American Bar Association Section of Intellectual Property Law

American Bar Association Section of Intellectual Property Law 32 nd Annual Intellectual Property Law Conference Practical Considerations for Protecting Trademarks in Cuba Katherine V. Hely, Esq. Caribbean IP Katherine Van Deusen Hely, P.L.L.C. West Palm Beach, Fla. April 4-6, 2017 Arlington, VA

I. Working with Cuban lawyers from the U.S. A. An IP Lawyer s Embargo Essentials The embargo of Cuba by the United States has prevented the flow of goods and services both to and from Cuba to varying degrees since Fidel Castro rose to power in 1959. Several federal statutes govern the American embargo of Cuba. 1 The Office of Foreign Assets Control ( OFAC ), an office of the Department of the Treasury, implements portions of the embargo through the Cuban Assets Control Regulations ( CACR ). 2 Absent a specific authorization, the CACR restricts persons, natural and corporate, who are subject to the jurisdiction of the United States from, inter alia: paying Cuba or a Cuban national; dealing in or transferring (domestically or abroad) property in which Cuba or a Cuban national has an interest; or engaging in a transaction for the purpose or which has the effect of evading or avoiding the other prohibitions. 3 Fortunately, intellectual property is the subject of some exceptions to the general prohibitions above. Of particular importance to IP lawyers are Sections 515.527-.528, which deal with Cuba or Cubans holding American intellectual property and those within the embargo s jurisdiction holding Cuban intellectual property, respectively. While the former is important, we will focus on the latter here. Section 515.528 of the CACR authorizes one to: File and prosecute applications for intellectual property; File and prosecute renewal applications; Receive Cuban intellectual property; File and prosecute oppositions; File and prosecute infringement actions; Defend oppositions and infringement actions; Pay government fees for authorized transactions; and Pay reasonable attorneys fees for authorized transactions. This authorization, termed a general license, does not clearly cover every transaction one might have with respect to Cuban trademarks. Notably, assignment of trademarks is not covered and would typically require an application for a specific license. Also, while the general license allows one to bring infringement actions, it does not clearly authorize the payment of Cuban counsel for services related to a less formal enforcement action like a cease and desist letter. It is not completely clear where recordals meant to maintain trademark registrations fall. It might be assumed that recordals pursuant to a renewal application would almost certainly be included within the general license, as such recordals may be required by the local IP office in order to complete a renewal application. Attorneys or mark holders wishing to do any trademark-related work in Cuba 1 E.g., Antiterrorism and Effective Death Penalty Act of 1996 (AEDPA), 18 U.S.C. 2332d; Cuban Democracy Act of 1992, 22 U.S.C. 6001-10; Cuban Liberty and Democracy Solidarity (Libertad) Act of 1996, 22 U.S.C. 6021-91; Trade Sanctions Reform and Export Enhancement Act of 2000, 22 U.S.C. 7201-11; Trading with the Enemy Act (TWEA), 50 U.S.C. 5, 16. 2 Cuban Assets Control Regulations, 31 C.F.R. 515.101 -.901 (2016). 3 Id. at 515.201. 2

