Tuesday, June 10, 2014

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.

Read comments and post your comment here.

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.


At 2:26 PM, Anonymous Anonymous said...

I assume there must be some very interesting issues in this case regarding allegations of fraud, abandonment, and incontestability? It appears General abandoned for 5 years and then started up again?

If someone abandons a mark for a period of 5 years, but then starts using it again for let's say 5 years, can a third party use the prior 5 year abandonment period to cancel the registration at any later point in time? That seems to be the argument here? Otherwise, the registration would still be incontestable, even though at a prior point it was not in use, but no one objected?
So you if stop using a mark while it is registered and no one objects until years after you start again, was it abandoned?

At 3:53 PM, Anonymous Roberto said...

John - in response to your questions ... the general license covers "registration and renewal" at the USPTO, so I would think that a declaration of use to maintain a registration would be included within the "renewal" exception granted under the general license. Also, the TMEP lists "trade embargo" as an example of excusable non-use.

At 7:01 PM, Anonymous Orrin A. Falby said...

The presumption of abandonment is 3 years, not 5. This was changed to comply with GATT/TRIP(?) The presumption is rebutable with documentary evidence or credible testimony of use, or an "intent to resume" use. US courts generally are receptive to the contention that an owner has not abandoned its trademark as a result of excusable non-use -- i.e., certain circumstances that are outside the trademark owner’s control. Legal restrictions on the continued sale of goods under the mark is recognized as a situation that is out of the trademark owner's control. Arguably, an embargo satisfies this requirement.

At 7:22 PM, Blogger John L. Welch said...

No one said the abandonment presumption is 5 years. He said General Cigar had abandoned for five years.

At 7:18 AM, Anonymous Frank Herrera said...

The real point of this dispute is what is the practical effect if Cubatabaco succeeds in canceling a mark that has proven first use in the United States and has the stamp of approval from the 2nd Circuit? Let's take this further, what if the embargo is lifted after the Supreme Court takes up B&B Hardware and decides these issues in the affirmative?:

(1) Whether the Trademark Trial and Appeal Board’s finding of a likelihood of confusion precludes respondent from relitigating that issue in infringement litigation, in which likelihood of confusion is an element; and (2) whether, if issue preclusion does not apply, the district court was obliged to defer to the Board’s finding of a likelihood of confusion absent strong evidence to rebut it.

At 7:28 AM, Blogger John L. Welch said...

Thanks for your comment, Frank. As I was blogging this decision, I was thinking about B&B Hardware and how this decision fits in. I just didn't have the time or energy to follow up on my embryonic thought.

At 2:20 PM, Anonymous Frank Herrera said...

John: It's absolutely maddening. See the ongoing dispute between Guantanamera Cigars v. Corporacion Habanos. For a real treat, figure out the pleadings in Cancellation No. 92058848. Consider the fact that Guantanamera has first use in US since 1997 and other applications and registrations for same mark for other goods. What happens to this client if and when the embargo is lifted?

It just doesn't sit well with me that "excusable non-use" could ultimately prevail over 17 years of consistent use of a mark in United States commerce.

but I digress...


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