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08-Mar-2006
Cigar lovers catch a whiff of lower prices

Lovers of exclusive hand-rolled Cuban cigars caught the whiff of falling prices on Thursday, when non-approved parallel imports of "habanos" were given the green light by a London court.

Three senior judges at the Court of Appeal found that Corporacion Habanos, the Cuban-Spanish cigar marketeer, had allowed – and even facilitated – the purchase of small commercial quantities of the cigars by foreigners, knowing that these would be resold overseas, including in Europe. One reason was the desire for hard currency.

The court therefore ruled that neither Habanos nor its exclusive distributors could complain that consignments which made their way into the UK were infringing Habanos' trade marks.

The decision was immediately hailed as a victory by Mastercigars, a small company set up six years ago to import cigars for sale in the UK in competition with Hunters & Frankau, the approved exclusive distributor and importer of Habanos.

Mastercigars had initiated litigation after a consignment of cigars flown from Havana was impounded at Gatwick airport at H&F's request in 2004.

The company stopped trading after losing that trademark infringement case at the High Court last year. But when the appeal court overturned that ruling on Thursday, Christopher Kenyon, Mastercigars' owner, said he hoped the company could begin operating again. "Anyone who tried to stop us now, would do so at enormous cost to themselves," he said.

Hunters & Frankau, however, believed the appeal court decision would make "very little difference" to future sales. "The decision relates only to the circumstances of specific importation of cigars into the UK by certain individuals prior to August 2004," it said.

Since then, H&F claimed, "changes have been made to the way in which Habanos' cigars are sold . . . in particular, the invoices given to individuals purchasing cigars now expressly bear the words 'not for resale' on their face".

H&F and its lawyers contend that this wording makes explicit Habanos' lack of consent to the parallel import of cigars into the European Union.

"Habanos will take appropriate legal action against any entity undertaking such importation of Habanos cigars into the EU for resale," H&F warned on Thursday.

The practical implications of the Court of Appeal ruling – in particular, whether it paves the way for luxury Cuban cigars to be sold more cheaply by competing importers – remain in doubt, and some analysts doubted whether cigar smokers would see much benefit.

"At worst, this ruling suggests management controls at Corporacion Habanos are imperfect . . . But it seems clearly within Habanos/Cuba's power to tighten controls," said Jonathan Fell, at Deutsche Bank.


Source: Euro2day