What’s the Value of a Brand, like Cohiba or Opus X?
Takeaways for consumers from the premium cigar industry’s greatest trademark battles.
Part One: “Carlito Fuente Bets the Farm” and “The Cohiba Wars”.
What’s in a name?
In the world of luxury goods, everything.
This is because we buy products largely based on brand associations. But why are brands so important to us when we are selecting which product or service to purchase? And what makes us choose, say, to buy a bottle of Four Roses bourbon over Elijah Craig when we’re at the local liquor store? These are interesting questions at the heart of brand identity.
For we cigar lovers, what is it about the prestige of brands like Cohiba or Fuente Opus X that have made them cult classics – and the subject of constellations of heated trademark litigation throughout the U.S. court system? Why are brands like Cohiba and Opus X so special to cigar consumers that we hunt them like rare gemstones and pay a sizable premium to buy them, if we can ever find them in the first place?
Whatever the reasons for this brand value are, it is an indisputable fact that brand value exists. And for this reason, brand value is often under attack, legal and otherwise. If there is a certain value to brand – like Cohiba or Opus X (or Opus One) – then chances are, it will be contested. And perhaps even litigated.
This column, What’s the Value of a Brand?, will showcase the importance of the brand name and its protection – quite literally, as trademark lawsuits reveal how a name impacts the existence of a brand, and how much money it is worth.
We offer the stories and highlights of the greatest premium cigar industry trademark lawsuits and brand battles in modern cigar history. This column will also explore these legal battles’ lasting impacts on cigar smokers and look toward how these disputes might play out in the future.
With further ado, we start What’s the Value of a Brand? with the epitomes of all premium cigar industry legal disputes: the fight over who owns the rights to sell Opux X and Cohiba cigars in the United States.
Fuente Cigar, Ltd. v. Opus One (“The Opus X Litigation”)
When Carlito Fuente silenced his many doubters by growing the Dominican wrapper leaf needed for his Dominican puro, the FuenteFuente Opus X, the third-generation cigar maker proved true the maxim that no good deed goes unpunished.
What was Mr. Fuente’s reward for creating the first cult cigar of the modern era and for putting the Dominican puro on the map? Getting slapped with a trademark infringement lawsuit from the Opus One wine partnership - a partnership between wine giants Robert Mondavi and Baron Philippe de Rothschild - in federal court in Northern California in October 1996.
Instead of backing down to Opus One’s legal claims of massive economic damages and attorneys’ fees and changing the name of his crown jewel creation to something different, Carlito Fuente “bet the farm” and risked everything by litigating to save the Opus X cigar.
Long story, short, and small mountain of legal briefs later: Carlito Fuente won the case on summary judgment in 1998; Opus One lost. And the chilling effect of trademark infringement lawsuits from other luxury brands, like those in the premium wine and spirits world, like Opus One, against cigar manufacturers, like Fuente, was effectively killed at the root.
The premium cigar industry owes Carlito Fuente a tremendous debt of gratitude for his fighting, funding, and winning, the Opus One trademark litigation. The precedent that Fuente capitulating to Opus One’s threats, or, God forbid, losing the Opus One lawsuit, would have been catastrophic to the premium cigar industry. If Fuente had caved in or lost to Opus One, then there would be no Opus X cigars today. Which is punishment enough. However, and secondarily, anything other than total victory for Fuente would have encouraged the filing of other trademark infringement lawsuits from owners of other luxury brands against brand owners in the premium cigar space.
The Fuente Cigar, Ltd. v. Opus One litigation, though, is only one trademark infringement dispute that has brought a prominent member of the premium cigar industry into federal court. The last three decades have been rife with cigar-trademark litigation.
“Cohiba v. Cohiba” (Empresa Cubana del Tabaco v. Culbro Corp.)
The constellation of litigation known as “Cohiba v. Cohiba” is, without a doubt, the greatest legal soap opera in the history of the premium cigar industry. This drama, still unresolved, continues to this day with no end in sight.
The backstory: “Cohiba” is the only premium cigar brand, sold in both Cuban and non-Cuban versions under the same brand name (e.g., Partagas, Montecristo, Romeo y Julieta, etc.), that started in Cuba after the Castro revolution of the 1960’s. In other words, the communist Cuban government created the “Cohiba” brand. The Cuban government did not steal the “Cohiba” mark, as it did with all the other pre-Castro heritage Cuban brands.
