Cuba – possible trademark troll?

Relations between the United States and Cuba reached their nadir in the early 1960s. By 1960, Fidel Castro’s government had seized private land, nationalised hundreds of private companies – including several local subsidiaries of US corporations – and heavily taxed US products. The Eisenhower administration responded by imposing trade restrictions on all Cuban imports, except for food and medical supplies. The expansion of Soviet Union trade with Cuba prompted the United States to cut all diplomatic ties – the two countries have been talking through Switzerland ever since. President Kennedy then issued a permanent embargo on February 7 1962 (directly after ordering a shipment of 1,200 Cuban cigars for himself). Kennedy also oversaw the failed Bay of Pigs operation in April 1961, while the 13-day showdown over Soviet missiles installed in Cuba the following year cemented the country’s status as ground zero in the Cold War.

The United States strengthened its embargo rules in 1992 and again in 1996 with the Cuban Liberty and Democratic Solidarity (Libertad) Act (Helms-Burton Act, PubL 104–114, 110 Stat 785, 22 USC §§ 6021-6091), which disallowed foreign subsidiaries of US companies from trading with Cuba. These actions reduced commerce between the two countries to the absolute minimum, with occasional concessions. Unsurprisingly, there have been concerns over IP protection since the very beginning of these prohibitions.

However, in 2014 President Obama announced a shift in US policy towards Cuba. This has apparently encouraged some to consider the business opportunities resulting from this altered situation. In particular, there has been a rush of Cuban applicants trying to register well-known US trademarks without any real intention of building their own businesses.

So far, at least six individuals have filed applications for US trademarks. Only one of these is a Cuban citizen – Gustavo Alejandro Fuentes Ledo – who has applied to register at least 65 well-known US trademarks, including CHASE and NFL. In most cases he has applied for the logos or device trademarks.

The only reason to register dozens of trademarks belonging to others would be to impede these businesses from entering the Cuban market without first talking to these bad-faith applicants. This has prompted many observers to wonder whether we are seeing the first trademark trolls in Cuba.

Embargo exceptions

Technically, US companies have always had the legal means to protect their IP assets in Cuba. The US government enacted an exception to the trade embargo in the Cuban Assets Control Regulations. Until August 1994, these permitted IP-related payments to be made to the Cuban government and Cuban attorneys or representatives. However, on August 26 1994 the Office of Foreign Assets Control amended the regulations to restrict payments for establishing, maintaining, protecting or registering IP rights.

The general licence for IP payments was restored in October 1995 allowing the protection of intellectual property – including trademarks, patents, commercial names and copyrights – in Cuba belonging to US individuals or corporations. More specifically:

Part 515—Cuban assets control regulations

Subpart E—Licenses, Authorizations, and Statements of Licensing Policy

515.528 Certain transactions with respect to blocked foreign intellectual property.

(a) The following transactions by any person who is not a designated national are hereby authorized:

(1) The filing and prosecution of any application for a blocked foreign patent, trademark or copyright, or for the renewal thereof;

(2) The receipt of any blocked foreign patent, trademark or copyright;

(3) The filing and prosecution of opposition or infringement proceedings with respect to any blocked foreign patent, trademark, or copyright, and the prosecution of a defense to any such proceedings;

(4) The payment of fees currently due to the government of any foreign country, either directly or through an attorney or representative, in connection with any of the transactions authorized by paragraphs (a) (1), (2), and (3) of this section or for the maintenance of any blocked foreign patent, trademark or copyright; and

(5) The payment of reasonable and customary fees currently due to attorneys or representatives in any foreign country incurred in connection with any of the transactions authorized by paragraphs (a) (1), (2), (3), or (4) of this section.

(b) Payments effected pursuant to the terms of paragraphs (a) (4) and (5) of this section may not be made from any blocked account.

(c) As used in this section the term blocked foreign patent, trademark, or copyright shall mean any patent, petty patent, design patent, trademark or copyright issued by any foreign country in which a designated foreign country or national thereof has an interest, including any patent, petty patent, design patent, trademark, or copyright issued by a designated foreign country.

