Empresa Cubana Exportadora v. Dept. of Treasury

• Decision Date: 30 March 2009
• Docket Number: Civil Action No. 06-1692 (RCL).
• Citation: 606 F.Supp.2d 59
• Parties: EMPRESA CUBANA EXPORTADORA DE ALIMENTOS Y PRODUCTOS VARIOS, d/b/a Cubaexport, Plaintiff, v. UNITED STATES DEPARTMENT OF TREASURY, Office of Foreign Assets Control, et al., Defendants.
• Court: U.S. District Court — District of Columbia

606 F.Supp.2d 59

EMPRESA CUBANA EXPORTADORA DE ALIMENTOS Y PRODUCTOS VARIOS, d/b/a Cubaexport, Plaintiff, v. UNITED STATES DEPARTMENT OF TREASURY, Office of Foreign Assets Control, et al., Defendants.

Civil Action No. 06-1692 (RCL).

United States District Court, District of Columbia.

March 30, 2009.

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Peter M. Brody, Ropes & Gray, Washington, DC, Brynn Metzger-Hare, Eric R. Hubbard, Herbert F. Schwartz, Michele M. Winneker, Pablo D. Hendler, Vincent N. Palladino, Ropes & Gray LLP, New York, NY, for Plaintiff.

Eric R. Womack, U.S. Department of Justice, Washington, DC, for Defendants.

MEMORANDUM OPINION

ROYCE C. LAMBERTH, Chief Judge.

Now before the Court is plaintiff's motion [35] for summary judgment, and defendants' cross-motion [36] to dismiss or in the alternative, for summary judgment. Upon consideration of the motions, the oppositions, the replies, the entire record herein, and applicable law, the defendants' motion [36] will be GRANTED; plaintiff's motion [35] will be DENIED.

I. BACKGROUND

Two words—Havana Club—have been at the center of litigation that has now traversed two federal Circuits, two federal agencies, and two decades. The latest incarnation of this controversy is a suit by plaintiff Empresa Cubana Exportadora de Alimentos y Productos Various ("Cubaexport") against the United States Department of Treasury, the Secretary of the Treasury, the Director of the Office of Foreign Assets Control ("OFAC"), and the United States. This litigation arises out of OFAC's refusal to authorize Cubaexport to renew its trademark rights in the "HAVANA CLUB" name with the United States Patent and Trademark Office.

Given this case's significant legal and factual underbrush, the Court will set out the background to the case before delving into the specifics.

A. United States Trade Embargo Against Cuba

The Trading With the Enemy Act ("TWEA") authorizes the President to impose and administer trade embargoes during wartime. 50 U.S.C.App. § 5(b) (2007). The President has delegated this authority to the Secretary of the Treasury, who has in turn delegated it to the Office of Foreign Assets Control ("OFAC"), a division of the United States Department of Treasury. Regan v. Wald, 468 U.S. 222, 227 n. 2, 104 S.Ct. 3026, 82 L.Ed.2d 171 (1984). In 1963, when the TWEA also applied to peacetime emergencies, President Kennedy adopted the Cuban Asset Control Regulations ("CACR") "to deal with the peacetime emergency created by Cuban attempts to destabilize governments throughout Latin America." Id. at 226, 104 S.Ct. 3026. Congress later removed peacetime emergencies from TWEA's scope but permitted the President to maintain existing embargoes, including the embargo against Cuba. Id. at 228-29, 104 S.Ct. 3026.

The Cuban Asset Control Regulations ("CACR"), which implemented the trade embargo against Cuba, generally prohibit transactions in the United States involving Cuban-owned property unless the transaction is authorized by OFAC. A transaction involving Cuban-owned property can be authorized by OFAC in a couple of ways. The first way is through the general license, which broadly authorizes entire classes of transactions. 31 C.F.R. 515, subpart E. When no general license applies, "[a]ny person having an interest in a transaction or proposed transaction may file an application [with OFAC] for a [specific] license." Id. § 515.801(b)(2).

Prior to 1998, the CACR included a general license for trademark registration and renewal by Cuban nationals:

Transactions related to a registration and renewal in the United States Patent and Trademark Office or the United States Copyright Office of patents, trademarks, and copyrights in which the Government of Cuba or a Cuban national has an interest are authorized.

31 C.F.R. § 515.527.

Congress carved out a major exception to the general license provision, however, when it passed Section 211(a)(1) of the Omnibus Act in 1998, which states:

[N]o transaction or payment shall be authorized or approved pursuant to section 515.527 of title 31 ... with respect to a mark, trade name, or commercial name that is the same as or substantially similar to a mark, trade name, or commercial name that was used in connection with a business or assets that were confiscated unless the original owner of the mark, trade name, or commercial name, or the bona fide successor-in-interest has expressly consented.

