United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued September 24, 2010 Decided March 29, 2011
No. 09-5196
EMPRESA CUBANA EXPORTADORA DE ALIMENTOS Y
PRODUCTOS VARIOS, DOING BUSINESS AS CUBAEXPORT,
APPELLANT
v.
UNITED STATES DEPARTMENT OF THE TREASURY, OFFICE OF
FOREIGN ASSETS CONTROL, ET AL.,
APPELLEES
Appeals from the United States District Court
for the District of Columbia
(No. 1:06-cv-01692)
David H. Bernstein argued the cause for appellant. With
him on the briefs were Carl Micarelli and Peter M. Brody.
Jonathan H. Levy, Attorney, U.S. Department of Justice,
argued the cause for appellees. With him on the brief were
Tony West, Assistant Attorney General, U.S. Department of
Justice, Ronald C. Machen, Jr., U.S. Attorney, and Douglas
N. Letter, Attorney, U.S. Department of Justice.
Before: KAVANAUGH, Circuit Judge, and EDWARDS and
SILBERMAN, Senior Circuit Judges.
2
Opinionfor the Court filed by Circuit Judge
KAVANAUGH, with whom Senior Circuit Judge EDWARDS
joins.
Dissenting opinion filed by Senior Circuit Judge
SILBERMAN.
KAVANAUGH, Circuit Judge: First enacted in 1917, the
Trading with the Enemy Act authorizes the President, under
specified conditions, to impose embargoes on trade with
foreign nations. In 1963, acting pursuant to that statute,
President Kennedy directed the Department of the Treasury to
issue the Cuban Assets Control Regulations. Those
regulations prohibit most transactions between American and
Cuban persons. The regulations authorize the Secretary of the
Treasury to make certain exceptions to the embargo, but the
regulations state that any such exceptions “may be amended,
modified, or revoked at any time.”
As issued in 1963, the Treasury regulations contained an
exception allowing Cuban-affiliated entities to register and
renew U.S. trademarks. In 1976, acting under that exception,
a Cuban corporation known as Cubaexport registered the
trademark HAVANA CLUB with the U.S. Patent and
Trademark Office. In 1996, one of Cubaexport’s subsidiaries
renewed the trademark. But in 1998, Congress modified the
exception to the Cuban Assets Control Regulations that had
allowed Cubaexport to register and renew its HAVANA
CLUB trademark. The 1998 law barred renewals of certain
trademarks, including Cubaexport’s. As a result, the
Department of the Treasury’s Office of Foreign Assets
Control prohibited Cubaexport from renewing its trademark
when the trademark again came due for renewal in 2006.
3
In this Court, Cubaexport invokes the presumption
against retroactivity and argues that the 1998 law should be
interpreted to bar only new trademark registrations, not
renewals of previously registered trademarks. Cubaexport
also contends that, if the 1998 law does bar renewal of
previously registered trademarks, then it violates the
substantive due process doctrine. We disagree with both
arguments. Because the Cuban Assets Control Regulations
stated that exceptions were revocable at any time, Cubaexport
had no vested right to perpetual renewal of the trademark.
Therefore, the presumption against retroactivity does not
apply, and we must interpret the 1998 law according to its
terms – namely, to bar both new registrations and renewals of
previously registered trademarks. Moreover, the 1998
legislation readily satisfies the deferential substantive due
process test. Cubaexport raises several other contentions, but
they likewise are without merit. We therefore affirm the
District Court’s judgment against Cubaexport.
I
The Trading with the Enemy Act of 1917 authorizes the
President to impose comprehensive economic sanctions on
foreign nations in certain circumstances. See 50 U.S.C. app.
§ 5(b).1 In 1963, pursuant to that Act and President
Kennedy’s order, the Department of the Treasury issued the
Cuban Assets Control Regulations, 31 C.F.R. Part 515. Those
regulations prohibit, among other things, transactions by “any
1
As enacted in 1917, the Act authorized sanctions in war and
peacetime national emergencies. In 1977, Congress amended the
Act so that it no longer applies to peacetime emergencies. But
Congress grandfathered the embargo against Cuba, allowing its
extension by presidential declaration. See Pub. L. No. 95-223,
§ 101, 91 Stat. 1625 (codified as note following 50 U.S.C. app.
§ 5); see generally Regan v. Wald, 468 U.S. 222, 226-29 (1984).
4
person subject to the jurisdiction of the United States”
involving property in which Cuba or any Cuban national has
“any interest of any nature whatsoever, direct or indirect.”
31 C.F.R. § 515.201.
Under the regulations, exceptions may be “specifically
authorized by the Secretary of the Treasury (or any person,
agency, or instrumentality designated by him).” Id. Such
exceptions may take two forms: A so-called “general license”
is a general exception written into the Treasury regulations
themselves. A “specific license” is an exception made by the
Department of the Treasury for a specific applicant. Id.
§§ 501.801, 515.316-.318.
