13 Votes Short and the Road Ahead

Today, the House voted to override President Bush's veto on expansion of the State Children’s Health Insurance Program (SCHIP), but they came 13 votes short. Earlier this month, Democrats in the House waged an ad campaign against SCHIP expansion opponents, which may also signal the beginning of election battles going into '08.

On Tuesday, the Miami Herald's Lesley Clark reported that Reps. Ileana Ros-Lehtinen, Lincoln and Mario Diaz-Balart began "a preemptive strike" on Radio Mambi to counter ads that criticized their opposition to expansion of SCHIP. The three voted against expansion of SCHIP when it passed the House last month with 265 versus 159 votes, and a prior passage in the Senate with 67 versus 29 votes supporting expansion. They voted the same today on reasons that many Republicans share: that the expansion of $35 billion for SCHIP went far beyond the intended $5 billion and would encourage more Americans to seek federal coverage instead of private insurance. Today's vote is the culmination of a media campaign that began on the 8th targeting Republicans who initially voted in opposition.

Early this week on Monday, Ileana, Mario and Lincoln heard about the proposed ads against them and immediately called in to Radio Mambi. Together they called in to Ninoska Perez-Castellon's afternoon show, and later to Armando Perez-Roura's show in the evening. The damage control continued on Tuesday and Wednesday with the three Republicans trying to get as much airtime as possible to defend their position on SCHIP. But, aside from the usual defense that the SCHIP program is too costly and would lead people away from private insurance, Ileana, Mario and Lincoln had a different argument for Radio Mambi listeners on Tuesday: SCHIP would destroy small Cuban-owned cigar-makers here in Florida.

It was Tuesday evening on Radio Mambi that Ileana, Mario and Lincoln called in to make their usual case, but they were supported by other guests that night to defend tobacco. Ana Navarro, Republican lobbyist, was on the show with two Cuban small-business owners who were arguing that the tax increase on tobacco, attached to the $35 billion expansion of SCHIP, would seriously damage the cigar business in South Florida. The show went on to speak of the rich Cuban history with cigar-makers, a mention of the decreased risk of cancer from cigars in comparison to cigarettes, and the possible negative impact on cigar employee wages if the tax increase on tobacco would pass. This is possibly the "small minority-owned businesses" that Rep. Mario Diaz-Balart had in mind in his letter to the Miami Herald from the 15th.

But, the show neglected several facts about cigars and the tax on tobacco. According to the American Cancer Society, "[i]f you smoke cigars, your risk of death from laryngeal, oral,or esophageal cancers is 4 to 10 times the risk compared to non-smokers... In a recent study, researchers found that the concentrations of carbon monoxide at two cigar social events in San Francisco were higher than the levels found on a busy California freeway." The guests on Radio Mambi made no mention of these negative health effects from cigars.

Also, the Center on Budget and Policy Priorities recently issued a rebuttal to the White House's defense against the possible tax increase on tobacco. In essence, "[t]he SCHIP bill would advance efforts both to improve children’s health and to reduce the harm and costs of smoking, and the biggest gains in both areas would come among low-income families." The argument here goes that the tax increase (from 39 cents to $1) and high price of cigarettes would lead to fewer smokers within low-income families (who make up the minority of smokers anyway), increase family funds, and thus improve general health of low-income families. The majority of smokers (about 60%), who make at least twice as much as those living on the poverty line, will carry the costs of the tax increase. A recent ABC News/Washington Post poll showed that 72% of Americans favored the tax on tobacco and $35 billion expansion of SCHIP.

Nancy Watzman from the the Huffington Post pointed to the influence of "tobacco money" on Capitol Hill. Since 2000, the tobacco industry spent nearly $25 million on federal campaign contributions, and "[n]early 80 percent of that cash went to Republicans."

Blogger Larry Thorson described a small demonstration that took place on Tuesday outside Ileana Ros-Lehtinen's office. He's keeping his eye on both Ileana and Lincoln Diaz-Balart with respective blogs.