that is not specifically authorized by Section 515.528 of the CACR should consider pursuing a specific license from OFAC. Much more complexity exists with regard to the embargo and its implementing regulations, but this section should provide a solid foundation for trademark attorneys and owners to evaluate the impact. Most importantly, attorneys can feel confident that the CACR authorizes one to work with Cuban counsel for particular trademark matters without seeking a specific license from the OFAC. B. Practicalities of working with Cuban counsel Cuban law requires those domiciled outside Cuba to use Cuban counsel to transact business with the IPO. 4 A number of practical hurdles can cause delay or other difficulty when dealing with Cuban trademark counsel. Most obviously, a language barrier will exist for many American attorneys. Sending documents to Cuba can cause logistical problems and be quite expensive. Fortunately, the registry accepts electronically-transmitted documents in most trademark-related circumstances. Even though electronic copies of most documents are permitted, electronic communications can experience outages that may last days. One should leave plenty of time before any statutory deadlines to transmit documents to Cuba, even electronically. Moreover, one should not overpromise a client when deadlines are tight. The biggest logistical hurdle in dealing with Cuban counsel is payment. While the CACR grant a general license to pay both official and professional fees to Cuban counsel, 5 it can be difficult to get money to Cuba. As a general rule, American financial institutions will not allow one to transmit funds to Cuba, even though it is lawful to do so. Furthermore, local Cuban counsel requires pre-payment of all fees (official and professional) prior to proceeding with a service. This requirement is only waived by the local firms in limited circumstances most often, when a deadline for renewal or otherwise is in jeopardy. The options for Cuban-based trademark counsel are limited. In a country with more than 11 million people 6, there are only a handful of firms handling intellectual property matters. However, there are many skilled practitioners in Cuba. The most common problems that arise are not with the counsel themselves, but with the logistics and communications involved with working with them. At times, the shortage of firms can lead to particular difficulty when a potential conflict of interest arises. This can be especially problematic when multiple blocking registrations are cited against an international registration in a provisional refusal, particularly because the mark holder typically does not have Cuban counsel at that time in the process. 4 Decreto-Ley N 203 de Marcas y otros Signos Distintivos (Decree Law No. 203 of Trademarks and Other Distinctive Signs), Art. 8.3, Dec. 24, 1999 (Cuba) [hereinafter Decree Law 203]. 5 31 C.F.R. 515.528(a)(4)-(5). 6 CENT. INTELLIGENCE AGENCY, THE WORLD FACTBOOK: CUBA (2013), available at https://www.cia.gov/library/ publications/the-world-factbook/geos/cu.html. 3

II. The Cuban Trademark Regime A. Cuba and International Agreements Cuba is a party to several international IP treaties, including: The Berne Convention for the Protection of Literary and Artistic Works; The Lisbon Agreement for the Protection of Appellations of Origin and their International Registration; Both the Madrid Agreement and Protocol; The Nairobi Treaty on the Protection of the Olympic Symbol; The Nice Agreement Concerning the International Classification of Goods and Services for the Purposes of the Registration of Marks; The Paris Convention for the Protection of Industrial Property; The Trademark Law Treaty; The Vienna Agreement Establishing an International Classification of the Figurative Elements of Marks; and The WIPO Convention. 7 Cuba is also a member of the WTO (and therefore a a party to the TRIPS Agreement), the General Inter-American Convention for Trade Mark and Commercial Protection (sometimes also known as the Washington Convention or the Pan-American Convention), and the Inter-American Convention on the Rights of the Author in Literary, Scientific and Artistic Works. 8 i. Madrid Specifics Cuba is one of only a few Caribbean jurisdictions to be a member of the Madrid Union. Cuba has made special declarations under the Madrid Protocol (Article 8(7)(a)) to receive an individual fee. Furthermore, Cuba has made a declaration pursuant to the Common Regulations to receive its individual fee in two parts. The fees for the first part vary depending on if the mark is a collective mark or not and include an enhancement if paid in the grace period. 9 Madrid applications are a relatively popular means of seeking a Cuban mark, even if Cubans are not utilizing the system. In 2015, Cuba was the origin office for three Madrid applications. 10 In contrast Cuba has been a designated office in an average of 2,020 Madrid applications in the last two years (i.e., 2015-16, ostensibly since the change diplomatic relations with the U.S.), up from an average of 1,390 in 2013-14. 11 That represents a 45 percent increase in designations of Cuba since President Obama s announcement that he would seek to change 7 WIPO-ADMINISTERED TREATIES CUBA, http://www.wipo.int/treaties/en/showresults.jsp?country_id= 41C (last visited Feb. 24, 2017). 8 WIPO LEX CUBA, http://www.wipo.int/wipolex/en/profile.jsp?code=cu (last visited Feb. 24, 2017). 9 INDIVIDUAL FEES UNDER THE MADRID PROTOCOL, http://www.wipo.int/madrid/en/madridgazette/remarks/ ind_taxes_old.html (last visited Feb. 24, 2017). 10 WORLD INTELLECTUAL PROPERTY ORGANIZATION, WIPO IP FACTS AND FIGURES 2016 at 42 (2016). 11 WIPO IP STATISTICS DATA CENTER, http://www.ipstats.wipo.int (last visited Feb. 24, 2017). 4

