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Cuba - It's Not Just About Cigars Anymore

Most Americans could probably find Cuba on a map (or at least identify it as one of the larger islands in the Caribbean off the coast of Florida). But if you asked them to tell you what else they know about the country, they would probably have a hard time recalling much more than something about Fidel Castro, the Cuban Missile Crisis of the 1960's, and communism. Oh, and they probably know that Cuba is renowned for its cigars. Beyond that, they probably don't know much.

Soon, they will know much, much more.

After more than fifty years of tensions between the United States and Cuba, the two sworn enemies have taken significant steps towards normalizing relations by reopening their respective embassies and by vowing to reestablish commercial relations. The sudden shift in U.S. policy towards Cuba is likely to have a far-reaching and long-lasting positive impact for both countries, particularly as U.S. companies move back into an economy from which they have been barred for more than half a century. And the American companies that are first to recognize these opportunities and to take advantage of them are likely to reap the most significant benefits. Nowhere is this more evident than in trademark protection.

With regard to trademarks, Cuba is known as a "first to file" country. What this means is that under Cuban law, the first person or business entity to file for trademark protection is considered by the Cuban government to be the legal owner of the trademark. In "first to file" countries like Cuba, it doesn't matter that a trademark registrant has never used the trademark in commerce or otherwise established a legitimate interest in the trademark. All that is required is registration. The U.S., in contrast, is a "first to use" country.

In Cuba (and other "first to file" countries like Japan), enterprising bad actors have been known to file trademark applications without any intention of actually using the trademarks. They file before the true owner of the trademark files in order to "squat" on the trademark and force the legitimate owner to then (a) pay exorbitant fees for the right to "buy" or license the use of their own marks in country, or (b) file an expensive, time-consuming opposition proceeding seeking to cancel the earlier bad faith registration so that they can obtain their own legitimate registration.

Due to the trade embargo against Cuba, U.S. trademark owners have had even more practical problems. In 1995, the U.S. enacted an exception to the Cuban trade embargo for intellectual property effectively allowing them to protect their rights in Cuba by filing and prosecuting registration applications and maintaining those registrations on an active basis under Cuban law. Oddly enough, there was little reason for such registrations because there were so few American-made goods sold in Cuba.

Additionally, Cuban trademark registrations have further faced the challenge of money transfers because Cuban and U.S. banks were not allowed to directly exchange currencies. This required registrants to make payments through third-party countries or intermediaries and thereby increased the costs associated with registration. Anticipated relaxation of banking and credit restrictions by the Obama administration are likely to make transmitting payments to trademark agents in Cuba much easier and less expensive.

Now that diplomatic relations have been restored and commercial relations are bound to be normalized very soon, there is likely to be an explosion of U.S. economic activity in Cuba and with it the need to establish brands and to protect the associated trademarks. U.S. companies that expect to be doing business in Cuba would do well to learn more about the nation of more than 11 million potential consumers and to take appropriate steps now to protect their trademarks even if those trademarks have nothing to do with cigars.

Why it matters

In Cuba, there are two ways to obtain a trademark registration. First, for those companies that already have a U.S. trademark registration, the most economical approach is to file an "international registration" under the Madrid protocol. The cost for filing an international registration in Cuba for one class of goods or services is less than $400. Second, trademark owners can work with a local lawyer or trademark agent in Cuba to file a trademark application directly through the Oficina Cubana de la Propiedad Industrial ("OCPI"). The OCPI is the Cuban equivalent of U.S. Patent and Trademark Office.

The Cuban trademark process is much slower than its U.S. counterpart. It can take years to obtain a registration, especially now that the OCPI is flooded with new trademark applications from U.S. companies. They scrambled to get ahead of trademark squatters and competitors and to nail down valid registrations will mean an increase in these delays and potentially further complicate the use of trademarks within Cuba itself.

No one knows for sure how long it will take to U.S. to lift the trade embargo, but Cuban trademarks, like U.S. trademarks are valid for a period of 10 years and maybe renewed in 10 year increments thereafter. Companies that do business in Cuba or that are hoping to do business in Cuba, should start the trademark registration application process now so that they will hold all the rights necessary to exploit their own brand when they do eventually expand into Cuba.

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