Feature

REVOLUTION: United States, Cuba, and the Future of Trademarks

Robert R. Jimenez

©2016. Published in Landslide, Vol. 8, No. 6, July/August 2016, by the American Bar Association. Reproduced with permission. All rights reserved. This information or any portion thereof may not be copied or disseminated in any form or by any means or stored in an electronic database or retrieval system without the express written consent of the American Bar Association or the copyright holder.

The line between politics and law is thin. The nature of the adversarial process lends itself well to the politics of lawmakers and judiciaries. Trademark law is no less immune than other areas of jurisprudence, a fact proven by the often tumultuous, often fervent trademark cases involving Cuban and American litigants. Change, however, is now on the horizon.

On December 17, 2014, U.S. president Barack Obama and Cuban leader Raúl Castro announced that diplomatic relations between both nations—severed in 1961—would be restored. A year and a half later, U.S. restrictions on remittances, travel, and banking have slightly eased, and Cuba saw its first visit by an American president since 1928. Barring a sharp, unexpected twist in political discourse (a common characteristic of U.S.-Cuba relations), a new era seems imminent. Should normalization of economic ties become a reality, novel issues in trademark law would immediately arise. The use of identical marks on similar goods has been a consequence of the U.S. trade embargo against Cuba, and the topic of trademark harmonization would necessarily require the attention of both countries and their businesses. The Cuban trademark system will need logistical, technological, and procedural overhaul in order to accommodate a high volume of applications, and it will be essential for American companies to have confidence in Cuba’s administrative and judicial review mechanisms before attempting to register their marks. Moreover, differing standards on freedom of speech would—and in all probability will—cause clashes in areas such as fair use, trademark parody, and domain name dispute resolution.

While the task of addressing these and other trademark matters will be critical to the success of economic relations in a post-embargo age, a variety of international and domestic measures are available to ensure that synchronization of trademark systems can be achieved.

Trademarks in a Post-Embargo Age

As the Berlin Wall separating Miami from Havana begins crumbling in the face of ongoing U.S.-Cuba diplomacy, questions regarding trademarks are fast approaching. Given that trademarks are inseparable from commercial activity, any policy pressing for an end to the embargo must necessarily contemplate and be sensitive to trademark concerns. Initial consideration should take into account the differences and similarities between trademark systems as a lead-in to harmonization, as well as potential barriers that could restrict ease of access. Of course, “Cuba has [already] instituted a series of legislative changes that aim to align its domestic IP [intellectual property rights] regime” with international standards.1 “In part, this was motivated by Cuba’s desire to attract [foreign direct investment],”2 and such a philosophy will be key in successfully navigating the waters of post-embargo IP relations.

Cuba’s current trademark framework was established in 1999 through Decree-Law 203 (Decree),3 “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.”4 Article 3.1 of the Decree stipulates what qualifies for protection as a trademark, and it shares several commonalities with U.S. trademark law. Whereas the Lanham Act defines a trademark as “any word, name, symbol, or device, or any combination thereof . . . [used] to identify and distinguish his or her goods,”5 the Cuban Decree specifically delineates that trademarks can be words, images and symbols, three-dimensional shapes (including product shape and/or packaging), smells, sounds, and personal names (so long as the individual consents and use of the name does not cause public confusion).6 “For trademarks and commercial slogans, registration is binding and ensures exclusive rights, whereas for trade names, signs, and company emblems, registration is a ‘declaration of rights,’ which must be sealed by ‘first use in commerce’; otherwise, competitors can file a cancellation action for nonuse.”7 The procedure and requirements for registration of marks is contained in Decree article 4.1, which outlines that registration is to be made in the Cuban Office of Industrial Property. Of particular importance to the future of U.S.-Cuba trademark relations, however, is Decree articles 7–9 (collectively, section 4), which regulate how registration can be made by foreign individuals and entities.

