IP Law Daily, TRADEMARK—E.D. Va.: USPTO Director had authority to accept renewal of Cubaexport HAVANA CLUB trademark ten years after it expired, (Mar 7, 2025)

By Robert Margolis, J.D.

Court rejects Bacardi’s request to set aside Director’s decision under Administrative Procedure Act, finding decision was consistent with applicable statutes and regulations, and therefore not arbitrary or capricious.

The United States Patent and Trademark Office Director acted within her statutory and regulatory authority when she accepted in 2016 a renewal application for the HAVANA CLUB and design trademark originally filed in 2005 by Empressa Cubana Exportadora De Alimentos Y Productos Varios d/b/a Cubaexport (“Cubaexport”) which was initially rejected, the federal district court in Alexandria, Virginia has held. The court granted summary judgment affirming the Director’s 2016 order and dismissing Bacardi & Company Limited’s challenge to that approval under the Administrative Procedure Act (Bacardi & Co. Ltd. v. USPTO, No. 1:21-cv-01441-LMB-IDD (E.D. Va. March 5, 2025)).

Cubaexport. Cubaexport is a Cuban corporation that the Cuban government established in 1965, which since the 1970s has exported rum to countries other than the United States under the HAVANA CLUB and design mark. The Cuban embargo prevented Cubaexport from exporting rum into the United States. In 1976, however, Cubaexport obtained a PTO registration for the HAVANA CLUB trademark for Cuban rum, which trademark was unchallenged until 1993. At that time, an international beverage distributor entered into an agreement to distribute Havana Club rum worldwide. Bacardi, a competitor, attempted to register its own “Havana Club” trademark, but the PTO issued an Office Action indicating the application would be denied due to conflict with Cubaexport’s existing registration.

2006 renewal. The Cuban embargo blocks most transactions between the United States and Cuban entities, but Cubaexport was able to file an application for registration with the PTO and pay its registration fee under a “general license” permitted in the embargo regulations, which authorize Cuban companies to register their trademarks in the United States. In 1998, Congress modified the general license provision in the embargo regulations to exclude the registration of trademarks that are the same or substantially similar to any mark used in connection with businesses or assets that had been confiscated, which includes the HAVANA CLUB trademark. In 1960, the Cuban government had expropriated the assets, including the trademarks, of the Cuban rum distiller that had used the HAVANA CLUB trademark for many years before the expropriation. That Congressional act, therefore, required Cubaexport to obtain a “specific license” from the Office of Foreign Assets Control (“OFAC”), to renew its trademark when it became due for its Section 8/9 renewal in January 2006.

Cubaexport timely filed its Section 8/9 renewal in December 2005, which included an authorization for the PTO to charge the PTO deposit account of Cubaexport’s law firm, Ropes & Gray, LLP, for the filing fees. Because it was no longer clear after the Congressional act whether Cubaexport could rely on the general license to pay the filing fee, it cited an existing specific license that OFAC had issued to Ropes & Gray that authorized the firm to represent Cubaexport. The PTO withdrew the renewal fee from the Ropes & Gray account in December 2005. Then, in April 2006, OFAC informed Cubaexport that the Ropes & Gray license did not authorize the payment, and invited Cubaexport to apply for a specific license, which it promptly did.

In July 2006, the PTO’s Post-Registration Division issued an Office Action refusing to accept Cubaexport’s renewal application, citing OFAC’s position that the Ropes & Gray specific license did not authorize acceptance of the fee payment. The Office Action noted that Ropes & Gray had applied for another specific license and that Cubaexport should notify the PTO within six months of the mailing of the Office Action whether the license application has been accepted or denied. OFAC denied the specific license application later that month, and Cubaexport timely notified the USPTO of that denial within the six-month deadline. The PTO issued a new Office Action in August 2006, maintaining the refusal to accept the renewal application, refunding the renewal fee payment, and informing Cubaexport of its right to petition the PTO Director requesting review, which petition must be filed within six months of the mailing of that second Office Action. Cubaexport did so. In December 2006, the PTO suspended that petition pending the results of Cubaexport’s court challenge to the OFAC decision denying its request for the specific license, which the court ultimately rejected in 2012.

Then in 2015, in light of the different political climate for U.S.-Cuba relations, Cubaexport applied for a new license authorizing all transactions necessary to process the 2006 renewal fee, including the payment the PTO had refused to accept in December 2005, and a fee required for an upcoming 2016 renewal. OFAC granted that license in January 2016, and the next day Cubaexport supplemented its petition to the Director, which was still suspended, setting forth the specific license that OFAC had issued. The Commissioner for Trademarks, acting on behalf of the PTO director, granted Cubaexport’s petition and accepted the renewal application and fees. The Commissioner’s decision stated that because the OFAC license specifically authorized the December 2005 payment, the payment would be deemed effective as of December 2005 and the combined Section 8/9 filing considered complete and acceptable as of that date.

APA suit. Bacardi filed suit against the PTO and the Director under the Administrative Procedure Act (“APA”), contending the Director exceeded her authority in accepting the renewal payment some ten years after it had originally been due. After the district court’s dismissal of the lawsuit on subject matter jurisdiction grounds, and a reversal by the Fourth Circuit, the district court addressed the merits of Bacardi’s claim.

Under the APA, a court may overturn the PTO Director’s decision only if it was “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law.” 5 U.S.C. § 706(2). Finding that the Director’s decision in fact was authorized by governing law, the district court granted summary judgment against Bacardi.

The record showed that Cubaexport complied with all time deadlines set by the PTO, including the time to file the initial renewal fee in 2005. Bacardi contended that the 2016 fee payment was not timely because the fee submitted in 2005 had been refunded in August 2006 when OFAC had determined that Ropes & Gray lacked the proper license, and that the Director cannot waive that lack of timeliness. The court rejected that argument.

It noted that OFAC’s 2016 license could legally authorize a transfer of funds previously made in violation of the embargo, and pursuant to regulations, such license “shall validate such transfer or render it enforceable to the same extent as it would be valid and enforceable but for the [embargo].” 31 C.F.R. § 515.203(c). This regulation rendered Cubaexport’s December 2005 payment timely, since the only problem with it was OFAC’s lack of authorization; but OFAC’s subsequent retroactive authorization cured that defect and had the effect of validating the payment as having been made in December 2005 when it was timely.

Bacardi’s argument that the Director disregarded the law and was arbitrary and capricious because Cubaexport had not timely cured the deficiency was also rejected. Bacardi was wrong that Cubaexport had to cure the deficiency within six months of the July 2006 Office Action. Once Cubaexport sought review of the examiner’s refusal to register, and its review petition was pending, there was no prescribed time period for curing the deficiency. And the Director has supervisory authority over a petition, even if there was no error by an examiner, if a petitioner can show it has substantially complied with the requirements of statutes or rules. 35 U.S.C. § 2; 37 C.F.R. § 2.146(a)(3); TMEP § 1707 (2015). As noted, Cubaexport had complied with all deadlines, and any deficiency had been cured when the renewal (and a deficiency surcharge) were paid. It was, therefore, within the Director’s supervisory authority to accept the payment in 2016 in response to the amended petition.

The Case is No. 1:21-cv-01441-LMB-IDD.

Judge: Brinkema, L.

Attorneys: Damon William Suden (Kelley Drye & Warren LLP) for Bacardi & Co Ltd. Matthew J. Mezger, U.S. Department of Justice, for Coke Morgan Stewart.

Companies: Empressa Cubana Exportadora De Alimentos Y Productos Varios d/b/a Cubaexport; Barcardi & Company Limited; Bacardi USA, Inc.

Cases: Trademark VirginiaNews USPTO