Business Monday

U.S. trademarks and the new U.S.-Cuba reality and its potential

Jorge Espinosa
Jorge Espinosa

Less than 15 years ago, in retaliation for a U.S. court decision against the Cuban government over the use of the trademark “HAVANA CLUB,” Fidel Castro threatened to make his own counterfeit Coca-Cola. Although Castro never carried out his threat, the incident highlights the turbulent history of trademark rights between the two countries. With President Barack Obama’s recent announcement of normalization of relations, we are on the cusp of the most pronounced commercial change in U.S. relations with Cuba in 50 years. Its effect on U.S. owners of trademarks will eventually have a significant impact on the future economy of Cuba and of South Florida.

The Cuban embargo prohibits most types of commerce with Cuba absent a special license from the Office of Foreign Assets Controls (OFAC). However, the law provides a general license, which does not have to be specifically applied for or renewed, that allows nationals of either country to legally spend money to register, prosecute or oppose a patent, trademark or copyright. The general license significantly does not provide for court enforcement of trademarks or a waiver of the use requirement, thereby creating a significant obstacle to the proper protection of Cuban trademarks in the U.S.

In reliance on the general license, some U.S. companies have registered their trademarks in Cuba anticipating future change allowing trade and commerce. These registrations normally come in waves during times when the possibility for change is in the news. The current policy change is likely to generate a new wave of registrations. However, changes in the status quo are likely to be slow due to the 1992 Cuban Democracy Act (the “Torricelli Law”) and the 1996 Cuban Liberty and Solidarity Act (“Helms-Burton Act”) which limited the authority of the Executive Branch to modify or end the embargo. The latter of the two particularly makes it illegal to exploit property, including intellectual property that was confiscated without compensation by the Castro government. A U.S. business wishing to purchase and protect a previously confiscated Cuban trademark would be prohibited by this Act. This is particularly significant in South Florida with its large number of confiscated trademarks such as La Ideal (retailer), Havana Club (rum) and Partagas (cigars).

What changes could we see in the short term in view of this legislative barrier? While Obama cannot undo all aspects of the embargo, he still has the power to modify the regulations that govern its enforcement. Such changes could include an amendment of the regulation to allow excusable non-use and court litigation under the general license. This would obviate the need to request a special license for such normal and customary trademark transactions.

A significant change that has already been announced is the relaxation of banking and credit restrictions between the two countries. Cuban and U.S. banks would not previously accept direct exchanges of money transfers. This has traditionally complicated the protection of trademarks in Cuba and has raised expenses by requiring payments through third countries or intermediaries.

A requirement that cannot easily be solved without legislative intervention and inter-country negotiation is the use requirement. In the U.S., a trademark that is not used can be deemed abandoned and cannot be renewed. Before 1982, the inability to use the trademark due to the embargo was excused, but this exception was withdrawn. Like the U.S., Cuba has a legislative requirement that trademarks must be used in commerce to avoid claims of abandonment. Although this requirement is relaxed for trademarks deemed famous, it is in effect for non-famous trademarks. After several years of non-use, a third party can petition to cancel a trademark. As a result, the inability of U.S. companies to use the trademark to promote its goods or services creates a serious vulnerability.

For South Florida, such a change would be important. Many small local businesses may want to begin registering their trademarks for restaurants, construction services and products. Names that are recognized by Cubans on either side of the Florida Straits, although not famous per se, can have enormous value to local businesses should commercial restrictions be lifted. However, since the mark cannot be used on the island under the current laws, the applicant will be playing a waiting game hoping that his or her investment will become usable before the passage of time renders it vulnerable to claims or abandonment or nonrenewable.

Although changes are not likely to come quickly, the doors of imagination have been opened as to the possibilities for Americans and U.S. businesses in a future Cuba. This is likely to increase interest in the registration of trademarks on the island.

Florida Board Certified in intellectual property law, Jorge Espinosa, a Cuban American and founding member of the Miami law firm of Espinosa | Trueba, P.L., centers his practice on the domestic and international protection of trademarks, patents and copyrights.

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