So what are the ramifications of this defeat? Ron Pollack from Families USA believes that 718,603 uninsured children in Florida are at risk. And Floridians may have lost $2.45 billion in federal funding that, aside from providing healthcare for children, would have provided $1.08 billion in increased business activity, $417.1 million in increased wages and 12,953 additional jobs for state residents. A recent University of Florida study also noted that possible increases to premiums in Florida's SCHIP would have "a lasting effect on poorer families, who remained more likely to drop out of the program even after the premium was restored to its original level." E. Richard Brown, the director of the University of California-Los Angeles Center for Health Policy Research, says that "[i]f we increase the cost and kids are dropped, we’re really missing the important goal of why we developed SCHIP in the first place, which is to ensure children have health coverage and access to care."

Surely, this debate will carry into '08, and according to Ian Swanson from The Hill, Democrats in Miami may already be preparing for an election battle. The ads that began this week against Ileana, Mario and Lincoln were "the first time the national Democratic Party has targeted advertising toward those districts." In my opinion, the way that the three Republicans immediately scrambled towards their base, pandering to Cuban exiles, revealed a sign of concern.

[Photo above from SEIU petition march in Washington D.C. on Oct. 1]

Fake Cuban Cigars (Part 9)

"Pernod Ricard [and Cubaexport] knowingly purchased an interest in property that the Castro government illegally confiscated from my family and therefore has no legitimate claim to this trademark," said Jose Manuel Arechabala, speaking on behalf of the original Havana Club owners, the Arechabala Family.

In 1960, the Cuban government expropriated all of the Arechabalas' property connected to its rum business. The family then fled to the US and Spain. According to Stephen Kimmerling (1999)[PDF] and Perry, Woods & Shapiro (2000)[PDF], the Arechabala Family had evidently abandoned the Havana Club name from 1960 to 1974, when Cubaexport filed for the Havana Club registration. Perry et al. remind its readers that the Arechabala Family "neglected to renew the Havana Club trademark registration in the United States, although they could have done so with a Certificate of Excusable Non-Use." This is a very important point.

According to Kenneth Germain, a lawyer and professor of intellectual property who appeared before the Senate Committee on the Judiciary in 2004, US Trademark Laws rely on proper use of the trademark, and their constant renewal in order to "unclutter" the Trademark Register. Unfortunately, the Arechabala Family "allowed its pre-embargo U.S. Trademark Registration of HAVANA CLUB (for rum) to lapse by failing to file an appropriate and available post-registration document attesting to excusable non-use. Had this company acted appropriately, it could have maintained that registration. Because it did not, CubaExport, the record owner of U.S. Trademark Registration 1,031,651, was able to register HAVANA CLUB as a U.S. trademark for rum."

This is why section 211 exists. Bacardi-Martini Ltd. know that the Havana Club trademark was abandoned, and that if they ever had to go to court over ownership, they would lose to Cubaexport (Fidel Castro). Section 211 saves Bacardi from going to court, and allows everyone to hide behind the US embargo as an excuse. That's why the entire "stolen property" argument is irrelevant. And section 211 is but a fraud.

Just last month, reported in a few news outlets, a Spanish court made an important ruling. It was reported that a "Provincial Court of Madrid, Spain... rejected the Bacardi claims over ownership of the Havana Club rum." Part of the decision was based on the fact that "the Havana Club brand was never used by the previous owner and neither was it renewed when the time to do so expired."

It's a decision that Bacardi plans to take to the Spanish Supreme Court, but its doubtful it will win. Spain doesn't have a section 211, or an embargo. But, most importantly, its obvious that the Arechabala Family abandoned their trademark, and allowed it to expire under the laws of intellectual property around the world.

But, here we are, in the USA with our fake Cuban cigars and fake Cuban rum, all because of a fake policy towards Cuba. Not surprisingly, here in Miami, there are a lot of fake arguments about Cuba. And, I believe all this deceit can be remedied once the US embargo towards Cuba is gone, and only then will we begin to smell, taste, and see the real Cuba that has long been forbidden to the senses of reality.

