IP Law Daily, TRADEMARK—D.D.C.: Bacardi successfully blocks trademark counterclaim under Trading with the Enemy Act, (Oct 16, 2024)

By Patricia K. Ruiz, J.D.

The court found the statute barred Cubaexport from enforcing any rights regarding its confiscated HAVANA CLUB mark.

The U.S. District Court for the District of Columbia granted a motion to dismiss a counterclaim by Empressa Cubana Exportadora De Alimentos Y Productos Varios, d/b/a Cubaexport, in a trademark dispute with Bacardi & Company Limited and Bacardi U.S.A., Inc., (Bacardi, collectively) over ownership rights in the mark HAVANA CLUB for rum. The court agreed with Bacardi that the counterclaim was barred by the Trading with the Enemy Act (Bacardi & Co. Ltd. v. Empresa Cubana Exportadora De Alimentos Y Productos Varios, No. 1:04-cv-00519-EGS (D.D.C. Oct. 15, 2024)).

Dispute over HAVANA CLUB mark. Jose Arechabala, S.A., (JASA) was a Cuban rum distilling business founded in 1878. Between 1934 and 1953, JASA obtained several trademark registrations for the mark HAVANA CLUB in Cuba and the United States. In 1960, the Cuban government seized and expropriated the physical assets, property, accounts, business records, and trademarks of many Cuban businesses, including JASA. By 1974, JASA’s HAVANA CLUB registrations had expired, after which Cubaexport registered the mark in the United States for itself. Years later, JASA sold its interest in the HAVANA CLUB mark to Bacardi, which applied to register the mark and petitioned the PTO to cancel Cubaexport’s registration. The PTO denied Bacardi’s application, and the TTAB rejected its cancellation petition.

Bacardi initiated the instant lawsuit in 2004 to challenge the TTAB’s grant of summary judgment to Cubaexport. Bacardi sought an order directing the PTO to cancel Cubaexprot’s registration or to rectify the register on various grounds. Barcardi also sought declaratory judgments against HCH and Cubaexport. In 2007, the court stayed the proceeding while Cubaexport pursued an appeal of the PTO’s determination that Cubaexport’s rights in the HAVANA CLUB mark would be cancelled or expired based on Cubaexport’s inability to renew the mark because of OFAC’s denial of a specific license. Cubaexport received the specific licenses from OFAC, authorizing it to renew its rights in the mark, the court granted the parties’ motion to lift the stay.

Counterclaim. Bacardi filed an amended complaint seeking review of the TTAB’s grant of summary judgment, Cubaexport filed an answer, as well as the counterclaim at issue, which alleged trademark infringement under the Lanham Act. Bacardi moved to dismiss Cubaexport’s counterclaim, arguing that the counterclaim should be dismissed on two grounds: (1) Cubaexport is barred by statute from enforcing any rights it may have in the HAVANA CLUB mark; and (2) even if Cubaexport’s claim is not statutorily barred, it must be dismissed because it is impossible for Cubaexport to establish a likelihood of confusion among consumers due to the Cuban embargo. The court agreed that Cubaexport’s counterclaim is barred by statute.

Embargo on trade with Cuba. In 1963, the U.S. imposed a total embargo on trade between the U.S. and Cuba under the Trading with the Enemy Act, implemented by the Cuban Asset Control Regulations (CACR). CACR permitted transactions related to the registration and renewal of trademarks in the U.S. under general licenses and authorized the Treasury Department’s Office of Foreign Assets Control (OFAC) to grant specific licenses in individual cases. Exceptions may be specifically authorized by the Secretary of the Treasury: a “general license,” which is a general exception written into the Treasury regulations themselves, and a “specific license,” which is an exception made by the Treasury for a specific applicant. However, in 1998, Congress curtailed the previous exceptions for trademarks.

Plain language of statue. Bacardi argued the plain terms of the statute bar Cubaexport’s counterclaim because the HAVANA CLUB trademark is a confiscated mark, which was registered under the then-existing general license. Cubaexport argued in response that its counterclaim is not barred because the rights it asserts in its counterclaim are based on its 2016 trademark renewal, which was not obtained under the general license.

The court found that the statute only bars certain mark holders from enforcing their rights in the mark based on how that mark was registered and does not carve out any exceptions for marks that were renewed under a different provision. Thus, the plain language of the statute covers Cubaexport’s rights in the HAVANA CLUB mark. The court also identified several other provisions of the Lanham Act that treat registration and renewal as distinct acts. Because the court agreed with Bacardi that Cubaexport’s counterclaim is barred, the court granted the motion to dismiss, finding it did not need to also determine whether Cubaexport’s counterclaim should be dismissed for failing to adequately allege likelihood of confusion among consumers as a matter of law.

The Case is No. 1:04-cv-00519-EGS.

Judge: Sullivan, E.

Attorneys: Emily Johnson Henn (Covington & Burling LLP) for Bacardi & Co Ltd. and Bacardi U.S.A., Inc. Carl Micarelli (Debevoise & Plimpton LLP) for Empresa Cubana Exportadora Y Alimentos Y Productos Varios.

Companies: Bacardi & Co Ltd.; Bacardi U.S.A., Inc.; Empresa Cubana Exportadora Y Alimentos Y Productos Varios

Cases: Trademark USPTO DistrictofColumbiaNews