Section 4 will provide a barrier to U.S. companies due to its requirement that foreign registrations without domicile or commercial/industrial establishment in Cuba be represented in the registration process by an official agent certified by the Office of Industrial Property.8 This contrasts sharply with registration procedures in the United States, where any individual can file an application in/for any class of goods or services. The formalities inherent in Decree section 4 are likely to create serious backlog in trademark registrations given the high number of applications expected to flood into Cuba upon termination of the embargo. Plainly, Cuba lacks experience handling voluminous amounts of trademark registrations, a reality evinced by the statistic that from 1997 to 2011 only 39,000 trademark applications were filed in the country.9 In contrast, in the first four months of 2016, the U.S. Patent and Trademark Office (USPTO) received over 263,600 applications.10

When coupled with the fact that Cuba lacks a publicly accessible electronic trademark database for would-be registrants to search for preexisting marks, one can predict that Decree section 4 will make registration of U.S. marks a slow process taxed by heavy local effort. Seen in this light, section 4 pays tribute to the maxim that wherever there is administrative bureaucracy, politics and procedural inefficiency thrive. Indeed, the strength and efficiency of an IP system “is intended not only to stimulate innovation in key sectors but also to create a business environment that attracts international commercial transactions,” which Cuba is keenly interested in given the continuing lag of its economy and its slow move toward a market-based system.11 Therefore, Cuba should strive to parallel the sophistication of the American trademark regime through simplification of its registration process, especially given that trademark priority in Cuba is based primarily on registration rather than use.12 To do this, U.S. aid should be offered to improve Cuba’s digital infrastructure so that a system comparable to that used by the USPTO can be established. This will serve to greatly increase the speed of market entry for American companies that are unlikely to enter Cuba or invest in foreign infrastructure until their trademark rights are firmly established. Additionally, Cuban entities and entrepreneurs will greatly benefit from the ability to more actively engage their own trademark system, assuming an end to the embargo will help foster domestic private enterprise on the island.

Of particular interest to U.S. companies will be access to review of trademark application decisions by the Cuban Office of Industrial Property, adequate forums for litigating trademark disputes, and mechanisms for deepening protections against unfair competition and piracy. “While Cuba maintains both civil and administrative procedures for processing claims, litigation in Cuba has generally not advanced beyond the trial level, and many cases have been limited to appeals from administrative refusals.”13 That situation must be remedied, as Cuba will inextricably face a rise in domestic and foreign trademark disputes that will require resolution through effective and adequate judicial and/or administrative processes.14 Although Cuba’s own experiences in U.S. trademark litigation have often been infused with anti-Castro politics that have occasionally tipped the scales of justice in favor of American interests, it is undeniable that Cuba has also found the U.S. trademark system amenable to its claims and grievances despite the hostility of both the Cold War and the embargo. This is evinced by a relatively recent dispute.

In Corporacion Cimex, S.A. v. DM Enterprises & Distributors, Inc., DM filed a U.S. application in 1999 for the mark CUBITA for coffee.15 Cimex, a Cuban entity, opposed DM’s application, arguing that its own 2007 application for the same mark had priority under article 7 of the General Inter-American Convention for Trade Mark and Commercial Protection.16 Noting the self-executing nature of the convention and that Cimex had met all corresponding requirements thereunder,17 the Trademark Trial and Appeal Board held that Cimex had standing to pursue its opposition and that its application for CUBITA had priority over DM’s.18 Just as Cimex and other cases evince that Cuban parties can have confidence in American administrative and judicial processes, so too must U.S. entities share a belief that trademark applications, oppositions, cancellations, and lawsuits will all be legitimately considered and adjudicated on the island. While the Cuban Decree—like the Lanham Act—outlines procedures for the filing and presentation of all such actions,19 the existence of institutional measures are wholly distinct from the realities of their adequacy and efficiency. Part of the assurance for U.S. companies must include robust trademark jurisprudence, which is lacking on several fronts in Cuba despite the tenets of the Decree.

“Cuba has few laws on unfair competition and counterfeiting,” and “piracy of U.S. goods . . . has become widespread.”20 While the Cuban government has traditionally characterized piracy as a byproduct of the embargo, that excuse continues fading in the face of growing diplomatic relations (and would disappear entirely should the embargo fall).21 While such piracy raises more concerns for U.S. copyright holders, it is foreseeable that a surge in trade will lead to a rise in counterfeit goods. To battle piracy, Cuba should offer remedies that track U.S. measures under § 42 of the Lanham Act,22 and it should strengthen trademark protection as a whole by promulgating laws against unfair competition (similar to those provided nationally in the United States by § 43(a)).23 However, because other nations are likely to see U.S.-Cuba commercial relations as a reason to increase or strengthen their own market presence on the island, it is in the interests of U.S. corporations to ensure that Cuba’s protection against unfair competition arises quickly. To achieve this, preexisting international agreements should be adhered to.

