New Potential Trademark Squatters in Cuba

A review of the Official Bulletin of Cuba’s IP office (Oficina Cubana de la Propiedad Industrial) reveals continued efforts by trademark squatters to lay claim to, and presumably hold hostage, well-established marks of world-wide brands. While some mark holders must react quickly to these squatters to prevent permanent damage to their marks, others can take proactive steps to avoid the business and legal costs associated with trademark squatters.

Between them, Crosscurrents Holdings, LLC, a Florida-based company, and International IP Holdings, LLC, a Delaware-based company, applied to register more than twenty marks in the latter part of 2015. These applications cover marks for hotels, airlines, banks, law firms, fast food restaurants, television and communication providers, international couriers, and brewers.  Doubtlessly, the two applicants do not intend to enter into these expensive and regulated industries, but rather seek to extract ransom from the rightful owners of the marks outside of Cuba.

Timing is Everything

Although it is not fully clear when relations between the U.S. and Cuba will completely thaw, American and foreign companies and brand owners should consider registering trademarks long before they know they will do business in Cuba. Cuba is a first-to-file jurisdiction. Thus, mark holders may find themselves beaten to the punch if a squatter decides to target the brand. All American businesses have a general license to protect their IP rights in Cuba (and pay the necessary fees to do so) under the Cuban Assets Control Regulations (CACR). Moreover, businesses have a three-year period from the completion of registration to institute use of their marks. Thus, there is time to allow continued progress in the ongoing ease of restrictions on doing business in Cuba.

Some mark holders may choose to delay protecting their marks until gaining authorization to do business in Cuba. This could be a costly mistake. By the time a company clears the bureaucratic hurdles, it almost certainly left a paper trail of its intention to use the mark in Cuba. As businesses move through the approval process and closer to doing business in Cuba, they run the risk of attracting more attention from a squatter and signaling the increased value of their marks in Cuba. For this reason, brand owners should strongly consider frontloading the protection of their IP rights in Cuba. In all likelihood it will be one of the least expensive pieces of the Cuba puzzle.

An Ounce of Protection…

Registering one mark in one class in Cuba will cost a mark holder just under $400 in official fees. Compared to the cost of filing an opposition (assuming one has the notice to do so and can wait for the process to run its course, which can take a year or longer) proactively protecting marks starts to look like a small cost. If a squatter successfully registers the mark, a brand owner is left with a number of untenable options, among them: avoiding or abandoning the Cuban market; risking the confiscation of its goods; defending an infringement action; buying the trademark rights from the squatter; or bringing a costly cancelation action in Cuban courts, which may require first applying for a specific license from OFAC (as the CACR only authorizes prosecution, opposition, and infringement actions by general license, a general right to pursue cancelation remains an open question). Moreover, the business must trust its fate to the Cuban registry and courts, which may not be favorable to foreign businesses, especially if the adversary is a Cuban or the subject goods fall within hot-button classes (e.g., tobacco, alcohol).

As an alternative, or in addition, to litigating a dispute with a squatter in Cuban courts, an American brand owner may be able to pursue an action in an American court against an American squatter, as discussed in Steele v. Bulova Watch Co., 334 U.S. 280 (1952), and its progeny. While that route might provide enhanced pressure to settle the matter (including an assignment) or a route to damages under the Lanham Act, it also presents a costly means of dealing with a squatter after it has registered the brand owner’s trademark. Moreover, it appears this remedy is only available when both parties are Americans.

For all of these reasons, the old adage that an ounce of prevention is worth a pound of cure may understate the value of a proactive registration. Undoubtedly one cannot fully predict the course of the continued opening of Cuba to Americans and American businesses, as it depends on the whims of politics and foreign relations. However, for a relatively low cost, brand owners can ensure their rights will be available for years to come without worrying about squatters.

For any questions, please contact us at Katherine@Caribbean-IP.com.