The U. S. Court of Appeals for the Federal Circuit reversed the Trademark Trial and Appeal Board’s (the Board) decision, holding that a Cuban cigar manufacturer’s standing to pursue cancellation of two federal registrations was not barred in light of a prior decision of the U.S. Court of Appeals for the Second Circuit, which held that the Cuban Assets Control Regulations (CACR) precluded the Cuban company from owning the marks at issue.  Empresa Cubana Del Tabaco (d/b/a Cubatabaco) v. General Cigar Co., Inc., Case No. 13-1465 (Fed. Cir., June 4, 2014) (Rader, J.).

The plaintiff, Cubatabaco, is a Cuban entity that owns the COHIBA mark in Cuba for use in connection with cigars.  The defendant, General Cigar, owns two trademark registrations for the mark COHIBA for use in connection with cigars.

In 1997, Cubatabaco filed an application to register the COHIBA mark in the United States for cigars and related goods, based on its registration of the same mark in Cuba.  Cubatabaco relied on Section 44(e) of the Lanham Act, which allows a foreign applicant to rely on a foreign registration to register the same mark in the United States if the applicant has a bona fide intent to use the mark in commerce.  The U.S. Patent and Trademark Office (PTO) rejected Cubatabaco’s trademark application based on General Cigar’s registrations, so Cubatabaco filed a petition to cancel General Cigar’s trademark registrations for COHIBA.

Under the CACR, a Cuban entity is prohibited from a wide range of transactions in the United States.  However, the CACR contains certain exceptions for Cuban entities to engage in certain otherwise prohibited transactions pursuant to a general or a specific license.  Cubatabaco obtained a special license and sued General Cigar over its use of the COHIBA mark.

The district court cancelled the two trademark registrations owned by General Cigar but the 2d Circuit reversed the decision, stating that the court could not grant Cubatabaco injunctive relief because that remedy would entail a prohibited transfer of property under the CACR, since Cubatabaco would acquire ownership of the mark.

When the PTO cancellation proceeding resumed, the Board held that Cubatabaco lacked standing to challenge the trademark registrations of the same mark because Cubatabaco was deemed to have no property interest in the mark.  Cubatabaco appealed.

On appeal, the Federal Circuit found that neither the 2d Circuit decision nor the CACR prohibits Cubatabaco from registering the mark.  The Court also held that CACR authorizes Cubatabaco to seek cancellation of registrations that block its application:  “Because the USPTO refused Cubatabaco’s registration based on likelihood of confusion with General Cigar’s Registrations, Cubatabaco has a real interest in cancelling the Registrations and a reasonable belief that the Registrations blocking its application are causing it damage. Cubatabaco therefore has a cause of action under the Lanham Act to seek cancellation of the Registrations.”

Finally, the Federal Circuit found that neither issue preclusion nor claim preclusion barred any of the grounds on which Cubatabaco sought cancellation.  Claim preclusion did not apply because the 2d Circuit did not render a final judgment on the merits of the cancellation claims.  Issue preclusion did not apply because of various reasons depending on the specific grounds, e.g., the 2d Circuit did not address a particular ground or determination of the issue was not necessary to the judgment.