Under the regulations, exceptions are not forever. Since
1963, the regulations have cautioned that any exception to the
trade embargo “may be amended, modified, or revoked at any
time.” See 28 Fed. Reg. 6974, 6985 (July 9, 1963); see also
31 C.F.R. § 501.803.
This case involves trademarks. As issued in 1963, the
Cuban Assets Control Regulations contained an exception
allowing Cuban-affiliated entities to register and renew U.S.
trademarks. See 28 Fed. Reg. 6974, 6982 (July 9, 1963).
In 1974, Cubaexport – a company owned by the Cuban
government – applied to the U.S. Patent and Trademark
Office to register the trademark HAVANA CLUB for the sale
of rum. In 1976, as a result of the regulatory exception
allowing Cuban companies to register U.S. trademarks, the
U.S. Patent and Trademark Office approved Cubaexport’s
application. In 1996, one of Cubaexport’s subsidiaries
renewed the trademark pursuant to that same exception to the
Cuban Assets Control Regulations.
5
In 1998, however, Congress passed and President Clinton
signed a law eliminating the ability of Cuban companies to
register or renew certain trademarks. See Omnibus
Consolidated and Emergency Supplemental Appropriations
Act, 1999, Pub. L. No. 105-277, § 211(a)(1), 112 Stat. 2681.
That Act provides:
Notwithstanding any other provision of law, no
transaction or payment shall be authorized or approved
pursuant to section 515.527 of title 31, Code of Federal
Regulations, as in effect on September 9, 1998, 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.
As of September 9, 1998, 31 C.F.R. § 515.527 stated:
Transactions related to the 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.
§ 515.527(a) (emphasis added). Thus, because of the 1998
Act and its reference to 31 C.F.R. § 515.527, Cubaexport’s
trademark no longer fit within the regulatory exception for
trademarks that had existed since 1963.2 The new law
2
The 1998 Act applies to marks used in connection with a
business or assets that were “confiscated.” That description covers
the HAVANA CLUB mark. In 1960, Cuba’s Communist
6
therefore posed a problem for Cubaexport when the
HAVANA CLUB trademark came due for renewal in 2006
and Cubaexport tried to renew the mark. The Department of
the Treasury’s Office of Foreign Assets Control, known as
OFAC, informed Cubaexport’s counsel that the company was
legally barred from paying the fee required to renew the
trademark.
Cubaexport then filed suit. Cubaexport contended that
the 1998 Act violated the substantive due process doctrine.
Cubaexport further asserted that OFAC’s decision
contravened the procedural requirements of the Due Process
Clause and the Administrative Procedure Act, and that
OFAC’s decisions were arbitrary and capricious under the
Administrative Procedure Act. The District Court rejected
each claim and granted summary judgment to the
Government. We review the District Court’s decision of
those questions of law de novo.
II
To begin, we think it clear that the 1998 Act bars not just
registration of new trademarks but also renewals of previously
registered trademarks. The Act specifically applies to
“transactions” and “payments.” A renewal is both. A
trademark renewal is a transaction. See THE AMERICAN
HERITAGE DICTIONARY OF THE ENGLISH LANGUAGE (3d ed.
1996) (transaction is “[s]omething transacted, especially a
government confiscated the businesses and facilities owned by the
distiller José Arechabala, S.A. Among the company’s assets at that
time were several U.S. trademark registrations for the rum brand
HAVANA CLUB. By 1974, those registrations had expired, at
which point Cubaexport registered the HAVANA CLUB mark as
its own. See Havana Club Holding, S.A. v. Galleon S.A., 203 F.3d
116, 127-30 (2d Cir. 2000).
7
business agreement or exchange” and to transact is to “do,
carry on, or conduct: transact business over the phone;
transacting trade agreements”). And a trademark renewal
requires a payment. See 15 U.S.C. § 1059 (requiring payment
of fee to renew trademark).
Even more to the point, the 1998 Act specifically cross-
references “section 515.527 of title 31, Code of Federal
Regulations, as in effect on September 9, 1998.” The
regulation at 31 C.F.R. § 515.527 expressly listed both
registrations and renewals as “transactions.”
Therefore, by its terms, the 1998 Act plainly bars both
new trademark registrations and renewals of previously
registered trademarks. As a result of the 1998 Act,
Cubaexport was prohibited from renewing its HAVANA
CLUB trademark when it tried to do so in 2006. Invoking the
presumption against retroactivity, Cubaexport argues that the
1998 Act bars only the new registration of trademarks, not the
renewal of previously registered marks such as Cubaexport’s.
Alternatively, Cubaexport contends that the 1998 Act
contravenes the substantive due process doctrine. We
disagree with both arguments.
A
Under the branch of the presumption against retroactivity
doctrine that is relevant here, a statute is interpreted not to
have retroactive effect if (i) the statute does not clearly
specify its temporal scope3 and (ii) applying the statute
3
The precedents are murky as to how precise a statute’s
temporal reach must be in order to overcome the presumption
against retroactivity. The Supreme Court has sometimes required
an “express command” – akin to a clear statement – for a statute to
have retroactive effect. Landgraf v. USI Film Products, 511 U.S.