diplomatic relations between the U.S. and Cuba. Cuba has also seen an 88 percent increase in Madrid refusals from 2015 to 2016. 12 1. Relative Advantages and Disadvantages of Using Madrid Applicants should strongly consider the relative advantages and disadvantages of using the Madrid system to apply for a Cuban trademark. While any Madrid application comes with relative advantages and disadvantages, this sections limits its discussion to those concerns specific to Cuba. Some of the advantages of designating Cuba in a Madrid System application include: relatively easy means of paying related fees; no need to retain local counsel, at least initially; and potentially a faster route to registration as compared to national filings. To give some context, for all national Cuban trademark applications instructed by the author since January 2015, none have proceeded to registration. Anecdotal evidence suggests that the trend of increasing time to registration for national applications will continue. Some disadvantages include: the relatively short timeframe provided to reply to a provisional refusal (30 days); the potential of conflicts of interest blocking the retention of local counsel due to the relatively low number of available firms if needed to respond to a provisional refusal; and the need to amend the application with the International Bureau in some cases, even if the amendment is only applicable to Cuba. ii. Classification Specifics Cuba adheres to the Nice Classification system and adopted the 11th edition at the beginning of 2017. Applicants must specify the goods or services for which they seek protection. Applicants cannot use class headings as their designation of goods or services, nor can they designate all goods or all services in a class. B. Important aspects of the Cuban National Trademark Regime i. First-to-File Most importantly, Cuba is a first-to-file jurisdiction. 13 This feature of their system has led to documented cases of squatters filing well-known American brands and then holding the applications for ransom. 14 Each trademark holder should be engaging in an analysis of the relative costs of registering their marks defensively against the costs of opposing a squatter, or worse, attempting to recover their rights when a squatter s mark proceeds to registration. ii. Oppositions 12 In 2014, 2015, and 2016 Cuba refused 240, 241, and 453 Madrid applications, respectively. Id. 13 Decree Law 203, supra note 4, Art. 12. 14 See Katherine Van Deusen Hely, Timing is Everything, ITMA REV., July-Aug. 2016, at 30, 30-31. 5