[Part 1] [Part 2] [Part 3] [Part 4] [Part 5] [Part 6] [Part 7] [Part 8]

Fake Cuban Cigars (Part 8)

Which brings me to the allegory of these "fake" products in the US. You see, because the US has codified our Cuban enemies into law (e.g., Helms-Burton), many people now absolve their mistakes by invoking the name of the official enemy. These arguments of innocence are as fraudulent as a Dominican cigar with a Cuban label on it.

Juan Penton, the Cuban cigar counterfeiter, sees himself as innocent because US policy tells him that the real criminal is Fidel, and thus Altadis USA has no trademark rights for Cuban cigars because of section 211. But, in reality, Penton is guilty of a crime, and Altadis does have registered trademarks in the US that are protected (as do many American companies have trademarks in Cuba that are protected). Section 211 does not cancel these legal trademarks, especially now that the WTO has ruled that section 211 is inconsistent with the core principles of international treaties protecting trademarks.

Jorge Rodriguez Marquez, Bacardi employee, sees nothing wrong with quid pro quo political contributions because the real villain (Fidel Castro) must not win. But, in fact, Rodriguez Marquez's actions were unethical and illegal because he had later violated the principles of the Lobbying Disclosure Act to hide his actions at the time. Bacardi alone has drawn numerous criticisms from the non-profit organization Citizens for Responsibility and Ethics in Washington (CREW) for violating federal campaign laws. CREW has also condemned the cancellation of Cubaexport's Havana Club trademark, and called Bacardi's political conspiracy as "fraudulent and deceitful."

Some US congressmen are also guilty of ignoring the errors of section 211 and the unethical tactics of Bacardi USA. According to the Miami Herald, Bacardi continues to influence and derail changes to section 211 in Congress. US Representative Tom Feeney (District 24) believes "the [Bacardi] cause is right... [Havana Club] was stolen by Castro." Feeney added his name to Robert Wexler's (Florida- District 19) newest House bill supporting section 211 this past March. The bill denies "recognition by United States courts of certain rights relating to certain marks."

The bill only helps Bacardi USA and discriminates against Cuba. Bacardi argues that the Havana Club name was stolen (expropriated) by the Cuban government, but this is only part of the whole story, and another example of a "fake" argument turned against the official enemy.

[Part 9]

Fake Cuban Cigars (Part 7)

Despite the four letters to the PTO, sent by those who specifically received Bacardi contributions, Cubaexport's registered trademark was still not canceled. The PTO decided in 2004 that Bacardi's "petition fail[ed] to state a claim for cancellation." Bacardi was obviously upset. Since 1997, they had battled with Cubaexport in US courts to claim the Havana Club trademark.

I don't wanna bore anyone with the minute details of the court proceedings, but as Stephen Kimmerling summarized [PDF] in 1999 for the ASCE, the question still remained: "Does Cubaexport or Bacardi own the Havana Club trademark in the United States?"

In 1999, it seemed that Cubaexport had lost. That year, a New York federal judge decided that Cubaexport "ha[d] no rights to the Havana Club trademark" in the US. Bacardi felt vindicated. But, most of the Judge's decision relied on one controversial legislation called section 211 of the Omnibus Consolidated and Emergency Supplemental Appropriations Act. Legislation that had conveniently been introduced the year before by Florida's two Senators, Connie Mack and Bob Graham.

The New York court had made it clear that while Cubaexport had no rights to register the Havana Club trademark in the US (because of section 211 and the US embargo), or stop Bacardi-Martini USA from registering the trademark itself in the US, the court nevertheless would not order the cancellation of the Havana Club registration at the PTO.

As reported, this is the time when Bacardi began its aggressive petition, with the help of Jeb Bush and other politicians, to influence the director of the PTO, James E. Rogan, and the Secretary of Commerce, Donald Evans to cancel Cubaexports application. Lobbying money from Bacardi peaked around this time too. Donald Evans, in 2002, had replied to Bacardi that he did not have the authority to do so. I'm sure Rogan didn't either. And, in 2004 they had no choice but to dismiss Bacardi's petition.