8
retroactively would affect a party’s vested rights. See
Fernandez-Vargas v. Gonzalez, 548 U.S. 30, 37 (2006).4
Cubaexport contends that it acquired a vested right to renewal
of the HAVANA CLUB trademark when it first registered the
mark in 1976. It argues that the 1998 Act therefore should be
244, 280 (1994). However, the Court more recently added that “in
the absence of language as helpful as that we try to draw a
comparably firm conclusion about the temporal reach specifically
intended by applying ‘our normal rules of construction.’”
Fernandez-Vargas v. Gonzalez, 548 U.S. 30, 37 (2006) (quoting
Lindh v. Murphy, 521 U.S. 320, 326 (1997)). We need not
determine here how clear a statute must be to override the
presumption against retroactivity (and in turn whether the language
of the 1998 Act suffices to meet that standard) because, as we
explain below, Cubaexport’s lack of a vested right means the
presumption does not apply in any event in this case. Cf.
Fernandez-Vargas, 548 U.S. at 41, 42-47 (statute lacks requisite
“clear statement” to apply retroactively, but presumption does not
apply because statute has no retroactive effect).
4
The presumption against retroactivity also applies when a
statute would “increase a party’s liability for past conduct, or
impose new duties with respect to transactions already completed.”
Id. at 37 (quoting Landgraf, 511 U.S. at 280). We do not
understand Cubaexport to advance an argument under that branch
of the retroactivity doctrine. Nor could it. The 1998 Act did not
increase Cubaexport’s liability or impose any new duties with
respect to past conduct or completed transactions. For example, a
hypothetical 1998 law that required Cubaexport to pay $10,000 for
its 1976 trademark registration would impose new liabilities or
duties for purposes of that branch of the retroactivity doctrine. The
actual 1998 Act at issue here, however, did not increase
Cubaexport’s liability or require Cubaexport to do anything.
Rather, it merely prevented Cubaexport from renewing a trademark
that was subject to the Cuban Assets Control Regulations. The
relevant retroactivity question is whether the 1998 Act deprived
Cubaexport of a vested right to renew such a trademark. It did not,
as we explain in the text.
9
construed (notwithstanding its text) to bar only new
registrations, not renewals of marks that were first registered
before 1998.
The key question in this case with respect to the
presumption against retroactivity is whether, as of 1998,
Cubaexport possessed a vested right to renewal of the
trademark. We think not. Even assuming that most
trademark registrants acquire a perpetual right to renew their
marks when they first register them, cf. Ewing v. Standard Oil
Co., 42 App. D.C. 321, 324 (D.C. Cir. 1914), Cubaexport did
not. The Cuban Assets Control Regulations – which
generally bar U.S. transactions involving Cuban-owned
companies – have been in effect since 1963. When
Cubaexport first registered its mark in 1976, the regulations
contained an exception allowing trademark registrations and
renewals. But the regulations also specified that any such
exception “may be amended, modified, or revoked at any
time.” 28 Fed. Reg. 6974, 6985 (July 9, 1963).
Because Cubaexport’s right to renew the trademark was
expressly revocable at any time, Cubaexport did not obtain a
vested right to perpetual renewal of the HAVANA CLUB
trademark when it registered the mark in 1976. See
Fernandez-Vargas, 548 U.S. at 45 (presumption of
retroactivity does not apply where party “had an ample
warning” of change in law); Dames & Moore v. Regan, 453
U.S. 654, 673 n.6 (1981) (no protected property interest if
contingent on revocable exception to embargo regulations).
Before 1998, Cubaexport perhaps had an expectation that it
would be able to renew its trademark if the regulatory
exception was not revoked. But it did not have a vested right.
And a law that merely “upsets expectations based in prior
law” – such as the 1998 statute at issue here – does not trigger
10
the presumption against retroactivity. Landgraf v. USI Film
Products, 511 U.S. 244, 269 (1994).
Contrary to the suggestion of the dissent, we do not
purport to do anything novel when we refer to a “vested
right.” We simply apply the Supreme Court’s precedents,
which have consistently used the term “vested right” in
considering this branch of the presumption against
retroactivity doctrine. See, e.g., Fernandez-Vargas, 548 U.S.
at 37 (“The modern law thus follows Justice Story’s definition
of a retroactive statute, as ‘taking away or impairing vested
rights . . . .’”) (alterations omitted); Republic of Austria v.
Altmann, 541 U.S. 677, 693 (2004) (“retroactive statutes may
upset settled expectations by taking away or impairing vested
rights acquired under existing laws”) (internal quotation
marks and alterations omitted); INS v. St. Cyr, 533 U.S. 289,
321 (2001) (“A statute has retroactive effect when it takes
away or impairs vested rights acquired under existing laws . . .