The Cuban government established Cohiba in 1966 as a limited production private label cigar exclusively for Fidel Castro, Cuban diplomats, and other high-ranking members of Cuban society. After the Cohiba label became famous for being given as diplomatic gifts, these cigars developed a cult following. Cubatabaco, now operating as Habanos, S.A., introduced the Cohiba brand commercially in 1982.
General Cigar Co., then a subsidiary of the Culbro Corporation, began selling non-Cuban cigars under the brand name “Cohiba” (the red dot Cohiba, as it is commonly known today, for the red dot in the cigars’ bands) in the early 1980’s. During the middle of the cigar boom of the ‘90’s, in 1995, General Cigar Co., registered its federal trademark for the name “Cohiba” with the U.S. Patent and Trademark Office.
Although it had been brewing for decades, the legal dispute known as “Cohiba v. Cohiba” began in 1997 when Cubatabaco filed its own application to register the trademark for “Cohiba” for cigars and related goods, based on Cubatabaco’s prior registration of that mark in Cuba. The USPTO denied Cubatabaco’s application, based on the certain confusion with General Cigar’s two existing US registrations for “Cohiba” for use in connection with cigars.
Undeterred, Cubatabaco then filed cancellation actions with the USPTO against General Cigar’s two U.S. trademark registrations of “Cohiba”. A few months later, Cubatabaco filed a federal lawsuit in the Southern District of New York, pleading trademark infringement and seeking to legally stop General Cigar from using the “Cohiba” name going forward.
The Trademark Trial and Appeals Board (TTAB) of the USPTO suspended the cancellation proceeding until there was a final determination of the federal district court trademark infringement lawsuit. That federal court litigation, at least at the trial level (the first layer of this litigation), resulted in Cubatabaco/Habanos winning their case on summary judgment in 2004. The federal trial court ordered General Cigar Co. to stop using the “Cohiba” mark and it cancelled the General Cigar’s trademark registrations of the “Cohiba” name.
Yet the legal battle over the “Cohiba” name had just begun...
The next stage in this legal saga is General Cigar appealing its loss in federal district court in New York City to the U.S. Court of Appeals for the Second Circuit. In February 2005, the Second Circuit reversed the district court's order in favor of Cubatabaco/Habanos. The basis for this appellate court reversal is the Second Circuit’s view that the underlying decision of the district court violated a provision of the Cuban embargo called the Cuban Assets Control Regulations (CACR).
The CACR prohibits a Cuban business entity, like Cubatabaco/Habanos, from selling products in the United States or from receiving a transfer of property rights from a person subject to US jurisdiction, like General Cigar. In its reversal, the Second Circuit Court of Appeals held that Cubatabaco/Habanos was not entitled to the injunctive relief it claimed because granting such a remedy would involve a prohibited transfer of property under the CACR.
So, the dispute over who owned the rights to the “Cohiba” brand name in the United States finally ended, right? Wrong.
Complicating the already-quite-complicated further, the Second Circuit, left it to the trademark trial board of the USPTO – the TTAB – to decide the separate issue of what effect the Second Circuit’s reversal-decision would have on the cancellation actions that were then pending at the TTAB of the USPTO.
From 2005 to 2008, the fight goes dormant and there is a legal cease-fire, practically speaking. Then, in 2008, a new legal precedent is handed down in a different case that offers new hope to Cubatabaco/Habanos in its argument that the Cuban embargo does not bar its registration of the “Cohiba” trademark; and that cancellation of General Cigar’s two trademarks on the “Cohiba” name is warranted.
The federal trial court in New York once again sided with Cubatabaco/Habanos in its refiled case in 2009, including finding that Habanos was entitled to an award of money damages against General Cigar. However, the Second Circuit Court of Appeals reversed this ruling, too, in 2010.
The fight then moved back to the TTAB (again) in 2013, when that board ruled to dismiss Cubatabaco’s/Habanos’ petition to cancel General Cigar’s trademarks. Then, on appeal of Habanos’ 2013 TTAB loss, the Federal Circuit Court of Appeals in Washington, D.C. (that handles appeals from the federal regulatory decisions) threw the cigar world a major curveball when it reserved the TTAB and ruled in favor of Cubatabaco/Habanos in 2014.
