Bacardi’s “Havana Club” does not falsely advertise the rum’s geographic origin because “no reasonable interpretation of the label as a whole” could reach that conclusion, the Third Circuit recently ruled.

Competitor Pernod Ricard filed suit, alleging that the name of the product violated the Lanham Act by falsely advertising Cuba as the origin. But Bacardi responded that the label as a whole was not misleading, as it included prominent lettering that read “Puerto Rican Rum” and an explanation that the rum is “distilled and crafted in Puerto Rico” using a recipe developed in Cuba.

At trial, Pernod presented unrebutted survey evidence that approximately 18 percent of consumers who viewed the label believed the rum was made in Cuba or from Cuban ingredients. After a three-day bench trial resulting in a verdict for Bacardi, Pernod appealed. It argued that the court should not have bypassed its survey evidence and was required to consider it when determining whether the “Havana Club” label amounted to a misleading statement of geographic origin.

The Third Circuit examined the message that was conveyed and disagreed. “[W]e conclude…that the Havana Club label, taken as a whole, could not mislead any reasonable consumer about where Bacardi’s rum is made, which means that survey evidence has no helpful part to play on the question of what the label communicates regarding geographic origin,” the court said. “[T]here is and must be a point at which language is used plainly enough that the question ceases to be ‘what does this mean’ and becomes instead ‘now that it is clear what this means, what is the legal consequence.’” Casting doubt on the use of survey evidence, the court said that “there are circumstances under which the meaning of a factually accurate and facially unambiguous statement is not open to attack through a consumer survey. In other words, there may be cases, and this is one, in which a court can properly say that no reasonable person could be misled by the advertisement in question.”

To read the decision in Pernod Ricard v. Bacardi, click here.

Why it matters: Despite the court’s dismissal of the survey evidence in the case, the panel emphasized that it wasn’t foreclosing its use in future cases. “We hasten to add that cases like the present one should be rare, for one hopes that a case with truly plain language will seldom seem worth the time and expense of contesting in court. … A word of caution is nevertheless in order, so that our holding today is not taken as license to lightly disregard survey evidence about consumer reactions to challenged advertisements. Before a defendant or a district judge decides that an advertisement could not mislead a reasonable person, serious care must be exercised to avoid the temptation of thinking, ‘my way of seeing this is naturally the only reasonable way.’ Thoughtful reflection on potential ambiguities in an advertisement, which can be revealed by surveys and will certainly be pointed out by plaintiffs, will regularly make it the wisest course to consider survey evidence,” the court said.