Trademarks in Cuba and the Cohiba and Havana Club Wars

December 2014Articles Business Insights: Cuba

Cuba’s demand for trademark protection within a legal framework of fair competition is a public interest of the state as part of its current efforts to transition to a market-oriented economy. Thus, the country has passed advanced intellectual property protection legislation in line with its active participation in the international arena. As a result, trademarks registered in the United States enjoy certain protection in Cuba under its current trademark laws and the international treaties to which Cuba and the United States are both signatories.

Any patents and trademarks can be registered in Cuba today with the Cuban Office of Intellectual Property (OCR). U.S. companies that registered trademarks and patents in Cuba prior to January 1, 1959, retain those rights subject to meeting renewal obligations. Since 1995, U.S. companies wishing to register trademarks and patents in Cuba for the first time or renew their patents and trademarks have been able to do so in Cuba.

However, the Cuban government has threatened to eliminate its support of U.S. trademarks on the island if the U.S. government persists in enforcing certain amendments made during the 1990s to the Cuban Assets Control Regulations (CACR).

This article will examine the general Cuban trademark landscape and the status of two high-profile IP disputes in the United States, involving two of Cuba’s most famous products: cigars and rum.

Cuban Trademark Legislation

Decree-Law 68 of May 14, 1983, “Inventions, Scientific Discoveries, Industrial Models, Trademarks and Appellations of Origin,” was modified by Decree-Law No. 203 of 1999 due to the accession of Cuba to the World Trade Organization (WTO), and thus to the Agreement on Trade-Related Aspects of Intellectual Property Rights, commonly known as the TRIPS Agreement.

Decree-Law 203 of 1999, together with successive regulations including Decree-Laws 290 and 291 of 2011, comprise the legal framework of Cuba’s trademark laws and regulations, whose main objective is to provide further protection with respect to trademarks and to ban the registration of a sign, mark or trade name that induces the public to error.

Cuba’s current legal framework prohibits registration of a sign, mark or trade name that is identical to an earlier trademark registration or pending application for the same products or services. Cuba’s laws also follow the principle that industrial property gives the right of exclusivity and exclusion, and that the registration of a trademark gives its owner the right to exclude others from taking a series of actions that interfere with its exclusive right to use the mark. Other criterion is also included as grounds for invalidating the registration of a mark, including acting in bad faith because the trademark used for goods or services is identical or similar to one previously applied for, registered or well-known in other countries. These protections are meant to protect business interests and the risk of confusion of association in consumers.

Key provisions of Cuba’s trademark laws, such as provisions for preliminary relief and customs enforcement measures, are intended to bring the country in line with the requirements of the WTO. The preliminary relief to infringement cases may take the form of a temporary restraining order or seizure, including on an ex parte basis. Preliminary relief orders may last up to 20 days. Similarly, preliminary customs injunctive relief is valid for 10 days and, for good cause, may be extended for another 10 days. In both instances, a bond needs to be posted to guarantee any damages in the event the proceedings were not justified. These procedures are similar to those used in most countries to fight piracy. Of course, an applicant or holder seeking to fight piracy would need to institute judicial action. In contrast, under U.S. law, Customs and Border Protection (CBP) is empowered to exclude, and in certain cases, destroy (counterfeit) goods without the need to commence a case in court.

Cuban legislation grants the holder of a trademark a series of rights to act against those who violate the law. The holder can seek the termination of infringing acts, compensation for damages, seizure of the proceeds related to the infringement, bans on the import or export of goods, seizure of materials or media related to the infringement, as well as the ownership and delivery of the products, materials or means relating to the offense. A trademark violation conviction will also be published.

The holder can also apply to the court for an order to prevent further infringement, avoiding its consequences, obtaining or preserving evidence or ensuring that the effectiveness of the action requires provisional measures that may be requested before initiating action, together with it or after its inception.

U.S. Laws and Regulations on Cuba’s Trademarks

The U.S. government enacted an exception to the 1963 U.S. trade embargo on Cuba in the Cuban Assets Control Regulations (CACR). The CACR was amended in 1995 and again in 1999 for the protection of intellectual property, including trademarks, patents, commercial names and copyrights in Cuba belonging to U.S. individuals or corporations.

The 1999 amendments, contained in the Omnibus Consolidated and Emergency Supplemental Appropriations Act of 1999 (Omnibus Act), have been controversial in Cuba. There are three primary elements of the 1999 amendments, which have two key effects in aggregate: (1) imposition of a consent requirement on those asserting rights in trademarks or trade names, which are the same or substantially close to that used with confiscated assets; and (2) the removal of these situations from judicial oversight. More specifically:

