Precedential No. 38: TTAB Orders Cancellation of COHIBA Registrations Under Pan American Convention, Rejects Issue Preclusion Defense

In the latest round of this 25-year-old saga, the Board granted a petition for cancellation of two registrations for the mark COHIBA (one mark in standard form, the other slightly stylized) for "cigars," on the ground of violation of Article 8 of the Pan American Convention. The evidence showed that Petitioner Cubatabaco enjoyed legal protection of the COHIBA mark in Cuba prior to Respondent General Cigar's constructive first use date in the United States, and that General Cigar had knowledge of Cubatabaco's use of the mark in Cuba prior to filing its underlying applications. The issue, then, was whether the Article 8 claim was barred under the doctrine of issue preclusion in light of the past federal court litigation between the parties. The Board said no. Empresa Cubana Del Tabaco d.b.a. Cubatabaco v. General Cigar Co., Inc., 2022 USPQ2d 1242 (TTAB 2022) [precedential] (Opinion by Judge George C. Pologeorgis).

Cubatabaco filed its petition for cancellation in 1997. The proceeding was suspended from 1998 to 2011 in view of a trademark infringement action (unsuccessful) brought by Cubatabaco. When the cancellation proceeding resumed, the Board granted General Cigar's motion for summary judgment on the ground of lack of standing. In 2014, the CAFC reversed the Board on the issue of standing, and further ruled that claim preclusion and issue preclusion based on the decisions by the courts did not apply to the claims pending before the TTAB. 

Article 8 of the Pan American Convention: Under Article 8 of the Pan American Convention, a petitioner may seek to cancel a U.S. registration if (1) the petitioner's mark enjoys legal protection in another contracting state prior to the respondent’s application filing date and the respondent either (2) had knowledge of the petitioner’s mark prior to filing its application or (3) the petitioner used the mark in the United States prior to the respondent’s filing date. [Tomorrow, the TTABlog will publish a brief article by Professor Christine Farley, describing the Pan American Convention and explaining the practical ramifications of the case.]

General Cigar filed its underlying applications after Cubatabaco had registered and began use of its COHIBA mark in Cuba, satisfying the first element of Article 8. The evidence from General Cigar's own records showed that it had knowledge of Cubatabaco's use of the mark COHIBA as a cigar brand in Cuba prior the filing of the underlying applications, thus satisfying the second element. And so the Board found that Cubatabaco had proven its claim under Article 8.

Issue Preclusion: General Cigar did not contest the Board findings regarding the Article 8 claim but, relying heavily On B&B Hardware v. Hargis, it maintained that the claim was barred by the doctrine of issue preclusion. Section 27 of the Restatement (Second) of Judgments sets for the elements of issue preclusion: (1) an issue of fact or law must have been presented in both the prior and current actions; (2) that issue must have been actually litigated in the prior action and determined adversely to the precluded party in a valid and final judgment; (3) determination of that issue must have been necessary and essential to the prior judgment; and (4) the parties are the same, or the precluded party’s position in the prior action was fully represented by another party.

However, the CAFC had already held (in 2014) that the issue decided in the federal action—whether § 44(h) of the Act incorporated Article 8 claims—is not the same as the Article 8 issue here. It ruled that "[i]ssue preclusion does not apply" because "the Board can cancel registrations directly under Article 8 of the IAC [Pan American Convention], pursuant to the Board’s jurisdiction under 15 U.S.C. § 1067(a) [Section 17(a) of the Lanham Act]." Therefore, pursuant to the CAFC's holding, the parties here are precluded from asserting issue preclusion.

General Cigar argued that the Board need not abide by the CAFC's ruling because of an exception to the "law of the case" doctrine when controlling authority (the Supreme Court's 2015 decision in B&B Hardware) "changed the law."

Under this exception, “[t]hree conditions must be satisfied.” Dow Chem.Co. v. Nova Chem. Corp., 803 F.3d 620, 629, 115 USPQ2d 2024, 2030 (Fed. Cir. 2015). “First, the governing law must have been altered. … Second, the decision sought to be reopened must have applied the old law. … Third, the change in law must compel a different result[.]” Id. These requirements are strictly construed. Sacramento Mun, 566 F. App’x at 996 (citations omitted).

The Board was not persuaded that B&B Hardware changed the law. In fact, the CAFC applied the rule that General Cigar itself claimed was later established by B&B Hardware: that district court rulings have preclusive effect before the Board if ordinary issue preclusion standards are met, a rule that "has been settled in the Federal Circuit for quite some time." Moreover, B&B Hardware "addressed an entirely different issue: 'whether the District Court in this case should have applied issue preclusion to the [Board’s] decision,' 113 USPQ2d at 2048, not vice versa."

The Board also observed that B&B Hardware did not change the standard for issue preclusion. Moreover, B&B Hardware "did not concern or address the scope of the Board’s jurisdiction under §§ 17(a) and 44 of the Lanham Act, Article 8 of the Pan American Convention or any other treaty-based claims."

In sum, the Board concluded that "B&B Hardware provides no warrant for the Board to disregard the Federal Circuit’s decision in contravention of established practice regarding mandates emanating from that Court."

If that wasn't enough, the Board also concluded that B&B Hardware is "irrelevant" to the CAFC's ruling because, as that court stated: "[u]nlike in the district court, the Board need not consider the interplay with [Lanham Act] Section 44(h)." Here Cubatabaco's claim for cancellation falls under Section 17 of the Act, and is therefore "entirely different."

And one more thing. "The Second Circuit held that to the extent its decision has any preclusive effect on this Board proceeding, Respondent could simply raise 'its estoppel claim before the [US]PTO and let the agency decide, subject to review by the Federal Circuit, what preclusive effect should be given to our decision.' Empresa, 88 USPQ2d at 1128." (emphasis added by the Board)."

And so, the Board concluded that issue preclusion does not bar Cubatabaco's claim under Article 8 of the Pan American Convention.

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TTABlogger comment: What are the odds that General Cigar will appeal to the CAFC? Seek review by way of civil action? Do nothing?

Text Copyright John L. Welch 2023.