United States District Court, S.D. New York
March 26, 2004.
EMPRESA CUBANA DEL TABACO, d.b.a. CUBATABACO, Plaintiff,
CULBRO CORPORATION and GENERAL CIGAR CO., INC., Defendants
The opinion of the court was delivered by: ROBERT SWEET, Senior District Judge Page 2
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The plaintiff Empresa Cubana del Tabaco. d/b/a Cubatabaco.
("Cubatabaco") seeks to recover for alleged willful acts of trademark
infringement, trade dress infringement, unfair competition,
misappropriation and trademark dilution by defendants Culbro Corporation
(now known as General Cigar Holdings, Inc. and General Cigar Co., Inc.
(collectively, "General Cigar") with respect to Cubatabaco's trademark
COHIBA for premium Cuban cigars and for cancellation of General Cigar's
trademark registrations for that mark.
After the completion of the pretrial proceedings, a non-jury trial was
held on various dates between May 27, 2003 and June 23, 2003. Upon all
the prior proceedings and the following findings of fact and conclusions,
judgment will be entered in favor of Cubatabaco. cancelling General
Cigar's trademark registrations and enjoining General Cigar from using
the COHIBA mark. Several of Cubatabaco's other claims, however, are
This action considers trademark issues in the unique context of the
trade embargo against Cuba. Cuba has developed several strong cigar
trademarks. While nearly all of them were developed before the Cuban
revolution, i.e., Partagas, Punch and Ramon Allones, the COHIBA trademark
was registered in 1969, and was
first sold outside of Cuba in 1982. Cubatabaco. alleges that General
Cigar has unlawfully infringed on the COHIBA mark in the United States
despite the fact that Cubatabaco. not only cannot sell Cuban COHIBA
cigars in this country because of the embargo*fn1, but did not register
the trademark when General Cigar stopped selling its COHIBA cigars for a
number of years, nor did it object to General Cigar's application to
register the mark in December 1992.
Several different issues were explored at trial and in the post-trial
submissions by both parties. However, as explained in greater detail
below, the following issues are the most important in resolving the
liability issues in this litigation:
Was COHIBA a well-known or famous mark in the United
States on November 20, 1992, the date of General
Cigar's first new use of the COHIBA trademark?
Is there a likelihood of confusion between the
Cubatabaco. COHIBA and the General Cigar COHIBA?
Did Cubatabaco. abandon the COHIBA mark in the
United States from 1992 to 1997?
Did General Cigar act in bad faith in exploiting the
Cubatabaco. is a company organized under the laws of Cuba with its
principal place of business in Havana, Cuba. Directly, and through its
licensee, Habanos, S.A., Cubatabaco. exports tobacco. products from Cuba
throughout the world, excluding the United States because of the current
trade embargo. It was established by the Cuban government as an
independent entity with its own assets and administration and is subject
to the jurisdiction of a Cuban ministry.
Culbro has been merged into and is survived by General Cigar Holdings,
Inc. General Cigar Holdings is a Delaware corporation with its principal
place of business in the county of New York and functions as a holding
company for General Cigar Co. Inc.
General Cigar Co., Inc. is a Delaware corporation with its principal
place of business in Bloomfield, Connecticut. General Cigar Co., Inc. is
in the business of manufacturing, marketing, advertising and distributing
General Cigar and its predecessors in interest have been major U.S.
manufacturers and distributors of cigars for more than a century.
Cubatabaco. filed its complaint on November 12, 1997, alleging that
Cubatabaco. possessed a COHIBA mark for its cigars that was "well-known"
in the United States at the relevant time, and that General Cigar's
efforts to exploit and trade upon Cubatabaco's COHIBA mark in order to
generate profits on the sale of its own cigars entitled Cubatabaco. to
relief under Articles 6bis and 10bis of the Paris Convention; Articles 7,
8, 20 and 21 of the Inter-American Convention; sections 38 and 43(a) of
the Lanham Act, 15 U.S.C. § 1120, 1125(c)(1) and 1125(a); and New
York state law.
On December 11, 1997, the parties in settlement discussions entered
into a written agreement that, inter alia, (1) the actions of both
parties in this court and in the U.S. Patent and Trademark Office ("PTO")
are "stopped"; (2) "the time spent during the negotiation will not be used
by any of the parties to the detriment of the other, in case there is no
[settlement] agreement;" and (3) "use of General Cigar's COHIBA trademark
as from the signing of this Contract will not be used in detriment of
Cubatabaco. if agreement is not reached." The parties reported this
agreement to the Court on December 16, 1997, and, at their request, all
proceedings were stayed, including discovery, until litigation was renewed
in February 2000.
By order dated December 5, 2000, Counts V (Article 22 of TRIPS), VI
(Article 10 of the Paris Convention), VIII (false representation of
origin in violation of Section 43(a) of the Lanham Act) and IX (deceptive
advertising in violation of Section 43(a) of the Lanham Act) were
dismissed with prejudice in light of the decision in Havana Club Holding
S.A. v. Galleon S.A., 203 F.3d 116, 124 (2d Cir. 2000). Cubatabaco's
motion to strike the jury demand of General Cigar was granted on December
15, 2000. See Empresa Cubana de Tabaco. v. Culbro Corp., 123 F. Supp.2d 203
(S.D.N.Y. 2000) ("Empresa I").
On June 26, 2002, this Court granted summary judgment for General Cigar
dismissing Counts I (Article 6bis of the Paris Convention) and III
(Article 7 and 8 of the Inter-American Convention), granted summary
judgment for Cubatabaco. on its claim that General Cigar had abandoned
the COHIBA mark from 1987 until 1992, and dismissed General Cigar's
equitable defenses. See Empresa Cubana de Tabaco. v. Culbro Corp.,
213 F. Supp.2d 247 (S.D.N.Y. 2002) ("Empresa II"). Accordingly,
Cubatabaco's claims are now limited to:
(1) Count II (Article 10bis of the Paris Convention);
(2) Count IV (Articles 20 and 21 of the Inter-American
Convention); (3) Count VII (Trademark Infringement
under Section 43(a) of the Lanham Act); (4) Count X
(state and common law unfair competition); (5) Count XI
(cancellation of the 1995 registration); (6) Count XII
(dilution under state and federal law); and (7) [Count]
XIII (common law misappropriation).
Id. at 286-87. Motions by both plaintiff and defendants to reconsider
Empresa II were denied on October 8, 2002. See Empresa Cubana de Tabaco.
v. Culbro Corp., 2002 WL 31251005 (S.D.N.Y. Oct. 8, 2002) ("Empresa
In an opinion dated March 12, 2003, the Court struck General Cigar's
inadequate defense of abandonment and permitted it to amend its answer to
assert an adequate abandonment defense, and excluded the testimony of two
late-disclosed witnesses. See Empresa Cubana de Tabaco. v. Culbro
Corp., 213 F.R.D. 151 (S.D.N.Y. 2003) ("Empresa IV").
In accordance with these rulings, the trial took place on various dates
between May 27, 2003 and June 23, 2003. Post-trial argument was heard on
October 9, 2003.
FINDINGS OF FACT
The following constitute the findings of fact of this Court and are
based upon evidence adduced from the trial, testifying witnesses, over
1,500 exhibits, and the proposed findings of fact from Cubatabaco. and
History of the Cohiba Mark Prior to 1992
Cubatabaco's Use of the COHIBA Trademark
In 1969, Cubatabaco. filed an application to register the "COHIBA" mark
in Cuba. By 1970, cigars branded with Cubatabaco's COHIBA trademark were
being produced at the El Laguito factory in Havana. The cigar box and
band bore a distinctive design developed for the COHIBA cigar as well as
the COHIBA trademark. The box is plain and unpainted the box top
contains only the COHIBA name and an Indian Head logo, colored solid
black, in the lower right corner. The band consists of a solid yellow
field on the bottom section, and rows of white squares on a black field
on the top. The name COHIBA, in all capitals in black on a white
background in a bold sans serif font, straddles the top and bottom
sections. The registration issued on May 31, 1972.
Throughout the 1970's, Cuban COHIBA cigars were commercially available
and sold in Cuba at Havana's main hotels, upscale restaurants and two
retail outlets. From 1970 to 1975, Cubatabaco. claims that annual sales
at the two retail outlets in Havana averaged approximately 100,000 cigars
and increased to approximately 180,000 cigars per year by 1975. In
addition, since at least 1970, COHIBA cigars had been sold to the Cuban
Council of State, which includes the office of the Cuban President and to
another Cuban state enterprise which in turn sold the cigars to
Cuban Ministries and other government institutions.*fn2 Cubatabaco
claims that the total volume of sales grew from approximately 350,000 to
375,000 per year from 1970 to 1975 to approximately 550,000 to 600,000
per year from 1975 to 1980. There are no records of these sales, however,
as Cubatabaco. has a policy of destroying its sales and production
records after five years.
By January 1978, Cubatabaco. had made application to register COHIBA in
17 countries, including most of the Western European countries.*fn3 The
applied-for registrations issued in due course. Cubatabaco. did not,
however, sell COHIBA cigars outside of Cuba until 1982.
In July 1981, Cubatabaco. announced that it would soon begin commercial
exports of COHIBA in Cubatabaco. International (July-December 1981),
published in English for the foreign cigar trade. The COHIBA cigar was on
the issue's front cover. In this publication, Cubatabaco. expressly
positioned COHIBA as the pinnacle of Cuban cigars.
On June 30, 1982, Cubatabaco. launched COHIBA's international
commercial sales at an event in Madrid during the World Cup.
In 1983, Cubatabaco. sought to register the COHIBA mark in the United
States for the first time. In August 1984, its United States attorneys,
Lackenbach, Siegal, Marzullo, Pesa & Aronson ("Lackenbach"), informed
Cubatabaco. that General Cigar had already obtained the registration on
February 17, 1981.
On February 22, 1985, Cubatabaco. filed an application with the PTO to
register in the United States the BEHIQUE mark with the same trade dress
it used on COHIBA cigars.
In 1987, Cubatabaco. sought and obtained an opinion from Lackenbach on
whether to begin legal proceedings over the COHIBA registration.
Thereafter, Cubatabaco. learned that General Cigar had filed a
Declaration of Use and Incontestability for its COHIBA registration under
Sections 8 and 15 of the Lanham Act in 1986 in connection with its 1981
registration for COHIBA. Cubatabaco. chose not to take any action against
General Cigar's Use of the COHIBA Trademark
General Cigar first learned of the name "COHIBA" in the late 1970's.
General Cigar executives had read a Forbes article
published on November 15, 1977 discussing the impact of Cuban cigars on
the U.S. industry and noting that Cubatabaco. was developing a COHIBA
cigar to market abroad. In addition, a December 1977 internal memorandum
refers to COHIBA as "sold in Cuba/brand in Cuba" and "Castro's brand
In February 1978, General Cigar employee Oscar Boruchin ("Boruchin")
discussed the COHIBA brand with Edgar Cullman Jr. ("Cullman"), chairman
of Culbro. Boruchin purportedly had learned of COHIBA from a friend who
visited Cuba on behalf of the State Department during the Carter
Administration and was given COHIBA cigars in Cuba by "the highest
echelons of government."
On March 13, 1978, General Cigar filed an application to register
"Cohiba," with a claimed first use date of on or before February 13,
1978. Before or after pursuing this application, General Cigar did not
request counsel to conduct a trademark search in Cuba or internationally,
which would have disclosed the Cuban registrations. There is evidence to
suggest that such a search would not have been industry practice in these
It is a disputed issue as to whether the COHIBA name was well-known at
this time. Boruchin testified that he told Cullman that "[n]obody knew
the brand," and it was "not on the market," "didn't mean anything to
anybody," and was "just given to visitors, diplomats." Cubatabaco.
states, however, COHIBA cigars were well-known in the United States cigar
industry and among the public because of the Forbes magazine article and
a February 6, 1978 article in New York magazine featuring Cubatabaco. and
COHIBA. Further, numerous United States journalists, business
executives, and others knew of the brand from seeing it on cigars for
sale in retail outlets and hotels in Havana, from receiving COHIBA cigars
as gifts in Cuba and at receptions in the United States, and by word of
On July 25, 1978, the U.S. Patent and Trademark Office ("PTO") asked
General Cigar "whether the term COHIBA has any meaning or significance in
the relevant trade or industry." General Cigar answered in the negative.
On March 20, 1979, the PTO, in another Office Action, noted, "Cohiba is
a geographical tobacco. growing region of Cuba," and stated that the
COHIBA application would be refused as either geographically descriptive
or misdescriptive, depending on whether
the goods were from Cohiba. In a September 14, 1979 response, General
Cigar asserted that COHIBA was "wholly arbitrary" and "fanciful and
arbitrary," which Cubatabaco. claims General Cigar clearly knew to be
On November 4, 1980, General Cigar's COHIBA application was published
in the Trademark Office Official Gazette for opposition purposes. Neither
Cubatabaco. nor any other entity opposed General Cigar's COHIBA
application. General Cigar obtained United States registration for the
COHIBA mark, Registration 1,147,309, on February 17, 1981.*fn6
General Cigar sold a cigar under the COHIBA name from 1978 until late
1987. From 1978 to 1982, General Cigar shipped 1000 or fewer
COHIBA-branded cigars per year. The cigars were White Owl "stock"
machine-made cigars that were shipped along with other White Owl cigars
(or other "seconds") labeled with as many as 32 other different brands as
part of a "trademark maintenance program."
Beginning in November 1982, General Cigar placed the COHIBA brand on
its pre-existing Canario D'Oro premium cigar. The
total sales from 1982 to 1985 were approximately 600,000 cigars,
while fewer than 10,000 cigars were sold in 1986-87. The cigars are
described by General Cigar as an "upscale bundle" of cigars, "positioned
between premium and machine-made cigars in terms of price and quality."
As a result of the declining sales, the lack of advertising by General
Cigar, and the nearly complete absence of media mentions of the early
General Cigar COHIBA, "[b]y November 1992, whatever goodwill, if any,
generated by the sales in the early-mid 1980's would have long been
entirely dissipated." Alan Siegel ("Siegel") Report, PX 318, at ¶ 5.
Fame of the COHIBA Mark in 1992 and Later
Evidence of the Fame of the COHIBA mark in November 1992
No studies were commissioned by either party to determine the level of
awareness of COHIBA in the U.S. in 1992. As a result, the quantitative
data that experts from both sides relied on was from periods before and
after General Cigar resumed use of the mark.
Cubatabaco. has presented evidence which demonstrates that there was a
significant interest in Cuban cigars generally in the period before
General Cigar's reintroduction of the mark. Cullman has acknowledged that
"Cuban cigars have had a mystique in the U.S. since the embargo." Tr. at
1021. In addition, according to the
Cigar Association of America, the cigar industry's national trade
organization, in 1988-89, despite the embargo, "as much as 10% of the 56
million premium cigars smoked in the United States were of Cuban origin."
PX 217. The most substantive indication of interest in Cuban cigars
and/or COHIBA cigars by premium cigar smokers, however, comes from survey
The Shanken Survey
In December 1991, a survey was conducted on behalf of M. Shanken
Communications, Inc. (the "Shanken Survey"). The results were tabulated
in January 1992. The survey participants were not representative of the
general population, nor were they intended to be. Approximately 44% of
the respondents reported annual incomes of over $100,000. Most of the
respondents were selected from a list of subscribers to Wine Spectator,
which is published by M. Shanken Communications, Inc.
The survey respondents expressed a particular interest in Cuban cigars:
47% of the respondents thought Cuba produced the best cigars; 33% of the
respondents traveled outside the U.S. at least two times a year, and 54%
of these travelers indicated that they had purchased Cuban cigars while
traveling; and 24% of the respondents stated that the brand of cigar they
normally smoked was Cuban.
The Shanken Survey did not measure either unaided awareness or aided
awareness for any cigar brands. Unaided awareness is awareness of a brand
without the benefit of prompting, while aided awareness measures the
recognition of a brand after that brand has been mentioned. As measured
by the Shanken Survey, awareness of the Cuban COHIBA was quite low:
Only 0.6% of respondents mentioned COHIBA as the
most preferred brand they normally smoked, which
placed it in a tie for 25th out of 26 among all
brands mentioned. COHIBA was only ranked 8th among
all Cuban cigars.
When asked about all brands of cigars normally
smoked, 1.1% of respondents mentioned COHIBA,
which placed it in a tie for the 29th position out
of 30 among all brands. Among Cuban brands, COHIBA
was ranked 8th.
2.2% mentioned COHIBA when asked about the finest
cigar they had ever smoked. On this measure, COHIBA
was tied for the 8th position out of 9, and was ranked
6th among Cuban brands. However, in the over $3.50 per
cigar group, COHIBA tied for fourth place, with 6%
Based in part on the Shanken Survey, General Cigar's expert Itamar
Simonson ("Simonson"), a marketing professor at Stanford University,
hypothesized an unaided awareness level of 3.5%. Simonson also testified
that given that figure, the true awareness level was "well below 50% and
in all likelihood, well below 15 to 20%," although he could not "put a
number on that." Simonson Dep. at 119.
February 1992 issue of The Wine Spectator
The Wine Spectator magazine published a feature in its February 15,
1992 issue entitled "The Allure of Cuban Cigars, Special Report from
Havana 30 Years After the U.S. Embargo." PX 1157. The issue included
several articles on Cuban cigars, and described COHIBA as Cuba's "finest"
cigar. Another article reported that COHIBA is "the hot brand" in
London's cigar shops. In an article entitled "The Man Behind the Coveted
Cohiba," it is reported that
Cohiba is revered by cigar aficionados like Lafite
or Petrus are treasured by wine connoisseurs.
American cigar collectors are known to pay three
or four times the normal retail price for a box of
25 Cohibas smuggled into America. Actor Tom Cruise
reportedly has a standing order for two boxes of
Cohiba Robustos whenever he is in Europe.
Id. The total paid circulation of the February 15 issue was 105,659
issues. PX 1221.
The Launch of Cigar Aficionado
Sometime in 1992, Marvin Shanken ("Shanken"), the editor and publisher
of Wine Spectator, approached Cubatabaco. to seek advertising and
assistance in putting together articles for Cigar Aficionado,
Cubatabaco. agreed to advertise in the magazine and to provide
information for articles about its cigars by giving Shanken
and his reporters access to farms and factories and setting up interviews
upon request. Cubatabaco. agreed to pay the expenses of Shanken and others
from Cigar Aficionado for their trips to Cuba.
On September 1, 1992, M. Shanken Communications, Inc. ("Shanken
Communications") published the premier issue of Cigar Aficionado magazine
(the "premier issue"). Other than trade papers, it was the only U.S.
publication devoted to premium cigars, and remained the sole publication
of its kind for several years. Before Cigar Aficionado was published, the
only article discussing the Cuban COHIBA in any detail was one written by
Shanken and James Suckling, Cigar Aficionado's European Editor, in the
February 15, 1992 issue of Wine Spectator.
The premier issue of Cigar Aficionado had a U.S. circulation of 115,000
copies. Of these, 73,000 represented paid subscriptions, 32,000 went to
newsstands (inclusive of cigar retail stores, street newsstands and
bookstores) and 10,000 were promotional.
At year-end 1991, there were 467,000 premium cigar smokers in the U.S.;
by year-end 1992, there were 483,100. Thus, the circulation of the
premier issue of Cigar Aficionado was equal to approximately 25% of all
premium cigar smokers at the time.
Cigar Aficionado's premier issue was a glossy, full color upscale
publication with high production values. The issue contains a six-page
story entitled, "The Legend of Cohiba: Cigar Lovers Everywhere Dream of
Cuba's Finest Cigar." COHIBA is described as "legendary to cigar
aficionados," and smoking a COHIBA is described as "giving the same kind
of satisfaction as a wonderful glass of Chateau Lafite-Rothschild does to
a wine lover or a superb main course at a Michelin three-star restaurant
does to a gourmet." The issue also rated cigar brands, and gave the
COHIBA Robusto the highest ranking, a 96 out of 100. Other highly
positive references to the Cuban COHIBA appear throughout the magazine.
Other than COHIBA, no article in the premier issue is devoted to a
particular cigar brand. Siegel, who has extensive experience in the
branding and marketing of products, testified that "[i]n my more than 35
years of experience, I cannot recall any product in any category getting
more powerful and favorable publicity than the Cuban Cohiba received in
the premier issue of Cigar Aficionado." Siegel Direct ¶ 17.
The premier issue was published with two different covers, one for the
U.S. market and one for the rest of the world. Both mentioned "Cuba's
Best Cigar" on the cover, but the international cover featured those
words, while the U.S. cover placed the words in smaller print at the
bottom, headlining instead "America's Favorite Cigars," a reference to an
article within about Dominican-made cigars.
Although it cannot be quantified with precision, the Cuban COHIBA was
further publicized by pass-along readership, the phenomenon whereby
"readers talk to others about what particularly memorable articles they
have read in an authoritative publication and frequently pass along the
issue." Siegel Direct ¶ 51. Cubatabaco's expert, Alvin Ossip ("Ossip")
testified that a premier issue of a magazine would receive greater than
average pass-along readership.