In the meantime, Cubaexport and Pernod-Ricard appealed the 1999 New York decision, received help from the Organization for International Investment, but eventually lost in a 2000 Supreme Court decision. They also looked to the WTO. Bacardi called the WTO attempt "an unwarranted and reckless intrusion into a civil dispute." But, in 2002, the WTO's Dispute Settlement Body gave a final report calling section 211 of the 1998 Omnibus Consolidated and Emergency Supplemental Appropriations Act a violation of parts of international law.

The WTO, along with the European Community and other nations, is hoping that the US will change section 211, implement the recommendations of the final report, and even provide that Cubaexport defend again its trademark in US courts, denied initially by section 211.

It's been five years since that report, and the US has stalled so far on making any changes to section 211. And, most likely never will make changes until they see a "free Cuba." Last year, the US Patent and Trademark Office finally canceled Cubaexport's Havana Club trademark. The European Community was "extremely disappointed" at the decision, and Bacardi finally gave its thanks to the PTO.

Like Altadis cigars in the US, Bacardi plans to sell Havana Club rum with ingredients not made in Cuba. Both are imitations of Cuban products, which the rest of the world so happens to enjoy authentically.

[Part 8]

Fake Cuban Cigars (Part 6)

Without question, what I had in mind with Fake Cuban Cigars has turned into another beast (but it will all come around to Juan Penton versus Altadis again). The battle over the Havana Club trademark, and the several reports and articles I read over this unprecedented legal dispute, that has lasted for about a decade, has delayed several other topics that I wanted to comment on. But, this has just been a fascinating and enlightening research topic concerning another conflict in the disappointing history of US/Cuba relations.

The history of the dispute over Havana Club has been written about extensively through reports (Kimmerling 1999; Perry, Woods & Shapiro 2001, Swann 2002) by the Association for the Study of the Cuban Economy (ASCE) , the WTO, and through articles from various organizations. Even an entire book has been devoted to this "hidden war" between the US and Cuba. I will attempt to summarize this story, but encourage readers to rely on the links for the detailed history. To start off, our main actors are Bacardi-Martini USA versus Cubaexport.

"The application NEEDS to be denied," pleaded Jorge Rodriguez Marquez in an e-mail to Jeb Bush's office in Washington D.C. Rodriguez Marquez was vice-president of communications for Bacardi-Martini USA at the time. He was referring to the trademark application for Havana Club that, for the moment, rightfully belonged to Cubaexport since 1976. And, this e-mail was just one of many frustrated exchanges between Bacardi and the office of Jeb Bush, revealed by the Washington Post and the Daily Business Review in 2002.

Both papers found that Rodriguez Marquez was demanding that Jeb Bush, Florida Governor, influence the US Patent and Trademark Office (PTO) to deny Cuba's trademark application, and in the meantime Bacardi also funneled tens of thousands of dollars into the coffers of the Florida GOP. It was reported that Bacardi in 2002 alone contributed about $60,000 to the Florida GOP. "Thank you for your valuable support regarding our problems at Commerce and Treasury," wrote back Rodriguez Marquez to Jeb. From 1998 to 2002, the total contributions were about $200,000 to the Florida Republicans. In 2004, Dan Christensen, reporter from the Daily Business Review, found that more Bacardi money had spread beyond Florida in order to fight Cubaexport's application.

Christensen reported that three US House Representatives in 2002, including the infamous majority leader Tom Delay, had received Bacardi contributions (about $60,000 total) during the same time Rodriguez Marquez was pleading with Jeb Bush to influence the PTO. When Jeb finally sent a letter to the PTO in 2002 "calling for cancellation" of Cubaexport's trademark, three other letters by the three US House Representatives had already been sent to PTO's boss, the US Secretary of Commere.

After the articles, the lawyers of Cubaexport's joint partners were angered. "Bacardi's attempt to bring political influence to bear on a matter that is supposed to be decided by administrative law judges on rules of law is grossly improper. The law bars ex-parte communications," explained the lawyers.