This means that there are contradictory court orders from two federal appeals courts – called a “circuit split” – on the issue of who owns the rights to the “Cohiba” brand name in the United States. Typically, the U.S. Supreme Court agree to hear cases that involve the resolution of so-called “circuit splits” on legal questions.
Next, in 2015, the U.S. Supreme Court denied General Cigar’s request to hear its appeal. Cubatabaco/Habanos can once again seek to bar General Cigar’s use of the “Cohiba” trademark. The case, due to the Supreme Court’s refusal to clarify these issues, is back to the TTAB on Habanos’ petition to cancel General Cigar’s trademarks.
The case at the TTAB continues today. Yes, you read that correctly. The legal war over who owns the right to sell “Cohiba” brand cigars in the U.S. is ongoing, with no sigs of ending on the horizon. On August 26, 2020, the TTAB ruled that a proposed supplemental expert witness report of Robb Report writer and luxury lifestyle journalist, Richard Hacker, was to be struck as untimely filed.
Key takeaways for cigar consumers: First, 25 years into this constellation of trademark litigation, there is no more clarity about who owns the rights to the “Cohiba” cigar brand name in the United States than when this saga first began. And to think that people criticise the court system for being inefficient and slow...
Second, this issue will have to be resolved, eventually. Someday, even if we are talking another 60 years, the Cuban embargo will be lifted. At that point, Habanos will seek to sell its Cohibas in the United States – and Americans will be dying to buy them. Something is going to have to give. Habanos is either going to have to market its Cohibas under a different brand name in the U.S. (see: the Mombacho/Casa Favilli trademark dispute for a case study on this type of situation) or General Cigar is going to have to change what it calls its “red dot” Cohibas. Or the parties are going to have to come together and reach a settlement, which seems highly unlikely after 25 years of scorched Earth litigation.
Third, this situation presents an interesting moral issue, in addition to the legal questions involved: if it is wrong for the Cuban government to nationalize, and appropriate, the existing premium cigar heritage brands from those prior owners then why is it not equally wrong for General Cigar Company to appropriate the Cohiba brand name? This is an interesting debate that will be forced upon the premium cigar industry if, and when, the Cuban embargo is ever lifted in the United States.
Parting Thoughts
Do brands add to our cigar smoking experience? Does seeing Opus X or Cohiba (or in my personal case, Plasencia) on our cigar band influence how we perceive the taste of the smoke of that cigar? The answer is yes, and in many ways.
Our anticipation and expectations for every cigar smoking experience that we have is affected by a plethora of factors. These include our subjective perceptions of the brand of the cigar, the band of the cigar, and even the name of the cigar. These factors are also external of us and independent of the cigar that we are smoking.
A cigar smoked on vacation, or on the beach, or at your wedding (or, for some people, to celebrate their divorce) or following a major life event like a graduation, all these factors and countless others will influence how you taste and judge your cigar.
Personally, I also believe that cigar shape – that is, the particular details of the vitola you are smoking – affects your expectations and experience of that cigar. I have a deep love for cigars with curves and tapers. How I perceive and taste a torpedo, a belicoso, or a big, beautiful, Salomon is different than how I taste their non-tapered, straight-edge, counterparts.
Wrapper color has a similar effect. Strong and full-bodied cigars can come draped in light, golden wrappers grown under shade. And milder, softer, cigars can come wrapped in dark maduro wrappers. But an overwhelming majority of mild cigars come wrapped in lighter color, shade-grown, wrappers and stronger cigars tend to come wrapped in darker, sun grown or maduro, wrappers.
This is not only about taste. It is also about associations and expectations that cigar consumers have in their minds (often formed by prior smoking experiences, enforcing the cyclical nature of many of our subjective perceptions). We expect cigar with lighter color wrappers to be milder than cigars with darker wrappers.
Brand name, and our perception of that brand’s “history”, will also be important considerations to cigar smokers. I grew up, illegally, smoking Ernesto Carrillo’s La Gloria Cubana cigars in the late 90’s and early aughts. Even though E.P. Carrillo left that brand in 2009, the La Gloria Cubana label (in both its Cuban and non-Cuban forms) will always hold a special place in my heart.
After all, you never forget your first love.