Other Publicity Following the Premier Issue
The September 21, 1992 issue of Newsweek, with a national circulation
of 3,195,309, see PX 64.1, reported on the launch of Cigar Aficionado
magazine. The article described Cigar Aficionado's "blind tastings," and
noted, "Unfortunately this month's winner, the five-inch Cohiba Robusto
(`mouth-filling with rich coffee, spicy flavors and an impressively long
finish'), is Cuban and can't be bought on the open U.S. market." PX
1112(c)(1)-49 at P10897. The article also commented on the "impressive 60
pages of ads for such premium products as a handblown bottle of Glenlivet
Scotch at $650, Louis Vuitton luggage and, of course, Cohiba cigars."
Other articles published soon after the premier issue focused on the
growing cigar market and referenced both Cigar Aficionado and COHIBA.
See Cynthia Penney, "Puff Piece," Forbes,
Nov. 23, 1992 (observing that Cuban cigars "have enormous cachet" and
noting demand for "the fabled Cohibas and Punches and Monte Cristos");
Gregory Katz, "Dominicans Burn With a Desire to Claim Cigar Dominance,"
Dallas Morning News., Nov. 1, 1992 (referring to COHIBA and Montecristo
as "the best Cuban cigars").
Other Media References
Between 1986 and November 20, 1992, there were approximately 46 news
articles published which mentioned COHIBA. The majority of the articles
are not about cigars and mention COHIBA only in passing. Over 70% of the
articles contain only a single reference to COHIBA. No evidence has been
produced as to how many premium cigar smokers were exposed to the
articles. However, COHIBA is referred to in the articles very positively
and is portrayed as the cigar of the rich and powerful. A 1990 New York
Times article on the film director Michael Winner reports that Winner
smoked a "$15 Cohiba cigar as smoked by Castro" and quotes him
observing: "Have you noticed that the world's greatest luxury items in
the world are always Aas used by' Communist leaders?" John Culhane, In
`Bulls-Eve!' the Aim is Laughter, N.Y. Times, Jan. 14, 1990, at Sec. 2,
p. 15. A 1992 article in a Miami newspaper stated in a featured sentence
in large print: "Cohibas, the best of the Cuban-made cigars, sell for $12
to $25 in London." Nancy San Martin, Fake Cuban Cigars Raise Quite A
Stink, Miami Herald, Sep. 30, 1992, at IB.
The evidence presented by Cubatabaco. demonstrates that there was
significant awareness of the COHIBA brand in November 1992. While the
Shanken Survey shows that awareness was quite low prior to the premiere
issue of Cigar Aficionado, that issue provided a significant boost in
name recognition for the brand. The only significant data on the fame of
the brand that post-dates the premier issue comes a year and a half after
General Cigar resumed sales of its COHIBA cigar, as set forth below.
Undoubtedly, the continued publicity of the Cuban COHIBA in subsequent
issues added to whatever fame the brand had achieved in November 1992.
Nevertheless, the data from July 1994 can be reasonably extrapolated to
determine that the estimates provided by Ossip for mid-1994 to mid-1995
do not grossly overestimate the probable awareness of the Cuban COHIBA
brand in November 1992.
The Introduction of the General Cigar COHIBA in 1992
In September 1992, following the publication of the premier issue of
Cigar Aficionado, General Cigar made a decision to adopt the name
"Cohiba" for a new super-premium cigar product. General Cigar made the
decision in part to capitalize on the success of the Cuban Cohiba brand
and especially the good ratings and the notoriety that it had received in
Cigar Aficionado, The General Cigar management, including President David
Burgh ("Burgh"), discussed the Cigar Aficionado article. The management
was pleased that the Cuban Cohiba had rated so well in the premier
issue, and thought that it would be good if General Cigar were able
to capitalize on those good ratings.
On November 20, 1992, General Cigar reintroduced its COHIBA as a
premium cigar, sold through Alfred Dunhill, a high-end nationwide chain of
cigar stores. General Cigar acknowledges that the reintroduction was at
least in part a response to Cigar Aficionado's coverage of the Cuban
COHIBA. However, Cullman and Ronald Milstein ("Milstein"), a former
in-house attorney for General Cigar, both testified that General Cigar
had intended to launch a premium COHIBA cigar and had been engaged in
discussions with outside counsel since 1989 regarding possible use of the
Cuban trade dress on such a cigar. No documentary evidence was adduced
showing that General Cigar had plans for a "super-premium" cigar prior to
the premier issue of Cigar Aficionado, General Cigar has stated that
"[t]he high ranking of the Cuban COHIBA and the perception at the company
that the brand would grow in prominence motivated General Cigar
management to direct that a product be introduced as soon as possible."
Def.'s PFF, ¶ 63.
In reintroducing its COHIBA, the General Cigar management wanted to use
trade dress for its product as close as permissible to that of the Cuban
COHIBA. General Cigar pursued this strategy because "they wanted to
somehow capitalize on the success of the Cuban brand, and especially at
this point in time the good ratings that it got, the notoriety that it
got from Cigar Aficionado."
Milstein Dep. at 283. General Cigar's Vice-President of Marketing,
John Rano ("Rano"), retained a graphic designer and asked him to produce
packaging that was "exactly same." Bachner Dep. at 56-57. The designer
did as instructed, although the prototypes that were made were never used
When considering packaging for the General Cigar COHIBA, Milstein wrote
to General Cigar's trademark counsel, Harry Marcus ("Marcus") of Morgan
& Finnegan, stating: "Enclosed is a label, a box with a label, and a
cigar with a band from Cubatabaco's COHIBA brand cigar. As we discussed,
we would like to use a label as near as possible to this one. Please
review their U.S. registration and suggest label designs as close as
possible to these." PX 926. General Cigar did not tell Marcus that their
purpose for wanting to use a label as close as possible to the Cuban
COHIBA was in order to capitalize on the success and notoriety of the
Cuban brand. See Tr. 1154-55 ("He wouldn't have told me because that is
not what I understood his purpose to be.").
The General Cigar COHIBA that was introduced in November 1992 was sold
in a high quality but plain wooden box. The box had only the COHIBA name
on the lid and the name of General Cigar's importing company on the
bottom with the words "made in the Dominican Republic." DX 287. The
COHIBA name printed on the box was in a bold sans serif typeface like
that of the Cuban COHIBA and was in a location similar to that of the
Cuban COHIBA box. General
Cigar did not use any element of Cubatabaco's registered Cuban COHIBA
trade dress, such as the Indian Head logo or the black, white and yellow
design. The box did not have any logo or design, and the cigars were sold
without bands. The cigars were sold without bands because General Cigar
"didn't want anything to be registering in a very big way with the
consumer for a long period of time," Rano Dep. at 99, and "because the
brand image was in transition, [General Cigar] did not wish to commit to
a band with a particular design on it." Collman Direct ¶ 56.
The General Cigar COHIBA introduced in November 1992 was in fact a
preexisting General Cigar product, "Temple Hall." General Cigar initially
manufactured a small quantity 3600 cigars and sold them exclusively
through Alfred Dunhill stores. Dunhill agreed to sell the unbanded Temple
Hall-COHIBA branded cigar because of the COHIBA name. The Dunhill catalog
advertised the General Cigar COHIBA as the "[r]ightful heir to the Cuban
legend," and noted that "[t]he cigars have no band, but you will know."
PX 335. Another Dunhill catalog states in reference to the General Cigar
COHIBA that "[t]oday's cigar enthusiast need look no further than the
Alfred Dunhill humidors for this celebrated range of Cuban origin." PX
1153. In March 1994, Marc Perez ("Perez"), a buyer for Dunhill,
characterized the Cuban Cohiba as "the most legendary cigars in the U.S.
market, where they cannot legally be purchased." PX 899. Perez testified
that when he wrote that he
was "playing off the hype that I believe started with the article
in the premier issue of Cigar Aficionado." Perez Dep. at 436.
The Temple Hall-COHIBA was sold by Dunhill, and later by Mike's Cigars,
a Florida retailer, wholesaler, and mail-order distributor, for almost
five years, from the end of 1992 to sometime in 1997. General Cigar
engaged in no advertising or promotion of its Cohiba cigar from 1992 to
1997. Sales of the General Cigar COHIBA from November 1992 to 1996 were
These sales constituted less than 0.05% of General Cigar's annual
premium cigar sales from 1992 to 1996.
In late 1992 and early 1993, General Cigar decided to seek Cubatabaco's
permission to use its registered Cohiba trade dress. According to a memo
authored by Milstein in January 1993, the stated rationale for seeking
Cubatabaco's permission was that in order "[t]o aid GC in successfully
repositioning and relaunching its Cohiba brand cigar, it would be useful
to exploit the popularity, familiarity, brand recognition and overall
the Cuban Cohiba." PX 1084. According to Milstein, this referred to
General Cigar's intent to develop a brand image in the U.S. based on the
growing reputation of the Cuban COHIBA outside the United States. Tr.
1286-87. The memo also stated that "[t]he obvious immediate benefit for
GC of such an arrangement is to promote its relaunch of Cohiba and
exploit the brand recognition and image of its Cuban cousin." PX 1084.
The plan to seek permission from Cubatabaco, however, was ultimately
In the same period from late 1992 to early 1993, General Cigar
developed a marketing and advertising strategy with its long-time
advertising agency, McCaffery, Ratner, Gottlieb & Lane ("McCaffery
Ratner"). The strategy, "Marketing the Cuban Cigar," was prepared either
by McCaffery Ratner or by General Cigar in late 1992 and early 1993. The
document describes the fame of Cuban Cohiba:
Cohiba is the magic word in the cigar industry. It
is consistently given top ranking by the industry
judges and the name has a high recognition factor
here in the U.S. despite the fact that it cannot
be purchased in the country.
PX 966. The possibility of confusion between the two brands was also
There is a problem that could lead to confusion in
the marketplace with the introduction of a premium
cigar with the Cohiba name. There is a "Cuban"
Cohiba already being advertised here. This creates
an uneven playing field
for the new introduction. It means, essentially, that
every Cohiba ad will benefit that cigar equally as
well as the American Cohiba cigar. When the embargo is
lifted, it is important that General Cigar continue to
own the Cohiba name so that they will have leverage in
distributing the real, Cuban Cohiba.
Id. Part of General Cigar's strategy was to foster an association of the
General Cigar COHIBA with Cuba. Phase 1 of the marketing strategy was to
"[e]xploit the Cohiba name, with its reputation as one of the world's
finest cigars, to build a brand image for the U.S. product." PX 314.
Among the "tactics" to be used in implementing that strategy was
"subliminally connect[ing] the Cohiba name with the romance of pre-Castro
Cuba," id., despite the fact that Cohiba was developed after the Cuban
Revolution. To do this, McCaffery Ratner originally suggested a "Cohiba
For the introduction of Cohiba we recommend a special
event. The time is the 50's, the place Havana, Cuba,
where the fantasy, glamour, romance and mystic [sic]
were at its height and the wealthy Americans and
Europeans used it as their playground. We want to
titillate the memories of those who have known and
those who have wondered.
PX 940.1. The phrase "the place Havana, Cuba" was replaced with "And the
place is reminiscent of the favored playgrounds of the Caribbean," id.,
but the proposal was otherwise unchanged.
The 1994 and 1995 Surveys
The first survey after Cigar Aficionado's publication was conducted by
General Cigar in July 1994 by telephone with a sample of 200. The source
of the respondents or their qualifications has not been provided by
General Cigar. However, Ossip reports that:
The respondents in these studies, compared with those
in the Shanken Study, were less likely to be $200,000
a year earners and less likely to be corporate
executives and managers, although there was a general
upward income skew among respondents. They were
somewhat more likely to be under 35 years of age than
those in the Shanken Study and somewhat less likely to
buy cigars via mail order.
Ossip Direct, ¶ 36. The 1994 survey measured the percentage of
respondents who indicated that they had tried a COHIBA cigar ("trial
awareness") at 18.5%, placing it 10th among all brands of premium
cigars. Unaided awareness in this survey, and in subsequent surveys, was
measured by first asking "What is the first brand of cigar you can think
of?" and following that up with "What other brands of cigar can you think
of?" Respondents were not asked to name Cuban brands. According to the
survey, the unaided awareness level for COHIBA was 14.5%. No aided
awareness survey data was taken for COHIBA, or for any other Cuban
Another telephone survey, reported in February 1995 with a sample of
304, but likely conducted earlier, registered a trial awareness for
COHIBA of 21.4% and an unaided awareness of 17.1%.
A third post-publication survey, reported in May 1995 with a sample
of 363, registered a trial awareness of 23.4% and an unaided awareness of
16.7%. Simonson, the defendant's expert, hypothesizes that trial
awareness is higher than unaided awareness because the previous trial
awareness questions "are likely to aid the consumer in retrieving cigar
names from memory." Simonson Direct ¶ 47. Ossip similarly suggests
that unaided awareness data
is obtained in studies like these in a telephone
interview where the respondent may not give deep
thought to plumbing his memory for brand names, and
where the interviewer, who has a long interview to
complete, will move the questioning along when the
Ossip Direct ¶ 38. On average, respondents volunteer 4.4 brand names
(some of which are not premium brand names) but they report having tried
an average of 6.8 brands.
All three surveys collected aided awareness data for other brands. The
following tables summarize the figures for four brands with comparable
trial and unaided awareness rates:
Trial Unaided Aided
Davidoff 27 18.0 73
Hoyo de Monterey 26 11.5 76
Avo 26 13.0 52
Ashton 22 8.5 60
COHIBA 18.5 14.5
Trial Unaided Aided
Davidoff 28 16.8 77
Hoyo de Monterey 32 16.4 80
Avo 31 15.0 58
Ashton 22 7.2 58
COHIBA 21.4 17.1
Trial Unaided Aided
Davidoff 31 18.4 80
Hoyo de Monterey 32 17.1 83
Avo 32 14.6 61
Ashton 23 7.7 57
COHIBA 23.4 16.7
Aided awareness frequently overstates the true brand awareness because
of the phenomenon of "spurious awareness." Spurious awareness occurs when
survey respondents are asked whether they have heard of a particular
brand name; if the name seems plausible for the product category, some
respondents will say they have heard of it even if they have not. Both
Cubatabaco's and General Cigar's experts have concluded, however, that
"it is almost always the case that true awareness exceeds unaided
Tr. 1427 (Simonson). One way to address the problem of spurious awareness
is to include "controls," which are "often fictitious brand names that
appear plausible for the product category or existing brands from related
but different product categories." Simonson Direct ¶ 26. Controls were
not used in the 1994 and 1995 surveys. Neither General Cigar nor
Cubatabaco. provided an estimate of the degree of spurious awareness in
the three telephone surveys.
Cubatabaco's expert, Ossip, has estimated that based on the survey data
"it is likely that Cohiba awareness in mid-1994 to mid-1995 was in the
62-71% range." Ossip Direct ¶ 50. Ossip examined the three surveys for
the differences between unaided and aided awareness for nine brands (four
of which are shown above), and then averaged the differences as a
guideline for the likely increment over Cohiba's reported unaided
awareness. Ossip initially averaged seven of the nine brands, which
yielded an average increment of 55%. Ossip excluded Macanudo and Partagas
"because their extremely high trial rates limit the potential for the
increment between unaided and aided awareness." Id. at ¶ 43. In response
to criticism by Simonson, Ossip averaged all nine brands, which produced
an average increment of 48%. Neither of these approaches are generally
used, and are not reported in the relevant literature. Ossip explains his
resort to estimation as follows:
The task of deriving an estimate of aided awareness
from unaided awareness numbers is uncommon since if
one has an
interest in both measures then such information would
be collected. Apparently, General Cigar was interested
in the nine brands for which both types of data were
collected, but not in Cohiba unaided awareness.
Consequently, I cannot draw on established
Ossip Direct ¶ 41. Simonson criticizes the methodology because it is
guaranteed to yield an aided awareness level of 48%, even for a brand
with zero unaided awareness. While such a result would not make sense,
Simonson's criticism has only limited application when applied to unaided
awareness levels which are comparable to other brands. In fact, three to
four brands in each survey registered lower unaided awareness than
COHIBA, despite being available in the United States. It is therefore
appropriate to use an estimation technique in determining the Cohiba's
aided awareness level in 1994 and 1995.
While it is true, as General Cigar argues, that "there is no way to
derive aided awareness for a given brand from the relationship between
aided awareness (or trial awareness) for other brands because these
relationships may vary significantly from one brand to another," Def. PFF
¶ 86, it does not therefore follow that it is illegitimate to estimate
aided awareness based on similar data for other brands. General Cigar
provides no evidence that the aided awareness figures for COHIBA would be
significantly lower than those of other brands with comparable trial and
unaided awareness figures. Indeed, Simonson also uses estimation
techniques to derive an awareness figure from the Shanken Survey,
which did not ask about unaided or aided awareness. See id. at ¶¶ 77-81.
Based on the evidence provided in the 1994 and 1995 surveys, aided
awareness of the COHIBA brand was significantly higher than 50% in July
Ossip also testified persuasively that the unaided awareness of Cohiba
would have measured significantly higher if questions such as "What
brands of Cuban cigars can you think of?" were asked, instead of asking
about cigar brands generally. Ossip Direct ¶ 40. Such an approach is
suggested by Kevin Keller in his book Strategic Brand Management:
Building, Measuring and Managing Brand Equity (2d ed. 2003), pp.
453-57, a book also cited by Simonson.
Evidence of General Cigar's Intent in Reintroducing the COHIBA Mark in
General Cigar Executives' Trip to Havana
In November 1992, Milstein and Alfons Mayer ("Mayer"), then General
Cigar's Vice President for tobacco, attended a symposium in Havana
celebrating the fifth centennial of the discovery of tobacco. Milstein
does not speak or read Spanish, although he was involved in the legal
aspects of General Cigar's international business. Mayer had worked for
General Cigar in Cuba prior to the revolution, and was fluent in Spanish.
Neither Milstein nor Mayer had been instructed to engage in any
discussion with Cubatabaco. Their plans were to learn more about the
world cigar markets and assess the implications for the company should
the embargo end.
Milstein and Mayer had a meeting with Cubatabaco's President, Francisco
Padron ("Padron"), on November 3, 1992. There was no mention of COHIBA at
the meeting. However, according to a memo by Milstein dated November 25,
1992, "Padron made it very clear that trademarks are not important. He
said that Havana will sell cigars no matter what name they have." DX 88.
Milstein was also introduced to a junior Cubatabaco. attorney named
Adareglio Garrido de la Grana ("Garrido") at a party in Havana. At the
time Garrido did not speak English and only understood spoken English
poorly. Garrido did not have any responsibilities for Cubatabaco's
trademarks in the United States or in any other English-speaking
territory. According to a memo prepared by Milstein on November 20,
1992, when Milstein and Garrido discussed COHIBA, Garrido stated that
Cubatabaco. "acknowledged that we owned the name in the U.S. and that we
would be free to sell a cigar under that name there." DX89. However, the
memo states that Garrido objected to the use of the COHIBA trade dress.
Milstein has no recollection of his conversation with Garrido other than
reviewing the memo he prepared afterward, and
does not remember if he made any notes relating to the conversation.
Garrido testified that he never told representatives of General Cigar
that it was free to sell cigars in the U.S. under the COHIBA name,
stating that "not even if I had lost my mind would I have said anything"
about the rights to COHIBA. Garrido Direct 5 3. Milstein describes the
meeting as "very much a social meeting in that it was a friendly sort of
chat rather than us sitting down around a conference table." Tr. 1224.
There was also no discussion of whether Garrido had been authorized to
speak on behalf of Cubatabaco. concerning COHIBA. Only Milstein and
Garrido were present and Milstein does not recall whether Garrido spoke
to him in Spanish or English.
General Cigar has argued that at Milstein's meeting with Garrido in
Havana in November 1992, Cubatabaco. recognized that General Cigar owned
the COHIBA word mark in the United States. However, the evidence shows
that General Cigar intended to reintroduce the COHIBA mark in September
1992, before the Milstein-Garrido meeting. Further, Garrido was not
authorized to make such statements, and General Cigar's trademark counsel
further warned that "an acquiescence defense may be difficult to prove
based on oral remarks." PX 834 at GC 87. Finally, in consideration of
Garrido's denial that he made any statement to that effect and the
language barrier that separated Milstein and Garrido at the time,
the evidence adduced by General Cigar of Cubatabaco's alleged
acknowledgment is not credible.
General Cigar's Communications with Its Trademark Counsel
General Cigar's relaunch of its COHIBA cigar took place before it had
consulted with its trademark counsel specifically on the use of the word
mark or the use of the Cuban COHIBA trade dress. Shortly afterward,
however, General Cigar requested an opinion on these issues.
In a December 1992 draft opinion letter that was never formalized or
signed, trademark counsel advised General Cigar that the use of the
COHIBA name along with Cubatabaco's trade dress would likely lead a trier
of fact "to conclude that there was deliberate copying to take advantage
of the goodwill associated with the Cuban product." PX 834. The letter
opined that for Cubatabaco. to establish a superior right to the COHIBA
word mark, "it would have to prove that (a) a segment of the U.S. public
associates the COHIBA mark with Cubatabaco, or even an anonymous source
of Cuban cigars; and (b) this brand recognition antedates General Cigar's
use of the mark in the ordinary course of trade." Id. However, the letter
concluded that it was "unlikely that Cubatabaco. could prove sufficient
exposure of the COHIBA brand to cigar smokers in the U.S. to establish
the requisite secondary meaning or likelihood of confusion necessary for
prevail." Id. The opinion letter also raises the possibility that General
Cigar may have abandoned the COHIBA mark by periods of non-use following
its application for registration in 1978 and the issuance of the
registration in 1981.
