and Jose Azel, Senior Research
Associate, Institute for Cuban and Cuban-American Studies, University
of Miami
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Response to Questions for the Record from the Honorable Kurt Tong,
Principal Deputy Assistant Secretary, Bureau of Economic and Business
Affairs, U.S. Department of State
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Questions for the Record submitted to Mary Boney Denison,
Commissioner for Trademarks, U.S. Patent and Trademark Office*
---------------------------------------------------------------------------
*Note: The Committee did not receive a response to these questions
at the time this hearing record was finalized and submitted for
printing.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
Response to Questions for the Record from William A. Reinsch,
President, National Foreign Trade Council
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
[all]