 The tiff over trademarks and the future of Cuban cigars in the United States
Los Angeles, September 15 – Yesterday, we looked at the curious creation of parallel brands in Cuba and the United States following decisions of the U.S. courts to allow the pre-nationalization owners to retain rights to the trademarks they owned prior to the intervention of the Castro government in 1960.
What happens now is anyone’s guess, but the playing field is shifting steadily.
At present, we count 23 brands being simultaneously produced in Cuba (for the worldwide market) and elsewhere, for the American market. There are a couple of other minor brands – Quintero y Hermano and Los Statos Deluxe – which have been produced for the U.S. market, but are not currently marketed in a serious way.
Recognizing this, the Cubans have introduced new brands with the idea to control the worldwide rights for these names. In the post-nationalization period, Cohiba was introduced in 1968, followed by a series of new brands in the late 1990s and beyond: Cuaba, Trinidad, Vegas Robaina, Vegueros, San Cristobal and Guantanamera. And when challenged, the Cubans have fought tenaciously to hold onto the ownership of these brands:
• A lengthy skirmish over the ownership of the Trinidad brand name for use in the U.S. market was finally resolved in favor of the Trinidad family in June 2001, allowing for a Trinidad cigar to be made for American consumption. The Cubans have trademarked the name in other countries for their Trinidad brand, introduced in 1998.
• A seesaw battle over the Cohiba name, currently also used by General Cigar here in the U.S., came to a head earlier this year when the U.S. District Court for the Southern District of New York recognized the Cubans as the rightful owners of the Cohiba trademark for the U.S. territory and ordered General Cigar to stop making and selling its Cohiba brand. However, that judgement has been appealed and General Cigar has been allowed to continue the manufacture and sales of its Cohibas in the U.S. while the appeal is heard.
So, what now?
Ownership of U.S. trademarks for most of the famous, currently-produced Cuban brand names rest with two companies: General Cigar and Altadis S.A.:
• General Cigar itself and through its subsidiaries owns the rights to Belinda, Bolivar, Cohiba (pending the outcome of the court case), El Rey del Mundo, Hoyo de Monterrey, La Gloria Cubana, Los Statos Deluxe, Partagas, Punch, Rafael Gonzalez, Ramon Allones and Sancho Panza.
• Altadis, through its subsidiaries, owns the rights to Cabanas, Gispert, H. Upmann, Juan Lopez, La Corona, Montecristo, Por Larranaga, Quintero y Hermano, Romeo y Julieta, Saint Luis Rey and Trinidad.
The other two marks – Fonseca and Troya – are owned by MATASA (Miami, Florida) and Lignum-2 (San Leandro, California), respectively.
But, Altadis is also the largest importer of Cuban cigars in the world and owns half of the Cuban national distribution company for cigars, Habanos S.A. This combination of distribution rights of Cuban brands and ownership of U.S. trademarks for a dozen currently-produced Cuban brands should resolve any serious conflict over marketing of those brands in the United States if and when the U.S. trade embargo is lifted. The Cubans will insist on using their marks as the “original” brands, but smokers in the U.S. and other countries will have little trouble with a simple brand-extension system already used in this country.
Example: for Montecristo, marketing of both the Cuban and Dominican-made brands could continue as “Montecristo” from Cuba and “Montecristo II” from the Dominican Republic. And fans of the medium-bodied taste of the Cuban version who would prefer to skip the bitter finish could enjoy, say, the Montecristo II Peruvian Square Pressed blend we like so much, which is made in the Dominican Republic.
For those marks owned by others, however, the situation is much more murky. General Cigar is owned by the giant Swedish Match and its view of its marks in the case of Cuban cigars being sold in the U.S. has not been made public. Suffice to say, for the 12 brand marks it owns, a lot of lawyers will be paid a lot of money to negotiate some agreement. Prediction: given the European ownership of General Cigar, my current guess at the likely outcome of such negotiations would be to allow General Cigar to be the importer of those 12 brands for U.S. consumption under strict rules which describe how the Cuban and non-Cuban versions of those brands are marketed and referred to. Equally likely would be the creation of a new entity, co-owned by Swedish Match and a Cuban-owned interest, to market specific Cuban makes in the U.S., again with specific agreement on how the non-Cuban cigars with the same trade names are presented.
All of this, of course, comes into play only when the U.S. trade embargo against Cuba is lifted. Although the Bush Administration has tightened restrictions considerably of late, historians have pointed out that “it took Nixon to go to China.” So, who knows, maybe a thaw will be forthcoming. It certainly would make the cigar trademark game a lot more interesting.
~ Rich Perelman
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