Cuban law provides a 60-day opposition period from the time of publication. 15 Various grounds for opposition exist on which a mark holder may rely, including that a mark has notoriety in Cuba or with Cuban nationals. 16 As may be expected, the ongoing embargo may make demonstrating that notoriety difficult, especially for American companies. The time taken to resolve an opposition is measured in years in Cuba. This provides squatters with a weapon, even if they are unlikely to ultimately proceed to registering a mark. For example, since 2015, two companies organized in the U.S. (Florida and Delaware specifically) applied for a number of trademarks with respect to arguably well-known brands of hotels, airlines, banks, and law firms, among others. Many of the brand owners filed oppositions to these presumably bad-faith filings. However, due to a growing backlog, the registry has not yet made decisions with respect to the oppositions. Squatters now have leverage over some brand owners who may be otherwise ready to enter the Cuban market. Thereby squatters can extract a nuisance ransom, even if the brand owner would have ultimately won the opposition. The Pan-American Convention 17 and Lanham Act 18 may provide, under certain circumstances, a means to attack a squatter. However, these are novel ideas and cannot serve as a substitute for prior registration of the mark in Cuba. iii. Use Another important aspect to consider is the ability to use one s mark. No proof of use is required, but a mark becomes susceptible to cancellation for non-use after three years from the date of actual registration of the mark. 19 While this is not a remarkable aspect of the law, the interplay of the requirement with the embargo-related disabilities to use the mark becomes a special area of concern for the holders of Cuban marks. Mark holders should consult with counsel knowledgeable about the embargo s restrictions and seek a means to use the mark in Cuba, either through a general license or after obtaining a specific license, to avoid potential cancellations. Note that Cuban law does not recognize de minimus use as valid. 20 However, use by a licensee inures to the benefit of a mark owner. 21 Moreover, one may argue a legal justification for non-use in an attempt to avoid cancellation. 22 Anecdotal evidence suggests that the registry is not actively evaluating use. Nonetheless, one risks a cancellation in a contentious circumstance. One silver lining of the general slow in processing by the local registry is that mark holders will have a de facto extended timeline of protection against non-use. 15 Decree Law 203, Art. 23. 16 Id.; see also id. at Art. 16-17 (listing the absolute and relative grounds for barring registration of a mark). 17 Fellow presented Prof. Farley has written on the potential use of the Pan-American Convention. See Christine Haight Farley, The Forgotten Pan-American Trademark Convention of 1929: A Bold Vision of Extraterritorial Meets Current Realities, in TRADEMARK PROTECTION AND TERRITORIALITY: CHALLENGES IN THE GLOBAL ECONOMY 57 (Irene Calboli & Edward Lee eds., 2014) 18 E.g., Steele v. Bulova Watch Co., 344 U.S. 280 (1952). 19 Decree Law 203, Art. 64. 20 Id. at Art. 53. 21 Id. at Art. 65. 22 Id. at Art. 66. 6

iv. Rights for Well-Known Marks Well-known marks may enjoy some protection without local registration. Notorious, but unregistered marks, can serve as the basis for an opposition or a nullity action. 23 However, one must consider that the mark must generally be well-known in Cuba 24 and that practical limitations of communications and the embargo often result in a difficulty in proving notoriety in the island. The Pan-American Convention may provide the ability to argue that notoriety in another party jurisdiction suffices to provide some protection in Cuba. 25 However, the Convention has not been well-tested in practice. v. Searching Searching in Cuba cannot be done via the IPO s website. However, the IPO does provide electronic copies of the Gazette online, which is generally published on a monthly basis. Searching is performed by local counsel, who must submit requests to the registry, along with a fee, 26 for the search and are then presented with the results by the registry staff. vi. Other Notable Aspects Other distinctive or notable characteristics of the Cuban trademark system include; Pre-publication examination is limited to formal elements of the application; The opposition period runs for 60 days after publication; Marks are ultimately examined substantively on absolute and relative grounds; No proof of use required for filing or renewal; Use of disclaimer practice; A ten-year term for marks; A distinction between nullity and cancellation actions, the former resulting in the mark being void ab initio; Marks containing non-standard Latin letters (e.g., &, +, @) will be classified as design marks by the registry; Marks are never incontestable; and Marking of products is not required. Other aspects of the Cuban trademark law include: Paris Convention priority claims are available; Protection of collective marks; Protection of service marks; 23 Id. at Art. 17; id. at Art. 57. 24 Id. at Art. 57 (speaking of a trademark notoriously known in the Republic of Cuba when a risk of confusion exists). 25 See generally General Inter-American Convention for Trade Mark and Commercial Protection, arts. 7-8, Feb. 20, 1929, 49 Stat. 2907. 26 Decree Law 203 at art. 117. 7

Protection of some non-traditional marks (three-dimensional marks and holograms; colors alone are not allowed and, while authorized by law, sounds and scents are not practically registerable); General trade-dress protection is provided for, but one can attempt to protect the various elements of trade dress, if protectable as marks; There is no provision to record a mark with Cuban customs; and Geographical indications and appellations of origin are protected by separate, specific law. 8