General Cigar restored as rightful owner of COHIBA mark

United States of America
In Empresa Cubana Del Tabaco v General Cigar Co Inc (Case 08-5878, July 14 2010), the US Court of Appeals for the Second Circuit has reversed a lower court holding that Empresa Cubana Del Tabaco (Cubatabaco) was not entitled to relief from a 2004 judgment dismissing Cubatabaco’s claim of unfair competition under New York law in connection with General Cigar Co Inc’s use of the famous COHIBA mark for cigars. The Second Circuit also reversed a previous judgment entered in favour of Cubatabaco that had permanently enjoined General Cigar’s use of the mark. 

Cubatabaco is a Cuban state corporation that has claimed, during almost 13 years of litigation, that it should own the US rights to the COHIBA mark. In 2006 it seemed that General Cigar owned use of the mark COHIBA in the United States after the US Supreme Court refused to hear Cubatabaco’s appeal. 

Subsequently, a New York court of appeals ruled that, while New York’s common law of unfair competition did not recognise the famous marks doctrine, a foreign plaintiff may prevail on a claim of unfair competition based on misappropriation, by showing that:
  • a defendant deliberately copied the plaintiff’s mark for use in New York; and
  • consumers of the defendant’s product primarily associate the mark with the plaintiff’s product. 
In the New York state case, the court did not mention a separate and distinct requirement of bad faith. After the case was reopened in the Southern District of New York, Cubatabaco relied on the intervening state court decision in framing its Rule 60(b) motion for relief from a judgment dismissing Cubatabaco’s unfair competition claims. Based on the New York state case, the district court again enjoined General Cigar from using the mark. General Cigar appealed. 

The Second Circuit explained that Rule 60(b)(6) provides for a catch-all provision that is a grand reservoir of equitable power to do justice in a particular case, and is properly invoked when extraordinary circumstances justify relief or when the judgment may create an extreme and undue hardship. However, the court cautioned that Rule 60(b) motions are disfavoured. 

The Second Circuit further explained that a Rule 60(b)(6) motion did not warrant reopening the 2004 judgment as a consequence of the New York state court decision because, as a general matter, a mere change in decisional law does not constitute an extraordinary circumstance for the purposes of the federal rule. The Second Circuit also found that the state court decision did not represent an intervening change in New York’s law of unfair competition, nor did it clarify elements of an unfair competition claim or correct misinterpretations of New York law by federal or lower state courts. 

Shilpa V Patel, McDermott Will & Emery LLP, New York

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