[28 FR 6974, July 9 1963, as amended at 60 FR 54196, October 20 1995]

Since 1995, US companies have been able to conclude international transactions to handle their IP portfolios in Cuba. The main stumbling block has been motivation. Why bother to invest in intellectual property in Cuba at all if it is not possible to trade and sell your products – especially while the costs of international IP protection continue to rise?

Cuba’s trademark system

Cuba is a member of the World Trade Organisation (WTO) and a signatory to the Madrid Protocol and the Paris Convention, among other multilateral IP treaties. The importance of these treaties is recognised in the Trademark Law (203/1999) – if there is no applicable treaty, the Cuban Trademark Office will apply the rule of recipricosity.

Cuba has had valid trademark legislation in place since the 1930s, with the rule being altered in 1983 (Decree Law 68/1983) to that of a social economy. The legislation was modified again by Decree Law 203/1999 when Cuba acceded to the WTO and thus the Agreement on Trade-Related Aspects of Intellectual Property Rights. These laws – together with Decree Laws 290/2011 and 291/2011 – make up the legal framework of Cuba’s trademark regime.

Characteristics of the system

Cuba has a broad definition of ‘trademarks’ and accepts registrations for non-traditional marks, including three-dimensional marks, sounds and smells.

Unlike the United States, Cuba has a first to file system. The current legal framework prohibits the registration of a sign, mark or trade name that is identical to an earlier trademark registration or pending application for the same products or services. However, it does contain specific provisions governing the way that foreign rights holders should be treated (Article 7.2 of Decree Law 203/1999 – national treatment is also included in most international treaties).

The trademark regime prohibits the registration of signs that are not inherently distinctive, are generic or are identical or confusingly similar to a previously registered trademark. However, it will grant registrations on the basis of acquired distinctiveness or secondary meaning (Articles 16.1 and 17.1 of Decree Law 203/1999).

Interestingly, the Cuban regime has a conciliatory process for parties in dispute over a trademark (Articles 23.4 and 17.1 of Decree Law 203/1999).

Registration process

Interested parties can either file a trademark application via the Madrid Protocol or file a national application directly with the Trademark Office. National applications must be filed by one of the law firms that have been authorised to represent clients with regard to trademarks.

The application procedure takes a year, with formal examination of the trademark taking 180 days. After this time, the Trademark Office reviews the application to check whether the sign is included in any of the prohibitions set out in the trademark regime and then renders a conclusive notification denying or granting the trademark.

Exclusion rights

Cuba’s trademark regime also follows the principle that industrial property grants a right of exclusivity and exclusion, and that a trademark registration thus gives its owner the right to exclude others from taking certain actions that might interfere with its exclusive right to use the mark. Other criteria included as grounds for invalidating a registration include acting in bad faith because the trademark is identical or similar to one that has previously been applied for, been registered or become well known in other countries.

Under Cuban trademark law, a rights holder may take action against any party that violates its exclusive rights. The holder can seek termination of the infringing acts, compensation for damages, seizure of the proceeds relating to the infringement, bans on the import or export of goods and seizure of materials or media relating to the infringement, as well as the ownership and delivery of the products, materials or means relating to the offence. All convictions for trademark violations will be published. The rights holder can also apply for a court order to prevent further infringement, to obtain or preserve evidence or for provisional measures to ensure the effectiveness of the action, which may be requested before initiating action, together with it or after its inception.

A Cuban Intellectual Property Office decision to overturn a KOOL AID registration on the grounds of non-use was reversed; the court excused the non-use based on force majeure, since the US economic blockade prevented Kool Aid from selling its products in Cuba

PicTure: Anna Jedynak/Shutterstock.com

Obligations of use

One of the warnings always posted by the International Trademark Association (INTA) is that use is required before trademarks can be registered in Cuba.

While this rule exists in many countries around the world, until now it has been extremely difficult for US brands to be used in commerce on the Cuban market due to the embargo. There has been at least one precedent in Cuban courts where the non-use cancellation procedure was considered invalid, precisely because of force majeure conditions (ie, the embargo).

