Denial of Section 37 relief affirmed in dispute over COHIBA mark

General Cigar argued that in view of the district court’s decision that Cubatabaco was not entitled to the COHIBA mark in the United States, the court should simply order the commissioner to dismiss the pending petition for cancellation and Cubatabaco's application.

 

The district court viewed General Cigar's motion as a motion to amend or alter the judgment pursuant to Rule 59(e) of the Federal Rules of Civil Procedure. In this regard, the court determined that because General Cigar had not made a Section 37 claim in its pleadings in the underlying case (by way of a counterclaim for cancellation, for example), the motion to amend to the judgment was untimely. 

 

On appeal, the Second Circuit reviewed the district court decision from two perspectives. First, it examined the motion made by General Cigar in the context of a motion to amend the judgment. On that front, the court agreed with the district court that because General Cigar had not raised the Section 37 claim in the pleading stage of the case, it was within the discretion of the district court to have denied the motion. The Second Circuit based its decision on the language of the statute, which is clearly permissive in nature in that it states that the court "may" grant relief (and not that the court "shall" grant relief). The court also pointed out that General Cigar was free to argue to the TTAB that the decision in the court proceedings should act as an estoppel to Cubatabaco’s arguments in the US Patent and Trademark Office, but the court would not go so far as to order the commissioner to take a particular action given the facts of this case.

 

The Second Circuit then went on to examine General Cigar's motion in the context of the district court’s ancillary jurisdiction. Essentially, General Cigar’s argument was that the courts have the inherent power to take the steps necessary to enforce their judgments. Therefore, the district court should give effect to the judgment by ordering the commissioner to do what he would eventually have to do anyway - namely, to dismiss the cancellation proceedings. However, the Second Circuit, citing the Supreme Court’s caution against the exercise of such jurisdiction where the relief sought is of a different kind or is based on a different principle than that of a prior decree, noted that the claim for Section 37 relief was not before the district court during the underlying action, or previously on appeal. As such, the court concluded that the requested Section 37 relief was a different kind of relief than that contemplated by the district court’s judgment. 

 

Moreover, since what General Cigar actually requested was premised more on an estoppel theory (ie, Cubatabaco was estopped from challenging General Cigar's registration) than on the theory of the underlying case, General Cigar’s requested relief was based on a different legal principle than had been contemplated below. Accordingly, the Second Circuit affirmed the district court decision refusing to issue an order directing the commissioner to dismiss the cancellation proceedings and refuse registration, paving the way for the TTAB to finally bring some closure to this long-term dispute.