The letter took into account the publicity created by the premier issue
of Cigar Aficionado, but noted that "any brand recognition which may
exist in the U.S. is limited to the highest echelon of the cigar smoking
public in terms of amount spent per cigar." Id.
The letter acknowledged the alleged comments made by Garrido to
Milstein regarding the use of the COHIBA mark in the U.S., and raised the
possibility that the statements "may give rise to the defense of
acquiescence in connection with your use of the word mark." Id. However,
it also noted that "an acquiescence defense may be difficult to prove
based on oral remarks," and suggested obtaining written confirmation from
Trademark counsel's advice in the letter was to "file a new U.S.
trademark application, based either on use in commerce or intent-to-use,
coinciding with the new launch of COHIBA product. If a new application
for COHIBA depicts the mark in some stylized form, or even in block
letters, it would not be deemed duplicative of the existing
General Cigar did not rely on the draft letter when it adopted and
began use of the Cohiba mark in late November of 1992. Trademark
counsel's letter is dated December 1992, and it was transmitted to
General Cigar on December 2, 1992, after General Cigar has already begun
marketing COHIBA cigars.
General Cigar Files for a Second COHIBA Registration
Pursuant to the advice of trademark counsel, General Cigar applied for
a second COHIBA registration on December 30, 1992. In December 1991,
trademark counsel had conducted a trademark search and provided a legal
opinion that no one else had a right to the COHIBA word mark in the U.S.
at that time. General Cigar's application was published for opposition on
April 12, 1994, and granted without opposition in 1995.
For the purposes of the second application, trademark counsel faxed to
a trademark illustrator a photocopy of the COHIBA mark from the Cuban
COHIBA box. The resulting block letter drawing was attached to the
application that trademark counsel filed in December 1992 on General
Cigar's behalf to reregister the COHIBA word mark using a specific
General Cigar claims that it did not believe there was much awareness
of the Cuban COHIBA in the U.S. It relied on the opinion of its trademark
counsel, who were aware of the Cigar
Aficionado articles on the Cuban COHIBA, that COHIBA was unlikely to be
well-known in the U.S. General Cigar also claims that it believed that
Cubatabaco. did not and would not assert rights to the COHIBA word mark
in the U.S. as a result of the conversation between Milstein and Garrido
in Havana and Padron's published remarks.
Cubatabaco's Intent with Respect to the COHIBA Mark in the U.S. Between
1992 and 1997
Padron's First Interview With Cigar Aficionado
In a November 1992 interview, published in the Spring 1993 Cigar
Aficionado, Francisco. Padron, director of Cubatabaco, replied to a
question regarding the company's future strategy for Cuban cigars. The
magazine included the following purported exchange:
CA: Many American smokers don't realize that there
are two brands of Partagas, a Partagas in America
from the Dominican Republic and a Partagas sold
around the world from Cuba. Assuming that tomorrow
the embargo was lifted, how would it work?
Padron: We are not going to have two brands over
there. Not even in Europe. We decided to break off
our deal with Davidoff because of that. So what
would happen is that we would launch new things
for the North American market, new brands. Or we
could make an arrangement with the brand owners
CA: General Cigar, as an example, owns the brand
names Partagas, Ramon Allones and Cohiba for the
U.S. market, and it has tremendous distribution in
the United States. I would imagine that they would
love to sit down with you
and work it out to represent those brands of Cuban
cigars in America. Is this possible or a problem? You
are shaking your head no.
Padron: The first condition is that they must pass the
brand name to us. This is the first condition
Immediately. If not, forget about it. Second
condition, they must be our partner the same way that
we have it with the rest of the world. There is no
other way to make a deal with us. If not, forget about
Padron also stated:
We want to have [a] Habano cigar, not a brand name. It
doesn't matter if it is Bolivar, Montecristo or even
Cohiba. For the last four years, we have been telling
the connoisseur how to recognize a Havana. When we
launched the smoke ad we just put Havana, now
Habanos. We think the most important thing is the
umbrella that can cover all brand names. We can create
a brand name whenever we want.
Cubatabaco. challenges these statements as unreliable given the
difficulties of translation (the interviewer spoke no Spanish) and
complexity of legal issues. In response, General Cigar notes that Padron
never corrected or disclaimed the statements attributed to him in the
Padron's Second Interview with Cigar Aficionado
In a December 1993 interview with Padron, which appeared in the Spring
1994 edition of Cigar Aficionado, the following exchange purportedly took
CA: If the embargo ended tomorrow or two to five years
from now, have you thought through how it would happen
and what the scenario would be? You have problems with
certain brands as far as trademark issues, and with
other brands you do not have a problem. Have you
thought how you would introduce your brands to the
Padron: First there is going to be a fight. We have
not been able to have the brand name in the United
States because of the embargo. It was forced by [the
United States]. It was not decided on our side. . . .
But we are not going to fight in order to get our
cigars into the United States. As we always say, a
Habano [cigar] is a Habano [cigar]. With a name of
Marvin or Padron or Meyer or whatever goes on the
cigar, it is a Habano. So, we are going to let
everybody know that we are here, and this is a
Habano. We are not going to fight with somebody else
because he owns the brand name of Cohiba or
Montecristo in America. We have been living without
that for a long time.
Cubatabaco. challenged this statement for the same reasons it objected to
Padron's earlier interview excerpts. As noted in Empresa II, Padron's
statement is internally contradictory on the issue of whether there is
"going to be a fight." 213 F. Supp.2d at 277 n. 44. Further, both
interviews were made without "the true knowledge of the facts that
General Cigar was pursuing a new registration for the COHIBA mark." Id.
at 277. Padron's statements to the press therefore do not constitute a
conclusive expression of Cubatobaco's intent.
Cubatabaco's Efforts to Promote the COHIBA Brand in the United States
Since the 1970's, Cubatabaco. has registered Cohiba in International
Class 34 in 115 countries. Cubatabaco. launched
COHIBA internationally in Spain in 1982. By 1987, the brand was being
exported to more than 22 countries, including Canada, Mexico, and several
European countries. Despite their inability to sell cigars in the U.S.,
Cubatabaco. has made efforts to promote the brand in the United States.
In January 1997, Cubatabaco. filed an application to cancel General
Cigar's registration of the COHIBA mark.
After the article in The Wine Spectator in February 1992, Shanken
returned to Havana to seek the support and collaboration of Cubatabaco.
for the launch of Cigar Aficionado, Cubatabaco agreed and assisted the
magazine by facilitating the visit of journalists to Cuba, arranging for
them to visit Cuba's tobacco. farms and cigar factories, and arranging
interviews. The staff of Cubatabaco. were instructed to collaborate with
Cigar Aficionado in order to promote Cuban cigars, including COHIBA, to
cigar smokers in the United States as well as other English-speaking
In the 1992 meeting between Cubatabaco. and Shanken, both Shanken and
Cubatabaco. representatives expressed the view that the premier issue of
Cigar Aficionado should feature a major article on COHIBA. Cubatabaco.
did not suggest that an article be written about any other brand.
Cubatabaco. decided that its advertisement in Cigar Aficionado would be
for COHIBA and not for any other brand. The ad
ran in the premier and second issues of Cigar Aficionado, but further
advertisements were prevented by General Cigar's threat of infringement
actions. The advertisement was a full-page, color advertisement that bore
the legend, "COHIBA is the first name in cigars."
After the premier issue, the Cubatabaco. Marketing Department continued
to provide ongoing assistance to Cigar Aficionado's writers, who visited
Cuba between two and three times per year between 1992 and 1997, as well
as later. Cigar Aficionado reported much more on COHIBA than on any other
In November 1992, Cubatabaco. launched the 1492 Siglo line of COHIBA at
the 5th Centennial celebration of the landing of Columbus in Cuba.
Cubatabaco. invited Shanken and Suckling from Cigar Aficionado, and both
attended. The March 1993 issue of Cigar Aficionado contained a laudatory
feature on the Siglo launch, and gave high ratings, from 90 to 96, to
each cigar in the line.
The Cubatabaco. Marketing Department requested that Shanken be granted
an interview with President Castro, to be published in Cigar Aficionado,
The interview, conducted by Shanken, appeared in Cigar Aficionado's June
1994 issue. The magazine's cover portrayed Castro with a COHIBA cigar.
The Shanken interview with Castro generated articles referencing COHIBA
in several newspapers.
In 1994, Cubatabaco. collaborated with Cigar Aficionado on the
organization of the "Dinner of the Century," promoted by Cigar
Aficionado as a lavish cigar dinner for elite personalities in Paris on
October 22, 1994. The Marketing Department understood that a number of
U.S. personalities would be invited and the event would be covered by
Cigar Aficionado. Cubatabaco. proposed that COHIBA be the featured
cigar, and produced and provided, free of charge, new vitolas, or cigar
shapes, of COHIBA created especially for the dinner, as well as special
The association of the COHIBA cigar with this event provided
substantial publicity for COHIBA in Cigar Aficionado and in other U.S.
publications, including the New York Times and the Miami Herald. Numerous
prominent Americans sat on the dinner board, including R.W. Apple Jr.,
Washington Bureau Chief of the New York Times, and Steven Florio,
President of Conde Nast Publications.
The Marketing Department invited Shanken and Suckling to the cigar
events it organized in Cuba in 1994 and 1995, and in 1996, it extended to
them invitations to attend its 30th anniversary celebration of the
COHIBA. In 1995, Habanos, S.A., Cubatabaco's licensee, named Shanken
"Habanos Man of the Year for Communications" at the September 1995 dinner
it held in Havana.
In late 1995, Habanos, S.A. decided to organize a gala celebration to
mark the 30th anniversary of COHIBA, to take place in 1996. In early
1996, it decided to postpone the event until 1997 to allow for adequate
preparation. The Marketing Department carried out planning of the event
from early 1996 and invitation lists were drawn up in 1996. The 30th
anniversary events took place in Havana during the last week of February
In drawing up the invitation list, Habanos included a wide range of
U.S. press, celebrities and business persons. More than 800 persons
attended the event, including almost 100 persons from the U.S., of which
more than 30 were journalists. NEC and CNN covered the event, as did
journalists from Cigar Aficionado.
More than 35 stories were published on the COHIBA celebration in the
U.S. press preceding the event. Cigar Aficionado included articles in
both its May/June and July/August 1997 issues, as did the Summer 1997
issue of Smoke. With Habanos' permission and assistance, CNN filmed
footage in the spring of 1996 in preparation of the celebration, and
aired a program using this material on April 10, 1996. In late 1996, CNN
shot footage at the El Laguito factory and conducted numerous interviews
with Cubans connected with the production and sale of COHIBA cigars. CNN
covered the 30th Anniversary, and CBS broadcast a report on its "Sunday
Morning" program that included footage of the 30th anniversary
celebration. National Public Radio introduced its live
broadcast from Havana on February 28, 1997 with a piece about the
30th anniversary of COHIBA.
Between 1992 and the end of 1996, as well as after that, Cubatabaco's
Marketing Department met with and assisted numerous U.S. journalists in
order to promote Cuban cigars, and COHIBA in particular. The head of the
Marketing Department met with, among others, representatives of CNN and
CBS, Business Week, Smoke, and Tobacco. International, as well as Cigar
Aficionado. Throughout the 1990's, the Marketing Department worked with
and provided assistance to many other U.S. writers and journalists,
almost all of whom pursued a particular interest in COHIBA.
During the 1992-1997 period, the Marketing Department assisted several
authors in their research of books on cigars that prominently featured
and praised COHIBA, and granted them the use of photographs and
materials. It contracted for the U.S. publication of the leading Cuban
book on Cuban cigars, which also contained material on COHIBA. It also
assisted U.S. filmmakers who made videos on Cuban cigars with prominence
given to COHIBA.
It has been the policy and practice of the Marketing Department to
assist all U.S. journalists. It has given preference to requests of U.S.
journalists for information and interviews about COHIBA, and has
facilitated their visits to the El Laguito factory and other factories
where COHIBA cigars are manufactured.
According to Ana Lopez Garcia ("Lopez Garcia"), the Director of
Marketing for Cubatabaco. from 1993 to 1994, and the Director of
Marketing at Habanos, S.A., from 1994 until the present, Cubatabaco. has
always intended to sell COHIBA in the United States market as soon it was
legally possible, and the Marketing Department, in furtherance of this
intention, engaged in activities aimed at building and maintaining the
reputation of COHIBA in the U.S., including during the period 1992-1997.
Lopez Garcia Direct § 50.
After learning in 1996 that a Dominican company named Monte Cristi was
manufacturing Dominican cigars bearing the COHIBA name and the Cuban
COHIBA trade dress and exporting them in large numbers to the United
States, Cubatabaco. moved against Monte Cristi in the Dominican Republic.
Cubatabaco. successfully cancelled Monte Cristi's Dominican trademark
registration, and Cubatabaco's exclusive licensee, Habanos, S.A., now
sells Cuban COHIBAs in the Dominican Republic.
Cubatabaco's Attempts to Cancel General Cigar's COHIBA Registration
In January 1994, Cubatabaco. received a box of General Cigar's
COHIBA-branded Temple Hall cigars. Along with the box, Cubatabaco
received a note stating that the box was not sold as a "regular item" and
that it was being produced by General Cigar only
for purposes of its trademark registration.*fn7 At the time Cubatabaco.
believed that General Cigar was not making stable or continuous use of
the COHIBA trademark in the United States. Cubatabaco's counsel did not
learn of the box until some time later.
On April 12, 1994, General Cigar's application to register COHIBA in a
block letter format was published for opposition. No entity challenged
General Cigar's application to register COHIBA in block letter format at
After its aborted attempt to register the COHIBA mark in 1983 and
1984, Cubatabaco. pursued registration again in June 1994 when it learned
that General Cigar had filed a second application for the mark and
believed that General Cigar's prior registration and use rights might be
vulnerable. Cubatabaco's chief counsel at that time conferred with the
law firm Rabinowitz, Boudin, Standard, Krinsky & Lieberman
("Rabinowitz, Boudin") in June and July 1994 as to the availability of
legal remedies with respect to General Cigar's registration and use of
the COHIBA mark, and with other United States attorneys at other times in
1995 and 1996. Garrido conducted investigations in Cuba in late 1995 and
presented a final memorandum to Cubatabaco's president in August 1996.
Cubatabaco's board authorized litigation on September 12, 1996.
On January 15, 1997, Cubatabaco. commenced a proceeding in the
Trademark Trial and Appeal Board ("TTAB") to cancel General Cigar's
registration of the COHIBA mark and filed an application with the United
States Patent and Trademark Office ("USPTO") to register COHIBA in
International Class 34. General Cigar's senior management was aware of
the cancellation petition at that time.
On May 28, 1997, Cullman, Jr. contacted Francisco. Linares ("Linares"),
president of Habanos, S.A., a marketing arm of Cubatabaco, to propose a
settlement meeting. As noted earlier, the instant lawsuit was filed on
November 12, 1997.
During the period from 1992 to 1997, Cubatabaco. intended to market its
COHIBA in the United States in the event that it became legally possible
to do so.
Likelihood of Confusion of the Cuban COHIBA with the General Cigar
General Cigar's Assessment of the COHIBA Brand From 1992 to 1997
Cullman, Jr. was interviewed by Cigar Aficionado for its September 1996
issue. The following exchange was reported in the magazine:
CA: One obvious question is Cohiba. What are you
doing with that? You own the American rights but
you haven't done much with it. Why haven't you
taken the brand to market and made it a priority
given the awareness and consumer demand for the
Cullman: I think it's a very good question and the
answer really lies in the fact that we don't have a
blend and a unique taste for the cigar that we would
be happy with. We think it's such a blockbuster brand
name that we must come out with something that is
equal to the expectation of the brand. . . . We need
to develop a third leg, in essence, a taste for
Cohiba. If we just came out with something that was a
variation of a Macanudo or a variation of a Partagas,
we don't think that would cut it.
Cullman also testified that "by May of 1997, the awareness and the cult
status of the Cuban Cohiba was much more recognized." Cullman Dep. at
442. He also stated that "it was impossible not to acknowledge at that
point a strong awareness among cigar smokers that Cohiba existed, there
was a Cuban Cohiba, and as I mentioned before, there was great interest,
smokers especially, to walk around with, showing off the Cuban Cohiba
label." Id. at 443.
The 1997 Launch of the Super-Premium General Cigar COHIBA
In late January or February 1997, General Cigar made a decision to
launch a new product under the COHIBA name at the July 1997 annual Retail
Tobacco. Dealers of America ("RTDA") convention. The earliest evidence
adduced concerning the proposed General Cigar COHIBA launch is a document
from February, 23, 1997. Rano testified that the decision to launch the
new product was made "very early in `97." Rano Dep. at 178.
McCaffery Ratner did no work on COHIBA from mid-1993 until late 1996 or
early 1997. General Cigar asked McCaffery Ratner to use the same 1950's
Havana/Caribbean mystique proposal they had prepared in 1993 in the
various "Marketing the Cohiba Cigar" documents. The 1950's Caribbean
mystique strategy was executed as the advertising and promotion that
accompanied the General Cigar COHIBA launch in September 1997.
General Cigar has repeatedly acknowledged that the Cuban COHIBA was
well known by U.S. cigar consumers prior to General Cigar's super-premium
COHIBA launch in fall 1997. Cullman, Jr. testified that "[i]n 1997 the
Cuban Cohiba was certainly well known in the United States." Tr. 1103. A
Fall 1997 General Cigar
document created for the sales force as a selling tool described
COHIBA as "the most recognized cigar brand in the world." PX 881.
The marketing strategy of General Cigar was to exploit the fame of the
Cuban brand for the new General Cigar product. In its Product Development
Guide, dated May 13, 1997, General Cigar stated that the "Cuban cigar
heritage and the near `cult' status of the Cohiba Cuban version will be a
benefit to generate initial trial of the brand, and easy brand
recognition, but not the main engine driving the brand." PX 98. Further,
the design of the relaunched General Cigar COHIBA was modeled after the
look of the Cuban COHIBA. The same document states:
"Packaging/presentation will be minimal in keeping with [the] clean,
sparse look of [the] Cuban Cohiba." Id. The band of the new General Cigar
COHIBA consists of two thick black stripes on the top and bottom of the
band. The remainder of the band is white, except for the name COHIBA in
black bold letters, with a red dot inside the "0", and a red oval with
the words "HAND MADE" in small black letters.
The look of the cigar band, while similar in typeface to the Cuban
COHIBA, is significantly different, as reported by Cigar Insider in
The unvarnished mahogany box in which the cigars will
be packaged is still plain, but the new band has a
distinct graphic identity that's in the spirit of the
famous Cuban logo, but doesn't precisely imitate it.
Instead of the signature yellow and black of Cuba's
brand has simple black lettering; a splash of red in
the circle of the "0" is the only flourish.
PX 867. The assessment of the "graphic" difference between the two
bands is, of course, a distinct issue from the identically worded
Advertising for the Relaunched General Cigar COHIBA
The 1997 advertising for the General Cigar COHIBA attempted to create
an association in the consumer's mind to Cuba and the Cuban COHIBA.
General Cigar's expert acknowledged that advertising themes such as "past
and present come together in COHIBA" evoked an association with Cuba.
Simonson Dep. at 187-88. In-store posters for use by retail tobacconists
were created based on a work order to "[c]reate a Cohiba brand image
poster that incorporates the mystique of Cuba." PX 987. Several of the
initial advertisements, as well as the flyleaf enclosed in the cigar
box, also promoted the claim that the filler of the General Cigar COHIBA
contained "Cuban seed" tobacco. See DX34A (flyleaf); PX 882 (promotion
sent to retailers stating that "the filler is grown from Cuban seed,
`Piloto Cubano' grown in the Dominican Republic.")
Cigar retailers promoting the General Cigar product advertised the
cigar in a manner that suggested its association with the Cuban COHIBA.
General Cigar has submitted no evidence
showing that it attempted to dissuade retailers from pursuing such a
strategy. In August 1998, Famous Cigars, a major retailer, provided
General Cigar with pre-publication catalog copy for its COHIBA with the
heading "COHIBA: THE CIGAR EVERYONE WANTS TO SMOKE! NOW AVAILABLE IN THE
U.S.!!" PX 327. The copy also described the General Cigar COHIBA as
"[t]rue to its Cuban roots." Id. Another major retailer, Thompson &
Co., stated in its catalog that "there are only two places in the world
where this brand is legitimately manufactured: Castro's Cuba and in the
Diaz y Cia subsidiary of General Cigar Co. in Santiago, Dominican
Republic." PX 356. The catalog later states that
As you might imagine, given the popularity of the
Cohiba brand, getting a supply of them is quite
difficult. After all, tobacconists the world over
are clamoring for any supply they can procure,
legitimate or otherwise.
Id. Cubatabaco. has provided evidence of numerous similar advertisements
for the General Cigar COHIBA by less prominent retailers. See e.g., PX
1131-1 (internet website of Amalfi Cigar Company: "The pride of the
Havanas is now made in the Dominican Republic. Named after what the Taino
Indians of Cuba called tobacco.") The existence of such advertisements
contributed to possible consumer misunderstanding over the relation
between the two brands, a misunderstanding that General Cigar did not
attempt to dispel.