.”) (internal quotation marks omitted); Landgraf, 511 U.S. at
269 (“[E]very statute, which takes away or impairs vested
rights acquired under existing laws . . . must be deemed
retrospective.”); id. at 274 (no retroactivity found in prior case
because “plaintiff had no ‘vested right’”). Adhering to the
Supreme Court’s precedents, this Court has likewise
repeatedly referred to vested rights in retroactivity cases. See,
e.g., Arkema Inc. v. EPA, 618 F.3d 1, 7 (D.C. Cir. 2010) (“A
rule operates retroactively if it takes away or impairs vested
rights.”); Marrie v. SEC, 374 F.3d 1196, 1207 (D.C. Cir.
2004) (“a rule is retroactive if it takes away or impairs vested
rights”) (internal quotation marks omitted); Celtronix
Telemetry, Inc. v. FCC, 272 F.3d 585, 589 (D.C. Cir. 2001)
(no retroactivity under Landgraf because plaintiff had “no
vested right” in previous licensing regime given that “the
Commission always retained the power to alter the term of
existing licenses by rulemaking”).
11
The dissent says: “Whether OFAC could revoke”
Cubaexport’s “right – and under what conditions – is quite
beside the point.” Dissenting Op. at 3. We disagree. We
think the Government’s longstanding authority to revoke
Cubaexport’s right to renewal is exactly the point. In our
judgment, the Government’s express and longstanding
revocation authority devastates Cubaexport’s argument that it
somehow had a “vested right” to perpetual renewal of the
trademark.5
Because Cubaexport did not possess a vested right to
renewal of the trademark, the presumption against
retroactivity does not apply in this case. We therefore
interpret the 1998 Act according to its ordinary meaning. By
its plain terms, the Act bars both new registrations and
renewals of marks (such as Cubaexport’s) that were first
5
The dissent also relies on a Second Circuit case interpreting a
different provision of the 1998 Act, a provision barring Cuban
trademark holders from obtaining injunctive relief to enforce
certain trademarks. But our approach is consistent with that of the
Second Circuit. That court stated that the 1998 Act may lack
sufficient precision to overcome the presumption against
retroactivity, but it ultimately declined to decide that issue or apply
the presumption against retroactivity because, under the Supreme
Court’s analysis in Landgraf, “application of the new provision
[was] not retroactive.” Havana Club Holding, S.A. v. Galleon S.A.,
203 F.3d 116, 128-29 (2d Cir. 2000) (quoting Landgraf, 511 U.S. at
273). In the portion of Landgraf relied on by the Second Circuit,
the Supreme Court explained that “relief by injunction operates in
futuro,” and thus a “plaintiff had no vested right” to such relief.
Landgraf, 511 U.S. at 273-74 (internal quotation marks omitted and
second emphasis added). As in the Second Circuit case,
Cubaexport’s lack of a vested right here means we need not reach
the question whether the 1998 Act is so clear as to overcome the
presumption against retroactivity. See supra note 3.
12
registered before 1998. See Fernandez-Vargas, 548 U.S. at
42-47.
B
According to Cubaexport, if the 1998 Act bars renewal of
previously registered trademarks, then the statute violates the
substantive due process doctrine.
Cubaexport’s argument rests on an inflated conception of
substantive due process. Unless legislation infringes a
fundamental right, judicial scrutiny under the substantive due
process doctrine is highly deferential. See Washington v.
Glucksberg, 521 U.S. 702, 720-22 (1997). This case does not
involve a fundamental right – and Cubaexport does not claim
otherwise. Therefore, under the Supreme Court’s precedents,
we ask only whether the legislation is rationally related to a
legitimate government interest. See United States v. Carlton,
512 U.S. 26, 30-31 (1994); FCC v. Beach Communications,
Inc., 508 U.S. 307, 313-15 (1993); Ferguson v. Skrupa, 372
U.S. 726 (1963); Williamson v. Lee Optical, Inc., 348 U.S.
483 (1955); see also Lochner v. New York, 198 U.S. 45, 74-76
(1905) (Holmes, J., dissenting).
If a statute applies retroactively – for example, when a
statute imposes new duties or liabilities for past acts – the
“retroactive aspects of legislation, as well as the prospective
aspects, must meet the test of due process, and the
justifications for the latter may not suffice for the former. But
that burden is met simply by showing that the retroactive
application of the legislation is itself justified by a rational
legislative purpose.” Carlton, 512 U.S. at 31 (quoting
Pension Benefit Guaranty Corp. v. R.A. Gray & Co., 467 U.S.
717, 729-30 (1984)) (alterations omitted); see also Usery v.
Turner Elkhorn Mining Co., 428 U.S. 1, 16-17 (1976); cf.
13
Eastern Enterprises v. Apfel, 524 U.S. 498, 547-50 (1998)
(Kennedy, J., concurring).
The deferential substantive due process test is easily
satisfied here. The 1998 Act is rationally related to the
legitimate government goals of isolating Cuba’s Communist
government and hastening a transition to democracy in Cuba.
See Memorandum from Paul Simons, Deputy Assistant
Secretary of State (July 28, 2006), Joint Appendix 85-86. The
Act reinforces the Castro regime’s isolation by denying
Cuban-affiliated entities the use of U.S. trademarks related to
businesses and assets confiscated by the Cuban government.