The case dealt with the KOOL AID trademark, which had been registered in Cuba since 1951. The Cuban Trademark Office decided to cancel the registration for non-use. However, the court reversed the administrative decision and ruled in favour of Kraft Foods, Inc, excusing the non-use based on force majeure, since the US economic blockade prevented Kool Aid from selling its products in Cuba. Kraft was subject to circumstances beyond its control and therefore still deserved trademark protection.

It is unclear whether this is the definitive position of the Cuban courts – judicial precedents are not mandatory in future cases.

Oppositions and cancellations

Cuban trademark law requires that oppositions be filed based on prior local trademark registrations. All evidence must be filed at the same time, together with a power of attorney.

An opposition can also be based on a violation of a prior copyright (Cuba is also a member of the Berne Convention) or of a prior commercial name.

The internal procedure to render a decision usually takes between 12 and 18 months. After the opposition is filed, the Trademark Office notifies the applicant within 60 days – it then has 30 days in which to respond. Within 18 months the Trademark Office will issue a resolution rejecting or accepting the trademark opposition. This resolution may then be appealed before the local courts. There is also the possibility of taking the case to the Supreme Court.

Pan-American Convention

The much overlooked General Inter-American Convention for Trademark and Commercial Protection, or Pan-American Convention, of 1929 binds contracting countries to grant one another the same rights and remedies as their own national laws with respect to trademarks and trade names. This could be crucial for US rights holders – especially where trademark applications are filed in Cuba by different persons.

The convention was adopted in Washington DC on February 20 1929. The member states are Colombia, Cuba, Guatemala, Haiti, Honduras, Nicaragua, Panama, Paraguay, Peru and the United States. In particular, it defines standard procedures among the members for registration, opposition, cancellation and trademark abandonment, and gives owners of trademarks that are protected in a contracting state the right to oppose the use or registration of an identical or confusingly similar mark by a third party in another contracting state upon proof that it has full knowledge of the prior mark – in other words, that it is acting in bad faith.

The rights pursuant to the convention are available not only to nationals of contracting states, but also to “domiciled foreigners who own a manufacturing or commercial establishment or an agricultural development in any of the contracting states”. In addition, the benefits of Article 7 are available to “any owner of a mark protected in one of the contracting states”. Thus, many Latin American rights holders that are not nationals of a party to the treaty, but which have protected their mark in a country that is a party, will be able to invoke the provisions in that other country.

Article 7 of the Pan-American Convention provides:

Any owner of a mark Protected in one of the contracting states in accordance with its domestic law, who may know that some other person is using or applying to register or deposit an interfering mark in any other of the contracting states, shall have the right to oppose such use, registration or deposit and shall have the right to employ all legal means, procedure or recourse provided in the country in which such interfering mark is being used or sought, and upon proof that the person who is using such mark or applying to register or deposit it, had knowledge of the existence and continuous use in any of the Contracting States of the mark on which opposition is based upon goods at the same class, the opposer may claim for himself the preferential right to use such mark in the country where the opposition is made or priority to register or deposit in such country, upon compliance with the requirements established by the domestic legislation in such country and by this Convention.

Article 8 states:

When the owner of a mark seeks the registration or deposit of the mark in a Contracting State other than that of origin of the mark and such registration or deposit is refused because of the previous registration or deposit of an interfering mark he shall have the right to apply for and obtain the cancellation or annulment of the interfering mark upon proving, in accordance with the legal procedure of the country in which cancellation is sought, the stipulations in Paragraph (a) and those of either Paragraph (b) or (c) below:

(a) That he enjoyed legal protection for his mark in another of the Contracting States prior to the date of the application for the registration or deposit which he seeks to cancel; and

(b) That the claimant of the interfering mark, the cancellation of which is sought, had knowledge of the use, employment, registration or deposit in any of the Contracting States of the mark for the specific goods to which said interfering mark is applied, prior to the adoption and use thereof or prior to the filing of the application or deposit of the mark which is sought to be cancelled; or

(c) That the owner of the mark who seeks cancellation based on a prior right to the ownership an use of such mark, has traded or trades with or in the country in which cancellation is sought; and that goods designated by his mark have circulated and circulate in said country from a date prior to the filing of the application for registration or deposit for the mark, the cancellation of which is claimed, or prior to the adoption and use of the same.