General Cigar's Actions Against the Cuban COHIBA
General Cigar has consistently acted against the importation,
advertisement and display of the Cuban COHIBA in the U.S. on the ground
that the Cuban COHIBA infringes on General Cigar's COHIBA.
In November 1997, after Cubatabaco. commenced this lawsuit, counsel for
General Cigar wrote to the United States Custom Service to demand that
Customs stop U.S. persons returning from Cuba from legally bringing Cuban
COHIBAs into the United States on the ground that such COHIBA-labeled
cigars infringed General Cigar's trademark rights. In the letter, Cuban
COHIBAs are referred to as "counterfeit goods." PX 1134-17. Although
returning visitors are allowed under the U.S. embargo to bring up to
$100.00 worth of Cuban goods into the U.S., General Cigar prevailed upon
Customs to bar consumers from bring back more than one item bearing the
COHIBA mark. Under U.S. trademark law, persons returning from abroad are
allow to bring only one infringing item into the country for personal
At Cubatabaco's request, Hunters & Frankau, a distributor of cigars in
London, placed an advertisement in the premier issue of Cigar Aficionado
featuring the Cuban COHIBA. After the advertisement appeared, General
Cigar gave formal notice in a November 5, 1992 letter to Hunters &
Frankau, with a copy to the
editor and publisher of Cigar Aficionado, that it considered the
advertisement to infringe on General Cigar's registered mark (1981
In September 1993, General Cigar wrote to Havana House, a Canadian
cigar distributor, and accused it of intending to advertise the Cuban
COHIBA in Cigar Aficionado. General Cigar threatened Havana House with an
injunction under 15 U.S.C. § 1114 if it ran such an advertisement.
General Cigar similarly responded to advertisements in Cigar Aficionado
by the Cohiba Cigar Divan in Hong Kong.
General Cigar's General Counsel, Ross Wollen ("Wollen"), testified that
it remained the company's position that all of these Cigar Aficionado
advertisements were infringing because any use of the word "COHIBA" in
association with cigars would cause confusion in the U.S. marketplace.
Wollen Dep. at 306. Wollen testified that "[a]n American consumer reading
this magazine [Cigar Aficionado] and a customer of Dunhill might be
confused that this is the General Cigar Cohiba sold in Dunhill, and it
isn't." Id. at 303. Austin McNamara ("McNamara"), President of General
Cigar at the time, testified that advertisement of the Cuban COHIBA in
1994 would "absolutely" cause confusion with consumers in the United
States. McNamara Dep. at 135.
General Cigar's Actions Against Third Parties
General Cigar has brought enforcement actions against third parties who
made use of the COHIBA name in conjunction with trade dress used by the
Cuban COHIBA. Some of these counterfeit cigars bore a Dominican
designation of origin, some bore a Cuban designation of origin, some bore
no designation of origin at all; many used elements of the Cuban COHIBA
checkerboard, Indian Head and black, white and yellow colors. As was
implied by the trade dress, consumers understood these products to be the
Cuban COHIBA or affiliated with the Cuban COHIBA, and General Cigar
understood this to be the consumer's perception.
From late 1995, counterfeit COHIBAs bearing trade dress used by the
Cuban COHIBA became increasingly prevalent in the U.S. market. General
Cigar brought enforcement actions against counterfeit COHIBAs in the
ground that they were likely to cause confusion.
Many of the counterfeit COHIBAs were manufactured in the Dominican
Republic by a company called Monte Cristi de Tabacos. Monte Cristi
COHIBAs used trade dress very similar to that used by the Cuban COHIBA.
Monte Cristi COHIBAs sometimes, but not always, featured a "Republica
Dominica" designation of origin.
On January 31, 1996, General Cigar recorded its COHIBA mark with U.S.
Customs, giving Customs the power to seize Monte Cristi Cohibas and other
goods bearing the mark as infringing upon the defendant's mark. At
General Cigar's urging, and with its assistance, Customs seized over
35,000 counterfeit Cohibas by May of 1997, most of which mimicked the
Cuban Cohiba's trade dress.
In July 1997, General Cigar sent a letter to retailers regarding Monte
Cristi Cohibas and other counterfeits. It stated that it had received
numerous complaints about product which has been
purchased by unwary consumers who think they are
buying a high quality General Cigar or Cuban made
Cohiba. Instead, what they have found they have
purchased are low grade, inferior quality cigars
manufactured for the most part in the Dominican
Republic and banded to deceive the uneducated
PX 1077. General Cigar's COHIBA was unbanded in July 1997. In the
letter, General Cigar stated that consumers purchasing counterfeit cigars
banded like the Cuban COHIBA were in fact confused among such cigars,
Cuban Cohibas and General Cigar Cohibas.
In fall 1997, General Cigar successfully sought a preliminary
injunction from this Court against one of Monte Cristi's distributors,
Global Direct Marketing. See General Cigar Co. v. G.D.M., Inc.,
988 F. Supp. 647, 660 (S.D.N.Y. 1997). General Cigar argued to this Court
that all eight Polaroid factors favored
the issuance of a preliminary injunction, and that confusion was
inevitable because "the marks and type of goods are identical, except
that G.D.M.'s Cohiba cigars are inferior." PX 649 at GC 005481. Mark
Perez of Dunhill testified on behalf of General Cigar that differences
between the counterfeit Cuban Cohiba trade dress employed by G.D.M. and
General Cigar trade dress would not be sufficient to dispel confusion
because, "the name is what people attach to the product, not necessarily
the band or the trade dress. The name is the most important thing that
drives consumers I believe." Perez Dep. at 455-56 (acknowledging G.D.M.
testimony). The Court found it "extremely likely that confusion will
occur between the COHIBA marks used by GDM and General Cigar." General
Cigar, 988 F. Supp. at 665.
In 1998, General Cigar brought criminal infringement proceedings
against various Los Angeles operations selling Cohiba cigars bearing the
Cuban Cohiba trade dress. In an affidavit prepared in support of a search
warrant, John R. Geoghegan, Vice President for Strategic Planning and
Brand Development at General Cigar, stated that consumers are "likely to
attribute the inferior quality [of counterfeits] to General Cigar." PX
Also in 1998, General Cigar brought suit, and in November 1999 obtained
a consent injunction against a company called Cohiba de Dominica that
sold cigars, clothing and other goods bearing the
mark COHIBA and using trade dress used by the Cuban COHIBA, some of
which bore the designation "La Habana, Cuba."
The 1998 Cambridge Group Presentation
In 1998, General Cigar retained a market consultant and research firm,
The Cambridge Group, which was paid over $500,000 for its work on a focus
group and quantitative research on several General Cigar brands,
including COHIBA. The Cambridge Group made a presentation to senior
General Cigar management, including Cullman, Jr. on June 15, 1998, in
which it projected transparencies of pages from its report, "Building the
Premium Cigar Consumer and Brand Factbase Progress Update." PX
185. It also provided a hard copy of the report to General Cigar.
One of the report's pages presented at the meeting read as follows:
Consumer Confusion Over "Different Kinds"
of Cohiba Is a Major Concern
Substantial confusion exists over Dominican versus
Knowledgeable people tend to look down on
Dominican Cohibas as an imitator or a fake
Others are simply confused
"There are two brothers, one who makes Cohiba in
Cuba and the other in the Dominican Republic"
Strategically, it appears questionable to
invest behind extending our Cohiba brand to
new categories while this issue remains.
Id. The report contained several other references to consumer confusion,
including a summary which states that "[t]here is serious consumer
confusion over different types of Cohibas." Id. The observations about
COHIBA in the report were generated from "focus group qualitative
research, based on perhaps six to eight groups of about eight cigar
smokers each." Ossip Direct ¶ 83. General Cigar took no corrective
action in response to these findings. General Cigar did not undertake any
investigation or additional research to test the accuracy of the findings
in The Cambridge Group's report.
A 1998 survey taken by NFO Research, Inc. for The Cambridge Group
measured aided awareness of COHIBA at 56%. See PX 181 at NFO 1263.
The 2000 Survey
In late 2000, Ossip conducted a survey designed to measure consumer
confusion between the Cuban COHIBA and the General Cigar COHIBA. The
report on the study is dated March 2001. Households that participate in
an Internet survey panel were sent an e-mail soliciting their
participation if any household member over 21 years of age smokes cigars.
The participating cigar
smokers then accessed a survey questionnaire via the Internet. The
survey interviews took place in October and November 2000.
Of 1873 respondents, 962 were identified as cigar smokers who will buy
premium cigars, defined for the purposes of this study as cigars priced at
$65 or higher for a box of 25 or $2.81 per cigar or higher. This level
was selected by considering cigar prices for approximately 375 individual
cigars for over 80 premium brands shown by Cigar Insider magazine in
Those respondents that had heard of COHIBA, and who indicated that at
least some COHIBA cigars are made in Cuba 30% of respondents were
then shown pictures of a General Cigar COHIBA box, as well as cigars, and
were told that they were from "a box of cigars sold by quality retailers
in the United States." Ossip Direct ¶ 116, 126. The respondents were
then asked questions to determine if they believed that (a) Cuban COHIBAS
and General Cigar COHIBAS were made by the same company; (b) if the two
companies have an association or business connection; and (c) if one
company received authorization or approval from the other to use the name
COHIBA. About 53% of those respondents indicated source confusion.
Ossip's analysis of the data shows a level of source confusion at
a little above 15% in the gender balanced sample
and almost 16% among male smokers. Among all those
who have heard of Cohiba, where the potential for
trading on the Cohiba name may exist, about 21%
Id. at ¶ 121. Among those likely to buy cigars for $120 a box (the low
end of the price range for General Cigar Cohibas), Ossip estimates the
confusion level at 19%, based on the fact that the confusion level for
those who had heard of COHIBA is over 24%.
Simonson contends that the 2000 survey shows that aided awareness of
the Cuban COHIBA was only 28% because that is the percentage of
respondents indicated that they had heard of COHIBA from a list and had
listed Cuba as one of the countries where COHIBA cigars are made.
Simonson Direct ¶ 81. Simonson criticizes the 2000 survey as a measure
of likelihood of confusion because it used "gender balancing," because it
did not use a control in order to determine the "noise level" of the
survey, and because it used a "side-by-side" methodology that
misleadingly asked questions about the Cuban COHIBA and the General Cigar
COHIBA by placing them in close proximity to one another, which allegedly
did not reflect true marketplace. Def.'s PFF ¶ 166-67.
The gender balancing used in the 2000 survey was employed to reflect
the greater tendency of females to respond to surveys, which resulted in
their being over-represented in the survey relation to their numbers in
the premium cigar buyer population. The survey results were therefore
properly adjusted to reflect the
fact that "females would account for about 11% of the premium cigar
buyer population." Ossip Direct ¶ 119.
Simonson argues that "a survey designed to estimate likelihood of
confusion must include a proper control." Simonson Direct ¶ 79. This
categorical statement is made after citing to what Simonson states is the
most common type of survey the "Eveready format," after the case in
which the survey was used, Union Carbide Corp. v. Ever-Ready, Inc.,
531 F.2d 366 (7th Cir. 1976), cert. denied, 429 U.S. 830 (1976). The
study in that seminal case, however, did not contain a control. See Ossip
Direct ¶ 160. A control in such a study would be a fictional mark which
is "equivalent to the junior mark at issue, without infringing on the
senior mark." Simonson Direct ¶ 79. The purpose of a control is to
determine to what extent reports of confusion in fact reflect guessing or
survey bias. It is difficult to determine from Simonson's criticism
exactly how a control could have been helpfully employed in the 2000
survey. Any non-COHIBA word trademark would not serve as an effective
control, while a fictional third COHIBA cigar would clearly infringe on
the senior mark. The likelihood of confusion shown by the 2000 survey
undoubtedly reflects some degree of guessing on the part of the
respondents. However, Simonson has not shown that the survey as designed
would significantly overstate the actual likelihood of confusion.
Simonson also criticizes the 2000 survey for presenting the two COHIBA
brands side-by-side even though the Cuban COHIBA is not sold in the
United States. The two brands are not actually shown side by side at any
point during the survey. However, Simonson argues that the design of the
survey unduly focused the attention of the respondents on the two marks
in a manner "they would not have considered in a normal purchase
situation." Ossip Direct ¶ 157 (quoting Simonson Report). Cubatabaco
submitted evidence at trial, however, showing that over half of the
"heavy users of COHIBA" purchased their cigars on the Internet, Tr.
1357-58, where sales of the Cuban COHIBA and the General Cigar COHIBA are
effectively sold side by side, albeit on different websites. In an
internet cigar forum run by General Cigar, references by participants to
the Cuban COHIBA are hyperlinked to the General Cigar COHIBA, that is,
when the word COHIBA is "clicked on," the user is brought to a website
advertising the General Cigar COHIBA. See Tr. 1364-69. Further, the
numerous implicit references to the Cuban COHIBA in advertising for the
General Cigar COHIBA would likely also cause potential consumers to focus
their attention on the two marks. Under such marketing conditions, the
use of a side-by-side methodology in the 2000 Survey was not misleading.
The 2000 Survey confirms the likelihood of confusion between the COHIBA
marks as evidenced by General Cigar's assessments, its 1997 launch and
advertising, its actions against
the Cubatabaco. COHIBA mark and counterfeit marks, and the assessment of
the Cambridge Group, as found above.
CONCLUSIONS OF LAW
Jurisdiction and Venue
This court has subject matter jurisdiction under 28 U.S.C. § 1331 and
1338(a) for claims arising under the Paris Convention for the Protection
of Industrial Property, the Inter-American Convention for Trademark and
Commercial Protection; under 28 U.S.C. § 1331, 1338(a) and
15 U.S.C. § 1121(a) for claims arising out of alleged violations of
Sections 38, 43(a) and (c), and 44(b) and (h) of the Lanham Act,
15 U.S.C. § 1120, 1125(a) and (c) and 1126(b) and (h); under
28 U.S.C. § 1338 (b) and 1367 for claims arising out of the state law of
unfair competition, misappropriation and dilution. Venue is proper in
this district under 28 U.S.C. § 1391.
The Article 10bis Claim Is Dismissed As Duplicative
General Cigar has contended that Count II of the Complaint, which
alleges a violation of Section 10bis of the International Convention for
the Protection of Industrial Property (the "Paris Convention"), should be
dismissed as it does not confer any rights beyond those conferred by the
common law. General Cigar
cites several cases for the proposition that "trademark protection under
[Article 10bis of] the Paris Union Convention gives no greater protection
than that already provided by section 43(a) of the Lanham Act." Scotch
Whisky Ass'n v. Majestic Distilling Co., 958 F.2d 594, 597 (4th Cir.
1992). See also Int'l Cafe, S.A.L v. Hard Rock Cafe Int'l (U.S.A.),
Inc., 252 F.3d 1274, 1278 (11th Cir. 2001) (same).
Cubatabaco. cites only one case in which simultaneous claims under the
Lanham Act and under foreign treaties, including the Paris Convention,
were permitted to go forward. See Benard Indus. Inc. v. Bayer
Aktienqesellschaft, 38 U.S.P.Q.2d 1422, 1425-26, 1996 WL 218617 (S.D.
Fla. Feb. 29, 1996) (". . . it does not appear that Bayer cannot prove
any set of facts which would entitle it to relief under the [Paris and
Inter-American] Conventions as well as the Lanham Act.").
In the leading case of Vanity Fair Mills v. T. Eaton Co., 234 F.2d 633
(2d Cir. 1956), the Second Circuit held that the Paris Convention
is essentially a compact between the various member
countries to accord in their own countries to citizens
of the other contracting parties the rights comparable
to those accorded their own citizens by their domestic
law. The underlying principle is that foreign
nationals should be given the same treatment in each
of the member countries as that country makes
available to its own citizens.
Id. at 640. Because a United States citizen could not file a distinct
Paris Convention claim alleging unfair competition, neither can
Cubatabaco. See also Piccoli A/S v. Calvin Klein Jeanswear Co.,
19 F. Supp.2d 157, 172 (S.D.N.Y. 1988) (holding that plaintiff's "Paris
Convention claim is duplicative of it Lanham Act claim and thus must be
The Inter-American Convention Claim is Dismissed as Duplicative
Count IV of the Complaint alleges a violation of the prohibition
against unfair competition under Articles 20 and 21 of the General
Inter-American Convention for Trade Mark and Commercial Protection, Feb.
20, 1929, 46 Stat. 2907, 2930-34 ("IAC"). General Cigar argues that the
IAC does not confer any rights beyond those conferred by the common law.
The Second Circuit dismissed a claim under Article 21 of the IAC because
the language of Article 21 "authorizes the prohibition of its specified
acts of unfair competition `unless otherwise effectively dealt with under
the domestic laws of the Contracting States.'" Havana Club Holding,
S.A. v. Galleon S.A., 203 F.3d 116, 134 (2d Cir. 2000). The Second
Circuit then found that "because article 21(c) of the IAC prohibits a
subset of the conduct already effectively prohibited under American law
by Section 43(a)" of the Lanham Act, the plaintiff had failed to state an
Inter-American Convention claim via section 44(h) of the Lanham Act.
Id. at 135 (quoting Article 20, 46 Stat.
at 2932); see also Empresa III, 2002 WL 31251005 at *3 n.2. Accordingly,
Cubatabaco's article 21 claim is dismissed.
Article 20, however, does not contain language relating to whether the
conduct it proscribes is already effectively dealt with by domestic law.
See 46 Stat. at 2930-32. However, Article I of the IAC states the
principle behind the Convention as a whole:
The Contracting States bind themselves to grant to the
nationals of the other Contracting States and to
domiciled foreigners who own a manufacturing or
commercial establishment or an agricultural
development in any of the States which have ratified
or adhered to the present Convention the same rights
and remedies which their laws extend to their own
nationals or domiciled persons with respect to trade
marks, trade names, and the repression of unfair
competition and false indications of geographical
origin or source.
Id. at 2912. The language of Article I establishes that the purpose of
the IAC is analogous to that of the Paris Convention, that is, "to accord
in their own countries to citizens of the other contracting parties the
rights comparable to those accorded their own citizens by their domestic
law." Vanity Fair, 234 F.2d at 640. Accordingly, the IAC confers no
greater rights than are found under domestic law, whether that law is the
common law or the Lanham Act. Cubatabaco's Article 21 claim is therefore
Cubatabaco. argues that this Court's holdings that "Section 44(h)
incorporates the substantive provisions of Articles 20, 21, and 22" and
that "Articles 20 and 21 of the IAC . . . have the force of law under
Section 44(h)", Empresa II, 213 F. Supp.2d at 280 and n.49, imply that
the IAC claims can survive as distinct claims. However, the fact that
these provisions of the IAC have the force of law does not imply that
they make available forms of relief not already available under domestic
law. As the above analysis has shown, they do not.
The Trademark Infringement Claim Under Section 43(a) of the Lanham Act
"The purpose of the trademark laws is to protect the public from the
confusion and deception which flows from the copying of marks which,
through their distinctiveness or exclusivity of use, identify the origin
of the marked products." W.E. Bassett Co. v. Revlon, Inc., 3554 F.2d
868, 871 (2d Cir. 1966) (Lumbard, C.J.). The property right of the
plaintiff is important, but it is the perspective of the consumer that
must be borne in mind in determining if infringement has occurred. See 1
McCarthy on Trademarks and Unfair Competition ("McCarthy") § 2:33 at 2-58
(4th ed. 2000)). Accordingly, trademark infringement may be found even
when the two parties are not in competition and no harm will necessarily
befall the plaintiff as a result of the infringement.
Cubatabaco. alleges that General Cigar's conduct with respect to the
COHIBA brand constitutes willful trademark infringement and trade dress
infringement in violation of Section 43(a) of the Lanham Act,
15 U.S.C. § 1125(a). To prevail on this claim, Cubatabaco. must establish
both that its mark is entitled to protection and that General Cigar's
"use of the mark is likely to cause consumers confusion as to the origin
or sponsorship of the defendant's goods." Virgin Enterprises, Ltd. v.
Nawab, 335 F.3d 141, 146 (2d Cir. 2003) (citing Gruner Jahr Publ'g v.
Meredith Corp., 991 F.2d 1072, 1074 (2d Cir. 1993)). See also Time, Inc.
v. Petersen Publ'g Co. L.L.C., 173 F.3d 113, 117 (2d Cir. 1999) (noting
that Gruner test is applicable to claims brought under §§ 1125(a)).
Cubatabaco. Has a Protectable Mark
The Court has previously held that General Cigar abandoned the COHIBA
mark between 1987 and 1992. Empresa II, 213 F. Supp.2d at 271.
Accordingly, General Cigar's 1981 registration and 1986 incontestability
declaration are cancelled. Id. Further, the Court rejected General
Cigar's argument that Cubatabaco. cannot be the owner of the COHIBA mark
because it did not register the mark with the USPTO because "one need not
have registered the mark to `own' it." Id. at 286.
General Cigar argues that it is the owner of the mark because it was
the first to use the mark after it was abandoned. "It is well established
that the standard test of ownership is priority of use." Tactica Int'l,
Inc. v. Atlantic Horizon Int'l, Inc., 154 F. Supp.2d 586, 599 (S.D.N.Y.
