History of Cubatabaco’s Fight for U.S. Rights to the COHIBA Trademark

Posted on by lfrank

General Cigar, a U.S. company, first registered the COHIBA trademark in 1981, after learning that the Cuban COHIBA was Cuban President Fidel Castro’s favorite. General Cigar discontinued its very limited sales of COHIBA-labeled cigars at least from 1987 to late 1992. When the premier issue of Cigar Aficionado prominently proclaimed the Cuban COHIBA as the world’s best cigar in Fall 1992, General Cigar applied for a second registration, recognizing that its first registration was vulnerable to cancellation on grounds of abandonment, and also began nominal sales in an effort to re-establish rights in the U.S. to the COHIBA mark. In internal documents, obtained through discovery in subsequent litigation, General Cigar expressly stated its plan was to “exploit” the reputation and renown of the Cuban COHIBA in the U.S.

In January 1997, our firm filed an application on behalf of Cubatabaco to register the COHIBA mark in the U.S., on the basis of Cubatabaco’s ownership of the Cuban registration, and simultaneously filed a petition in the Trademark Trial and Appeal Board (“TTAB”) to cancel General Cigar’s two registrations, which blocked Cubatabaco’s application.

In September 1997, General Cigar launched its COHIBA cigar, made in the Dominican Republic, on a national scale for the first time, compelling us to file suit in federal court for an injunction against General Cigar’s use of the COHIBA trademark. The TTAB has no authority to issue injunctions; its jurisdiction is confined only to trademark registrations.

In the court’s first significant ruling, Judge Robert W. Sweet, of the United States District Court for the Southern District of New York, held that General Cigar had abandoned its first registration and any trademark rights it had acquired through over five years of non-use, from at least 1987 to 1992.

Then, after a lengthy trial, Judge Sweet held that the Cuban COHIBA’s renown in the United States prior to General Cigar’s 1992 application and its 1992 use of the mark provided Cubatabaco with trademark rights and priority – even though Cubatabaco had not applied to register the mark or sold COHIBA-branded cigars in the U.S., the usual ways to establish priority under U.S. law. (The U.S. embargo, of course, prohibits the sale of almost all Cuban-origin products in the U.S.). Although arguably required by the Paris Convention, Article 6bis, the “well-known” marks doctrine upheld by Judge Sweet has found scant judicial acceptance in the U.S.

Relying on survey and other evidence, Judge Sweet also found consumer confusion, enjoined General Cigar’s use of the trademark, and ordered cancellation of General Cigar’s registrations.

On appeal, the United States Court of Appeals for the Second Circuit reversed, without reaching the merits of Judge Sweet’s decision. Rather, the Second Circuit held that the U.S. embargo regulations prohibited the federal courts from enjoining General Cigar’s use of the trademark or ordering cancellation of General Cigar’s registrations. These orders, according to the Second Circuit, were unlicensed transfers of property prohibited by the Cuban Assets Control Regulations (“CACR”). Further, according to the Second Circuit, the CACR only permitted Cuban parties to acquire trademark rights by registration, not by operation of law, such as the “well-known” marks doctrine upon which Judge Sweet predicated his decision.

When Cubatabaco petitioned the Supreme Court for review of the Second Circuit’s decision, the Court requested the United States Government to submit its views. The Government responded that the Second Circuit had erred in its application of the CACR to the case, but nonetheless advised the Court not to exercise its discretion to grant review. The Government explained that the CACR issue did not have broad application, and that the Executive Branch had adequate authority on its own to remedy any violations of treaty obligations resulting from the Second Circuit’s decision. The Supreme Court followed the Government’s lead and denied review.

General Cigar then asked Judge Sweet to order dismissal of our still pending petition in the TTAB to cancel General Cigar’s registrations, which had been stayed by the TTAB pending the outcome of the federal court litigation. Judge Sweet denied the motion, ruling that the TTAB should decide whether Cubatabaco had a right to proceed with its petition despite the Second Circuit decision. The Second Circuit affirmed.

We then amended our cancellation petition before the TTAB. General Cigar moved to dismiss the amended petition, on the ground that the Second Circuit’s decision precluded the possibility of our prevailing. The TTAB agreed, without dissent.

The Court of Appeals for the Federal Circuit, in Washington, D.C., which has direct appellate jurisdiction over the TTAB, reversed the TTAB’s dismissal of Cubatabaco’s petition. The Federal Circuit agreed with our argument that a general license in the CACR authorized the TTAB to cancel registrations that were blocking a Cuban party’s own application to register a trademark, even if the CACR did not, as the Second Circuit had concluded, authorize the federal courts to cancel registrations in those circumstances. Therefore, the Federal Circuit concluded, the Second Circuit’s ruling has no effect on Cubatabaco’s cancellation petition in the TTAB.

In its decisive construction of the CACR’s general license for proceedings in the TTAB, the Federal Circuit relied both on our analysis of the CACR and on the interpretation of the general license that our firm had obtained in 1996 from the Treasury Department’s Office of Foreign Assets Control, the federal administrative agency in charge of the CACR.

The Federal Circuit also ruled that Cubatabaco, on remand to the TTAB, was free to pursue all of its grounds for cancellation. These grounds include cancellation on the basis of:

• Cubatabaco’s promotion of COHIBA in the U.S. prior to General Cigar’s 1992 use and application to register the mark, under section 2(d) of the Lanham Act;

• General Cigar’s knowledge of the Cuban COHIBA when it applied to register the mark in the U.S., under the General Inter-American Convention for Trade-mark and Commercial Protection, Article 8;

• The Cuban COHIBA’s renown prior to General Cigar’s use or application to register the mark, under the Paris Convention, Articles 6bis;

• General Cigar’s adoption of the COHIBA mark in order to exploit the Cuban COHIBA’s renown and goodwill; and

• General Cigar’s abandonment of its first registration through non-use, without intent to resume use.

These and other of Cubatabaco’s grounds for cancellation present issues of great importance in U.S. and international trademark law.

Upon cancellation of General Cigar’s registrations, we will prosecute Cubatabaco’s application to register the COHIBA trademark on the basis of its ownership of the Cuban registration, as the Federal Circuit recognized.