Property, intangible

a blog about ownership of intellectual property rights and its licensing

Buy Your U.S. Cohiba Cigars Now

You know a lawsuit has been going on a long time when the decision starts with “The parties’ familiarity with the prior proceedings and facts underlying this dispute is assumed. In brief,” and then goes on for 7 pages of a 33 page opinion just to explain the procedural history of the case. Empresa Cubana del Tabaco d/b/a Cubatabaco v Culbro Corp. and General Cigar Co. just passed its 11th anniversary, with 14 decisions available in the Westlaw database. In 2000, when I worked at Cantor Colburn LLP we moved in to the building in Bloomfield, Connecticut formerly occupied by General Cigar, a building surrounded by tobacco fields. Gap reminds me that we had a Cohiba conference room. I’m three jobs past Cantor Colburn (and Cantor Colburn has itself moved to snazzy new offices in downtown Hartford), but the cigar case still rolls along.

The most recent decision was in the trial court, relieving Cubatabaco of final judgment under Fed. R. Civ. P. 60(b)(6). With the decision, Cubatabaco’s protection of its COHIBA trademark in the U.S. has been revived.

The Las Vegas Trademark Attorney has previously summarized the convoluted proceedings. For those of you who haven’t stumbled across it in the past decade, it’s a dispute between Cubatabaco and General Cigar over the ownership of the trademark COHIBA for cigars (the senior General Cigar registration (with pending cancellation proceeding) is here and the junior suspended Cubatabaco application here). The trial court originally held that Cubatabaco owned the COHIBA mark under the well-known marks doctrine, but the decision was reversed on appeal. Cubatabaco’s problem, according to the Court of Appeals for the Second Circuit, was that it is a Cuban company and under the Cuban Assets Control Regulations (CACRs), a Cuban national cannot acquire property rights, i.e., a trademark, in the United States.

In the original lawsuit, in addition to Lanham Act claims Cubatabaco also alleged misappropriation of its trademark under state common law. That claim was dismissed by the trial court and affirmed by the appeals court because Cubatabaco had not proven that General Cigar had bad faith when it adopted the COHIBA mark.

Then the New York Court of Appeals, on a question certified from the Court of Appeals for the Second Circuit, decided ITC Limited v. Punchgini, Inc., 880 N.E.2d 852, 9 N.Y.3d 467, 850 N.Y.S.2d 366 (2007). In the decision, the New York court elaborated on the standard for protection of well-known marks under New York state common law. There was no mention of bad faith as a required element.

As a result Cubatabaco moved for relief from judgment under Fed. R. Civ. P. 60(b)(6). Although rarely granted, the clarification of state law in the ITC Limited decision demonstrated that the Cubatobaco court’s earlier decision on the state law misappropriation claim was in error, so the district court granted the requested relief.

The district court then held that Cubatabaco had adequately proven its claim for misappropriation of the COHIBA trademark under the ITC Limited standard. Misappropriation occurs under New York state common law when (1) the defendant deliberately copies and (2) consumers primarily associate the mark with the foreign plaintiff. The record had ample evidence that this was the case for the COHIBA mark.

The federal embargo in CACRs was not a bar to the suit because the misappropriation claim was not about ownership of a U.S. trademark, but instead about the misappropriation of commercial advantage. The court noted that misappropriation law does not provide a foreign party with the right to exclude others or reserve a designation for its exclusive use (ed note.: this would be true since the misappropriation standard does not bar innocent infringement). Rather, here Cubatobaco’s claim was in protection of the goodwill in its Cuban mark, not a claim of ownership in a U.S. mark, so not prohibited by the CACRs. Judgment therefore entered in favor of Cubatabaco on its misappropriation claim and presumably General Cigar will be enjoined from using the COHIBA mark.

No doubt an appeal will follow, so this suit will linger on for several more years. Cubatabaco’s petition to cancel the General Cigar mark remains outstanding and suspended. I can’t even begin to imagine the struggle the TTAB will have with this one.

Empresa Cubana del Tabaco d/b/a Cubatabaco v Culbro Corp., 97 Civ 8399, 2008 U.S. Dist. LEXIS 94085 (S.D.N.Y. Nov. 19, 2008)

© 2008 Pamela Chestek

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