2001) (citing 2 McCarthy § 16.1). While Cubatabaco. was using the COHIBA
mark throughout the world in 1992, it is also well established that
"foreign use of a trademark cannot form the basis for establishing
priority in the United States." Id. (citing Person's Co. v. Christman,
900 F.2d 1565, 1568-69 (Fed. Cir. 1990)) ("[F]oreign use has no effect on
U.S. commerce and cannot form the basis for a holding that [the foreign
user] has priority here."). This principle is known as the territoriality
principle.*fn8 See Grupo Gigante, S.A. v. Dallo & Co., Inc.,
119 F. Supp.2d 1083, 1089 (C.D. Cal. 2000). Because of the
embargo, Cubatabaco. could not legally use the COHIBA mark commercially
in the United States.
General Cigar's priority of use, however, is not the end of the
matter. Under the common-law "well-known" or "famous marks" doctrine, "a
party with a well-known mark at the time another party starts to use the
mark has priority over the party using the mark." Empresa II, 213 F.
Supp.2d at 286; see also 4 McCarthy at 29:4 (recognizing the doctrine); 3
Rudolf Callman, The Law of Unfair Competition, Trademarks and Monopolies
(4th ed.) ("Callman") § 20:26 at 20-170-73 (same). The concept of a
well-known mark was first recognized in Article 6bis of the Paris
Convention. See Frederick W. Mostert, Famous and Well-Known Marks 7
(1997). Article 6bis states, in relevant part,
(1) The countries of the Union undertake, ex officio
if their legislation so permits, or at the request of
an interested party, to refuse or to cancel the
registration, and to prohibit the use, of a trademark
which constitutes a reproduction, an imitation, or a
translation, liable to create confusion, of a mark
considered by the competent authority of the country
of registration or use to be well known in that
country as being already the mark of a person entitled
to the benefits of this Convention and used for
identical or similar goods. These provisions shall
also apply when the essential part of the mark
constitutes a reproduction of any such well-known mark
or an imitation liable to create confusion therewith.
It has already been held that "the rights guaranteed by Article 6bis have
been subsumed by federal and common law." Empresa III, 2002 WL 31251005,
The well-known marks doctrine was applied in two frequently cited New
York cases: Vaudable v. Montmartre, Inc., 20 Misc.2d 757, 193 N.Y.S.2d 332
(N.Y.Sup.Ct. 1956) and Maison Prunier v. Prunier's Restaurant & Cafe,
Inc., 159 Misc. 551, 288 N.Y.S. 529 (N.Y. Sup.Ct. 1936). The doctrine has
also been recognized in decisions of the Trademark Trial and Appeal Board
("TTAB"). See, e.g., Mastic Inc. v. Mastic Corp., 230 U.S.P.Q. 699, 701
n. 3 (T.T.A.B. 1986); The All England Lawn Tennis Club (Wimbledon) v.
Creations Aromatigues, Inc., 220 U.S.P.Q. 1069, 1072, 1983 WL 51903
(T.T.A.B. 1983); Techex, Ltd, v. Dvorkovitz, 220 U.S.P.Q. 81, 83, 1983 WL
51872 (T.T.A.B. 1983); Mother's Restaurants, Inc. v. Mother's Other
Kitchen, 218 U.S.P.Q. 1046, 1048 (T.T.A.B. 1983). While decisions of the
TTAB are "not binding courts within this Circuit, [they] are nonetheless
`to be accorded great weight.'" Buti v. Perosa, S.R.L., 139 F.3d 98, 105
(2d Cir. 1998) (quoting Murphy Door Bed Co. v. Interior Sleep Svs.,
Inc., 874 F.2d 95, 101 (2d Cir. 1989)). The Second Circuit recognized the
famous marks exception to the territoriality principle in dicta in Buti.
See 139 F.3d at 104 n.2. The district court in Buti had considered the
famous marks doctrine, although it concluded that the mark in question
was insufficiently famous to trigger the doctrine. See Buti v. Perosa,
S.R.L., 935 F. Supp. 458, 473-74 (S.D.N.Y. 1996).
A Secondary Meaning Level of Recognition Is Required For A Mark to be
This court has held that the relevant question is "whether the Cuban
COHIBA was `so famous that its reputation [was] known in the United
States' and thus `should be legally recognized in the United States.'"
Empresa II, 213 F. Supp.2d at 285 (quoting Grupo Gigante, 119 F. Supp.2d
at 1089). It was not decided, however, what level of renown is required
to establish a known reputation.
The available case law does not provide a consistent standard to
determine whether a mark is famous within the meaning of the famous marks
doctrine. Several TTAB decisions, however, cite the requirement that the
mark must be famous "within the meaning of Vaudable v. Montmartre." See,
e.g., Mother's Restaurant, 218 U.S.P.Q. at 1048; All England Lawn Tennis,
220 U.S.P.Q. at 1072. See also Buti, 139 F.3d at 104 n.2 (citing the
Vaudable standard). In Vaudable, the owner and operator of Maxim's
restaurant in Paris sought to restrain defendants from opening a
restaurant in New York City using the same name. See 20 Misc.2d at 758.
Its fame is described as follows:
It received wide publicity as the setting of a
substantial portion of Lehar's operetta, "The Merry
Widow," has been the subject over a long period of
years of numerous newspaper and magazine articles, and
has been mentioned by name and filmed in movies and
television. There is no doubt as to its unique and
eminent position as a restaurant of international fame
and prestige. It is, of course, well known in this
country, particularly to the class of people residing
in the cosmopolitan city of New York who dine out.
Id. This level of fame was not, however, required for the court to find
that plaintiff's mark entitled to protection. In response to defendant's
argument that the name Maxim's had originally become famous as a name of
both a "smokeless powder" and a machine gun, the court held that it is
not the source of the name that is relevant, but "the origination and
development of its use in a particular field which may entitle the user
thereof to protection by virtue of the secondary meaning acquired
therein." Id. at 758-59 (emphasis added). As shown below, a mark which
has achieved secondary meaning standard need not have achieved a "unique
and eminent position" internationally, or in the United States.
Secondary meaning is a characteristic of descriptive marks, that is,
marks that describe the product in some way, rather than of arbitrary or
fanciful marks such as COHIBA. Secondary meaning
is used generally to indicate that a mark or dress
"has come through use to be uniquely associated with a
specific source." Restatement (Third) of Unfair
Competition § 13, Comment (Tent. Draft No. 2, Mar.
23, 1990). "To establish secondary meaning, a
manufacturer must show that, in the minds of the
public, the primary significance of a product feature
or term is to identify the source of the product
rather than the product itself."
Two Pesos, Inc. v. Taco. Cabana, Inc., 505 U.S. 763, 766 n.4, 112 S.Ct
2753, 120 L.Ed.2d 615 (1992) (quoting Inwood Laboratories, Inc. v. Ives
Laboratories, Inc., 456 U.S. 844
, 851, n. 11,
102 S.Ct. 2182, 2187, n. 11, 72 L.Ed.2d 606 (1982)). The secondary
meaning standard can, however, be applied by analogy to distinctive marks
such as COHIBA because some of the measures of secondary meaning can be
appropriately applied to descriptive and distinctive marks. District
courts considering the degree of fame needed to satisfy the famous marks
doctrine have used a secondary meaning standard. See Grupo Gigante, 119
F. Supp.2d at 1091; Buti, 935 F. Supp. at 473-74 (because defendant failed
to offer admissible evidence of "any secondary meaning of its [trademark]
in the United States . . . the Court cannot find the Vaudable exception
While Cubatabaco. agrees that the secondary meaning inquiry may be
partially analogous to the question of the level of fame needed to
establish that a mark is protectable under the famous marks doctrine, it
argues that less renown should be required under the famous marks
doctrine because the secondary meaning standard is applied to restrict
the use of a descriptive term that other producers would have a
legitimate reason to use. In the case of a distinctive mark such as
COHIBA, by contrast, no other producer would have a legitimate reason to
use the mark. While Cubatabaco. raises a cogent distinction, it fails to
mention, however, that the secondary meaning standard is applied in the
domestic context and the famous marks doctrine is applied
internationally. Because the famous marks doctrine carves out an
exception to the well settled territoriality principle, and may
result in the cancellation of a trademark by the domestic registrant even
though the foreign user neither filed its own registration nor contested
the domestic user's registration, there is no justification for requiring
less renown than the secondary meaning standard.
General Cigar argues that the appropriate standard is the statutory
standard for fame contained in the Federal Trademark Anti-Dilution Act
("FTDA"), 15 U.S.C. § 1125(c). The FTDA protects only those marks that
have shown "a substantial degree of fame." TCPIP Holding Co. v. Haar
Communications Inc., 244 F.3d 88, 99 (2d Cir. 2001). The legislative
report on the FTDA used as examples "Dupont, Buick, and Kodak . . . marks
that for the major part of the century have been household words
throughout the United States." Id. (citing H.R. Rep. No. 104-374, at 3
(1995)). While a legislative report is not dispositive as to the standard
of fame required, the Second Circuit found it improbable that Congress
intended to confer anti-dilution protection on "marks that have enjoyed
only brief fame in a small part of the country, or among a small segment
of the population . . ." Id. As shown below, in November 1992 the COHIBA
mark could not meet the standard for fame under the FTDA.
General Cigar makes no argument for why the standard for anti-dilution
actions should be applicable in the context of the famous marks doctrine,
except for the empirical observation that
"[t]he FTDA standard for fame is consistent with cases analyzing fame
under the well-known marks doctrine." Def.'s Post-Trial Mem. at 17. Each
of the cases cited by General Cigar draw on the Vaudable standard which,
as shown above, requires a showing of secondary meaning and not a
"substantial degree of fame."
There are a number of reasons why the FTDA standard is inappropriate in
the context of the famous marks doctrine. As noted in the leading
treatise on trademarks, "[t]he international `famous marks' doctrine
developed outside the United States and addresses an issue of trademark
protection that is significantly different from that of dilution." 4
McCarthy, § 24:92 at 24-166 n.1. The primary purpose of the FTDA is to
protect marks with regard to use on dissimilar goods. See H.R. Rep. No.
104-374, at 3, reprinted in 1995 U.S.C.C.A.N. 1029, 1030 ("Thus for
example, the use of DUPONT shoes, BUICK aspirin, and KODAK pianos would
be actionable under [the FTDA]."). The protection available under the
FTDA is much greater. "It permits the owner of a qualified, famous mark
to enjoin junior uses throughout commerce, regardless of the absence of
competition or confusion." TCPIP, 244 F.3d at 95 (citing 15 U.S.C. § 1127).
Accordingly, "the standard for fame and distinctiveness required to
obtain anti-dilution protection is more rigorous than that required to
seek infringement protection." Id. (quoting I.P. Lund Trading v. Kohler
Co., 163 F.3d 27, 47 (1st Cir. 1998)).
Leading commentators have suggested standards that are comparable to
the secondary meaning standard used in Vaudable and Grupo Gigante.
McCarthy argues that
If a mark used only on products and services sold
abroad is so famous that its reputation is known in
the United States, then that mark should be legally
recognized in the United States. If a junior user were
to use a mark in the United States that is confusingly
similar to the foreign famous mark, then there would,
by definition, be a likelihood of confusion among
United States customers.
4 McCarthy, § 29:4 at 29-10. Further commentary strongly suggest that the
"known reputation" standard for fame is significantly lower than the
FTDA's. In reference to the Vaudable case, McCarthy states that the
famous mark rule may be interpreted "as not constituting an exception to
the general rule at all, since it could be said that the foreign service
business had already established priority in the United States through
advertising and reputation prior to the defendant's opening." Id. The
footnote to this sentence cites to another section of the treatise that
discusses the Tea Rose-Rectanus doctrine. Under the doctrine, "priority
of use of a mark in one area of the United States does not give rights to
prevent its use by a good faith and innocent user in a remote geographic
area." Grupo Gigante, 119 F. Supp.2d at 1090 (citing McCarthy § 26:2).
There is an exception, however, "when a senior user located in one area
of the United States has achieved an appreciable level of fame in the
junior user's trading area." Id.
While McCarthy states that the Tea Rose-Rectanus doctrine does not
apply outside the United States, see § 26:5 at 26-12, the citation to the
doctrine in the discussion of the famous marks doctrine suggests that the
Tea Rose-Rectanus doctrine may provide guidance in applying the famous
marks doctrine. See Grupo Gigante, 119 F. Supp.2d at 1090 (finding the
Tea Rose-Rectanus doctrine "helpful in delineating the famous mark
doctrine."). The Grupo Gigante court drew on the doctrine for the purpose
of restricting the fame of the mark at issue to the geographical area of
the United States where the plaintiffs sought protection. Id. at
1090-91. That aspect of the doctrine is not relevant in the instant case
because premium cigar smokers are spread throughout the United States.
Instead, the reference to the Tea Rose-Rectanus doctrine in McCarthy's
discussion of the famous marks doctrine suggests that Cubatabaco. need
only show that the COHIBA mark had a "known reputation" to premium cigar
smokers in November 1992. This standard is consistent with the secondary
meaning standard from Vaudable, discussed above.
Factors To Be Assessed In Determining COHIBA's Fame in November 1992
The same factors which are used in the caselaw in determining whether a
trademark has established a secondary meaning will obviously be critical
in determining whether COHIBA was famous within the meaning of the famous
marks doctrine. However, other factors have also been suggested in an
international document which
has been endorsed by the United States. The Joint Recommendation
Concerning Provisions on the Protection of Well-Known Marks (the "Joint
Recommendation") has been adopted by both intergovernmental bodies
concerned with trademark protection: the General Assembly of the World
Intellectual Property Organization ("WIPO") and the Assembly of the Paris
Union.*fn9 It identifies factors relevant to determining whether a mark
Determination of Whether a Mark is a Well-Known
Mark in a Member State
(1) [Factors for Consideration]
(a) In determining whether a mark is a well-known
mark, the competent authority shall take into
account any circumstances from which it may be
inferred that the mark is well known.
(b) In particular, the competent authority shall
consider information submitted to it with respect to
factors from which it may be inferred that the mark
is, or is not, well known, including, but not
limited to, information concerning the following:
1. the degree of knowledge or recognition of
the mark in the relevant sector of the public;
2. the duration, extent and geographical area
of any use of the mark;
3. the duration, extent and geographical area of
any promotion of the mark, including advertising
or publicity and the presentation, at fairs or
exhibitions, of the goods and/or services to which
the mark applies;
4. the duration and geographical area of any
registrations, and/or any applications for
registration, of the mark, to the extent that
they reflect use or recognition of the mark;
5. the record of successful enforcement of rights
in the mark, in particular, the extent to which
the mark was recognized as well known by competent
6. the value associated with the mark.
(c) The above factors, which are guidelines to
assist the competent authority to determine whether
the mark is a well-known mark, are not
pre-conditions for reaching that determination.
Rather, the determination in each case will depend
upon the particular circumstances of that case. In
some cases all of the factors may be relevant. In
other cases some of the factors may be relevant. In
still other cases none of the factors may be
relevant, and the decision may be based on
additional factors that are not listed in
subparagraph (b), above. Such additional factors may
be relevant, alone, or in combination with one or
more of the factors listed in subparagraph (b),
The WIPO factors do not provide guidance as to what level of fame
is required to find that a mark is well-known. However, they do suggest
that the inquiry into fame must be wide-ranging, taking into account any
available relevant evidence.
The factors to be considered in determining secondary meaning in this
Circuit are similarly wide-ranging. They include "(1) advertising
expenditures, (2) consumer studies linking the mark to a source, (3)
unsolicited media coverage of the product, (4) sales success, (5)
attempts to plagiarize the mark, and, (6) length and exclusivity of the
mark's use." Genesee Brewing Co. v. Stroh Brewing Co., 124 F.3d 137, 143
(2d Cir. 1997) (quoting
Centaur Communications, Ltd, v. A/S/M Communications, Inc., 830 F.2d 1217,
1221 (2d Cir. 1987)).
Factors relating to advertising and sales will be of minimal relevance
because of the inability to sell Cuban COHIBA cigars. The sixth factor is
also not relevant to the instant litigation, as it has been previously
determined that the COHIBA mark was in the public domain in November 1992
following General Cigar's abandonment of the mark. Accordingly, the
determination of whether the fame of the COHIBA mark is equivalent to the
secondary meaning standard for recognition will rest largely, but not
exclusively, on the three remaining factors.
1. Consumer Studies
Evidence from consumer surveys rarely provides the sole evidence of
secondary meaning. See 5 McCarthy, § 32:190 at 32-315 ("survey data is
not a requirement, and secondary meaning can be, and often is, proven by
circumstantial evidence.") A survey of the caselaw, then, cannot provide
a magic number above which secondary meaning may be established.
Further, different surveys are taken in different contexts, with
different questions and measurement techniques. Nevertheless, they
provide a rough estimate of the level of recognition required.
In Grupo Gigante, the court dismissed the probativeness of two of the
three pieces of evidence put forward by plaintiffs in showing the renown
of their foreign mark, leaving only a survey conducted one year prior to
defendant's use of the mark. See Grupo Gigante, 119 F. Supp.2d at
1092-93. Upon a showing that 20-22% of the relevant public was aware of
plaintiff's mark, the court found that the secondary meaning standard was
met, and that plaintiff's mark was protectable. Id. The court made this
determination by drawing on caselaw on likelihood of confusion, after
citing the argument from McCarthy that "there is no logical reason to
require [a] higher percentage to prove secondary meaning than to prove
likelihood of confusion." Id. (citing 5 McCarthy, § 32:190).
In the Second Circuit, survey data showing 50% or greater recognition
has generally been required to establish secondary meaning. See Harlequin
Enters. Ltd, v. Gulf & Western Corp., 644 F.2d 946, 950 n.2 (2d Cir.
1981) (50% recognition of publisher's name properly found probative but
"not conclusive" of secondary meaning); RJR Foods, Inc. v. White Rock
Corp., 201 U.S.P.Q. 578, 581 (S.D.N.Y. 1978) (66% recognition supported
finding of secondary meaning), aff'd, 603 F.2d 1058 (2d Cir. 1981); Essie
Cosmetics, Ltd v. Dae Do Int'l, Ltd., 808 F. Supp. 952, 955, 960
(S.D.N.Y. 1992) (65% recognition provided "ample evidence" that trade
dress had acquired secondary meaning). General Cigar cites Zippo Mfg.
Co. v. Rogers Imports, Inc., 216 F. Supp. 670, 689-90 (S.D.N.Y. 1963) for
the proposition that 25% recognition is insufficient to
establish secondary meaning. However, the court did not treat the
25% survey figure as indicative of the actual level of awareness because
the survey was taken three years after the relevant date, and because the
survey also showed that nearly as many respondents identified the trade
dress with another producer. General Cigar also cites the testimony of
Cubatabaco's expert, Ossip, to the effect that 50% awareness is required
to find a trademark well-known. While Ossip's expertise in brand
recognition is noted by the Court, his opinions as to legal standards
carry no weight.
General Cigar has not argued that the promotion of its COHIBA mark from
1981-1987 would have resulted in any residual fame of the COHIBA mark in
November 1992. Indeed, General Cigar's position is that the mark was
virtually unknown at that time. Accordingly, any consumer studies which
may be useful for determining the November 1992 level of fame would be
measuring the level of fame of the Cuban COHIBA.
The absence of any consumer studies from the relevant period
necessitates making inferences from surveys conducted both beforehand and
afterward. The Shanken Survey, conducted in December 1991, shows a low
level of trial awareness of COHIBA. COHIBA is mentioned by only 1.1% of
respondents when asked about the brand of cigar normally smoked. The most
impressive result is the 6% of respondents who spend more than $3.50 per
cigar who named COHIBA as the finest cigar they had smoked.
The Shanken Survey is deeply flawed, however, for it takes no measure of
either unaided or aided awareness, and focuses only on those cigars
actually smoked. Given the extraordinary difficulty of obtaining a Cuban
COHIBA, the results are entitled to little weight. The survey also
underestimates the renown of the mark in November 1992 because it was
taken before the considerable publicity that COHIBA received around the
time of the premiere issue of Cigar Aficionado.
The next survey was not reported until September 1994, although it
likely was administered somewhat earlier. That survey reported an unaided
awareness figure of 14.5% for COHIBA, and a trial awareness of 18.5%.
Unfortunately, aided awareness was not tested. Cubatabaco's expert,
Ossip, has used the average differential between unaided and aided
awareness for other brands to estimate that COHIBA's aided awareness
should be approximately 48-52% greater than the unaided awareness
figures. General Cigar's expert, Simonson, counters with the reductio ad
absurdum argument that an entirely unknown brand, with 0% unaided
awareness, would still score at least 48% aided awareness. Simonson is
unpersuasive on this point, however, because Ossip has compared COHIBA to
the other brands surveyed using a number of methods which demonstrate
that COHIBA is not an outlier brand whose aided awareness figures should
be expected to differ significantly from the others. Although it is
impossible to determine a particular figure from the data presented,
Ossip has shown persuasively that COHIBA's aided
awareness in September 1994 is significantly higher than its 14.5%
unaided awareness for that period.