Rather than awaiting new legislation, the General Inter-American Convention for Trade Mark and Commercial Protection24 may be used as a gap-filler to protect against unfair competition while the Cuban government considers promulgation of any necessary measures. Article 21 of the convention declares a variety of acts as unfair competition, including the offer for sale to the public of a product that directly or indirectly creates a false impression of origin or falsely describes the nature of the product.25 Article 22 further mandates that “[t]he Contracting States which may not yet have enacted legislation repressing the acts of unfair competition . . . shall grant relief by way of injunction . . . [and] damages to the injured party.” While the American judiciary has been clear that the convention is self-executing in the United States, article 28 expressly aims to make the treaty as directly applicable in all contracting states.26 Therefore, Cuba can rely on the provisions of the convention to dispel concerns held by foreign enterprise that the country is deficient in the protection it offers, at least theoretically.

As mentioned, confidence in Cuban administrative and judicial institutions will be as important to trademark owners as any series of laws or regulations. Nonetheless, some of the most critical trademark issues in a post-embargo period will revolve around parallel marks on identical goods. The ongoing controversy over the mark HAVANA CLUB is perhaps the greatest example, and the latest developments in the dispute may be proof that while the U.S. government is ready to sit at the table of diplomacy, some U.S. businesses may not be as amenable.

The Cold War’s Final Battle

No trademark dispute has been more characteristic of U.S.-Cuba trademark litigation than the fight over HAVANA CLUB, a brand confiscated by the Castro government in 1960. In what has truly been a clash of giants, the war over HAVANA CLUB has spanned two decades, four distinct cases (as well as varying appeals), a trade dispute between the European Union and the United States, and, most recently, a complete policy reversal by the Office of Foreign Assets Control (OFAC) in the wake of renewed diplomatic ties.

The HAVANA CLUB mark was created in 1934 by the Arechabala family, who sold their original recipe for rum to Bacardí Limited in 1997.27 The mark was registered in the United States under § 44 of the Lanham Act in 1976 by Empresa Cubana Exportadora de Alimentos y Productos Varios (Cubaexport), a Cuban state enterprise.28 So as to transfer the trademark to reformed joint ventures, in October 1995 Cubaexport applied to OFAC for a specific license under the provisions regulating the embargo (the Cuban Assets Control Regulations, or CACR). Because the CACR “prohibit transfers of property, including trademarks, in which a Cuban entity has an interest,”29 a license authorizing the assignment of the HAVANA CLUB trademark was required. “On November 13, 1995, OFAC issued [the license], which approved the assignment and authorized all necessary transactions incident to the assignment of the [HAVANA CLUB] mark.”30 Subsequently, Congress tightened the embargo through passage of the Helms-Burton Act in 1996, prompting OFAC to issue a notice of revocation of the license.31 Bacardí, which had been sued for trademark infringement for distributing Bahamian-made rum in the United States bearing the HAVANA CLUB mark, would ultimately prevail thanks to both OFAC’s revocation and Congress’s passing of § 211 of the Omnibus Act in October 1998.32

After Cubaexport filed an application for a license to renew the HAVANA CLUB trademark registration in 2006, OFAC denied the request, stating that “it would be inconsistent with U.S. policy to issue a specific license authorizing transactions related to the renewal.”33 As a result, the HAVANA CLUB registration expired, allowing Bacardí to register it and continue using the mark on rum. Immediately, Cubaexport sued the Department of the Treasury, the Secretary of the Treasury, and the Director of OFAC for allegedly violating the Administrative Procedure Act and taking Cuba’s property without paying compensation. In ruling against Cubaexport on all claims, the district court cited a letter sent by Bacardí that it was the bona fide successor-in-interest to the confiscated mark and that it did not consent to renewal registration by Cubaexport,34 thus supporting the reasonableness of OFAC’s denial of a specific license under the Omnibus Act. The U.S. Court of Appeals for the District of Columbia affirmed,35 and the U.S. Supreme Court denied certiorari.36

To try and prevent Bacardí from continuing sales of its version of HAVANA CLUB rum, Pernod Ricard USA filed a false designation of origin/false advertising suit in 2006,37 paralleling the Cubaexport litigation against the U.S. government. Pernod, Cubaexport’s partner in global distribution, argued that Bacardí’s use of the mark was a false designation of goods under § 43(a)(1)(B) of the Lanham Act.38 The district court ruled that Bacardí had a First Amendment right to accurately portray where its product was historically made, and held that the product’s label was not deceptive because it clearly indicated the Puerto Rican origin of the rum.39 The Third Circuit affirmed, outlining that if the trademark HAVANA CLUB had been used in isolation, the mark may have been geographically deceptively misdescriptive. However, given the label’s “plain and explicit statements of geographic origin,” no reasonable consumer could be deceived.40

