RCW, Supervisor, Inc. v. Cuban Tobacco Company

• Decision Date: 18 July 1963
• Parties: R. C. W., SUPERVISOR, INC., Plaintiff, v. CUBAN TOBACCO COMPANY, Inc. and Robert W. Dill as Collector of Customs of the Port of New York, Defendants.
• Court: U.S. District Court — Southern District of New York

220 F. Supp. 453

R. C. W., SUPERVISOR, INC., Plaintiff, v. CUBAN TOBACCO COMPANY, Inc. and Robert W. Dill as Collector of Customs of the Port of New York, Defendants.

United States District Court S. D. New York.

July 18, 1963.

Rabinowitz & Boudin, New York City, for plaintiff; Leonard B. Boudin, Henry Winestine, New York City, of counsel.

Robert M. Morgenthau, U. S. Atty., for defendant Robert W. Dill as Collector of Customs of the Port of New York; Anthony H. Atlas, Asst. U. S. Atty., of counsel.

Chadbourne, Parke, Whiteside & Wolff, New York City, for defendant Cuban Tobacco Co., Inc.; Edward R. Neaher, Eugene R. Anderson, New York City, of counsel.

FREDERICK van PELT BRYAN, District Judge.

Plaintiff R.C.W., Supervisor, Inc., (R. C.W.) sues to enjoin defendant, the Collector of Customs for the Port of New York, from giving effect to a directive of the Commissioner of Customs. The directive gives notice to customs officials throughout the United States of the recordation by defendant Cuban Tobacco Company, Inc. (Cuban Tobacco) of the trademarks "Cabanas" and "H. De Cabanas y Carbajal" pursuant to the provisions of § 42 of the Lanham Act (15 U.S.C. § 1124).¹ The effect of the recordation under § 42 is to make it illegal under § 526 of the Tariff Act of 1930 (19 U.S.C. § 1526) to import into the United States cigars bearing either of the recorded marks without consent of the recording party.²

R.C.W. also seeks to enjoin defendant Cuban Tobacco from interfering with its importation and distribution of cigars bearing these marks. Finally it seeks judgment declaring that Cuban Tobacco is not the rightful owner of the trademarks in question.

Cuban Tobacco has counterclaimed to enjoin R.C.W. from infringing the marks, which it claims rightfully belong to it, and from importing into the United States and distributing here cigars bearing the marks or any imitation of them. Cuban Tobacco also seeks an accounting of its damages and plaintiff's profits resulting from the alleged infringement and demands treble damages. Finally it seeks an injunction restraining plaintiff from paying to anyone but it, the price or value of any goods bearing the marks or its trade name.

Jurisdiction is based on the Lanham Act (15 U.S.C. §§ 1051-1127).

Plaintiff has now moved for a temporary injunction, pursuant to Rule 65, F.R.Civ.P., asking that the activities against which it is seeking permanent injunctive relief be enjoined during the pendency of the litigation. It seeks to have the Collector of Customs restrained, pendente lite, from giving effect to the directive of the Commissioner of Customs, and Cuban Tobacco restrained, pendente lite, from interfering with the importation and distribution of cigars bearing the disputed trademarks.

R. C. W. alleges that because cigars have to be kept under carefully controlled conditions to retain their freshness, those which are being held by the Collector of Customs pursuant to the recordation will become worthless if kept for the duration of the litigation and that, therefore, unless preliminary relief is granted it will suffer irreparable harm. It also alleges irreparable damage arising from a disruption of its business.

Cuban Tobacco has cross-moved, pursuant to Rule 65, for a temporary injunction to restrain plaintiff from importing or distributing cigars bearing defendant's corporate name, the trademarks in question, or any imitation thereof during the pendency of the litigation.

Defendant Collector of Customs opposes plaintiff's motion and takes no position with regard to the cross-motion of defendant Cuban Tobacco.

The facts pertinent to this controversy are as follows:

A trademark which consists of the name "H. De Cabanas Y Carbajal" and a monogram displayed within an oval frame, was first registered in the United States on August 7, 1906 under the Trade-Mark Act of 1905 by H. De Cabanas Y Carbajal (De Cabanas), a New Jersey corporation which was wholly owned by Cuban Tobacco. The presently subsisting registration of the mark and monogram, No. 313,205 was made by De Cabanas on May 22, 1934, also under the Act of 1905.

In 1952 De Cabanas was liquidated and defendant Cuban Tobacco succeeded to the ownership of the mark and registration pursuant to an "Instrument of Transfer and Assignment" dated March 31, 1952. The assignment of registered trademarks was recorded in the United States Patent Office on June 3, 1952 and in 1954 Cuban Tobacco renewed the registration of the mark under the Trade-Mark Act of 1946.