It is also impossible, from survey evidence alone, to determine whether
COHIBA's level of renown is closer to the September 1994 survey or the
December 1991 survey. Other evidence is required to determine this
2. Unsolicited Media Coverage
With the exception of the coverage related to the launch of Cigar
Aficionado, the 46 articles mentioning COHIBA between 1986 and 1992 are
minimally probative of the level of recognition of the mark in November
1992. Because the relevant public is the premium or super-premium cigar
smoker, which numbered approximately half a million in 1992, mentions of
the product in general circulation publications would not be expected.
Mentions of COHIBA during this period, however, are quite favorable,
referring to the cigar either as Fidel Castro's preferred brand (until he
quit smoking), or as the best of the Cuban cigars.
The coverage of COHIBA in first The Wine Spectator and then Cigar
Aficionado cannot be considered entirely unsolicited, given the cozy
relationship that has been described between Cubatabaco's marketing
department and the editorial staff of Cigar Aficionado, which shares
editorial staff with its sister
publication. However, even if the COHIBA-related articles published in
both magazines are "puff pieces," they have undeniably generated positive
publicity for the brand. The Cuban COHIBA received the strongest possible
endorsement in the premiere issue of Cigar Aficionado. Praise for COHIBA
in the premiere issue also spilled over into magazines with wider
circulation, such as Forbes, Newsweek, and the Dallas Morning News.
Cubatabaco. argues that the circulation figures of Cigar Aficionado
demonstrate that 25% of the premium cigar smokers in the United States
were aware of COHIBA because of the premiere issue. Such an inference is
not warranted given that some issues may have been received by those who
do not smoke cigars, and the issue may have been unread by others.
Cubatabaco. also argues that a premiere issue of a magazine would have
strong "pass-along" readership. While the publication and distribution of
the premiere issue, by itself is not sufficient to establish a 25%
awareness of the COHIBA brand, it is undoubtedly probative evidence that
awareness increased significantly from the time when the Shanken Survey
3. Attempts to Plagiarize the Mark
General Cigar argues that because Cubatabaco. did not have a
protectable mark in 1992, any evidence of copying cannot be used to
establish secondary meaning. It is true that "[p]roof of
intentional copying, by itself, does not trigger any presumption of
secondary meaning under Second Circuit precedent." Kaufman & Fisher
Wish, Ltd, v. F.A.O. Schwarz, 184 F. Supp.2d 311, 319 (S.D.N.Y. 2001).
General Cigar urges an even stronger holding, namely that intentional
copying is irrelevant if the trademark is not protectable. See Erqotron,
Inc. v. Herqo Erqonomic Support Systems, Inc., No. 94 Civ. 2732, 1996 WL
143903, at *9 (S.D.N.Y. 1996). However, Erqotron found evidence of
copying irrelevant because the trade dress in question was not
distinctive and because the defendant believed it was copying only
functional features. Id. Because COHIBA is a distinctive mark, evidence
of copying may be probative.
Also inapposite is Person's Co. v. Christman, 900 F.2d 1565, 1570
(Fed. Cir. 1990), in which the court found that deliberate copying of a
foreign trademark did not establish bad faith on the defendant's part.
The bad faith inquiry is distinct from an inquiry into fame or secondary
meaning, and the Person's court had already established that the
plaintiff's company "had no goodwill and the `PERSON'S' mark had no
reputation here." Id. at 1569-70. The Second Circuit has held that
"imitative intent can help support a finding of secondary meaning."
Bristol-Myers Squibb Co. v. McNeil-P.P.C., Inc., 973 F.2d 1033, 1042 (2d
Cir. 1992). Accordingly, General Cigar's intentions, as well as its
statements made at the time it was reintroducing the mark, will be
considered as evidence of secondary meaning.
Because General Cigar had abandoned the COHIBA mark in 1992, see
Empresa II, 213 F. Supp.2d at 271, the decision to use the name again in
1992, by itself, provides strong evidence of intentional copying. General
Cigar argues that it used the COHIBA name at least in part because
Cubatabaco, through Garrido, acknowledged that it did not own the U.S.
rights to COHIBA. Even if Garrido had said something to that effect, it
would not demonstrate that General Cigar was not plagiarizing the COHIBA
mark for purposes of the secondary meaning inquiry, in view of the facts
found above to the contrary.
Beyond the evidence of fame provided by the mere fact of the adoption
of the COHIBA name, there is further evidence that the decision to
reintroduce the COHIBA brand was connected with the fame of the COHIBA
mark. General Cigar made the decision in part to capitalize on the
success of the Cuban COHIBA brand and especially the good ratings and the
notoriety that it had received in Cigar Aficionado. According to General
Cigar, the choice of the COHIBA name reflected not the fact that the
brand was famous in November 1992, but that the brand would grown in
prominence as a result of the publicity and the high rankings it was given
in Cigar Aficionado.
Contemporaneous statements from General Cigar, however, demonstrate
that it regarded the brand as well-known at that time. The January 14,
1993 memo from Milstein to General Cigar executives
states that the rationale for seeking permission from Cubatabaco. to
use the COHIBA trade dress is "[t]o aid GC in successfully repositioning
and relaunching its Cohiba brand cigar, it would be useful to exploit the
popularity, familiarity, brand recognition and overall success of the
Cuban Cohiba." PX 1084. General Cigar argues that this referred to the
success of the brand outside the U.S., and that in any case the memo
reflected talking points to be used with Cubatabaco, and was therefore
designed to be flattering. While the context of the memo diminishes its
probativeness as an indicator of fame, it is not true, as General Cigar
argues, that it shows only "that the Cuban COHIBA was prominent in the
minds of General Cigar executives." Def.'s Mem. at 10. It is unlikely
that General Cigar based its exploitation strategy on such an extremely
constricted sense of popularity, familiarity and brand recognition.
The strategy document "Marketing the Cohiba Cigar," PX 966, prepared
either by McCaffery, Ratner, or General Cigar, similarly describes COHIBA
as "the magic word in the cigar industry," and as having "a high
recognition factor here in the U.S. despite the fact that it cannot be
purchased in the country." Id. General Cigar argues that the document was
written by someone with little knowledge of the cigar industry, and that
it was created at a time when General Cigar's management were heavily
focused on the Cuban COHIBA and the ratings it had received in Cigar
Aficionado. As with the Milstein memo, these circumstances diminish the
import given to the claims made about the fame of the
COHIBA. However, because McCaffery, Ratner and General Cigar would
have no reason to misrepresent the fame of the Cuban COHIBA in these
documents, they provide an important perspective on the renown of the
Cuban COHIBA to premium cigar smokers in late 1992.
In March 1994, a buyer for Dunhill described the General Cigar COHIBA
as selling "very well simply because of the strength of the [Cuban
COHIBA] name." PX 899. The buyer also described the Cuban COHIBA as "the
most legendary cigars in the U.S. market where they cannot legally be
purchased." Id. While the fact that Dunhill was the exclusive retailer for
the General Cigar COHIBA may lead to some exaggeration, the remainder of
the letter does not uniformly praise every cigar brand. Its assessment of
the fame of the brand in March 1994 and, implicitly, some time before
that, is entitled to some weight.
Advertisements by Dunhill of the General Cigar COHIBA at time refer to
its Cuban counterpart as the "Cuban legend," PX 335, and "this celebrated
range of Cuban origin." PX 1153. More than any internal document, a
public advertisement is likely to overstate the prestige and recognition
of the brand with which it attempts to create an association. However,
the COHIBA name must resonate with premium cigar smokers in order for
such an advertising strategy to be effective.
In light of the credible evidence presented by Cubatabaco. of the level
of renown of the COHIBA name in November 1992, it is concluded that the
COHIBA trademark achieved a level of fame consistent with secondary
meaning as described in Vaudable and other cases. The COHIBA mark is
therefore famous within the meaning of the famous marks doctrine, and it
is concluded that Cubatabaco. had a legally protectable right to the mark
at that time.
A Likelihood of Confusion Exists Between the Cuban COHIBA and the
General Cigar COHIBA
In Empresa II, this Court held that, for the purposes of Cubatabaco's
motion to dismiss General Cigar's equitable defenses, "Cubatabaco's claim
of likelihood of confusion is . . . not brought into reasonable doubt."
213 F. Supp.2d at 275 (internal quotations omitted). Both parties have
submitted further evidence to show that there is, or is not, a likelihood
of confusion. After considering those submissions, at trial and
afterward, it is concluded that the evidence supports the prior ruling
that there is a likelihood of confusion between the Cuban COHIBA and the
General Cigar COHIBA.
The standard test for confusion in this Circuit is laid out in Polaroid
Corp. v. Polarad Elec. Corp., 287 F.2d 492, 495 (2d Cir. 1961). The
factors are: (1) the strength of the plaintiff's mark; (2) the similarity
of the plaintiff's and defendant's marks;
(3) the comparative proximity of the services; (4) the likelihood that
plaintiff will "bridge the gap" and offer a service like defendants; (5)
actual confusion; (6) good faith on the defendant's part; (7) the quality
of the defendant's service; and (8) the sophistication of the buyers. See
also Estee Lauder, Inc. v. The Gap, Inc., 108 F.3d 1503, 1510 (2d Cir.
1997); Empresa II, 213 F. Supp.2d at 274. The Polaroid factors are "not
dispositive, and additional factors may be considered or initial factors
abandoned." Gruner Jahr USA Publ'g v. Meredith Corp., 991 F.2d 1072,
1077 (2d Cir. 1993).
General Cigar acknowledges that if the Cuban COHIBA were currently
available in the U.S., the fact that both products have the same name and
both are cigars would, as a practical matter, "end the inquiry under the
Polaroid test." Def.'s Post-Trial Mem. at 46 n.24. It argues, however,
that the embargo against Cuban goods casts the analysis in an entirely
different light. Because the embargo has been in place for four decades,
General Cigar argues, consumers are highly aware that cigars sold in the
U.S. are not made in Cuba and contain no Cuban tobacco.
The embargo significantly changes the Polaroid analysis. When two marks
are identical and are used for the same product in the same market,
consumer confusion is "inevitable." Empresa II, 213 F. Supp.2d at 274
(collecting cases). The unavailability of the Cuban COHIBA makes the
issue of confusion a closer call. In
addition, not all forms of consumer confusion are relevant in the context
of a trademark infringement action. "[T]rademark infringement protects
only against mistaken purchasing decisions and not against confusion
generally." Lang v. Retirement Living Publishing Co., 949 F.2d 576, 583
(2d Cir. 1991). General Cigar argues that, to the extent that consumers
may have mistaken impressions about past or present relations between the
Cuban COHIBA and the General Cigar COHIBA, such confusion is unrelated to
In particular, General Cigar argues that "[a] consumer who mistakenly
believes that the maker of the General Cigar COHIBA had once been
affiliated with the maker of the Cuban COHIBA does not buy it under the
misapprehension that it is produced or sponsored by Cubatabaco." Def.'s
Post-Trial Reply Brief at 33. General Cigar provides no support for this
proposition. As previously noted by this Court, "the embargo does not
prevent a Cubatabaco-sponsored cigar from being sold in the United States
under similar circumstances." Empresa II, 213 F. Supp.2d at 275 (citing
31 C.F.R. § 515.204; 515.302-303); see also Dallas Cowboys Cheerleaders,
Inc. v. Pussycat Cinema, Ltd., 604 F.2d 200, 204-05 (2d Cir. 1979) ("The
public's belief that the mark's owner sponsored or otherwise approved the
use of the trademark satisfies the confusion requirement.").
In order for confusion between the two brands to be relevant in the
present litigation, there must be a significant risk that the consumer
will make a purchasing decision based not on the goodwill or reputed
quality of the General Cigar COHIBA but on the mistaken association with
the Cuban COHIBA, a brand with a reputation as being one of the best
cigars in the world. See e.g., El Greco. Leather Prods. Co. v. Shoe
World, Inc., 806 F.2d 392, 395 (2d Cir. 1986) ("One of the most valuable
and important protections afforded by the Lanham Act is the right to
control the quality of the good manufactured and sold under the holder's
trademark."); 1 McCarthy, § 3-2 at 3-3 (among the functions which
trademarks perform is "[t]o signify that all goods bearing the trademark
are of an equal level of quality."). While it is true that a
misapprehension as to historical lineage does not, by itself, necessarily
imply that the consumer will believe that the quality of the Cuban COHIBA
is imparted to the General Cigar COHIBA, such confusion is certainly
possible. In examining the likelihood of confusion under the Polaroid
factors, that possibility must be considered.
1. Strength of Plaintiff's Mark
The strength of a trademark encompasses both the mark's inherent
distinctiveness, or its arbitrariness in relation to the product for
which it is used, and its "acquired distinctiveness," or "the extent to
which prominent use of the mark in commerce has
resulted in a high degree of consumer recognition." Virgin Enterprises
Ltd. v. Nawab, 335 F.3d 141, 147 (2d Cir. 2003). Cubatabaco's COHIBA mark
is arbitrary or fanciful for use on cigars. See General Cigar Co. v.
G.D.M., Inc., 988 F. Supp. 647, 660 (S.D.N.Y. 1997) ("It seems doubtful
that prospective purchasers of COHIBA cigars . . . would make the
association between the mark and the word in a language spoken by the
indigenous population of the Dominican Republic."). Further, the Cuban
COHIBA also has significant acquired distinctiveness. The findings above
detail the fame of the mark in November 1992. By the time of the
introduction of the super-premium COHIBA by General Cigar in 1997, as
Cullman, Jr. testified, "the Cuban Cohiba was certainly well-known." Tr.
1103. The strength of Cubatabaco's COHIBA mark weighs toward a likelihood
2. Similarity Between the Two Marks
Because Cubatabaco. has alleged infringement only of the COHIBA word
mark, the fact that the two marks are identical also weighs toward a
likelihood of confusion. Further weighing toward confusion is the
testimony of Mark Perez, a buyer for Dunhill, who acknowledged the
statement he had made in previous litigation by General Cigar with
respect to infringement of the COHIBA mark by a company selling cigars in
the U.S., that "the name is what people attach to the product, not
necessarily the band or the trade dress. The name is the most important
thing that drives consumers I
believe." Perez Dep. at 455-56. See also Cullman Ventures, Inc. v.
Columbian Art Works, Inc., 717 F. Supp. 96, 128 (S.D.N.Y. 1989) ("As
courts have long recognized, consumers ask for a product by its name, not
3. The Proximity of the Products
The fact that both Cubatabaco. and General Cigar both produce COHIBA
cigars clearly weighs in favor of confusion. See id. at 127 ("the
products are more than confusingly similar they are identical and thus
consumer confusion is inevitable") (citing Mushroom Makers, Inc. v. R.G.
Barry Corp., 580 F.2d 44, 47-48 (2d Cir. 1978)). However, because the two
products do not compete with each other in the U.S. limits the proximity
under this factor. But the competitive limitation is not sufficient to
weigh against a likelihood of confusion, or even to neutralize the
factor. The relevant consideration is whether the proximity of the
products in the mind of the consumer will lead that consumer to make a
purchasing decision based on that proximity. Consumer confusion is not
limited to the belief that Cubatabaco. or the Cuban government controls
the content of the General Cigar COHIBA. An imagined informal present or
past arrangement may, nevertheless, suggest to the consumer that the
quality of the Cuban COHIBA is to be found in the General Cigar COHIBA.
Advertisements for the General Cigar COHIBA from 1992 to the present
imply that the quality of the Cuban COHIBA will carry over to the General
Cigar COHIBA. A pre-1997 Dunhill catalog advertised the General Cigar
COHIBA as the "[r]ightful heir to the Cuban legend." PX 335, while JR
Cigars, which holds over a third of the retail premium cigar market,
described it as "a flavorful
Dominican version of this classic Cuban cigar." PX 276. Cubatabaco has
produced evidence of numerous other similarly misleading advertisements.
"The way that a challenged mark is used in advertising is highly
probative of whether it is likely to cause confusion." McCarthy, § 23:58;
see also Sports Authority, 89 F.3d at 962-63 (considering use of marks in
General Cigar's actions against the Cuban COHIBA and against third
parties using the COHIBA name also provide evidence that the trade dress
of the Cuban COHIBA, and even a Cuban designation of origin, is not
sufficient to differentiate the products. The possibility of confusion
between General Cigar COHIBAs and cigars with no designation of origin or
a Dominican designation are not relevant to the proximity analysis.
However, General Cigar has taken as well as threatened legal action
against several parties using the COHIBA name in the United States, even
though many of the products of which General Cigar complained bore the
designation "La Habana, Cuba." General Cigar has made no distinction
between the origins of designation on the products, contending that they
all infringe on General Cigar's trademark. General Cigar's in-house
counsel also testified that advertising for the Cuban COHIBA in Cigar
Aficionado in 1992 and 1993 might lead a consumer to "be confused that
this is the General Cigar COHIBA sold in Dunhill, and it isn't." Wollen
Dep. at 303.
General Cigar argues that the "red dot" in the "0" in COHIBA will serve
to dispel confusion, as will tobacconists who encounter confused
consumers. These minimal measures are insufficient to counteract the
proximity that is created by the use of the same brand name on the same
product. Accordingly, this factor weighs toward likelihood of confusion.
4. Likelihood that Plaintiff Will "Bridge the Gap"
Cubatabaco. argues that because the parties already offer the same
product, "there is no gap to be bridged." Banff v. Federated Dept.
Stores, Inc., 841 F.2d 486, 492 (2d Cir. 1988). Such an argument
ignores the effect of the embargo, which currently prevents Cubatabaco
from offering a product like the defendant's in the U.S. market.
In Empresa II, it was held that "[t]he likelihood of Cubatabaco.
`bridging the gap' and entering the U.S. cigar market is dependent upon
whether the political tide will shift to bring an end to the Cuban
embargo." 213 F. Supp.2d at 275. At that time, it was projected that "the
end of the embargo appears more likely now than in the past." Id.
Cubatabaco. has provided indirect evidence of the eventual end of the
embargo in the form of the substantial numbers of registrations by U.S.
corporations of their trademarks in Cuba. See PX 1099, 1115 (listing
trademarks registered in Cuba). Cubatabaco. argues that such
show that these corporations consider the prospects for future trade with
Cuba to be significant.
The relevant consideration for this factor, however, is not when the
embargo will end but whether Cubatabaco. will enter the U.S. market once
the embargo has ended. See Katz v. Modiri, 283 F. Supp.2d 883, 896
(S.D.N.Y. 2003) ("If a trademark owner intends to enter the same market
as the defendant, `such a showing is indicative of future likelihood of
confusion as to source.'") (quoting Jordache Enterprises, Inc. v. Levi
Strauss & Co., 841 F. Supp. 506, 517 (S.D.N.Y. 1993)). It was held
previously that in the event the embargo is lifted, "Cubatabaco. will
almost definitely bridge the gap," Empresa II, 213 F. Supp.2d at 275, and
the above findings of fact after the trial confirm that conclusion.
Accordingly, this factor weighs towards likelihood of confusion.
5. Actual Confusion
"Actual confusion is defined as the likelihood of consumer confusion
that enables a seller to pass off his goods as the goods of another."
1-800 Contacts, Inc. v. WhenU.com, No. 02 Civ. 8043, 2003 WL 22999270, at
*23 (S.D.N.Y. Dec. 22, 2003) (citing W.W.W. Pharm. Co., Inc. v. Gillette
Co., 984 F.2d 567, 574 (2d Cir. 1993)). However, "it is black letter law
that actual confusion need not be shown to prevail under the Lanham Act,
since actual confusion is very difficult to prove and the Act requires
only a likelihood of confusion as to source." Id. (quoting Lois
Sportswear, Inc. v. Levi, Strauss & Co., 799 F.2d 867, 875 (2d Cir.
Cubatabaco. has presented several instances of anecdotal actual
confusion. The 1998 Cambridge Group report, based on focus groups and not
on statistically significant surveys, found that there was "serious
consumer confusion" between the Cuban and Dominican COHIBAs. It cited one
focus group participant, who believed that there were "two brothers, one
who makes COHIBA in Cuba and the other in the Dominican Republic."
The 2000 survey conducted by Cubatabaco's expert also demonstrated a
significant degree of confusion among consumers: among those who had
heard of COHIBA, approximately 21% were confused as to the source of the
products, and approximately 15% of all premium cigar consumers were
confused. Comments from the respondents indicate that some believed that
COHIBA was a parallel brand which was expropriated by Castro, where the
original makers then immigrated to the Dominican Republic and produced
"Proof of actual confusion, in the form of market research survey
evidence, is highly probative of the likelihood of consumer confusion,
`subject to the condition that the survey must . . . have been fairly
prepared and its results directed to the
relevant issues.'" 1-800 Contacts, 2003 WL 22999270, at *23 (quoting
Schieffelin & Co. v. Jack Co. of Boca, Inc., 850 F. Supp. 232, 245
(S.D.N.Y. 1994)). General Cigar's expert, Simonson, argues that the
survey is flawed because Ossip used "gender balancing" to compensate for
the disproportionate response to the survey by female cigar smokers.
However, gender balancing is appropriate to model the results on the
actual premium cigar population. Simonson also claims that Ossip
misleadingly showed the two cigar brands side by side. Such an approach
is not inaccurate: at trial, Cubatabaco. showed Simonson examples of
internet advertising that depicted or described the two brands side by
side, as in the survey, and he acknowledged that such advertisements
followed the approach of the survey. Tr. 1160-1163.