Omnibus Consolidated and Emergency Supplemental Appropriations Act, Pub. L. No. 105-277, § 211(a)(1), 112 Stat. at 2681-88. Section 211(c) further instructed the Secretary of the Treasury, acting through OFAC, to "promulgate such rules and regulations as are necessary to carry out the provisions of this section."

Thereafter, OFAC amended its regulations to include a provision that essentially mimics Section 211(a)(1) and states that no general license for a trademark shall be authorized if the mark was used in connection with a business that was confiscated unless the original owner of the mark or the bona fide successor-in-interest has expressly consented.¹ OFAC did not enact any further regulations to implement Section 211.²

B. The Procedural History of this Case

Plaintiff Cubaexport is a Cuban state-owned enterprise headquartered in Havana, Cuba. (Pl.'s Compl. ¶ 5.) The Cuban Ministry of Foreign Commerce chartered Cubaexport in 1965. In 1974, Cubaexport adopted the HAVANA CLUB trademark and registered it in Cuba for use in connection with rum. (Id.) Two years later, it applied to register the mark in the United States, and the United States Patent and Trademark Office ("USPTO") issued the registration on January 27, 1976.

Cubaexport periodically renewed the mark with the USPTO thereafter, but the registration was set to expire in January 2006. Cubaexport wished to renew the mark. Because Cubaexport is a state-owned company of Cuba, however, it needs either a specific or general license to overcome the CACR and conduct a transaction in the United States. Cubaexport's counsel, the law firm of Ropes & Gray, already had a specific license authorizing it to defend Cubaexport in proceedings initiated by Bacardi & Company in the USPTO's Trademark Trial and Appeal Board³ ("TTAB"). On December 13, 2005, Ropes & Gray sent a letter to the USPTO enclosing a renewal application and filing fee for the HAVANA CLUB trademark, stating that renewal was necessary in order to preserve the status quo until a decision regarding the cancellation proceedings initiated by Bacardi could be rendered. (Pl.'s Mot. [35] at 23⁴.) While the application for renewal was pending, OFAC intervened in the registration renewal process and sent a letter to Ropes & Gray and the USPTO on April 6, 2006. The letter stated that the specific license that had previously been granted to Ropes & Gray to defend Cubaexport in the trademark registration cancellation proceedings initiated by Bacardi did not authorize Ropes & Gray to pay a filing fee to the USPTO for renewal of the HAVANA CLUB registration. (Id. at 12.) OFAC also stated in that letter that Ropes & Gray could request separate authorization, including a separate specific license to renew the HAVANA CLUB trademark registration. The letter also stated that Ropes & Gray could seek further guidance regarding the separate authorization or ask any questions by contacting OFAC in writing or by telephone. The next day, April 7, 2006, Cubaexport, through Ropes & Gray, sought a specific license to renew the registration. Ropes & Gray also sent a letter to the USPTO⁵ arguing that the trademark should be renewed pursuant to the general license, in order to preserve the status quo until issues regarding whether the HAVANA CLUB mark was "confiscated" could be resolved in the United States District Court.

On July 28, 2006, one day after the deadline to renew the HAVANA CLUB registration had passed, OFAC sent a letter to Ropes & Gray regarding the April 7, 2006 specific license application. The letter stated:

Pursuant to the Cuban Asset Control Regulations, 31 C.F.R. Part 515, administered by the U.S. Department of Treasury's Office of Foreign Assets Control ("OFAC"), renewal of the HAVANA CLUB trademark under these circumstances would be prohibited unless specifically licensed.

OFAC has been engaged in consultation with the relevant agencies in the U.S. Government, including the Department of State ("State"), on this issue. We have received guidance from State informing us that it would be inconsistent with U.S. policy to issue a specific license authorizing transactions related to the renewal of the HAVANA CLUB trademark. Accordingly, your request is hereby denied.

(Id.)

Cubaexport thereafter filed its complaint in this action, asserting claims under the Administrative Procedure Act and the United States Constitution. The plaintiff alleged that OFAC violated the Administrative Procedure Act by: (1) deciding on April 6, 2006, that a specific OFAC license to defend Cubaexport in litigation involving cancellation of its HAVANA CLUB trademark did not authorize Ropes & Gray to renew Cubaexport's trademark registration; (2) deciding on July 28, 2006, that renewal of Cubaexport's HAVANA CLUB trademark registration "would be prohibited unless specifically licensed"; and (3) deciding on July 28, 2006, that it would not grant a specific license authorizing payment of the trademark renewal fee. Cubaexport also lodged constitutional claims, alleging that these decisions deprived it of procedural and substantive due process and violated the Takings Clause.

On September 27, 2007, this Court granted partial summary judgment in favor of defendants. The Court granted summary judgment in favor of defendants with respect to plaintiff's first and third APA challenges and denied without prejudice the defendants' summary judgment motion on the constitutional claims. The Court also denied without prejudice the defendants' ...