Section 2(e)(3) opponent must prove that substantial portion of consumers would be misled

United States of America

In Corporacion Habanos SA v Guantanamera Cigars Co (Opposition 91152248, February 16 2012), the Trademark Trial and Appeal Board (TTAB) has applied recent Federal Circuit precedent establishing a more stringent test for marks accused of being primarily geographically deceptively misdescriptive under Section 2(e)(3) of the Trademark Act. Specifically, a party opposing registration of a mark under this section must prove that a misleading association between goods or services and a geographic place would be a material factor to a consumer’s purchasing decision, in that a substantial portion of the intended audience would be misled. Previous decisions of the TTAB applied an unclear standard for materiality, or stated merely that some portion of relevant consumers must be misled. 

The applicant in this case was Guantanamera Cigars Co (GCC), a small Florida-based company that manufactures Cigars in Honduras. In 2001 GCC filed an application with the US Patent and Trademark Office to register GUANTANAMERA for use with cigars, which was opposed shortly after publication by Corporacion Habanos SA, a corporation jointly owned by a Spanish entity and the Cuban government (Corporacion Habanos SA v Guantanamera Cigars Co (6 USPQ2d 1473 (February 29 2008))). 

Habanos’ opposition was based on Section 2(e)(3) of the Trademark Act, which forbids registration of any mark that is primarily geographically deceptively misdescriptive. GUANTANAMERA, Habanos argued, translates to the female adjective form of 'Guantanamo', meaning having to do with, or belonging to, the city or province of Guantanamo, Cuba - or, alternatively, refers to a woman from the city or province of Guantanamo, Cuba. This mark, it continued, would thus mislead consumers into believing that GCC’s cigars were manufactured in, or associated with, Cuba, when they were not. 

The TTAB examined the GUANTANAMERA mark using the long-standing three-factor test for cases under Section 2(e)(3), which asks:

  • whether the mark's primary significance is a generally known geographic location;
  • whether the relevant public would be likely to believe that the goods originate in the place named in the mark (ie, that a goods/place association exists) when in fact the goods do not come from that place; and
  • whether the misrepresentation is a material factor in the consumer's decision. 

In applying this test, it was easily noted that GUANTANAMERA’s primary significance is as a reference to Guantanamo or a female person from Guantanamo, and that the location is well known to American consumers.  The bulk of the opinion concerned whether a goods/place association existed, and indeed, due largely to Cuba’s renowned reputation for tobacco and cigars, as well as GCC’s own packaging (which at one point falsely designated Guantanamera as the source of the cigars), such an association did exist. As to the third factor, however, the TTAB concluded in a single four-sentence paragraph that GCC’s misrepresentation would be material to consumers. This conclusion was again based on Cuba’s reputation for high-quality cigars, as well as GCC’s subjective attempt to associate themselves with Cuba through false claims on their product packaging.  Having found that Habanos satisfied all three elements of the Section 2(e)(3) claim, the TTAB refused registration of the GUANTANAMERA mark. 

GCC appealed the TTAB’s ruling to the US District Court for the District of Columbia (Guantanamera Cigar Co v Corporacion Habanos SA (729 F Supp 2d 246 (DDC 2010))). However, between the TTAB’s 2008 decision and the district court's opinion in 2010, the Federal Circuit issued a new ruling applicable to Section 2(e)(3) cases which complicated the analysis. That case, In re Spirits International NV (563 F3d 1347 (Fed Cir 2009)), vacated a TTAB refusal to register MOSKOVSKAYA for vodka under Section 2(e)(3) where the mark literally translated to “of or from Moscow”, even though the goods themselves had no connection to the city. While the TTAB had determined that at least some portion of consumers in the United States could translate the mark and thereby be misled, the Federal Circuit countered that something more was required to establish that the geographic misdescription was material to consumers, especially where only 0.25% of the American populace spoke Russian, and there was no evidence that Russian speakers made up a greater than expected percentage of the vodka consuming public. Instead, the court remanded the case to determine, as the proper test of materiality, whether a “substantial portion of the intended audience” would be misled.

In light of the Federal Circuit’s precedent in Spirits, the court in the present case similarly held that the TTAB had incorrectly applied the materiality portion of the three-part test. There too, the court remanded the case to the TTAB for an objective determination of whether the geographic misdescription would influence a substantial portion of relevant consumers’ purchasing decisions.

On remand, the TTAB reopened discovery and permitted additional briefing for the limited purpose of deciding the materiality question. It then addressed this issue through four sub-questions, namely:

  • whether persons who speak Spanish are a substantial portion of the intended audience;
  • whether the opponent must rely only on direct evidence on the question of materiality;
  • if not, whether the opponent may rely on indirect evidence in this case; and 
  • whether the misrepresentation in the mark is a material factor in a purchaser’s decision to buy the goods. 

The TTAB then decided each sub-question in favour of the opponent, Habanos. First, it was found that Spanish speakers represented a substantial portion of the intended audience, based on census data showing that more than 12% of Americans spoke Spanish in the home, and many millions more received Spanish language instruction in school. Second, the TTAB ruled that materiality may be proved both through direct evidence, such as surveys, as well as indirect evidence such as gazetteer entries, website evidence and expert testimony, based largely on the established practices of the TTAB in prior proceedings. Third, the TTAB rejected an argument by GCC that it was inappropriate to draw an inference of materiality in the present case, where there was no evidence that Guantanamo, specifically, is famous for cigars. Such evidence was not required, as the district court had already determined that Cuba is well-known for cigars, and cigar tobacco is produced in Guantanamo, Cuba. 

Reaching the ultimate issue under consideration, the TTAB again decided that GCC’s misrepresentation would be a material factor in a consumer's decision. This time, the ruling was supported by extensive indirect evidence. The opinion cited a dozen third-party advertisements suggesting that Cuban cigars are the standard against which other cigar producers compare their products, several magazine articles and other publications describing the value that consumers place on associations with Cuba and, perhaps most significantly, the admissions by GCC’s own expert explaining the unparalleled brand equity of Cuban cigars. Supported by the now voluminous record, the TTAB again sustained Habanos’ opposition on the ground of Section 2(e)(3) of the Trademark Act. 

The Federal Circuit’s Spirits decision likely provided much-needed clarity to a materiality test inherent in Section 2(e)(3) that had long been only loosely defined by the TTAB. The present case suggests that this clarity comes at the cost of an increased burden on those opposing registration of geographically misdescriptive marks, especially where the geographic nature of a mark is obscured by a foreign language. 

Howard J Shire and Eric Carnevale, Kenyon & Kenyon LLP, New York

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