And by barring renewal of trademarks that had previously
been registered (not just new registrations), the 1998 Act
applies to a greater number of such trademarks. Moreover,
any unfairness that otherwise might arise from applying the
1998 Act to renewals is mitigated – indeed, eliminated – by
the fact that the Cuban Assets Control Regulations had clearly
warned that exceptions for trademarks were revocable at any
time. Cf. Eastern Enterprises, 524 U.S. at 549-50 (Kennedy,
J., concurring). Therefore, for purposes of the substantive due
process doctrine, the 1998 Act – both in its substance and its
application to renewal of pre-1998 trademarks – is rationally
related to a legitimate government interest.6
Because the 1998 Act is clear and because Cubaexport’s
constitutional claim fails, we are likewise unpersuaded by
Cubaexport’s constitutional avoidance argument – namely,
that, in order to avoid a serious constitutional question, we
should construe the 1998 law to apply only to those marks
6
The Government separately argues that Cubaexport has no
substantive due process rights because it is a foreign national
without a substantial connection to the United States. Because we
reject Cubaexport’s substantive due process argument on other
grounds, we need not consider that contention.
14
first registered after 1998. A clear statute and a weak
constitutional claim are not a recipe for successful invocation
of the constitutional avoidance canon. See Clark v. Martinez,
543 U.S. 371, 381 (2005) (requiring “competing plausible
interpretations of a statutory text” and “serious constitutional
doubts” to apply the canon).
III
Cubaexport also argues that it was entitled under the
Administrative Procedure Act to notice and an opportunity to
be heard before the Department of the Treasury’s Office of
Foreign Assets Control determined that Cubaexport could not
renew the HAVANA CLUB trademark. See 5 U.S.C.
§ 558(c). But Cubaexport in fact received notice and an
opportunity to be heard – and was heard – prior to the
agency’s final determination.
After enactment of the 1998 law, Cubaexport’s trademark
next came up for renewal in 2006. Because of the 1998
statute, Cubaexport could no longer rely on the regulatory
exception (known as the “general license”) for trademarks. In
a letter dated April 6, 2006, OFAC thus notified Cubaexport
that the company would need an individualized exception
from OFAC (known as a “specific license”) in order to renew
the HAVANA CLUB trademark with the U.S. Patent and
Trademark Office. The OFAC letter invited Cubaexport to
communicate with OFAC in writing or by telephone.
Cubaexport did so, writing two letters to the U.S. Patent and
Trademark Office on which it copied OFAC. On July 28,
2006, however, OFAC notified Cubaexport of its decision
denying Cubaexport permission to renew the mark. OFAC
explained to Cubaexport that “under these circumstances”
(that is, after enactment of the 1998 law) the Cuban Assets
Control Regulations barred renewal of the HAVANA CLUB
15
mark unless OFAC were to make an individualized exception
(a “specific license”). The agency went on to say that it was
denying Cubaexport’s request for an individualized exception.
OFAC denied that request based in part on the State
Department’s guidance that issuance of such a license to
Cubaexport would be “inconsistent with U.S. policy.”
This sequence of events belies Cubaexport’s claim that it
did not receive notice and an opportunity to be heard.
Cubaexport obviously does not like the answer it received, but
it was allowed to (and did) advance its arguments to OFAC.7
Relying on 5 U.S.C. § 558(c), Cubaexport separately
suggests that a formal adjudication was necessary in order for
the Government to deny renewal of Cubaexport’s trademark.
According to Cubaexport, because the regulatory exception
for trademarks is called a “general license,” OFAC’s
determination that Cubaexport no longer qualified for that
exception constituted a license revocation governed by
§ 558(c). But even assuming that the general regulatory
exception for trademarks meets the definition of a “license”
for purposes of § 558(c), the text of § 558(c) does not require
formal adjudications for license revocations. Section 558(c)
mentions §§ 556 and 557 (which are the provisions governing
formal adjudication) only in connection with license
applications, not revocations. Four courts of appeals have so
interpreted § 558(c). See Gallagher & Ascher Co. v. Simon,
687 F.2d 1067, 1073-75 (7th Cir. 1982) (collecting cases).
Cubaexport cites a footnote to the contrary in Porter County
Chapter of the Izaak Walton League, Inc. v. NRC, 606 F.2d
1363, 1368 n.12 (D.C. Cir. 1979). However, even accepting
that this footnote applies to the regulatory exception at issue
7
Cubaexport’s procedural due process argument falters for the
same reason.
16
here, that footnote observation was at best dicta, and we
decline to elevate it now to a holding.
IV
Cubaexport also contends that OFAC’s actions were, for
a variety of reasons, substantively arbitrary and capricious in
violation of the Administrative Procedure Act. See 5 U.S.C.
§ 706(2)(A). We can quickly dispatch those claims.
Cubaexport challenges OFAC’s determination that the
Cuban Assets Control Regulations did not authorize renewal
of its trademark. But as we have already explained, the 1998
law passed by Congress applies to the HAVANA CLUB
mark. OFAC was of course required to follow the 1998 law.
