Soda Jerked

Can an Orlando housewife and her lime-flavor soda compete with the big boys of carbonation?

You invent a new product, it sells wildly, and you're a millionaire. It's the American dream. It's America Vaughan's dream. Vaughan is an Orlando housewife and artist who has invented a soft drink called Havana Cola, a key lime-flavor cola now sold in several Miami-area stores and restaurants. After making a splash at the Calle Ocho festival this past March, Havana Cola will soon stage more promotional coups as the featured soda at a fish-throwing contest near Pensacola and as a sponsor on the Slim Jim professional racecar circuit. So far about 170,000 cans of Havana Cola have been sold in Florida; an approximately equal number has been given away.

But as all free-marketeers know, the American dream doesn't materialize in your sleep. You have to compete for it. Although Havana Cola has been on the market for less than a year, it's already attracted opposition from major players such as the Cuban government and the giant soft drink corporations of the United States.

"Every time you're trying to introduce a new product, I guess you're going to have competition," observes Vaughan, a 48-year-old mother of four who's never run a business before. "We've come up against some very, very powerful competition, and it's an uphill battle. But it's just a matter of time before we get [Havana Cola] into more stores and restaurants. A little here, a little there."

Havana Cola was born in the Florida Keys, where Vaughan and her family often vacation and spend most of their waking hours sipping either Cuba libres or (depending on the hour) cola with key lime. Vaughan was born in Cuba and immigrated to the United States in the early Sixties; her husband Theodore Roosevelt Vaughan is a retired U.S. Navy officer.

In 1992 America Vaughan decided to start her own soft drink company. She hoped to sell her cola flavored with a hint of key lime, just the way it tasted when she was boating in the Keys. Her son Greg, now an eighteen-year-old college senior in Alabama, suggested the name Havana Cola. Vaughan didn't know the basics of starting a business, so she went to the public library and read trade magazines. "I called the Department of Commerce and they sent me a [trademark] application to register the product," Vaughan recalls. "I filled that out, sent it in, and then an examining attorney in Washington called and said, 'Your application has been accepted.' He did not see any conflict. I was really thrilled. I thought, Gee, how easy can it be?"

Not so easy, it turns out. Before a product's name can become a registered trademark, it must be published in a weekly government trademark magazine. Objectors notify the commerce department's patent and trademark office. After both sides argue their case before examiners, a panel decides whether the fledgling product will be allowed to keep the disputed name.

In early 1995 attorneys representing Havana Club rum filed papers opposing registration of the name Havana Cola. Havana Club is owned by a giant international consortium, two members of which are Cuban (state-owned) companies. Because of the U.S. embargo on trade with the island, it's illegal to sell Havana Club in the United States. (The Cuban rum consortium, however, has been battling Bacardi over rights to the Havana Club name, and is maneuvering for access to the United States.)

When lawyers for Havana Club noticed the tiny Florida startup called Havana Cola, they tried to nip it in the bud. "There was the concern," New York attorney John Keene says, "that if they are once again able to sell Havana Club rum in the United States, which we are working on now, that there might be confusion between Havana Club rum and Havana Cola. Rum and Coke is such a popular drink that people could assume the cola was made by the Havana Club people. This is something that trademark lawyers try to avoid."

The trademark office, as it is generally referred to, notified Vaughan of Havana Club's opposition to registration of Havana Cola. "That's when I had to find a trademark lawyer really fast," Vaughan recounts. After speaking with several attorneys who weren't interested, she mentioned her dilemma to a cousin in Miami, who referred her to Timothy Hiebert, a Boston trademark attorney.

Had Vaughan simply renamed Havana Cola, she wouldn't have had to take a job selling real estate to pay three years of legal expenses. She estimates she spent about $50,000 for Hiebert's expertise in warding off Havana Club's challenge. "I was basically playing poker, winner takes all," she says. "I was not negotiating."

By November 1997 Havana Club folded its hand. "Eventually they did not respond to our requests for written information," Hiebert comments. Keene characterizes the end of the dispute as an "amicable settlement," with both sides agreeing to take measures to ensure the two products couldn't be confused in the American public's mind.

Havana Cola was registered as a trademark by August 1998 and Vaughan had what she considered to be the perfect formula. She had found a veteran chemist in Atlanta, whom she says is responsible for many famous soft drink formulas. He agreed to work with her to develop the right combination of cola, key lime, and carbonation.

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