Bacardi & Company Ltd. v. Squires — Fourth Circuit Upholds Cubaexport’s Havana Club Trademark Renewal

Background

The HAVANA CLUB trademark dispute is one of the longest-running trademark battles in American legal history. Empresa Cubana Exportadora de Alimentos y Productos Varios (“Cubaexport”), a Cuban state-owned company, registered the HAVANA CLUB mark in the United States in 1976 and renewed it in 1986 and 1996. Bacardi, which purchased the original registrant’s remaining interest in the mark in the 1990s, has been trying to cancel Cubaexport’s registration and register HAVANA CLUB for itself ever since.

The crux of the dispute involves U.S. trade sanctions. Under the Cuban embargo, Cuban entities need a specific license from the Treasury Department’s Office of Foreign Assets Control (OFAC) to engage in most U.S. transactions—including paying trademark renewal fees at the USPTO. In December 2005, Cubaexport submitted its Section 8/9 renewal filing and paid the required fee without first obtaining that OFAC license. The PTO initially received the funds, but OFAC notified the agency that the payment lacked proper authorization. The PTO refunded the payment and the examining attorney refused to accept the renewal in 2006, leaving the registration in legal limbo.

Cubaexport fought back on two fronts: it sued OFAC in federal court (ultimately losing in 2011) and petitioned the USPTO Director for review. The Director suspended the petition while the OFAC litigation played out. In late 2015, Cubaexport applied again for an OFAC license—this time successfully. The 2016 OFAC license specifically authorized “all transactions necessary to renew and maintain” the HAVANA CLUB registration, “including those related to Cubaexport’s submission filed with the USPTO on or about December 14, 2005, and the payment referenced therein.” The USPTO Director then granted Cubaexport’s petition, found the December 2005 payment “effective as of December 14, 2005,” and accepted the renewal. Bacardi sued under the Administrative Procedure Act (APA), arguing the Director exceeded statutory authority. The Eastern District of Virginia granted summary judgment for the government and Cubaexport, and Bacardi appealed.

The Court’s Holding

The Fourth Circuit affirmed on all grounds, in a published opinion by Judge Richardson joined by Judges Niemeyer and Rushing.

Statutory authority. Federal regulations allow an OFAC license to “authorize or validate any transaction effected prior to the issuance thereof” if the license “specifically so provides.” 31 C.F.R. § 515.502(a). The 2016 OFAC license did exactly that—it identified Cubaexport’s December 2005 submission and payment by date and specifically authorized them. A companion regulation provides that such a license “shall validate” the prior transfer “to the same extent as it would be valid or enforceable but for” the embargo. 31 C.F.R. § 515.203(c). The court rejected Bacardi’s argument that “payment” under the Lanham Act requires the agency to accept and retain the funds, holding instead that “payment” focuses on the registrant’s tender—an act Cubaexport performed in December 2005. The PTO examiner’s subsequent refund was an agency action, not the registrant’s, and could not erase the legal effect of a timely validated tender.

No arbitrary and capricious action. The Director’s explanation was brief but adequate: it identified the examiner’s original reason for refusing renewal (the missing OFAC license), noted the changed fact (the 2016 license specifically authorizing the 2005 payment), and drew the straightforward legal conclusion that the fee was now “effective as of December 14, 2005.” Any challenge to the decade-long processing delay was forfeited because Bacardi never challenged the timing before the Director acted.

Key Takeaways

• A retroactive OFAC license can cure a defective trademark renewal fee payment, even years after the statutory deadline, if the license specifically identifies and authorizes the prior transaction under 31 C.F.R. § 515.502(a).
• The Lanham Act’s renewal “payment” requirement focuses on the registrant’s tender of funds, not on whether the agency ultimately accepts and retains them; a later agency-initiated refund does not retroactively extinguish a timely tender.
• In multi-step agency proceedings, the operative final action for APA review is the Director’s petition-grant decision, not an earlier examiner’s refusal—even if years separate the two.
• Bacardi’s challenge to the processing delay was forfeited by failing to raise it while the petition was pending or as a prejudicial-delay argument after the Director acted.

Why It Matters

This decision is the latest chapter in a saga that has consumed courts, regulatory agencies, and Congress for three decades. For Bacardi, the ruling is a significant setback: Cubaexport’s HAVANA CLUB registration remains on the books, continuing to block Bacardi from claiming the mark in the U.S. market. Cuban rum bearing the HAVANA CLUB name is unavailable in the United States under the embargo, yet the trademark itself—and the legal shadow it casts—remains very much alive.

More broadly, the ruling clarifies the interplay between OFAC embargo enforcement and trademark law: a specifically tailored retroactive OFAC license can reach back in time to validate transactions that were legally void when made, satisfying statutory requirements as if the embargo had never applied. Trademark holders operating in OFAC-sanctioned countries who missed U.S. registration or renewal deadlines because of embargo restrictions may find this ruling relevant if they later obtain retroactive licenses. The case is the fourth time the Fourth Circuit has weighed in on the HAVANA CLUB dispute and, barring Supreme Court review or a legislative fix, is unlikely to be the last word on who ultimately owns the name in the United States.