Empresa Cubana Del Tabaco v. Culbro Corp.

• Decision Date: 19 November 2008
• Docket Number: No. 97 Civ. 8399.,97 Civ. 8399.
• Parties: EMPRESA CUBANA DEL TABACO d/b/a Cubatabaco, Plaintiff, v. CULBRO CORPORATION and General Cigar Co., Inc., Defendants.
• Court: U.S. District Court — Southern District of New York

587 F.Supp.2d 622

EMPRESA CUBANA DEL TABACO d/b/a Cubatabaco, Plaintiff, v. CULBRO CORPORATION and General Cigar Co., Inc., Defendants.

No. 97 Civ. 8399.

United States District Court, S.D. New York.

November 19, 2008.

COPYRIGHT MATERIAL OMITTED

Rabinowitz, Boudin, Standard, Krinsky & Lieberman, P.C. by Michael Krinsky, Esq., David B. Goldstein, Esq., New York, NY, for Plaintiff.

Dla Piper U.S. LLP by Andrew L. Deutsch, Esq., Joshua S. Sohn, Esq., Morgan & Finnegan, LLP by Harry C. Marcus, Esq., Scott Greenberg, New York, NY, for Defendants.

OPINION

SWEET, District Judge.

Plaintiff Empresa Cubana del Tabaco, d/b/a Cubatabaco ("Plaintiff" or "Cubatabaco") has moved pursuant to Rule 60(b) (6), Fed.R.Civ.P., for an order relieving it from the final judgment in favor of defendants Culbro Corporation and General Cigar Co., Inc. (collectively, "Defendants" or "General Cigar") on Cubatabaco's claim of unfair competition under New York law. Upon the prior proceedings and the conclusions set forth below, Cubatabaco's motion is granted.

I. Facts and Prior Proceedings

This is the latest iteration of the dispute concerning the rights surrounding the famous Cuban cigar, the COHIBA. The dispute remains alive and well and relevant¹ after ten and a half years and the attention of the courts, agencies, and many able lawyers.

The parties' familiarity with the prior proceedings and facts underlying this dispute is assumed. In brief, in January 1997, Cubatabaco, a Cuban company, applied to register "COHIBA" with the United States Patent and Trademark Office ("PTO") and, at the same time, applied to the Trademark Trial and Appeals Board ("TTAB") to cancel General Cigar's two registrations of COHIBA. Later in 1997, General Cigar launched a COHIBA-branded cigar on a national scale. On November 12, 1997, Cubatabaco brought an action in this Court for an injunction against General Cigar's use of the COHIBA mark, as well as for cancellation of General Cigar's registrations. As provided for in TTAB Rule 2.117, 37 C.F.R. § 2.117, the TTAB cancellation proceedings were suspended pending the outcome of the federal court litigation.

On Cubatabaco's motion for summary judgment, this Court held that General Cigar had abandoned the rights it had obtained from its initial registration and use of COHIBA between 1978 and 1987 because of its non-use of the mark for a period of more than five years, between 1987 and 1992. After a bench trial, the Court held that Cubatabaco owned the COHIBA trademark in the United States under the "well-known" (or "famous") marks doctrine, finding that the Cuban COHIBA was "well-known" within the meaning of that doctrine at the time General Cigar used and registered the mark in 1992. On the basis of this holding, the Court found for Cubatabaco on its claim of trademark infringement under Section 43(a) of the Lanham Act, 15 U.S.C. § 1125(a), enjoined General Cigar's use of COHIBA, and ordered cancellation of its second registration. Empresa Cubana del Tabaco v. Culbro Corp., No. 97 Civ 8399, 70 U.S.P.Q.2d 1650, 2004 WL 602295 (S.D.N.Y. Mar. 26, 2004), rev'd on other grounds, 399 F.3d 462 (2d Cir.2005).

This Court also dismissed Cubatabaco's claim under the New York common law of unfair competition by misappropriation, holding that Cubatabaco had failed to prove General Cigar's "bad faith" in selecting the COHIBA mark. To establish its claim, Cubatabaco was required to establish that General Cigar chose the mark in order to exploit the reputation and goodwill of the Cuban COHIBA. As Cubatabaco had "presented no credible evidence that General Cigar believed that they did not own the COHIBA mark at the time," the claim was dismissed. Id. at 1693-94. It is this holding that is at issue on the instant motion.

On appeal, General Cigar contended that the Cuban Assets Control Regulations, 31 C.F.R. Part 515 (the "CACRs" or the "Regulations"), barred Cubatabaco's acquisition of rights in the COHIBA mark through the famous marks doctrine. The Court of Appeals agreed and reversed this Court's judgment insofar as it granted relief to Cubatabaco on its Lanham Act trademark infringement claim. Empresa Cubana del Tabaco v. Culbro Corp., 399 F.3d 462, 471-81 (2d Cir.2005). At the same time, the Court of Appeals affirmed this Court's dismissal of Cubatabaco's New York unfair competition claim. Id. at 485.

On September 20, 2004, after General Cigar raised the CACRs issue on appeal, Cubatabaco filed an application with the United States Treasury Department's Office of Foreign Assets Control ("OFAC") for a specific license retroactively authorizing this Court's issuance of relief in favor of Cubatabaco. At the time this motion was filed, that application was pending.