Having lost a third consecutive case to Bacardí and the U.S. government, Havana Club Holding registered the trademark HAVANISTA for Cuban rum, substituting that word for HAVANA CLUB on the original logo design.41 On January 13, 2016, the plot would take another turn as OFAC—likely as a result of the shift in U.S. foreign policy—issued Cubaexport the license necessary to renew its application, prompting the USPTO to renew Cubaexport’s registration for HAVANA CLUB. Within three weeks, Bacardí filed a Freedom of Information Act request with the U.S. Department of the Treasury regarding OFAC’s sudden action, and on March 11, 2016, Bacardí entities filed a first amended complaint against Cubaexport and Havana Club Holding for, among other things, cancellation of the new registration, pointing out that in February 2016 the “Treasury Department’s Alcohol and Tobacco Tax and Trade Bureau approved new labels from [Bacardí] for its HAVANA CLUB rum.”42 The situation is an oddity in trademark law: Bacardí is the senior user of the mark while Cubaexport is the senior registrant, and both own federal registrations that, at the time of this writing, are simultaneously listed on the Principal Register for the same goods.43

To be sure, the controversy over HAVANA CLUB is an oddity of U.S.-Cuba international relations, and it results more from the politics of Cuban-American exiles than the intricacies of trademark law. That is not to say, however, that if the embargo has led to the existence of other parallel marks on identical goods, territoriality should not provide the preferred solution, or that preexisting international law cannot effectively and efficiently solve future disputes. In any event, no matter what frictions eventually develop, it is without question that the return of diplomatic relations is an initial step toward revitalization of trade. That, in turn, will spawn a revolution for trademarks, someday.

Endnotes

1. Gary Clyde Hufbauer & Barbara Kotschwar, Peterson Inst. for Int’l Econ., Economic Normalization with Cuba: A Roadmap for US Policymakers 93 (2014).

2. Id.

3. Spanish text available on the website of the World Intellectual Property Organization at http://www.wipo.int/edocs/lexdocs/laws/es/cu/cu001es.pdf.

4. Hufbauer & Kotschwar, supra note 1, at 95; see also Raúl J. Valdés-Fauli, Trademarks in Cuba and the Cohiba and Havana Club Wars, Bus. Insights: Cuba (Fox Rothschild LLP), Dec. 2014, at 1, available at http://www.foxrothschild.com/content/uploads/2015/05/Business-Insights-Cuba-December-2014_.pdf. Decree-Laws 290 and 291 of 2011 also help comprise Cuba’s trademark framework. Valdés-Fauli, supra, at 1.

5. See Lanham Act § 45, 15 U.S.C. § 1127.

6. See Cuba Decree-Law 203, art. 3 (Signos que pueden constituir Marcas) [hereinafter Decree].

7. Hufbauer & Kotschwar, supra note 1, at 95 n.20.

8. See Decree art. 8.3.

9. Hufbauer & Kotschwar, supra note 1, at 94. Significantly, 65–88 percent of the applications were filed by foreigners.

10. See Second Quarter FY 2016, At a Glance, Data Visualization Center: Trademarks Dashboard, http://www.uspto.gov/dashboards/trademarks/main.dashxml (last visited May 2, 2016).

11. Hufbauer & Kotschwar, supra note 1, at 93; see also id. at 4 (“In 2010 the government announced that it would be ‘updating’ its economic model, encapsulated in the Draft Guidelines for Economic and Social Policy announced at the Sixth Cuban Communist Party Congress in October 2010. The new model contemplates incremental steps toward a market-oriented economy.”).

12. See Decree art. 12.1 (Derecho de Prioridad).

13. Hufbauer & Kotschwar, supra note 1, at 96.

14. Decree arts. 125–29 (Accion Judicial) (discussing judicial remedies for infringement and the processes related thereto; a case seeking relief for a violation of rights must be filed with the corresponding Provincial Tribunal).

15. Opposition No. 91178943 (T.T.A.B. Nov. 17, 2008), available at http://ttabvue.uspto.gov/ttabvue/ttabvue-91178943-OPP-20.pdf.

16. Id. at 2–3. Cimex also argued that DM’s mark was primarily geographically deceptively misdescriptive under § 2(e)(3) of the Lanham Act—as well as inherently deceptive under § 2(a)—because consumers would be likely to believe DM’s coffee originated from Cuba although it did not, and the deception would constitute a material motivation to purchase the DM product.