Cubaexport also objects that OFAC, in determining that
the Cuban Assets Control Regulations did not authorize
renewal of its trademark, primarily relied on factual findings
from a related suit, see Havana Club Holding, S.A. v. Galleon
S.A., 203 F.3d 116, 127-30 (2d Cir. 2000), to which
Cubaexport was not a party. Cubaexport argues that because
it never had an opportunity to contest those findings before
OFAC, it could not convince the agency that the original
owner of the mark, José Arechabala, S.A., was insolvent
when the Cuban government nationalized the business.
Consequently, according to Cubaexport, the business was not
“confiscated” under the terms of the 1998 Act. Even if we
assume that Cubaexport could demonstrate the insolvency of
José Arechabala, S.A., we believe it is obvious that the
business was confiscated within the meaning of the statute.
As both parties agree, the Cuban government nationalized the
business’s facilities, factories, and other industrial and
commercial enterprises in 1960. See THE AMERICAN
HERITAGE DICTIONARY OF THE ENGLISH LANGUAGE (3d ed.
17
1996) (defining confiscated as “[s]eized by a government;
appropriated”).
Cubaexport further contends that the agency acted
irrationally in refusing to carve out an individualized
exception to the 1998 Act for Cubaexport. Recall that even
though the 1998 Act eliminated the general exception (the
“general license”) for certain trademarks, OFAC still retained
residual authority to make an individualized exception to the
trade embargo (a “specific license”). But Cubaexport has
failed to show that OFAC acted unreasonably in declining to
grant such an exception.
Cubaexport complains, in particular, that OFAC should
not have relied on the State Department’s advice in reaching
its decision. That complaint doesn’t make much sense. The
State Department and OFAC are parts of a single Executive
Branch headed by one President, and we decline to impose a
novel Administrative Procedure Act rule that would deter one
executive agency from consulting another about matters of
shared concern. See U.S. CONST. art. II; cf. Sierra Club v.
Costle, 657 F.2d 298, 405-06 (D.C. Cir. 1981). Here,
moreover, it was entirely sensible for OFAC to reach out to
the Department of State. After all, the State Department is an
active participant in the Nation’s foreign policy, and the
Cuban embargo is of course a tool of foreign policy.
Finally, contrary to Cubaexport’s contention, OFAC has
not acted in an irrationally inconsistent manner in granting
individualized exceptions to the Cuban embargo regulations.
It is true that OFAC has allowed Cubaexport to pay legal
expenses related to the HAVANA CLUB mark. But that is
not inconsistent with OFAC’s refusal to allow Cubaexport to
renew that trademark. OFAC’s longstanding regulations treat
payment of legal expenses differently from transactions in
18
intellectual property. See 31 C.F.R. §§ 515.512 & 515.527(c).
That is logical; after all, paying attorneys and registering or
renewing a trademark may trigger different analyses of the
competing interests. We see no reason that an exception to
the regulations for legal expenses would require OFAC to
make an exception for this matter.
***
We have considered all of Cubaexport’s arguments and
find them without merit. We therefore affirm the judgment of
the District Court.
So ordered.
SILBERMAN, Senior Circuit Judge, dissenting: The court’s
opinion, in my view, is unsound doctrinally, both with regard to
principles of statutory interpretation and to basic tenets of
administrative law. The Department of Treasury, through its
Office of Foreign Assets Control (“OFAC”), has allowed Cuban
companies to register trademarks in the United States under the
Cuban Assets Control Regulations, see 28 Fed. Reg. 6974, 6982
(July 9, 1963), even though the companies are not permitted to
sell their products here.1 Cubaexport obtained its HAVANA
CLUB trademark in 1976, pursuant to a general license in the
Cuban Assets Control Regulations authorizing “[t]ransactions
related to the registration and renewal . . . of patents, trademarks,
and copyrights in which the government of Cuba or a Cuban
national has an interest.” 31 C.F.R. § 515.527(a)(1).
When Cubaexport sought to renew its trademark in 2006,
OFAC, by a letter (an informal adjudication), concluded that
renewal of the HAVANA CLUB trademark was prohibited.
OFAC’s director explained in a declaration to the district court
that he based this decision on 31 C.F.R. § 515.527(a)(2),
OFAC’s regulation implementing section 211. OFAC also
denied Cubaexport’s request for a specific license to renew its
trademark based on the same regulation. Nowhere in its
declaration did OFAC ground its decision in its power to modify
or revoke a general license pursuant to 31 C.F.R. § 501.803
(upon which the majority puts great significance).
* * *
1
That may be in anticipation of a regime change. As the
Solicitor of Labor in 1970 at an International Labor Organization
meeting in Geneva, I responded to a Cuban diplomat’s attack on the
U.S. with a disdainful rejection “because the Cuban government
represented only a temporary political phenomenon.” Time has
stretched my term “temporary.”
