The Cuban Trademark Crisis? – Easing of Trade Restrictions on Cuba May Present Challenges for U.S. Trademark Owners

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branding, Cold War, Cuba, Cuban Missile Crisis, embargo, intellectual property, international trademarks, Obama, trademark, trademark filing, trademark squatters, trademarks

President Obama’s announcement earlier this year that his administration would be taking the first steps towards normalizing relations between the United States and Cuba, including easing of the Cold War-era trade and travel embargo, immediately caused a stir throughout the country, while instigating intense debates on what the implications of this outcome would be (and whether the move was prudent or justified given Cuba’s human rights record).  One area of unintended consequence that the lifting of the trade embargo will have will be on the rights of U.S. trademark owners.  The loosening of trade restrictions of Cuba will present difficulties for U.S. trademark owners seeking legal protection in Cuba, as well as potential challenges to their trademark protection domestically.

The Cuban embargo, in place since 1962, prohibits most types of American trade and commerce with Cuba, unless a special license from the Office of Foreign Assets Controls is obtained (OFAC).  As a result, most U.S. companies have never registered their trademarks in Cuba, since there would be no point in doing so in a country which they were not legally allowed to do business in (trademarks are geographic in nature, so ownership in one country does not mean that a company automatically owns the same mark in another).  This is in spite of the fact that the U.S. and Cuban governments established a exception to the trade embargo for intellectual property which allowed companies from both countries to register trademarks in the other, despite the fact that they were still forbidden from conducting business there.

For those companies that did take advantage of this exception, many of them businesses located in South Florida who registered at various times when change in the restrictions seemed possible, the status of their trademarks might not be anymore secure.  Just like the U.S., Cuban trademark law requires use in commerce, otherwise a trademark may be considered abandoned.  Trademarks deemed to be ‘famous’ are excepted from the ‘use in commerce’ requirement, so iconic brands like Coca-Cola may be covered, but that’s hardly firm ground for most rights owners to rely on, particularly if their brands are not exactly world-renown.

Despite being an opponent of Capitalist Imperialism, Castro did have a weakness for beverages produced by the oppressors of the proletariat.

Additionally, the lack of trademark protection in Cuba for many American businesses, along with the fact that many companies, particularly those in the financial services, agriculture, construction, travel, telecommunications and tourism industries, will be eager to take advantage of the new markets that eased trade restrictions would offer, presents a golden opportunity for trademark squatters.   A ‘trademark squatter’ is a individual or even organization who registers trademarks that are already used by other businesses in other jurisdictions or contexts (such as in a web addresses) with no intent to actually use them.  Should the legitimate business actually move into that jurisdiction or otherwise attempt to use their marks in that geography or context, the squatter will send a cease and desist letter threatening the business with legal action, unless they pay the squatter for a license to use the mark, or purchase the rights in full from the squatter.   Already, would-be-squatters are filing applications for valuable American brands.  One squatter has filed applications for marks such as Sam’s Club, Chase, Kohl’s, Denny’s, Nordstrom, Quiznos and Chipotle.  Adding to the danger is the fact that, unlike the United States, Cuba is a first-to-file country where the first person to file for a mark, and not the first person who uses it in commerce, will receive trademark ownership. The end result is that U.S. companies seeking to do business in Cuba could find it suddenly costly as they seek to buy the rights to marks from trademark squatters or seek their cancellation.

Additionally, the easing of trade restrictions may also provide challenges for U.S. trademark owners domestically as well.  It is likely that Cuban business may also seek to do business in the U.S., and will also try to seek U.S. protection of their trademarks.  This could have an unsettling effect if the marks of Cuban businesses are similar to or identical to those of American companies, especially if the U.S. entities have been lax in maintaining protection for their trademark portfolio or if the Cuban companies can argue that their use of the marks pre-exist that of other claimants.  This is no remote possibility, especially considering the ongoing suit between U.S. company General Cigar, who registered the mark ‘Cohiba’ for cigars, and the Cuban business Cubatabaco, who sued General Cigar claiming rights to the Cohiba trade-name under the Lanham Act.  Cubatabaco is arguing that the fame of the Cohiba brand extended to the U.S., and preceded the date of first use by General Cigar.  This suit has dragged on for years in Federal Court, with the Supreme Court being asked to hear the case this year.  It’s no stretch of the imagination to think that suits like this one might become more common, especially for U.S. companies who registered marks that are identical to or derived from those of Cuban businesses.

Despite the potential difficulties (and expenses) that U.S. trademark owners may face in seeking/maintaining legal protection if direct trade is finally permitted with Cuba, there are practical steps that can be taken now to mitigate against those risks:

1) Immediately start the trademark registration process in Cuba.  U.S. trademarks owners, especially those in industries that are likely to have the most interest/opportunity in a newly-opened Cuba market or whose businesses are located in South Florida where expansion into Cuba makes geographic sense, should be immediately seeking to register their trademarks now, before trademark squatters move in.  Those who have previously done registrations should check that those registrations are still active and have yet to be considered or challenged as being abandoned. Additionally, trademark holders can obtain protection in Cuba by filing an international registration under the Madrid Protocol.

2) Double-check U.S. trademark legal protections.  Trademark owners should also check to make sure their marks are receiving maximum protection under U.S. law as well.  This would include registering for Federal trademark status, if not done so already, and keeping current on renewals of previously registered trademarks.

3) Record U.S. registered trademarks with the U.S. Customs and Border Protection.  This action is relatively inexpensive and helps allow the CBP to search and stop infringing products from being imported from Cuba.

In short, the lifting of trade restrictions on Cuba may present tremendous opportunity to U.S. companies, but that opportunity may present challenges in ensuring trademark protection, both in Cuba and the United States.