Figures comparable to those in the 2000 survey have been found
probative of a likelihood of confusion. See RJR Foods, 603 F.2d at 1061
(finding "evidence from two witnesses who were actually confused . . .
together with the results of a consumer study showing a fifteen to twenty
percent rate of product confusion" probative of actual confusion). General
Cigar cites Girl Scouts of U.S. of America v. Bantam Doubleday Dell Pub.
Group, 808 F. Supp. 1112, 1128 (S.D.N.Y. 1992), which found a survey
showing 12.6% confusion between the Girl Scouts and a book series bearing
the title "Pee Wee Scouts" insufficient to demonstrate actual confusion.
The Girl Scouts court, however, used a more stringent standard for actual
confusion in light of the First
Amendment concerns implicated in restricting artistic expression. It
interpreted the survey evidence as the Second Circuit did in Rogers v.
Grimaldi, 875 F.2d 994, 1000 (2d Cir. 1989), in which it was held that
courts "need not interpret the Act to require that authors select titles
that unambiguously describe what the work is about nor to preclude them
from using titles that are only suggestive of some topics that the work
is not about." The standards for actual confusion with respect to book
titles are therefore of little relevance in assessing confusion between
Cubatabaco. has presented survey evidence as well as anecdotal evidence
of actual confusion between the Cuban COHIBA and the General Cigar
COHIBA. Accordingly, this factor weighs toward likelihood of confusion.
6. Good Faith on the Defendant's Part
This factor considers whether the defendant "adopted plaintiff's marks
with the intention of capitalizing on the plaintiff's reputation and
goodwill and any confusion between [it] and the senior user's product."
Nora Beverages, Inc. v. Perrier Group of America, Inc., 269 F.3d 114, 124
(2d Cir. 2001) (quoting Lang, 949 F.2d at 583).
General Cigar concedes that its development of the COHIBA brand in 1992
was an attempt "to somehow capitalize on the success of the Cuban brand."
Milstein Dep. at 284. If Cubatabaco. was unambiguously the senior user of
the mark at that time, that admission would be sufficient to establish
General Cigar's bad faith. The central question, however, is whether
General Cigar believed it was the senior user of the mark when it resumed
use in November 1992. See Person's, 900 F.2d at 1569 ("[D]efendant is the
senior user, and we are aware of no case where a senior user has been
charged with bad faith. The concept of bad faith adoption applies to
remote junior users seeking concurrent use registrations . . .").
Although it has been determined that General Cigar was not the senior
user in November 1992 because of the operation of the famous marks
doctrine, the evidence is not sufficient to show that General Cigar's
failure to recognize that fact was in bad faith.
General Cigar first applied to register the COHIBA mark in 1978, before
Cubatabaco. sold COHIBA cigars outside of Cuba. It also began selling the
COHIBA-branded "White Owl" cigars in 1978, and in 1982 placed the COHIBA
brand on its Canario D'Oro premium cigar. See Empresa II, 213 F. Supp.2d
at 257-258. While General Cigar executives were aware of the Cuban
brand, and of Cubatabaco's intent to develop its brands for the
international market after the embargo, there is insufficient evidence to
show that COHIBA was well-known then. The USPTO issued a registration in
During the period of General Cigar's sale of its COHIBA-branded cigars
from 1978 to 1987, Cubatabaco. made no objection to General Cigar's use
of the mark. Nor did Cubatabaco. take any action to register the mark
following the five-year period in which General Cigar made no sales under
the COHIBA name, from 1987 to 1992.
The only indication that General Cigar had by late 1992 and early 1993
that it may not have been the senior user came from its trademark
counsel, Morgan & Finnegan. Morgan & Finnegan first assured General
Cigar that because "it is doubtful that Cubatabaco's COHIBA product was
known to any significant number of purchasers [in 1978], especially not
in the United States," the 1981 registration created a valid trademark
right. PX 834. In its draft opinion letter, Morgan & Finnegan discussed
the presumption of abandonment from two or more years of non-use, and
there may have been several such periods of
abandonment since Culbro/General Cigar filed the
application for the COHIBA mark in 1978 and/or since
the registration issued in 1981. Moreover, if General
Cigar's COHIBA mark has not been used for over two
years up until the present, it may be deemed to be
Id. Abandonment, by itself, would not be sufficient to make Cubatabaco.
the senior user, because General Cigar's resumption of the mark in 1992,
along with its second registration application, could re-establish its
rights to the mark. Marcus, the attorney at Morgan & Finnegan in charge
of the relationship between his law firm and General Cigar, testified
that the concern expressed in the
letter about possible abandonment was based on the incorrect belief
that "General Cigar had only made token use of the mark in the 1980's."
Marcus Direct ¶ 16. Further, Milstein believed that General Cigar
COHIBA cigars were sold by Dunhill throughout the 1980's and 1990's, and
therefore did not believe that General Cigar had abandoned the mark.
See Tr. 1271-72.
The opinion letter also discusses the possibility that, if abandonment
of the mark could be shown, Cubatabaco. could establish a priority right
to the mark
by showing that its COHIBA mark enjoys a continuous,
existing reputation among U.S. purchasers, dating back
to a time prior to any newly resumed use by General
Cigar, by virtue of: (a) the various aforementioned
means of exposure of the mark to U.S. purchasers,
including publicity and promotional material
circulated in the United States for their COHIBA
cigars; and (b) direct evidence of familiarity on the
part of U.S. purchasers, including travelers who have
purchased Cuban COHIBA cigars abroad.
Id. The cases cited in the letter do not specifically refer to the famous
marks doctrine, but it is stated implicitly. Morgan & Finnegan also sent
an earlier letter to Milstein, dated April 20, 1989, explaining the
famous marks doctrine in the context of the possible use and registration
in the U.S. of trademarks owned and used abroad by Cubatabaco. See PX
923. The COHIBA mark is not discussed in the 1989 letter, which cites
Maison Prunier, and advises Milstein that if the trademark "enjoys a
known reputation in the United States," Cubatabaco. may be able to
rights, notwithstanding its inability to sell cigars in the United
The two letters, however, do not conclude that Cubatabaco. would be
likely to prevail in a priority contest. Marcus testified that the advice
related in the opinion letter only set out the legal doctrine, and did
not conclude that the mark was sufficiently famous in the United States
to give Cubatabaco. priority rights to the mark. See Tr. 1164. It was
Marcus's opinion, given his knowledge of the renown of the Cuban COHIBA
in late 1992, that the Cuban COHIBA "was not well known in the United
States." Id. at 1159.
Cubatabaco. argues both that General Cigar withheld pertinent
information from Morgan & Finnegan, thus skewing its legal advice, and
that it failed to follow the advice given by the law firm. As to the
first issue, it has not been established that General Cigar held back
information from its counsel which could later be used against it in a
trademark registration dispute. Marcus testified of Milstein that
because he was seeking my opinion concerning [General
Cigar's] rights and potential liabilities with respect
to this brand, . . he was giving me whatever
information he had. He would hardly have held back any
Id. Marcus's testimony is credible and establishes that General Cigar was
not advised in late 1992 or early 1993 that Cubatabaco could establish
priority rights to the COHIBA mark. See Estee Lauder, Inc. v. The Gap,
Inc., 932 F. Supp. 595, 615-616 (S.D.N.Y. 1996), rev'd on other grounds,
108 F.3d 1503 (2d Cir. 1997) (finding no bad faith where defendant
"proceeded on the advice of experienced counsel, advice that was not
patently unreasonable," even though the court disagreed with counsel's
Cubatabaco. has also failed to establish that General Cigar ignored the
advice of its counsel. The advice regarding abandonment was based on
misinformation. Counsel's opinion that General Cigar must not "take
advantage of the goodwill associated with the Cuban product" by
"deliberate copying," PX 834, refers only to the Cuban COHIBA trade
dress, which General Cigar knew Cubatabaco. was seeking to protect,
rather than the word mark, which counsel believed that General Cigar
could properly use.
Cubatabaco. has presented no credible evidence that General Cigar
believed that they did not own the COHIBA mark at that time. General
Cigar's conduct in copying the COHIBA mark and attempting to exploit the
reputation of the Cuban COHIBA was not, therefore, taken in bad faith.
See Mushroom Makers, Inc. v. R.G. Barry Corp., 441 F. Supp. 1220, 1229-30
(S.D.N.Y. 1977), aff'd 580 F.2d 44 (2d Cir. 1978) ("The fact that one
believes he has a right to adopt a mark already in use because in his
view no conflict
exists since the products are separate and distinct cannot, by itself,
stamp his conduct as in bad faith," even after the USPTO refused
registration in light of the plaintiff's mark). Accordingly, this factor
weighs against a likelihood of confusion.
7. Quality of the Defendant's Product
The first and most frequent use of this factor is to determine "whether
defendant's products or services are inferior to plaintiffs, thereby
tarnishing plaintiff's reputation if consumers confuse the two." The
Morninqside Group Ltd v. Morninqside Capital Group, Inc., 182 F.3d 133,
142 (2d Cir. 1999). However, this formulation begs the question by
looking to the negative consequences of hypothetical confusion rather
than determining whether confusion is likely. There is also another
manner in which the quality of the defendant's product may be relevant:
"Products of equal quality may tend to create confusion as to source
because of that very similarity of quality." Id.; see also Hasbro Toys,
Inc. v. Lanard Toys, Ltd., 858 F.2d 70, 78 (2d Cir. 1988) (noting both
senses in which quality is relevant "without taking sides"). Because the
second use of the factor correlates more strongly to a finding of
confusion, it will be weighed more strongly than the first use.
Both ways of taking quality into account, however, favor a finding of
confusion. In Empresa II, it was found that although General Cigar's
has received several high evaluations from Cigar
Aficionado, those rankings are not consistently as
high as those of the Cuban COHIBA. The Cuban COHIBA
has the reputation as the best cigar in Cuba and,
perhaps, the world a reputation that General Cigar's
COHIBA has not surpassed according to the evidence
213 F. Supp.2d at 275. The evidence presented subsequently confirms that
conclusion. A chart prepared by Cubatabaco. demonstrates that Cigar
Aficionado rates the General Cigar COHIBA consistently between 83 and
89, while more than half of the Cuban COHIBA's dozens of ratings are over
90, with only four below 85. Lopez Garcia Direct, Exh. N. The only
retailer to testify regarding the quality of the two products described
the Cuban COHIBA as "one of the highest quality cigars, in terms of
tobacco, craftsmanship and taste, produced anywhere in the world," while
"neither the tobacco. used, nor the craftsmanship employed in
manufacturing the [General Cigar COHIBAs] are of extraordinary quality.
The taste of the General Cigar COHIBA similarly does not merit the high
cost that the consumer pays for the product." Jorge Armenteros Direct ¶¶
While the quality of the Cuban COHIBA is consistently higher than that
of the General Cigar counterpart and presents a
risk, although a small one, that the reputation of the Cuban COHIBA will
be tarnished, there is a greater risk that the generally high quality of
the General Cigar COHIBA will lead consumers into believing that the two
brands are affiliated in some way. Given the publicity that counterfeit
COHIBAs have received, a poor quality COHIBA is more likely to make a
consumer believe that the cigar is a fraud rather than confusing it with
the Cuban COHIBA. This factor weighs toward a likelihood of confusion.
8. Sophistication of Buyers
In Empresa II, it was determined at that time that the sophistication
of buyers of COHIBA cigars was a controverted issue:
While purchasers of fine cigars tend to be
knowledgeable and would realize that Cuban COHIBAS are
not legally available in this country, Cubatabaco. has
presented market research to suggest that buyers who
would be influenced by the "Cuba mystique" are not
sophisticated purchasers. Therefore, a person who
would buy a COHIBA because of its "mystique" may not
understand that the General Cigar COHIBA is not
sponsored by or related to the Cuban COHIBA.
213 F. Supp.2d at 275. At most, the evidence presented by Cubatabaco.
shows that younger consumers have become interested in COHIBA, that some
consumers may be in search of status or prestige, and that some customers
rate their cigar knowledge as low.
That evidence, however, must be viewed in the context of the high price
of premium cigars, and COHIBA cigars especially, as well as the
sophistication of premium cigar buyers generally. See General Cigar, 988
F. Supp. at 664 ("Ultimate consumers of [COHIBA] cigars are men
sufficiently enthusiastic about smoking cigars to spend a significant
amount of money on that pleasure, and are therefore presumably discerning
purchasers."); Camacho Cigars, Inc. v. Compania Insular Tabacalera, S.A.,
171 U.S.P.Q. 673, 674 (D.D.C. 1971) (purchasers of high-priced cigar
brands "are careful, well-in formed buyers."). Accordingly, this factor
weighs against likelihood of confusion.
The Polaroid analysis weighs strongly toward a finding of a likelihood
of confusion, even when the unique circumstances of the Cuban embargo is
taken into account. Further support for the conclusion from the Polaroid
factors may be found from two other types of confusion which have been
found actionable: initial interest confusion and post-sale confusion.
Initial interest confusion occurs when "potential customers initially are
attracted to the junior user's mark by virtue of its similarity to the
senior user's mark, even though these consumers are not actually confused
at the time of purchase." Jordache Enterprises, Inc. v. Levi Strauss &
Co., 841 F. Supp. 506, 514-15 (S.D.N.Y. 1993) (citing Grotrian,
Helfferich, Schulz, Th. Steinweq Nachf. v. Steinwav & Sons, 523 F.2d 1331,
1342 (2d Cir. 1975)). Post-sale confusion occurs after a product has been
purchased and put into use, and
occurs "when a manufacturer of knockoff goods offers consumers a cheap
knockoff copy of the original manufacturer's more expensive product, thus
allowing a buyer to acquire the prestige of owning what appears to be the
more expensive product." Hermes Intern. v. Lederer de Paris Fifth
Avenue, Inc., 219 F.3d 104, 108 (2d Cir. 2000) (citing Mastercrafters
Clock & Radio Co. v. Vacheron & Constantin-Le Coultre Watches, Inc.,
221 F.2d 464, 466 (2d Cir. 1955)). In the age of the internet, initial
interest confusion can readily occur even though it is not possible to
purchase Cuban COHIBAs in the United States. While the embargo diminishes
the possibility of post-sale confusion, it does not entirely eliminate
General Cigar's choice of COHIBA as the name for its premium cigar, by
itself, provides some evidence of intent to create initial interest
confusion. The advertising undertaken by others which misleadingly
suggests an affiliation only adds to the possibility of confusion at the
initial stage, even if the consumer later learns that there is no
affiliation between the two brands. As to post-sale confusion: while the
General Cigar COHIBA is not properly described as a cheap knockoff copy,
it is less expensive, less prestigious, and overall less highly regarded
than the Cuban COHIBA. The use of an almost identical typeface on the
band only adds to the possibility that the consumer may acquire the
prestige of smoking a Cuban COHIBA without actually purchasing one. It is
therefore held that, considering the Polaroid factors, as well as
the risk of both initial interest and post-sale confusion, that there is
a likelihood of confusion between the Cuban COHIBA and the General Cigar
Cubatabaco. Did Not Abandon the COHIBA Mark Between 1992 and 1997
In Empresa IV, it was held that the question whether Cubatabaco.
abandoned the mark between November 1992 and the filing of the
cancellation petition in January 1997 presented "a question of fact,
weighing the facts that Cubatabaco. did not attempt to register its mark
or contest the General Cigar COHIBA mark until 1997 with the fact that it
could not in any case use the mark in the United States, and with any
efforts that it took to maintain its fame in the United States." 213
F.R.D. at 158. The abandonment analysis was oriented by the decision of
the TTAB in Jose M. Arechabala Rodrigo v. Havana Rum & Liquors, S.A.,
Cancellation No. 22,881, slip op. at 15 (T.T.A.B. Oct. 19, 1995). In
Rodrigo, the TTAB rejected the argument that the Cuban registrant had
abandoned the "Havana Club" mark because of the embargo and "because the
respondents used the mark worldwide and intended to use the mark in the
United States `as soon as it is legally possible to do so.'" Empresa
III, 213 F.R.D. at 157 (quoting Rodrigo, slip op. at 19).
The Rodrigo decision was distinguished from the instant case, however,
because the respondent in Rodrigo had registered the
Havana Club mark, whereas Cubatabaco. took no official action manifesting
its intent to use the COHIBA word mark until the cancellation petition,
over 4 years after General Cigar had resumed using the COHIBA mark.
Cubatabaco. is therefore not entitled to a presumption of its intent to
begin using the mark as soon as the embargo is over, and "its intent to
use the mark in the United States must be found by other means." Id. at
In ruling on General Cigar's abandonment of the mark from 1987 to
1992, it was held that intent to use the mark must be shown by
"objective, hard evidence of actual `concrete plans to resume use' in the
`reasonably foreseeable future when the conditions requiring suspension
abate.'" Empresa II, 213 F. Supp.2d at 268 (quoting Silverman v. CBS,
Inc., 870 F.2d 40, 46 (2d Cir. 1989)). However, "[t]he party claiming
abandonment bears the burden of proof" of establishing intent not to
resume use. Id.; see also Proctor & Gamble Co. v. Quality King
Distributors, Inc., 123 F. Supp.2d 108, 116 (E.D.N.Y. 2000) (to succeed
on "an abandonment claim, the defendants must meet a `high burden of
proof.'") (quoting Warner Bros, Inc. v. Gay Toys, Inc., 724 F.2d 327, 334
(2d Cir. 1983)). Also, "because it constitutes forfeiture of a property
right, abandonment of a mark must be proven by clear and convincing
evidence, and a statutory aid to such proof must be narrowly construed."
Empresa IV, 213 F.R.D. at 156-57 (citations omitted). The relevant
statutory aid is the presumption that nonuse for two or three consecutive
years shall constitute prima
facie abandonment.*fn10 To show excusable nonuse, "the registrant must
produce evidence showing that, under his particular circumstances, his
activities are those that a reasonable businessman, who had a bona fide
intent to use the mark in United States commerce, would have taken."
Empresa II, 213 F. Supp.2d at 268-69 (quoting Rivard v. Linville,
133 F.3d 1446, 1449 (Fed. Cir. 1998)).
General Cigar argues that Cubatabaco. abandoned the mark because it did
not register the COHIBA word mark even though it is excused from the
requirement of use that other registrants must comply with in order to
maintain their rights. Cubatabaco. need only register a mark and file a
certificate of excusable non-use periodically in order to maintain the
rights to that mark. General Cigar notes that Cubatabaco. made efforts to
protect its rights to use other marks and registered its COHIBA trade
dress in the United States, but did not do so for the COHIBA word mark.
As found above, the legal actions taken by Cubatabaco. are consistent
with the intent to resume use beginning in June 1994, given its inability
to use the mark during the relevant period.
Cubatabaco. took no legal action prior to June 1994 because of the 1981
registration, the 1986 Declaration of Use and Incontestability, and its
belief that "General Cigar was not making stable or continuous use of the
COHIBA trademark in the United States." Id. at 262. From June 1994 until
the filing of the cancellation petition, the evidence shows that
Cubatabaco. was contemplating legal action in defense of the COHIBA
The evidence also shows that Cubatabaco's efforts to maintain the fame
of the COHIBA mark in the United States were sufficiently significant and
sustained, in the context of the embargo, to demonstrate an intent to
resume use when it became legally possible. During the period, General
Cigar undertook no advertising and publicity for its Temple Hall COHIBA,
and sold the cigar in limited numbers through two mail-order retailers.
The publicity generated by Cubatabaco, on the other hand, brought the
brand from relative obscurity, as measured by the January 1992 Shanken
Survey, to the point in 1997 where General Cigar acknowledged that "the
Cuban COHIBA was well-known in the U.S. in 1997." Def.'s Post-Trial Mem.
Cubatabaco's efforts did not include concrete business plans for
resuming use of the mark after the end of the embargo. However, such
plans should not be expected under circumstances in which the end of the
embargo was not in the foreseeable future. Instead, Cubatabaco's efforts
were devoted to raising awareness of
the COHIBA brand. The evidence shows that among all of Cubatabaco's
brands, COHIBA was promoted most forcefully. Very few of its marketing
efforts were directed solely at the United States. Such a strategy would
have made little sense, given that promotion of COHIBA in Europe and
elsewhere would be more immediately productive. Cubatabaco, however,
consistently made efforts to direct its promotion of COHIBA to premium
cigar consumers in the United States. Most significant among these
efforts is its long-standing relationship with Cigar Aficionado.
Cubatabaco. proposed articles, accommodated reporters, arranged an
exclusive interview with Fidel Castro, and participated in the planning
of a dinner in Paris to which numerous prominent Americans were invited.
Habanos, S.A. also named Shanken, the American publisher of the
magazine, as its "Habanos Man of the Year for Communications" in 1995.
While Cigar Aficionado is sold throughout the world, it reaches a
significant number of premium cigar smokers in the United States.
Cubatabaco. also encouraged and accommodated publicity from other
American media outlets, such as The New York Times, CNN, CBS, and
National Public Radio. The celebration of the 30th anniversary of COHIBA
included numerous Americans, and generated significant publicity for
COHIBA. Although the event took place in February 1997, the planning for
the event, including invitations, was done as early as 1995.