But, like Juan Penton versus Altadis, that didn't matter to Jorge Rodriguez Marquez, he was innocent, and facing a greater threat: Fidel Castro. In one of his e-mails, Rodriguez Marquez makes it clear that Bacardi is "a standing symbol of doing things the right way," but he was growing frustrated and fearful that "Castro and Pernod are winning." Pernod-Ricard was the French joint partner with Cubaexport.

[Part 7]

Fake Cuban Cigars (Part 5)

Last October, after ten long years, a decision was finally made by the US Patent and Trademark Office (PTO). They had denied Cuba the trademark rights to Havana Club, brand name of the famous liquor. Cubaexport, the Cuban enterprise that had legally registered the trademark in 1978, with the PTO, was rightly upset. They "energetically" rejected the decision. Yet, the South Florida Business Journal described it as "sweet victory."

Events had definitely turned out quite differently than with the Cohiba case. In 2004, a US federal judge had decided that Cuba, specifically Cubatabaco (the state tobacco enterprise), "had a legally protectable right" to the Cohiba trademark. A competing US company, General Cigar Holdings, was "obviously disappointed" and planned to appeal. But, Cuba had a strong case, just as it did with Havana Club. Yet, the only difference with the Havana Club case was the political conspiracy involved to deny Cuba its legitimate trademark.

To my surprise, it was a vast conspiracy that involved hundreds of thousands of dollars, unethical politicians, and a long chain of emails involving our very own former Governor, Jeb Bush.

[Part 6]

Fake Cuban Cigars (Part 4)

"Altadis es Fidel," Penton tells the Miami New Times in Spanish. He recalls the day he was arrested, just ten days before Christmas in 2005: "It felt like I was back in Cuba." In fact, back in Cuba, Penton belonged to a human rights group called Alianza Democrática Popular (ADEPO), People's Democratic Alliance. Penton admits that he was often detained because of his participation with ADEPO. Now, 90 miles away, he believed once again that Fidel was still behind it all.

Many in Miami blame Fidel Castro for a lot of things. But, like it or not, Fidel and Raul Castro are official enemies of the US thanks to laws like the Helms-Burton Act that specifically requires that "a transition government in Cuba is a government that... does not include Fidel Castro or Raul Castro"[sec.205(a)(7)]. Due to this official position (part of a disastrous US policy), people like Juan Penton now hide behind such laws as absolution for their illegalities, and find comfort that the real enemy lies in the Cuban government.

"Cuba owns no patents in the U.S.A. — everybody knows there's an embargo!" cries out Penton. "Did you see on the news, that they are manufacturing biological weapons [in Cuba]?" asks Penton to the New Times. "I'm telling you, this is how Fidel operates," says Penton, sounding eerily like a top US administration official.

Penton believes he did nothing wrong, and plans to appeal in court to confirm his innocence. "[I]f there is justice in this country, I will be found innocent," he says. Unfortunately, Penton plans to base his main argument on the controversial (and internationally condemned) laws of the US embargo, specifically those that deny the Cuban government the right to register their trademarks in the US "if it was previously abandoned by a trademark owner whose business and assets have been confiscated under Cuban law."

This is a dispute that the US government has undertaken since 1999, attempting to deny Cuba trademark rights through official measures of the US embargo, but seems to be losing their credibility in the process. Like Penton, the US refuses to admit any mistake, absolving their errors in exchange for condemnation of the official enemy.

[Part 5]

Fake Cuban Cigars (Part 3)

Those trying to recover from the cigar renaissance took drastic steps to sell off their inferior products. "Well, what happened was the cigar bubble burst. So, unable to sell their junk, they said — ooh, let's just rip off the other brands," explains the veteran lawyer for Altadis USA to the Miami New Times.

Altadis USA, the US subsidiary which sells legal imitation Cuban cigars made in the Dominican Republic, initiated an ironic hunt for Cuban cigar counterfeits (illegal imitations) in South Florida in 2005. Located in Fort Lauderdale, they argued that Cuban counterfeits cost them "the sale of hundreds of millions of dollars" every year. Altadis may be right about this, but according to the counterfeit busts that they helped with in 2005, they only recovered about $100,000 worth of fake cigar boxes in South Florida. Chump change when compared to "hundreds of millions of
dollars." In fact, Altadis USA may be overzealous in their "aggressive campaign" that netted Juan Penton when Canada alone has a "black market [of Cuban cigars] that cost $52 million a year in lost taxes alone" according to Abel Ortego, head of Havana House, exclusive importer and distributor of Cuban cigars for Canada.