  • §211(a)(1) of the Omnibus Act — Consent
    Section (a)(1) contains the requirement that the original owner or bona fide successor-in-interest of a confiscated mark of trade name consent to further mark or name activity mainly by prohibiting any “transactions” or “payments,” the latter a requirement for most U.S. Patent and Trademark Office (USPTO) procedural actions.
  • §211(a)(2) of the Omnibus ActForeclosing judicial enforcement of registration rights
    Subsection 211(a)(2) contains the first of two restrictions on the judiciary but limits its application to a defined class. The text provides that: “No U.S. court shall recognize, enforce or otherwise validate any assertion of rights by a designated national based on common law rights or registration obtained under such section 515.527 of such a confiscated mark, trade name, or commercial name.”
  • §211(b) of the Omnibus Act— Judicial consideration of treaty rights foreclosed
    Section 211(b) of the Omnibus Act limits the ability of U.S. courts to utilize §44 via the following language:
    “No U.S. court shall recognize, enforce or otherwise validate any assertion of treaty rights by a designated national or its successor-in-interest under sections 44 (b) or (e) of the Trademark Act of 1946 (15 U.S.C. 1126 (b) or (e)) for a mark, trade name, or commercial name that is the same as or substantially similar to a mark, trade name, or commercial name that was used in connection with a business or assets that were confiscated unless the original owner of such mark, trade name or commercial name, or the bona fide successor-in-interest has expressly consented.”

Examples of Cuban Intellectual Property Disputes

Two key intellectual property disputes involving Cuban brands in the United States involve the country’s famous cigars and rum.

Cohiba Cigars Dispute

General Cigar, a U.S. company, registered the Cohiba trademark for cigars in 1995. Empresa Cubana del Tabaco, dba Cubatabaco, a Cuban company, sued in federal court, claiming superior rights to the name Cohiba under § 44(b) of the Lanham Act, which recognizes well-known marks. The theory was that the mark was famous in Cuba, the fame extended to the United States and the fame preceded the date of first use of the mark by the U.S. user, Culbro, a subsidiary of General Cigar. The district court agreed with the plaintiff and recognized that the well-known trademark doctrine applied to this case. The Second Circuit reversed the decision on the grounds that the Cuban embargo barred Cuban firms from acquiring trademark rights in the United States through the well-known trademark doctrine. It further ruled that the same regulations prevent Cubatabaco from seeking cancellation of General Cigar’s trademark registrations but left it to the Trademark Trial and Appeal Board of the U.S. Patent and Trademark Office (Board) to determine the preclusive effect of the Second Circuit’s decision. In 2013, the Board denied Cubatabaco’s petition to cancel General Cigar’s registration after determining that Cubatabaco lacked standing.

On June 4, 2014, the Federal circuit reversed the Board’s decision (Empresa Cubana del Tabaco v. Gen. Cigar Co., 753 F.3d 1270). It held that Cubatabaco does have standing to seek cancellation of General Cigar’s registrations that block Cubatabaco’s ability to register the Cohiba mark.

In the most recent development, on October 31, 2014, General Cigar filed a petition for writ of certiorati seeking to have the U.S. Supreme Court answer the question of whether the CACR can bar Cubatabaco from obtaining cancellation of the Cohiba trademarks held by General Cigar and whether the issue of preclusion bars Cubatabaco from seeking administrative cancellation of the trademarks registered by General Cigar. If certiorati is denied, the way would be paved for Cubatabaco to go back to the Board and request resumption of the cancellation actions it started against General Cigar years ago. As of this writing, General Cigar’s registration is still in effect on the records of the USPTO, although under challenge by Cubatabaco, and Cubatabaco’s application for the mark is suspended pending disposition of the cancellation petition.

Rum Dispute

The Havana Club mark for rum was owned by the Cuban family Arechabala in Cuba. The family also owned a U.S. registration, but that was allowed to lapse in the 1970s. The Arechabala family’s property was expropriated by the Cuban government after the Cuban Revolution of 1959. The Arechabalas left Cuba subsequent to the revolution and assigned all their rights in Havana Club for rum worldwide to Bacardi in the 1990s, which started to make rum in the Bahamas.

After the expropriation, the Cuban government began production on a type of Havana Club rum in Cuba and entered into a joint-venture agreement with Pernod Ricard, who registered the mark with the PTO in 1978.

In 1996, the Cuban embargo went into effect, requiring the PTO to not enforce trademark rights in the United States if the trademark was used in connection with a business or asset confiscated by the Cuban government, unless the original owner of the mark provided consent.

The U.S. courts held that Pernod Ricard could not renew or enforce its trademark rights in the United States for the Havana Club mark for rum because of the Cuban embargo. The U.S. Supreme Court refused to hear the appeal and after a 17-year legal battle, Pernod Ricard changed the trademark to Havanista. Bacardi successfully lobbied Congress for passage of the so-called Bacardi Bill (Section 211 of the U.S. Omnibus Appropriations Act of 1998), which forbids the registration or enforcement of a trademark in the United States that is the same as or similar to one used in connection with a business or assets that were confiscated. As a result, Pernod Ricard was ultimately prevented from U.S. registration of the Havana Club trademark in the PTO.

The Cuban embargo has been challenged at the WTO, which found the Cuban embargo in violation of the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) because it discriminates against Cuban owners. The United States has been granted time to change its regulations to be consistent with TRIPS and to apply it to all citizens, not just Cuban citizens. However, the regulations have not yet been changed.

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