General Cigar argues that Cubatabaco. affirmatively abandoned the mark
in late 1992 and early 1993 by failing to protest when General Cigar
insisted that it owned the mark and that Cubatabaco. no longer run ads
for COHIBA in Cigar Aficionado. Cubatabaco. acknowledges that "further
advertisements were prevented by General Cigar's threat of infringement
actions." Pl's Mem. at 62. Lopez Garcia, the Director of Marketing at
Habanos, S.A., testified that she believes that Cubatabaco may not
advertise in the U.S. "because of General Cigar's registration and use of
the COHIBA mark." Lopez Garcia Direct ¶ 105. Such actions may, under
certain circumstances, constitute evidence of Cubatabaco's acquiescence
to General Cigar's use of the mark. However, General Cigar's affirmative
defense of acquiescence has been dismissed. See Empresa II, 213 F.
Supp.2d at 277-78. Such actions are not sufficient to show an absence of
intention to resume use at an unknown point in the future.
General Cigar also points to the interviews given by Padron to Cigar
Aficionado, in which he expressed the view that "Habanos" was more
important than any brand name. Padron also stated that if the embargo
were to end, "we would launch new things for the North American market,
new brands. Or we could make an arrangement with the brand owners over
there." D72. Such statements, to the extent that they constitute reliable
statements of Cubatabaco's intent, at most demonstrate that Cubatabaco.
believes that it will be able to market its Cuban cigars
successfully with or without the COHIBA name. They do not demonstrate an
affirmative intent not to resume use of the COHIBA mark once the embargo
is ended. Padron's statements were also made without the knowledge "that
General Cigar was pursuing a new registration for the COHIBA mark."
Empresa II, 213 F. Supp.2d at 277. Because of this, General Cigar was
precluded from "rely[ing] on the interviews to show conduct supporting its
acquiescence and estoppel claims." Id. For similar reasons, General Cigar
may not rely on the interviews in support of its abandonment defense.
In light of the evidence presented, General Cigar has not met its
burden of proving by clear and convincing evidence that Cubatabaco
abandoned the COHIBA mark between November 1992 and January 1997.
Cubatabaco. has consistently undertaken the efforts that a reasonable
businessman with an intent to resume using the mark would have taken
under the circumstances. It did not initiate legal action because of
General Cigar's 1981 registration, but began the process of contesting
General Cigar's re-registration of the mark as soon as it learned of it.
Further, its efforts to promote the mark in the United States are
consistent with an intent to maintain the fame of the mark for the
unknown duration of the embargo.
General Cigar's COHIBA Mark is Cancelled and General Cigar is Enjoined
From Using The COHIBA Mark
Cubatabaco. has presented evidence that it possessed a protectable mark
in November 1992 under the famous marks doctrine, and that there is a
likelihood of confusion between the Cuban COHIBA cigar and the General
Cigar COHIBA. General Cigar has not established that Cubatabaco.
abandoned the COHIBA mark between 1992 and 1997. Cubatabaco. is therefore
entitled to relief under § 43(a) of the Lanham Act. General Cigar's
trademark registration No. 1,898,273 is cancelled, and General Cigar is
permanently enjoined using the COHIBA word mark on or in connection with
any product or service or the manufacture, exportation, sale, offering
for sale, distribution, advertising, promotion labeling or packaging of
any product or service. General Cigar is also ordered to deliver up to
Cubatabaco. for destruction or other disposition any and all merchandise,
packaging, package inserts, labels, signs, prints, wrappers, receptacles,
advertising, plates and other mechanical means of reproduction or other
materials now or hereafter in their possession, custody or control, which
bear the infringing trademark and any reproduction, copy or colorable
The FTDA Claim is Dismissed
Count XII of Cubatabaco's complaint alleges that General Cigar's
conduct is likely to cause the blurring and dilution of the distinctive
quality of its COHIBA trademark in violation of the
FTDA, 15 U.S.C. § 1125 (c). While the COHIBA mark was famous within the
meaning of the famous marks doctrine in November 1992, it does not meet
the considerably more stringent requirements of the FTDA.
"In the Second Circuit, five elements are necessary to establish a
claim under the FTDA: (1) the senior mark must be famous; (2) it must be
inherently distinctive; (3) the challenged junior use must be a commercial
use in commerce; (4) it must begin after the senior mark has become
famous; and (5) it causes dilution of the distinctive quality of the
senior mark." Christopher D. Smithers Found., Inc. v. St.
Luke's-Roosevelt Hosp. Ctr., No. 00 Civ. 5502, 2003 WL 115234, at *4
(S.D.N.Y. Jan. 13, 2003) (citing Nabisco. Inc. v. P.F. Brands, Inc.,
191 F.3d 208, 215 (2d Cir. 1999); Lanham Act § 43(c); 15 U.S.C. § 1125
(c)). Because the COHIBA mark is insufficiently famous, the other factors
need not be addressed.
As discussed above, the FTDA protects only those marks that have shown
"a substantial degree of fame." TCPIP, 244 F.3d at 99; see also Smithers,
2003 WL 115234, at *5 ("Very few trademarks qualify as famous marks.").
In particular, the fame required "must exist in the general marketplace,
not in a niche market." Smithers, 2003 WL 115234, at *5 (citing TCPIP,
244 F.3d at 99). In TCPIP, the Second Circuit found that the mark "The
Children's Place" was not famous under the FTDA standard despite the fact
that its owner operated 228 retail stores in 27 states under the name,
and had achieved sales of $280 million. TCPIP, 244 F.3d at 99.
The court found that while the evidence "shows considerable commercial
success and growth, the aggregate sales under the mark since it
originated . . . may well not equal the sales of Dupont, Buick, or Kodak
in any given month." Id. at 100.
Cubatabaco. has put forward no evidence showing that the renown of the
COHIBA mark extended beyond premium cigar smokers in 1992 or at any other
time. All survey evidence comes from premium cigar smokers, and the
publicity received by the mark outside of publications such as Smoke and
Cigar Aficionado has been extremely limited. Further, the fact that the
Cuban COHIBA cannot legally be sold in the United States, combined with
the fact that the General Cigar COHIBA was not sold from 1987 to 1992 is
further evidence that the COHIBA mark has not acquired the level of fame
required by the FTDA. Accordingly, the federal dilution claim of Count
XII is dismissed.
The New York State Dilution Claim is Dismissed
Count XII also includes a claim alleging dilution of the COHIBA mark
and injury to business reputation in violation of New York's
anti-dilution law. The statute provides that:
Likelihood of injury to business reputation or of
dilution of the distinctive quality of a mark or
trade name shall be a ground for injunctive relief
in cases of infringement of a mark registered or
not registered in cases of unfair competition,
notwithstanding the absence
of competition between the parties or the absence of
confusion as to the source of goods and services.
N.Y. Gen Bus. Law § 360-1 (formerly § 368-d).
Cubatabaco. argues that a mark need not be famous in order to make out
a dilution claim under New York law. In support, Cubatabaco. cites Welch
Allyn, Inc. v. Tyco. Int'l Servs. AG, 200 F. Supp.2d 130, 150 (N.D.N.Y.
2002), which adopts that proposition. However, Welch Allyn also states
that "the New York anti-dilution statute `protects only extremely strong
marks.'" Id. (quoting Sally Gee, Inc. v. Myra Hogan, Inc., 699 F.2d 621,
625 (2d Cir. 1983)). The case law on the standards for establishing the
distinctiveness required to show dilution under New York law closely
resemble the standards for fame under the FTDA. See Mead Data Central,
Inc. v. Toyota Motor Sales, U.S.A., Inc., 875 F.2d 1026, 1031 (2d Cir.
1989) (mental association between marks required to show distinctiveness
"may be created where the plaintiff's mark is very famous and therefore
has a distinctive quality for a significant percentage of the defendant's
market."). In Sally Gee, the Second Circuit in dicta interpreted
extremely strong marks as applying only to the "most well known names."
699 F.2d at 625 (quoting Allied Maintenance Corp. v. Allied Mechanical
Trades, Inc., 42 N.Y.2d 538, 548, 399 N.Y.S.2d 628, 369 N.E.2d 1162
(1977) (Cooke, J. dissenting) (interpreting the majority opinion)). The
legislative history for New York's anti-dilution statute cites the same
very famous hypothetical misappropriations of trademarks
as does the federal legislation: "Dupont shoes, Buick aspirin tablets,
Schlitz varnish, Kodak pianos, Bulova gowns, and so forth," Mead Data,
875 F.2d at 1031 (quoting 1954 N.Y.Legis.Ann. 49-50) suggesting that only
highly recognizable marks merit protection. See also Id. at 1033 (Sweet,
J., concurring) (noting that the majority's conclusion "limits section
368-d's protection to nationally famous marks.")
These examples are to be expected, since the legislative history also
discloses that the purpose of the § 360-l, like the FTDA, is to prevent
"the whittling away of an established trademark's selling power and value
through its unauthorized use by others upon dissimilar products." Id. It
is inappropriate, therefore, to bring an anti-dilution claim on the basis
of two identical marks, especially when Cubatabaco. has also made other
claims. As the Second Circuit held in regard to § 360-l's predecessor
Section 368-d provides a cause of action distinct from
other state law actions for trademark infringement and
unfair competition. "The evil which the Legislature
sought to remedy was not public confusion caused by
similar products or services sold by competitors, but
a cancer-like growth of dissimilar products or
services which feeds on the business reputation of an
established distinctive trade-mark or name."
Sally Gee, 699 F.2d at 624 (quoting Allied, 42 N.Y.2d at 544).
Accordingly, the state dilution claim of Count XII is dismissed because
the COHIBA mark is not extremely strong and because an
anti-dilution action is not properly brought to protect against
competition from similar products.
The Unfair Competition Claim is Dismissed
The essence of New York's unfair competition law "is that the defendant
has misappropriated the labors and expenditure of another." Saratoga
Vichy Spring Co., Inc. v. Lehman, 625 F.2d 1037, 1044 (2d Cir. 1980). To
determine that misappropriation has occurred, bad faith must be found:
"Under New York law, common law unfair competition claims closely
resemble Lanham Act claims except insofar as the state law claim may
require an additional element of bad faith or intent." Nadel v.
Play-By-Play Toys & Novelties, Inc., 203 F.3d 368, 383 (2d Cir. 2000)
(quoting Genesee Brewing Co. v. Stroh Brewing Co., 124 F.3d 137, 149 (2d
Cir. 1997)); see also Empresa II, 213 F. Supp.2d at 284.
Cubatabaco's claim that General Cigar acted in bad faith by copying the
COHIBA name in November 1992 has been considered above and rejected. In
the absence of a finding of bad faith, Cubatabaco's New York unfair
competition claim is dismissed. See Mejia and Associates v. IBM Corp.,
920 F. Supp. 540, 552 (S.D.N.Y. 1996).
The Claim for Trademark Cancellation Under § 1120 is Dismissed
Count Eleven of Cubatabaco's complaint alleges a violation of
15 U.S.C. § 1120, which provides
Any person who shall procure registration in the
Patent and Trademark Office of a mark by a false
or fraudulent declaration or representation, oral
or in writing, or by any false means, shall be
liable in a civil action by any person injured
thereby for any damages sustained in consequence
Cubatabaco. requests an order, pursuant to this statute, cancelling
General Cigar's 1995 registration of the COHIBA trademark. Such an order
has already been granted under Count Seven for violations of
15 U.S.C. § 1125 (a).
In addition, Cubatabaco. has not met the standard for cancellation
under this provision. "Misstatements in a registration application
provide a basis for cancelling the registration only "if the misstatements
(1) were made with knowledge of their falsity, and (2) were material to
the determination to grant the application." Baker v. Parris,
777 F. Supp. 299, 305 (S.D.N.Y. 1991) (quoting Rick v. Buchansky,
609 F. Supp. 1522, 1537 (S.D.N.Y. 1985)) (emphasis in original). The
General Cigar statement in 1979 in response to the PTO inquiry concerning
the geographic description of COHIBA was not entirely accurate when it
described the mark as "wholly arbitrary."
See Empresa II, 213 F. Supp.2d at 255. However, that abandonment does not
invalidate the 1995 registration.
It has been found above that General Cigar believed at the time it
applied to register the mark that it was the valid owner. Cubatabaco. has
therefore not demonstrated that General Cigar made any misstatements in
its registration application with knowledge of their falsity.
The Misappropriation Claim is Dismissed
Count XIII lists a claim for common law misappropriation. General Cigar
argues that Cubatabaco's misappropriation claim is subsumed within its
unfair competition claim and provides no independent basis for relief. In
Empresa II, it was observed that "at least one district court has
dismissed a common law misappropriation claim" on the grounds that the
two claims are duplicative. 213 F. Supp.2d at 284 (citing Something Old,
Something New, Inc. v. OVC, Inc., No. 98 Civ. 7450, 53 U.S.P.Q.2d 715,
1999 WL 1125063, at *13 (S.D.N.Y. Dec. 8, 1999). However, the
misappropriation claim was not dismissed because the parties had not
briefed the issue. In its post-trial briefs, General Cigar raises the
same cases and arguments referred to by the Court in Empresa II.
Cubatabaco. has not responded on this issue. Accordingly, in recognition
of the fact that "[t]he essence of an unfair competition claim under New
York law is that the defendant
has misappropriated the labors and expenditures of another," Saratoga
Vichy Spring Co. v. Lehman, 625 F.2d 1037, 1044 (2d Cir. 1980), Count
XIII is dismissed as duplicative of Cubatabaco's common law unfair
Cubatabaco. also includes a "passing off" claim in its Pre-Trial
Statement of Claims, as part of Count Ten. This claim is also dismissed
as duplicative. See Regal Jewelry Co. v. Kingsbridge Int'l Inc.,
999 F. Supp. 477, 491 (S.D.N.Y. 1998) ("[T]he very purpose of unfair
competition law [is] to keep a seller from passing off his goods as those
The Trade Dress Infringement Claim Is Dismissed
In addition to its claim of trademark infringement in Count Seven,
Cubatabaco. also alleges that General Cigar's conduct constitutes trade
dress infringement under § 43(a) of the Lanham Act. In particular,
Cubatabaco. alleges that the bands which General Cigar included on its
COHIBA cigars beginning in 1997 infringe on the trade dress of the Cuban
In order for Cubatabaco. to prevail on its trade dress infringement
claim, it must show that: (1) Cubatabaco's cigar band was inherently
distinctive or had acquired distinctiveness through secondary meaning; (2)
the design of Cubatabaco's band is nonfunctional; and (3) a likelihood of
confusion exists between the
Cubatabaco. band and the General Cigar band. See Two Pesos v. Taco.
Cabana, Inc., 505 U.S. 763, 769 (1992).
The Cuban COHIBA band is inherently distinctive because of its
arbitrary graphical design. Fun-Damental Too, Ltd. v. Gemmy Industries
Corp., 111 F.3d 993, 1000 (2d Cir. 1997). General Cigar has also
acknowledged that awareness of the COHIBA band was high in 1997. See
Cullman Dep. at 443 ("[I]t was impossible not to acknowledge at that
point [May 1997] a strong awareness among cigar smokers that Cohiba
existed, there was a Cuban Cohiba, and as I mentioned before, there was
great interest, among new smokers especially, to walk around with,
showing off the Cuban Cohiba label."). The design of the band also serves
no functional purpose; it is merely decorative.
Cubatabaco. fails, however, to demonstrate that there is a likelihood
of confusion between the two cigar bands. The Cuban COHIBA band is yellow
on the bottom, and black with white squares on the top. The COHIBA name,
in black block letters on a white background, straddles the yellow and
black field. Below the name are the words "La Habana, Cuba" on the yellow
field in black script. The General Cigar band, by contrast, consists of
two thick black stripes on the top and bottom of the band. The remainder
of the band is white, except for the name COHIBA in black bold letters,
with a red dot inside the "0", and a red oval with the words "HAND MADE"
in small black letters.
While the font of the word COHIBA on the two bands undoubtedly bear a
resemblance to one another, the similarity between the two bands ends
there. The only evidence presented of confusion between the two brands is
the testimony of Siegel, Cubatabaco's expert, who testified that both the
cigar band and the box used by General Cigar have a "direct familial
relationship to the Cuban Cohiba tradedress." Siegel Direct, ¶ 176(a).
At most, Siegel's testimony demonstrates that the cigar bands of the two
brands stand out from other brands by their "clean, sparse look." Id. at
¶ 169 (quoting PX 98, a General Cigar memo dated May 13, 1997). The
combination of the COHIBA word mark and the look of the General Cigar
band is likely to lead to confusion, as determined above. However,
Cubatabaco. has shown no evidence that the band itself, apart from the
word mark, is likely to cause confusion. Were a different brand name to
be used with the General Cigar trade dress, any confusion between the two
bands would be removed, and the most one could conclude is that "both the
Cubatabaco. and General Cigar designs have a different look and feel from
almost all competitive premium luxury cigars, which use traditional,
ornate designs." P1. PFF, ¶ 69. In the absence of more substantive
evidence of confusion, such as survey data, the fact that the two bands
share a different look and feel is insufficient to establish a likelihood
of confusion. Accordingly, Cubatabaco's claim for trade dress
infringement is dismissed.
The Deceptive Trade Practices Claim is Dismissed
In the Joint Pretrial Order, Cubatabaco. alleges a claim for deceptive
trade practices as part of Count Ten, citing "N.Y. Gen. Bus. § 349 and
analogous laws in each and every State." A trademark infringement claim
such as the one brought by Cubatabaco. is not properly brought under §
349. "The gravamen of the complaint [under § 349] must be consumer injury
or harm to the public interest." Securitron Magnalock Corp. v.
Schnabolk, 65 F.3d 256, 264 (2d Cir. 1995) (internal quotation and
citation omitted). While confusion as to the source or quality of the
COHIBA cigar does count as a form of consumer injury, it has not been
held to be actionable under § 349. "The Courts of this Circuit have held
that trademark infringement actions alleging only general consumer
confusion do not threaten the direct harm to consumers required to state
a claim under section 349." Sports Traveler, Inc. v. Advance Magazine
Publishers, Inc., No. 96 Civ. 5150, 1997 WL 137443, at *3 (S.D.N.Y. March
24, 1997) (collecting cases). Accordingly, Cubatabaco's deceptive trade
practices claim is dismissed.
The Trade Dress Dilution and False Advertising Claims Are Not Properly
Before the Court
Within the section of the Joint Pretrial Order entitled "Plaintiff's
Statement of Claims to Be Tried," Cubatabaco. raises two claims that were
never pled in its original Complaint: "False Advertising," alleged to be
part of Count Ten, and "Trade Dress
Dilution" under state and federal law, alleged to be part of Counts
Seven and Twelve.
Count Ten asserts that General Cigar "violated principles of the state
and common law of unfair competition by wilfully passing off their goods
as those of Cubatabaco, by competing unfairly, and by employing deceptive
trade practices." Complaint, ¶ 72. However, there is no reference in
the claim to false advertising. General Cigar could not have been put on
notice of its need to defend against this claim.
Counts Seven describes a claim for "Trademark and Trade Dress
Infringement," but makes no reference to trade dress dilution. Count
Twelve alleges that General Cigar violated New York's anti-dilution law,
but reference is made only to the COHIBA trademark and not to the COHIBA
trade dress. General Cigar also was not given notice of this claim.
Cubatabaco. cites Rule 15(b) in arguing that it was sufficient to state
its claim in the Joint Pretrial Order. Rule 15(b) does permit issues not
raised in the pleadings to be tried "as if they had been raised in the
pleadings," but only by the "express or implied consent of the parties."
Fed.R.Civ.P. 15(b). General Cigar objected to the inclusion of both
the false advertising and trade dress dilution claims in the Pretrial
and has not consented, either implicitly or explicitly to raising
these claims. Accordingly, they are dismissed.
No Judgment is Appropriate At This Time On Cubatabaco's Claims For
As part of Count Ten, which claims unfair competition under state law,
Cubatabaco. also asserts a claim for unjust enrichment and constructive
trust. In its brief, Cubatabaco. argues that equitable principles mandate
that General Cigar not be permitted to retain profits from the sale of
its COHIBA cigar. Cubatabaco. also argues for an award of profits under
the Lanham Act and the New York common law of unfair competition.
Finally, Cubatabaco. argues that it is entitled to attorney's fees under
the Lanham Act.
As part of the Joint Pretrial Order, the parties stipulated and the
Any trial on the issue of monetary relief claimed by
Plaintiff against Defendants shall be bifurcated from
a trial on liability on the cause of action raised in
Plaintiff's complaint and Defendant's counterclaim.
Any trial on Plaintiff's claim for monetary relief
shall only be held after a finding by the district or
appellate courts that one or more of the Defendants is
liable to Plaintiff on one or more causes of action
for which Plaintiff has asserted it is entitled to
Because the Court has made a finding that General Cigar is liable
on the claim of trademark infringement, a trial on the issue of
monetary relief is warranted, and no decision will issue at this
The Court recognizes that one or both parties may wish to have the
liability determinations made thus far ruled on by the appellate court
before the issue of monetary relief is considered. Accordingly, if either
party desires certification of the claims adjudicated to date pursuant to
Federal Rule of Civil Procedure 54(b), a motion to that effect should be
brought within 10 days of the issuance of this opinion and order.
For the reasons set forth above, General Cigar's COHIBA trademark
registration is cancelled. No other relief has been granted at this time.
Following the stipulation of the parties, the issue of any monetary
relief for Cubatabaco. remains to be tried.
Submit judgment on notice.
It is so ordered.