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September 1, 2014 Vol. 69 No. 16 Back to Bulletin Main Page

UNITED STATES: Federal Circuit Upholds Cuban Company’s Standing to Seek Cancellation of U.S. Trademark Registrations

In June, the U.S. Court of Appeals for the Federal Circuit held that Empresa Cubana del Tabaco (d/b/a Cubatabaco), a Cuban company, had standing under the Lanham Act to seek cancellation of two trademark registrations owned by General Cigar Co., Inc. Empresa Cubana del Tabaco v. General Cigar Co., Appeal No. 13-1465 (Fed. Cir. June 4, 2014). Both Cubatabaco and General Cigar manufacture and distribute cigars under the COHIBA trademark.

Cubatabaco owns the COHIBA trademark in Cuba and supplies cigars bearing the mark around the world. While the Cuban Assets Control Regulations (“Control Regulations”) of the U.S. Department of the Treasury prohibit Cubatabaco from selling cigars in the United States, certain transactions are permitted, including transactions “related to the registration and renewal” of trademarks before the U.S. Patent and Trademark Office (USPTO). For other transactions, a Cuban entity must obtain specific authorization from the U.S. Department of the Treasury’s Office of Foreign Assets Control (OFAC).

In 1997, Cubatabaco filed a trademark application for COHIBA for cigars and related goods. The company relied on Section 44(e) of the Lanham Act, 15 U.S.C. § 1126(e), which allows an applicant to rely on a foreign registration to register its mark in the United States based on a bona fide intent to use the mark in commerce. After the USPTO refused registration of Cubatabaco’s mark based on a likelihood of confusion with General Cigar’s two COHIBA trademarks, Cubatabaco filed a petition with the Trademark Trial and Appeal Board (TTAB or Board) to cancel the registrations. It also obtained authorization from OFAC to “initiate legal proceedings in the U.S. courts and to otherwise pursue their judicial remedies with respect to the COHIBA trademark.” Accordingly, Cubatabaco sued General Cigar, alleging trademark infringement and seeking, among other things, to enjoin General Cigar’s use of the mark in the United States. The Board proceedings were subsequently stayed pending the outcome of the litigation.

The U.S. District Court for the Southern District of New York permanently enjoined General Cigar’s use of the mark and cancelled its registrations. The court found that Cubatabaco had acquired ownership of the COHIBA mark after General Cigar’s abandonment of the mark. On appeal by General Cigar, the U.S. Court of Appeals for the Second Circuit reversed. It held that the district court could not grant Cubatabaco such injunctive relief because it would involve a prohibited transfer of property under the Control Regulations.

When the proceedings before the Board resumed, the TTAB granted General Cigar’s motion for summary judgment and dismissed Cubatabaco’s amended petition for cancellation on the basis that Cubatabaco lacked standing in light of the “binding, federal court judgment” from the Second Circuit. Cubatabaco appealed to the Federal Circuit.

The Federal Circuit held that the Second Circuit’s finding was not relevant to the Board proceedings because the Second Circuit ruled only that the district court could not enjoin General Cigar’s use of the COHIBA mark under its interpretation of the Control Regulations. The court found that Cubatabaco had a legitimate commercial interest in the COHIBA mark and that neither the Second Circuit nor the Control Regulations prohibited Cubatabaco from seeking the cancellation of registrations that blocked its application. In light of that determination, the Federal Circuit vacated the TTAB’s decision and held that Cubatabaco had a statutory cause of action under the Lanham Act to seek cancellation of General Cigar’s registrations of the COHIBA trademark.

Although every effort has been made to verify the accuracy of items in the INTA Bulletin, readers are urged to check independently on matters of specific concern or interest. 

© 2014 International Trademark Association