Reversing TTAB, CAFC Rules that Cubatabaco May Seek Cancellation of General Cigar's COHIBA Registrations
The U.S. Court of Appeals for the Federal Circuit has vacated the TTAB's decision dismissing a petition for cancellation of two registrations for the mark COHIBA for cigars. The Board ruled (here) that petitioner Cubatabaco lacked standing in view of the decision of the U.S. Court of Appeals for the Section Circuit in Empresa Cubana Del Tabaco dba Cubatabaco v. Culbro Corp., 399 F.3d 462 (2nd Cir. 2005). The CAFC held that the question of cancellation was not decided by the Second Circuit, and it concluded that Cubatabaco has a statutory "cause of action" that is not barred by the Cuban Assets Control Regulations (CACR). Empresa Cubana Del Tabaco v. General Cigar Co., Inc., 111 USPQ2d 1058 (Fed. Cir. 2014) [precedential].
In January 1997, Cubatabaco filed a Section 44 application to register the trademark COHIBA for cigars and related goods, based on its Cuban registration. As required, it stated that it had a bona fide intention to use the mark in commerce. The application was blocked under Section 2(d) by the General Cigar's two registrations for the same mark, and so Cubatabaco filed a petition for cancellation.
In October 1997, Cubatabaco obtained a special license from the Treasury Department to allow it to sue General Cigar over its use of the COHIBA mark. The district court enjoined further use of the mark by General Cigar and cancelled the two registrations, but the Second Circuit reversed, holding that the court could not grant Cubatabaco injunctive relief since that remedy would entail a prohibited transfer of property under the CACR because Cubatabaco would acquire ownership of the mark.
The cancellation proceeding then resumed and General Cigar moved for summary judgment on the grounds of lack of standing, and claim and issue preclusion. The Board granted the motion and entered judgment, but only on the ground of lack of standing. The Board reasoned that because Cubataco was deemed to have no property interest in the mark, it lacked standing to challenge registration of the same mark.
The CAFC saw the issue not as one of standing, but more appropriately as whether Cubatabaco had a cause of action. Because its application was refused registration over the two registrations, Cubatabaco had a real interest in cancelling the registrations and a reasonable belief that the registrations were causing it damage.
The CAFC observed that the TTAB "appears to have read [the Second Circuit's] decision as barring Cubatabaco from ever acquiring any property interest in the mark under the CACR." But the Second Circuit did not address the cancellation issue, and its decision on the non-availability of injunctive relief is irrelevant here. Cubatabaco is authorized to seek cancellation under the general license provided by CACR that allows Cuban entities to engage in transactions "related to the registration and renewal" of trademarks, including a petition to cancel a prior registration.
In seeking registration under 44(e), Cubatabaco was not required to show use of its mark; a bona fide intent to use the mark sufficed. It therefore has a legitimate interest in seeking cancellation of the registrations that are causing it damage by blocking its application. If Cubatabaco succeeds in the cancellation proceeding, it could obtain registration of the COHIBA mark. And so the CAFC ruled that Cubatabaco has a statutory cause of action under the Lanham Act to seek cancellation of the two registrations.
Although the Board declined to reach the questions of issue and claim preclusion, the CAFC chose to resolve those issues as well. It found that issue preclusion did not bar any of the grounds on which Cubatabaco sought cancellation: either the Second Circuit did not address the particular ground, or determination of the issue was not necessary to the judgment, or Cubatabaco had chosen not to pursue the issue, or the issues were not identical at the TTAB and the court. Claim preclusion did not apply because the Second Circuit did not render a final judgment on the merits of Cubatabaco's cancellation claims. Moreover, the transactional facts differed between the court and the TTAB.
The CAFC therefore vacated the Board's decision and remanded the case to the Board for further proceedings.
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TTABlog note: What happens if Cubatabaco gets a registration but is barred from using the mark? Will the mark go abandoned and the registration be subject to cancellation? Or will the CACR serve as a legitimate excuse for non-use?
Text Copyright John L. Welch 2014.