The protection granted by these articles is in fact somewhat broader than, or at least different from, the famous marks doctrine – as protection is based not on the fame of the foreign mark, but on the usurper’s knowledge of it. Thus, even if the foreign mark is not well known to the public, the foreign rights holder is still entitled to protection if the usurper knew of it.

At least one of the current crop of Cuban applicants for famous US marks has worked in Spain and the United States, and is currently resident in Tampa, Florida, where he has a website and a small publication directed at the Cuban community: www.elpuenteflorida.com. As Fuentes Ledo lives outside Cuba and in the United States, it is highly likely that he is well aware of all the trademarks that he has applied for.

The Pan-American Convention has been applied in several cases in Latin America and even in the United States, with most decisions having been issued in Peru. In fact, Peru’s National Institute for the Defence of Competition and Protection of Intellectual Property (www.indecopi.gob.pe) has applied the Pan-American Convention between five and 10 times a year in the last 15 years.

Some of these decisions suggest that the Cuban Trademark Office should apply the convention’s provisions with regard to the applicant’s prior knowledge: “Maybe there are no irrefutable evidences that gives credit of the previous knowledge by the applicant of the existence and use of the trademark MICROPLEX, but given the phonetic identity (more being a fantasy name) and the actual graphic similarities between the marks in conflict that cannot be attributed to causality or coincidence, that the applicant had knowledge of the brand” (Resolution 4230-2013/TPI- National Institute for the Defence of Competition and Protection of Intellectual Property, Miller Chemical Fertilizer v José Aurelio García Fiestas, July 25 2012).

The institute has confirmed the requirement of knowledge in various different decisions, several of which also recognised internet evidence of the knowledge of the existence of the previous trademark.

There are also significant precedents in Colombia:

• Timberland Company v Stanton & Cia SA (Case 2002-3003-01) – in 1982 Colombian company Stanton & Cia SA applied to register TIMBERLAND in Colombia. The Colombian Trademark Office allowed the registration. As a consequence, Timberland Company – a famous clothing manufacturer based in the United States – initiated a number of actions in the Colombian courts, based on its prior use of the Timberland trade name in the United States, pursuant to the Pan-American Convention.
• Americana Annco INC v Holser y Cia – also in Colombia, the superintendent of commerce refused an application for the trademark ANN TAYLOR in Class 14, applied for by Holser y CIA SA de CV. The superintendent took into consideration Article 7 of the convention.

The Pan-American Convention has also been used in the United States, with one case involving Cuban coffee brand Cubita.

However, to grant protection to US trademarks in this way might well prompt the Cuban Trademark Office to consider what has happened in the past when Cuban rights holders have based their arguments on the convention in US courts. There are fears that politics may interfere with the fair application of justice.

What is really happening?

There is an impressive list of applications being filed for US trademarks in Cuba, but they are not being filed by the brand owners. As mentioned earlier, the majority of these applications have been filed by Fuentes Ledo (it is estimated that so far, he has invested approximately $50,000 in costs and legal fees).

If a trademark is registered in Cuba, the Pan-American Convention can and should be used and enforced by the Cuban Trademark Office. While a defendant might plausibly argue that it had no previous knowledge of the trademark in question, given the paucity of both advertising and online access in Cuba, it is highly improbable that one person plans to start 65 different new business using existing marks without bad faith being involved.

In addition, copyright could be used as a defence with regard to the attempt to register logos. There is no obligation for a work to be registered in Cuba in order for it to be protected by copyright law and Cuban law prohibits the registration of trademarks that violate prior copyright.

The fact that many of the trademarks in question are well known and famous could also form the basis of a defence. The Paris Convention recognises an exception to the territoriality principle for famous trademarks. Article 6bis protects famous marks even if they are unregistered, recognising the inherent function of trademarks – especially famous marks – as source indicators.

The Cuban Trademark Office has an interesting challenge ahead in using the Pan-American Convention to prevent the hijacking of US trademarks. Acceptance of evidence of prior knowledge and the Cuban authorities’ implementation of the convention will be crucial.

The clock is ticking and the first cases have been filed. The Cuban Trademark Office’s next move is awaited eagerly.