Cubatabaco's petition to the Court of Appeals for rehearing and for rehearing en banc was denied on June 1, 2005. The Supreme Court denied Cubatabaco's petition for a writ of certiorari on June 15, 2006. Empresa Cubana del Tabaco v General Cigar Co., Inc., 547 U.S. 1205, 126 S.Ct. 2887, 165 L.Ed.2d 916 (2006). Neither the petition for rehearing nor the certiorari petition sought review of the New York law issued raised by the dismissal of Cubatabaco's New York claim.

The Court of Appeals' mandate, issued on February 8, 2006, decreed that the district court's judgment be "AFFIRMED IN PART, REVERSED IN PART, and REMANDED in accordance with the opinion of this Court," which directed that the case be "remanded for entry of an order dismissing all remaining claims." See Empresa Cubana, 399 F.3d at 486. The mandate was entered in the district court on February 23, 2006. Pursuant to the mandate, this Court entered an order on May 27, 2006, as instructed by the Court of Appeals, "that all remaining claims in the above entitled action are dismissed."

On July 6, 2006, General Cigar moved to dismiss Cubatabaco's petition to cancel General Cigar's registrations in the TTAB and to deny Cubatabaco's application for registration of COHIBA in the PTO. The motion was heard on September 20, 2006, and denied by this Court in an order and opinion dated March 14, 2007 (the "March 14 Order and Opinion"). Empresa Cubana Del Tabaco v. Culbro Corp., 478 F.Supp.2d 513 (S.D.N.Y.2007). The Court concluded that General Cigar's motion was untimely, in that final judgment had been entered on February 23, 2006, the date of the mandate, or, alternatively, on May 15, 2006, the date of this Court's final order, and that the relief sought by General Cigar was precluded by the Court of Appeals' mandate. In the March 14 Order and Opinion, this Court also concluded that, even if the motion were timely and not precluded by the appellate mandate, since the Court's termination of the TTAB and PTO proceedings had not previously been sought or adjudicated in the federal court action, the TTAB and PTO, not this Court, should decide whether Cubatabaco's petition for cancellation of General Cigar's registration, and Cubatabaco's application for registration of COHIBA (on the basis of its Cuban registration), were precluded by the Court of Appeals' decision. General Cigar, the Court held, should address any arguments of estoppel on the basis of the Second Circuit's decision to the TTAB and the PTO, not the district court. General Cigar appealed the order, and the Court of Appeals affirmed on September 4, 2008. Empresa Cubana del Tabaco v. Culbro Corp., 541 F.3d 476 (2d Cir.2008).

On December 13, 2007, the New York Court of Appeals issued an opinion in ITC Limited v. Punchgini, Inc., 9 N.Y.3d 467, 850 N.Y.S.2d 366, 880 N.E.2d 852 (2007). Cubatabaco argues that this subsequent decision by the New York Court of Appeals and the "unusual and extraordinary circumstances of this case, warrant relief from the Court's judgment dismissing Cubatabaco's unfair competition claim under New York law." Pl. Mem. 17.

The instant motion was heard and marked fully submitted on April 2, 2008.

II. The Grant of Rule 60(b) Relief is an Appropriate Exercise of Discretion

a. The Rule 60(b)(6) Standard

Under Rule 60, Fed.R.Civ.P., a court may relieve a party from a final judgment, order, or proceeding for the specific reasons outlined in the rule, as well as, under Rule 60(b)(6), for "any other reason that justifies relief." The Second Circuit Court of Appeals has held that "subpart (6) is `properly invoked where there are extraordinary circumstances or where the judgment may work an extreme and undue hardship.'" DeWeerth v. Baldinger, 38 F.3d 1266, 1272 (2d Cir.1994) (quoting Matarese v. LeFevre, 801 F.2d 98, 106 (2d Cir.1986)).

Rule 60(b) (6) "confers broad discretion on the trial court to grant relief when appropriate to accomplish justice [and] it constitutes a grand reservoir of equitable power to do justice in a particular case." Marrero Pichardo v. Ashcroft, 374 F.3d 46, 55 (2d Cir.2004) (quoting Matarese, 801 F.2d at 106). A court's authority to issue relief under the Rule "should be liberally construed when substantial justice will thus be served." Matarese, 801 F.2d at 106.

Although "[i]ntervening developments in the law by themselves rarely constitute the extraordinary circumstances required for relief under Rule 60(b)(6)," relief may be granted "where a `upervening change in governing law calls into serious question the correctness of the court's judgment.'" Scott v. Gardner, 344 F.Supp.2d 421, 425-26 (S.D.N.Y.2004) (quoting Sargent v. Columbia Forest Prods., Inc., 75 F.3d 86, 90 (2d Cir.1996)); see Marrero Pichardo, 374 F.3d at 56 (granting relief where reconsideration based on subsequent change in law would prevent "manifest injustice"); Devino v. Duncan, 215 F.Supp.2d 414, 419 (S.D.N.Y. 2002) (granting relief based on "unique circumstances presented by the intervening decision" and practical, procedural hurdles).

In determining whether an intervening decision of law constitutes "extraordinary circumstances" justifying the exercise of a court's discretionary power under Rule 60(b)(6) "to accomplish...