A second trademark which consists simply of the name "Cabanas" was registered by Cuban Tobacco, registration No. 678,758, on May 19, 1959 on the Principal Register established by the Trade-Mark Act of 1946.

The brands of cigars on which these marks are used and with which this litigation is concerned have been on the market for over 35 years. They are "clear Havana" cigars of different sizes and shapes. They have the reputation of being among the finest cigars on the market.

During the early 1930's these cigars were produced in the United States in Trenton, New Jersey.³ In October of 1934, however, manufacture was shifted to Cuba and they were produced in that country exclusively until 1961.

On July 9, 1951 De Cabanas, the owner of the United States trademarks under which the cigars were then being sold in this country, and Tabacalera Cubana, S. A., (Tabacalera), the owner of the brand rights in Cuba and the actual manufacturer of the cigars since 1934, made an agreement clarifying the relationship between the two firms and expanding Tabacalera's rights in the world cigar market. Tabacalera was a Cuban corporation, wholly owned by defendant Cuban Tobacco, at the time.

By the terms of the agreement De Cabanas granted Tabacalera the privilege of marketing cigars under all the brand names owned by De Cabanas, throughout the world. Tabacalera, in turn, agreed that the cigars so marketed would be manufactured in conformity with the standard of quality and characteristics prescribed by De Cabanas, and that De Cabanas would have the right at any time to inspect the leaf tobacco and supervise the processes and methods of manufacture of the cigars. De Cabanas was to "at all times and in all respects have and retain full control over the standards of quality and characteristics of said brands."

The agreement also provided that "said trade-marks, brands, labels and trade names shall continue to be the property of Cabanas and that Tabacalera has and shall claim no right or title therein." De Cabanas specifically reserved the right to manufacture or market all of the brands of cigars involved any place in the world.

In 1952, when De Cabanas was liquidated, its parent, Cuban Tobacco, succeeded to its rights under this agreement. The rights of Cuban Tobacco and Tabacalera as to the production and distribution of H. De Cabanas y Carbajal and Cabanas cigars and the trademark rights thereto were governed by this agreement until 1960. Both companies apparently abided by the terms of the contract and, on the record now before me, there is no evidence of any dispute between them up to that point.

On December 31, 1958 the revolution in Cuba, known as the Movement of July 26th, was successful in overthrowing the Batista regime, then in power, and Fidel Castro, the leader of the revolt, assumed de facto control over the island. On January 7, 1959 the United States formally extended recognition to the new revolutionary government. However, with the passage of months relations between this country and the Castro regime cooled and reached a low point with the accusation by the United States that Castro had betrayed the revolution, had become a puppet of the Soviet Union, and had permitted that country to gain a military and political foothold in the Western Hemisphere, in violation of the Monroe Doctrine and various pronouncements of the Organization of American States. The naval quarantine which this country imposed upon Cuba at that point is recent history.

A complete review of the incidents involved in the deterioration of relations between the United States and Cuba is plainly unnecessary for the purposes of this motion. It is significant, nevertheless, that the Council of Ministers of Cuba on July 6, 1960 enacted Law No. 851 authorizing the President and Prime Minister of that nation "to nationalize, through forced expropriations, the properties or enterprises owned by physical and corporate persons who are nationals of the United States * * * or of the enterprise in which such physical and corporate persons have an interest, even though they be organized under the Cuban laws" if it be deemed "advisable or desirable for the protection of the national interests."

On September 16, 1960 an official of the Castro government, acting pursuant to a resolution of the Minister of Labor, dated September 15, 1960, took over the management and operation of Tabacalera and the custody of all its properties. Thereafter by Resolution No. 3 of October 24, 1960, President Dorticos and Prime Minister Castro, by reason of alleged "unscrupulous and criminal" attacks by the United States against Cuba, ordered the "nationalization by compulsory expropriation" of the properties encompassed by Law No. 851, including the property of Tabacalera, which was wholly owned by Cuban Tobacco, an American corporation, in Cuba.

After the nationalization, the Tabacalera plant continued to manufacture cigars, and continued to use the names "H. de Cabanas y Carbajal" and "Cabanas" on these products. Cuban Tobacco, however, was denied the right to control the standards of quality and characteristics of the cigars and to inspect and supervise the processes and methods of manufacture.

Some time after the nationalization, on March 15, 1961, Wood, who subsequently became president of plaintiff R.C.W., informed American importers of Cuban made cigars, by letter, that from that date forward all Cuban cigars were being...