But, unfortunately for Penton, Altadis SA has legal rights to famous Cuban cigar trademarks that Penton was copying. And, in 2005 he was busted along with seven other alleged counterfeiters in raids throughout South Florida. A year later, Penton got a fancy electronic bracelet, a five-year probation, and a $7,500 fine for selling fake Cuban cigars. He was found guilty of only selling $3000 worth. On their website, Altadis USA threatens other counterfeiters of proceeding "against the offender aggressively through civil and/or criminal channels." Altadis USA originally wanted to send Penton to prison for five years(!), a punishment that the judge fortunately rejected.

"Altadis is Fidel," declares Penton.

[Part 4]

Fake Cuban Cigars (Part 2)

Thompson quickly recounts the turbulent history of Cuban cigars and how Juan Penton, a balsero who arrived from Guantanamo in 1995, got a taste of the boom market in the 90's working for the Caribbean Cigar Company.

In the US, the mid-90's saw a huge growth in cigar sales. Radio personality and connoisseur, Cigar Dave called it a "renaissance." By 1997, imported cigar sales had quintupled to 417.8 million cigars from only four years before. Unfortunately that same year, the unmet demand for high quality tobacco burst the bubble, leaving Caribbean Cigar and its Dominican tobacco products to waste. Before the ship sunk, Caribbean Cigar attempted to salvage what they could, but violated federal laws in the process. They were sued by its stock holders and accused of having "materially overstated its accounts receivables, current assets, leasehold improvements and cash flow and understated its professional fees, advertising expenses, general and administrative expenses, and depreciation expenses." Today, the canceled bonds of the Caribbean Cigar Company are now collectibles for scripophiles.

Juan Penton survived unscathed from the 90's and in 2000 bought a warehouse in Hialeah to begin his own cigar business. He started by making "gift boxes", replicas of authentic Cuban cigar boxes such as Montecristo, and he even stamped on each "Hecho en Cuba" (Made in Cuba) to top it off. Intentionally or not, Penton had then stepped into the underworld of fake Cuban cigars, and eventually became lunch for a hungry conglomerate.

[Part 3]

Fake Cuban Cigars (Part 1)

It's a billion dollar industry that Javier Terres believes will triple in size once the US embargo is done away with, but whose history, according to Isaiah Thompson, "is steeped in intrigue, blood, global politics, and greed." Thompson, writing for this week's Miami New Times, narrates a tragic tale of a Cuban balsero, whose pursuit of the American dream to be his own boss is ironically crushed between a corporate giant and a failed American policy of isolation which continues to divide and conquer.

According to the American Cancer Society, Americans in 2005 smoked about 5 billion cigars. Another source indicates that about 220 million of those are top-end cigars. Worldwide, billions of dollars are made in tobacco, and Altadis SA has corned the Cuban cigar market. In a 2000 joint venture with the Cuban government, Altadis SA was given official rights to 20,000 acres of Cuba’s finest tobacco fields, and brand names like Cohiba, Montecristo and Romeo y Julieta. Altadis SA has been making some headlines recently because they are the target of a bidding war that has now reached $17.4 billion, in what may be the largest purchase of cigars in European history.

Smoking bans around the world may be triggering some of the latest buyouts of tobacco companies, but there may be an extra incentive for the purchase of Altadis. Javier Terres, development director of Corporación Habanos (the joint venture with Altadis and the Cuban government) believes that when the US market opens up to Cuban cigars there might be a threefold expansion of sales, a market estimated to be worth $1.8 billion. The recent developments in Cuba, and possible changes to the US embargo, may also explain the recent bidding war for Altadis SA, a company that sells the finest Cuban cigars to the rest of the world except the US.

In the 90's, Juan Penton got a taste of that market.

[Part 2]