17. In order to prevail under article 7 of the General Inter-American Convention, an opposing party must establish that (1) it is the owner of a mark protected in one of the convention’s ratifying states, (2) a trademark applicant is using or applying to register an “interfering mark” in the United States, (3) the applicant had knowledge of the existence and continuous use in the ratifying state of the mark in connection with goods in the same class prior to applicant’s use of the mark in the United States, and (4) the opposing party has complied with the requirements set forth in U.S. domestic legislation and in the convention (that is, filing for protection of its mark under § 44 of the Lanham Act). Cimex, Opposition No. 91178943, at 9–10.

18. Id. at 17.

19. See Decree arts. 67–73 (Procedimiento).

20. Hufbauer & Kotschwar, supra note 1, at 96.

21. Id. Hufbauer and Kotschwar contend that “[d]ue to the absence of diplomatic relations, U.S. companies have no official forum for addressing their complaints” about piracy. The authors’ work came before the current push for diplomatic relations, and, as such, the new political dialogue provides American firms the ability to address their grievances through the efforts of the U.S. government.

22. Decree article 126.1(d) and (e) is Cuba’s vehicle for seizure of infringing and counterfeit goods. Unlike in the United States where a trademark owner can directly prevent importation of counterfeit goods by engaging U.S. Customs and Border Protection (CBP) and the Department of the Treasury (and where CBP has the power to exclude, confiscate, and destroy counterfeit goods), a party in Cuba would need to initiate judicial action consistent with Decree articles 125–41. The ability to stop entry of counterfeit goods is especially important given the geographic proximity between Cuba and the United States.

23. It is of note that causes of action for unfair competition in the United States act as a “catch all.”

24. General Inter-American Convention for Trade Mark and Commercial Protection, with Protocol on the Inter-American Registration of Trade-Marks, and Final Act of the Pan American Trade Mark Conference, Feb. 20, 1929, 46 Stat. 2907, available at http://wipo.int/wipolex/en/other_treaties/text.jsp?file_id=206571.

25. See id. at art. 21(b), (d).

26. “In the absence of any special remedies insuring the repression of false indications of geographic origin or source, remedies provided by the domestic sanitary laws, laws dealing with misbranding and the laws relating to trade marks or trade names, shall be applicable in the Contracting States.”

27. See Pernod Ricard USA, LLC v. Bacardi U.S.A., Inc., 653 F.3d 241, 244 (3d Cir. 2011).

28. See Havana Club Holding, S.A. v. Galleon S.A., 974 F. Supp. 302, 305–06 (S.D.N.Y. 1997).

29. Id. at 305.

30. Id. at 306.

31. Id.

32. See Omnibus Consolidated and Emergency Supplemental Appropriations Act, 1999, Pub. L. No. 105-277, § 211(b), 112 Stat. 2681, 2681-88 (1998).

33. See Empresa Cubana Exportadora de Alimentos y Productos Varios v. U.S. Dep’t of Treasury, 606 F. Supp. 2d 59, 66 (D.D.C. 2009).

34. Id. at 67.

35. Empresa Cubana Exportadora de Alimentos y Productos Varios v. U.S. Dep’t of Treasury, 638 F.3d 794 (D.C. Cir. 2011).

36. Empresa Cubana Exportadora de Alimentos y Productos Varios v. U.S. Dep’t of Treasury, 132 S. Ct. 2377 (2012).

37. Pernod Ricard USA, LLC v. Bacardi U.S.A., Inc., 653 F.3d 241 (3d Cir. 2011).

38. Id. at 247.

39. Id.

40. Id. at 253, 256.

41. Registration No. 4,190,004 (filed Dec. 19, 2011, just over four months after the Third Circuit’s ruling in Pernod, and registered Aug. 14, 2012); see also Registration No. 4,008,063.

42. See First Amended Complaint (D.E. 114) at ¶ 129, Bacardi & Co. Ltd. v. Empresa Cubana Exportadora de Alimentos y Productos Varios, No. 1:04-cv-00519 (D.D.C. Mar. 11, 2016).

43. The Bacardí application serial number for HAVANA CLUB for rum is 74,572,667 (filed Sept. 12, 1994), and for Cubaexport the registration number is 1,031,651 (registered Jan. 27, 1976). There is also an application for HAVANA CLUB for rums produced exclusively in the Province of La Havana, Cuba, registered to Havana Club Holding as serial number 74,673,898 (filed May 15, 1995).

Robert R. Jimenez

Robert R. Jimenez practices law in Miami, Florida, and focuses on intellectual property issues, commercial litigation, e-discovery, and appellate practice.