2
My disagreement with the majority centers on the court’s
disposition of Cubaexport’s retroactivity argument. Cubaexport
contends that the presumption against retroactivity, see Landgraf
v. USI Film Prods., 511 U.S. 244, 278-80 (1994),2 requires us to
read section 211 as barring only the new registration of
trademarks, not the renewal of previously-registered trademarks
such as Cubaexport’s. The majority dismisses this appeal based
on its notion that Cubaexport lacks a “vested right” in its
HAVANA CLUB trademark. See Maj. Op. at 7. My colleagues
may well be correct that the power OFAC enjoys to modify or
revoke its trademark license at any time defeats Cubaexport’s
constitutional claim, but I do not think it appropriate to reach
that question because I believe Cubaexport should prevail on its
statutory interpretation argument, and the case should be
remanded.
The majority, apparently using the term “vested rights” to
mean something more than substantive rights, Maj. Op. at 8,
misapplies governing Supreme Court jurisprudence regarding
the interpretation of statutes – indeed does so in a fashion that
drives a large hole in the presumption against retroactivity. The
recent Supreme Court case upon which the court relies,
Fernandez-Vargas v. Gonzales, 548 U.S. 30 (2006), states that
“[s]tatutes are disfavored as retroactive when their application
‘would impair rights a party possessed when he acted, increase
a party’s liability for past conduct, or impose new duties with
respect to transactions already completed.’” 548 U.S. at 37
(quoting Landgraf, 511 U.S. at 280). To be sure, Fernandez-
Vargas cited an early case in which Justice Story referred to
“vested rights,” see id. (quoting Soc’y for the Propagation of the
2
See also Bowen v. Georgetown Univ. Hosp., 488 U.S. 204, 208
(1988) (“Retroactivity is not favored in the law. Thus, congressional
enactments and administrative rules will not be construed to have
retroactive effect unless their language requires this result.”).
3
Gospel v. Wheeler, 22 F. Cas. 756, 767 (No. 13,156) (CCNH
1814)), but Fernandez-Vargas then equated “vested” with
“substantive” (as distinct from procedural), id. The Supreme
Court’s retroactivity jurisprudence consistently frames the
protected rights as “substantive.” See, e.g., Lindh v. Murphy,
521 U.S. 320, 326 (1997); Landgraf, 511 U.S. at 278. (In his
Landgraf concurrence, Justice Scalia made clear that the
majority’s use of the phrase “vested rights” meant only to
differentiate substantive rights from procedural ones. See
Landgraf, 511 U.S. at 290-91 (Scalia, J., concurring).) Indeed,
the other cases cited by the majority also use “vested” and
“substantive” interchangeably.3 If the presumption against
retroactive legislation protected only substantive rights that are
somehow invulnerable – that could not be threatened by other
legal attacks – the presumption’s value would be degraded
substantially.
There is no question that Cubaexport had a substantive
“right” to its trademark; otherwise, what did its trademark
mean? Whether OFAC could revoke that right – and under what
conditions4 – is quite beside the point. As I noted, the
government nowhere purported to exercise its revocation
authority in this case. (It may well be that an OFAC license
3
The majority cites Celtronix Telemetry Inc. v. FCC, 272 F.3d
585 (D.C. Cir. 2001), for the proposition that a party does not have a
vested right in a licensing regime if the government retains the power
to alter the terms of existing licenses by rulemaking. Maj. Op. at 10
(citing Celtronix Telemetry, 272 F.3d at 589). But Celtronix’s holding
is not so broad. There, we considered whether a party’s right to
request payment grace periods for a video and data service license
from the FCC was a vested right. Id. at 589. But as Celtronix makes
clear, the right in question was merely “procedural.”
4
Would not the APA’s arbitrary and capricious standard govern
OFAC’s authority?
4
revocation carries implications not apparent to us.) It is,
moreover, a patent violation of SEC v. Chenery Corp., 318 U.S.
80 (1943), for a reviewing federal court to uphold agency action
based on a legal theory – let alone a potential agency action –
that the agency did not initiate or embrace. That the government
contends that OFAC could exercise that power, as Chenery
explained, decidedly is not a relevant consideration. Chenery,
318 U.S. at 88.
In any event, as the majority concedes, Maj. Op. at 8 n.4,
quite apart from its “vested rights” approach to the presumption
against retroactivity, the presumption applies, as well, if a
statute would “impose new duties with respect to transactions
already completed.” Fernandez-Vargas, 548 U.S. at 37. As I
discuss below, OFAC, by interpreting section 211's
“transaction” to not include a renewal of a trademark – and
therefore to require Cubaexport to seek a new license for its
renewal – is certainly imposing a new duty if renewal rights are
automatic, and bound up with the initial registration of the
trademark. I think the majority errs in not reading Cubaexport
to assert that it did not complain that section 211 imposed any
new or increased liabilities or duties for past conduct. See Maj.
