The latest decision in the ongoing battle over the ownership of the COHIBA trademark in the United States was rendered by the Court of Appeals for the Second Circuit in September 2008, in Empresa Cubana del Tabaco v. Culbro Corp., et al., 541 F.3d 476 (2nd Cir. 2008) (per curiam). In its decision, the court of appeals affirmed the district court’s denial of a motion filed by the defendant and, essentially, laid the groundwork for the case to proceed back to the Trademark Trial and Appeal Board (“TTAB”), where the controversy between the parties began in 1997.
By way of background, in 1997 plaintiff Empresa Cubana del Tabaco, which does business under the name “Cubatabaco”, initiated a trademark cancellation action against defendants, collectively known as “General Cigar”. In that proceeding, Cubatabaco sought cancellation of General Cigar’s United States trademark registration for the mark COHIBA for cigars, on the grounds that, inter alia, Cubatabaco was the rightful owner of the trademark. Thereafter, Cubatabaco filed the instant lawsuit against General Cigar in federal district court in New York, and the TTAB proceeding was suspended pending the outcome of the litigation.2 Over the intervening years, there have been several district court and appeals court decisions the results of which have established, inter alia, that Cubatabaco has no rights in the COHIBA trademark in the United States and that General Cigar’s use and registration of the name in the U.S. were not improper. See generally, Empresa Cubana del Tabaco v. Culbro Corp., et al., 399 F.3d 462 (2nd Cir. 2005). The present decision grows out of an attempt by General Cigar to use the decisions of the district court and court of appeals as a basis for summarily disposing of the stillpending TTAB case.
Subsequent to the dismissal of Cubatobaco’s claims against General Cigar, General Cigar made a motion under 15 U.S.C. § 1119 (Section 37 of the Trademark Act), seeking an order from the district court directing the Commissioner of Patents and Trademarks to dismiss both the pending cancellation proceeding and Cubatabaco’s pending trademark application. Section 1119 provides that in a court action “involving a registered mark, the court may determine the right to registration, order the cancellation of registrations, . . . and otherwise rectify the register with respect to the registrations of any party to the action.” General Cigar argued that in view of the district court’s decision that Cubatabaco was not entitled to the COHIBA name in the U.S., the court should simply order the Commissioner to dismiss the pending petition to cancel and the Cubatabaco application.
The district court viewed the General Cigar 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 1119 claim in its pleadings in the underlying case (by way of a counterclaim for cancellation, for example), the motion to amend 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 did not raise the Section 1119 claim in the pleading stage of the case, it was within the discretion of the district court to have denied the motion. The appeals court premised 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 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 appeals court then went on to examine the General Cigar motion in the context of the district court’s ancillary jurisdiction. Essentially, General Cigar’s argument here was that the courts have the inherent power to take the steps necessary to enforce their judgments, and thus that the district court should give effect to the judgment by ordering the Commissioner to do what he would eventually (in its view) have to do anyway, namely dismiss the cancellation proceeding. However, the court of appeals, 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 1119 relief was not before the district court during the underlying action, or previously on appeal. As such, the court concluded that that requested Section 1119 relief was a different kind of relief than the relief that had been contemplated by the district court’s judgment. Moreover, since what General Cigar was actually requesting was premised more on an estoppel theory (i.e., Cubatabaco is now estopped from challenging the General Cigar 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 appeals court affirmed the district court decision refusing to issue an order directing the Commissioner to dismiss the cancellation proceeding and refuse registration, paving the way for the TTAB to finally bring some closure to this long-term dispute.