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.
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
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").
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
Hoyo de Monterey 32 16.4 80
Hoyo de Monterey 32 17.1 83
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. ...