Op. at 8 n.4. Cubaexport broadly argued that section 211
“‘attaches new legal consequences to events completed before
its enactment.’” Appellant’s Opening Brief at 27 (quoting
Landgraf, 511 U.S. at 270).5
5
Since the majority relies on a “vested rights” theory not
advanced by the government, its rather strained contention that
Cubaexport did not object to the new duty of renewal – which it did
– violates the “chuztpah” doctrine. See Harbor Ins. Co. v. Schnabel
Found. Co., 946 F.2d 930, 937 & n.5 (D.C. Cir. 1991); Nw. Airlines,
Inc. v. Air Line Pilots Ass'n, Int'l, 808 F.2d 76, 83 (D.C. Cir. 1987).
5
Turning to Cubaexport’s argument that the government is
improperly applying section 211 retroactively, the obvious
initial inquiry is whether section 211 speaks prospectively only,
or both prospectively and retrospectively. I think section 211 is
more naturally read – even without the presumption – as
applying to the future only. It states that “[n]otwithstanding any
other provision of law, no transaction or payment shall be
authorized or approved pursuant to Section 515.527” (the
licensing regulations). Omnibus Consolidated and Emergency
Supplemental Appropriations Act of 1999, Pub. L. No. 105-277,
112 Stat. 2681 (1998), § 211 (emphasis added). OFAC
obviously realized this because it issued a regulation
implementing the statute, which changed “shall be authorized or
approved” to “is authorized or approved” (which the majority
ignores). 31 C.F.R. § 515.527(a)(2) (emphasis added). And the
district court also saw section 211 as speaking only
prospectively, but it concluded that although Cubaexport’s
registration of its trademark was unaffected, a renewal could be
stopped because it was a separate “new” transaction. See
Empresa Cubana Exportadora de Alimentos y Productos Varios
v. Dep’t of Treasury, 606 F. Supp. 2d 59, 81 (D.D.C. 2009).
That is the government’s essential statutory argument before us
– not the “vested rights” theory advanced by the majority – that
renewal was a new transaction that OFAC had to authorize or
approve, and therefore section 211 applied to all trademark
renewals undertaken after its passage.
The key question, then, is the interpretation of the word
“transaction” in section 211. I read section 211 as certainly, at
least, suggesting that a “transaction” includes both the
registration, as well as necessary renewals, because renewal is
not separately mentioned, and therefore implicitly is coupled
with the initial license registration. Cubaexport drives that point
home by persuasively explaining that under our governing
trademark law, a holder’s right to a trademark, “once acquired,”
6
is “perpetual” unless abandoned. Ewing v. Standard Oil Co., 42
App. D.C. 321, 324 (1914); see also Qualitex Co. v. Jacobson
Prods. Co., Inc., 514 U.S. 159, 165 (1995). Renewal “in no
sense confers new rights,” and instead, “amounts only to a
record of existing rights.” Ewing, 42 App. D.C. at 324. The
government would have us ignore Ewing simply because it is an
old case – but that argument is silly. In any event, it seems clear
that the Patent and Trademark Office must renew a trademark
when requested, so long as the holder pays the usual fee and
submits an affidavit describing the mark’s use or explaining its
non-use. See 15 U.S.C. §§ 1058(b), 1059(a). The only purpose
of a renewal is to remove an abandoned trademark from the
register. See Ewing, 42 App. D.C. at 324; In re Bose Corp., 580
F.3d 1240, 1246 (Fed. Cir. 2009); Torres v. Cantine Torresella
S.r.l., 808 F.2d 46, 48 (Fed. Cir. 1986)). It does not add to,
subtract from, or alter a trademark holder’s substantive rights in
the trademark. The government does not dispute this
proposition.
To be sure, the use of the additional word “payment” in
section 211 is anomalous. It is possible, although hardly
obvious, that by using the word “payment” Congress sought to
require a Cuban trademark holder to obtain a separate payment
license before it could renew its trademark. If we give
“payment” this separate meaning, it would render invalid section
515.527(a)(1)’s implicit authorization to pay renewal fees. And,
as a result, section 211 would have retroactive effect. But while
this reading is barely plausible, certainly section 211 does not
mandate it. At most, this plausible interpretation of “payment”
creates an ambiguity as to whether section 211 authorizes OFAC
to act retroactively.
The majority is not influenced by the Second Circuit’s
observation, in a related case, that “[s]ince section 211 does not
clearly indicate that it should be applied retroactively, the
7
traditional presumption against retroactivity would likely
apply.” Havana Club Holdings SA v. Galleon SA, 203 F.3d 116,
128-129 (2d Cir. 2000).6 The Second Circuit dutifully relied on
the Supreme Court’s opinion in Landgraf, the leading case
explaining that a statute is presumed to apply prospectively only,
in observing that section 211 should be construed as limited to
transactions occurring after the statute’s passage. I think we are
obliged to do so as well. Our inquiry should be at an end
because “the agency has misconceived the law,” and the case
should be remanded. Chenery Corp., 318 U.S. at 94.
I respectfully dissent.
6
The Second Circuit’s observation was dicta because the
provision at issue, not implicated in this case, spoke of the propriety
of prospective relief only. But its conclusion regarding section 211
nevertheless contradicts the majority’s opinion and supports my
position.