Retroactive OFAC Licensing Validates Trademark Renewal Fees and Preserves Timely Lanham Act Renewals

Introduction

Bacardi and Company Limited v. John Squires (4th Cir. June 16, 2026) is the latest chapter in a long-running dispute over the HAVANA CLUB trademark. The controversy centers on whether Empresa Cubana Exportadora de Alimentos y Productos Varios (“Cubaexport”), a Cuban state-owned entity, validly renewed its U.S. trademark registration when U.S. sanctions law made its 2005 renewal-fee payment legally ineffective absent an authorization from the Treasury Department’s Office of Foreign Assets Control (“OFAC”).

The key legal issues were:

  • Statutory authority: Whether the U.S. Patent & Trademark Office (“PTO”) exceeded the Lanham Act’s renewal provisions by granting renewal years after the registration would have expired.
  • Administrative law: Whether the PTO Director’s decision was arbitrary and capricious under the Administrative Procedure Act (“APA”), including whether the agency adequately explained itself despite the long delay.
  • Sanctions interaction: Whether OFAC’s 2016 “specific license” could retroactively validate Cubaexport’s December 2005 renewal payment.

Summary of the Opinion

The Fourth Circuit affirmed. It held that OFAC’s 2016 license retroactively authorized and validated Cubaexport’s December 2005 renewal payment, thereby removing the “sole legal obstacle” that previously prevented the payment from counting under the Lanham Act. With payment treated as effective in 2005, the PTO Director acted within statutory authority in granting renewal. The court also held the Director’s explanation—though brief—was adequate under APA standards. Bacardi’s argument that the agency acted arbitrarily by failing to explain the delay was deemed forfeited.

Analysis

Precedents Cited

  • Bacardi & Co. Ltd. v. U.S. Pat. & Trademark Off. (Bacardi II), 104 F.4th 527 (4th Cir. 2024): The court relied on its prior description of the dispute’s factual background and procedural posture, and it echoed Bacardi II’s framing that APA review is available for the PTO’s final agency action in this posture. Bacardi II functioned as the “platform” for reaching the merits here.
  • Pharm. Coal. for Patient Access v. United States, 126 F.4th 947 (4th Cir. 2025): Provided the standard posture on appeal—summary judgment de novo with the court “review[ing] the PTO’s actions directly.”
  • Outdoor Amusement Bus. Ass'n, Inc. v. DHS, 983 F.3d 671 (4th Cir. 2020): Supplied the lens for the statutory-authority question (reviewed de novo), reinforcing that the key inquiry is whether the agency stayed within congressionally set bounds.
  • U.S. Pat. & Trademark Off. v. Booking.com B.V., 591 U.S. 549 (2020) and Iancu v. Brunetti, 588 U.S. 388 (2019): Cited for core features of the Lanham Act’s registration system and the significant benefits of federal registration, underscoring why renewal rules matter in practice.
  • Empresa Cubana Exportadora de Alimentos y Productos Varios v. U.S. Dep't of the Treasury, 638 F.3d 794 (D.C. Cir. 2011), cert. denied, 566 U.S. 986 (2012): Demonstrated that Cubaexport previously litigated and lost an OFAC-licensing dispute; the Fourth Circuit used it primarily to explain the delay and the administrative history.
  • Ohio v. EPA, 603 U.S. 279 (2024); Motor Vehicle Mfrs. Ass'n v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29 (1983); Bowman Transp., Inc. v. Ark.-Best Freight Sys., Inc., 419 U.S. 281 (1974): Anchored the APA analysis: agencies must show a “rational connection” and courts will uphold even “less than ideal clarity” if the agency’s path is reasonably discernible.
  • Vanda Pharms., Inc. v. Ctrs. for Medicare & Medicaid Servs., 98 F.4th 483 (4th Cir. 2024) (quoting Rural Cellular Ass'n v. FCC, 588 F.3d 1095 (D.C. Cir. 2009)): Reinforced the “very deferential” nature of arbitrary-and-capricious review once the agency’s rationale can be traced.
  • MCI Telecomms. Corp. v. Am. Tel. & Tel. Co., 512 U.S. 218 (1994): Used to justify resolving competing dictionary definitions by returning to statutory context—here, what “payment” means in a scheme that places the renewal burden on the registrant.
  • Ford Motor Co. v. United States, 768 F.3d 580 (6th Cir. 2014): Supported the court’s rejection of Bacardi’s “payee-acceptance” theory of payment by noting it can be improper to let the agency-payee define away payment.
  • Grayson O Co. v. Agadir Int'l LLC, 856 F.3d 307 (4th Cir. 2017): Cited for forfeiture principles—Bacardi’s delay-based APA theory was not timely pressed in a manner that preserved it for merits review.
  • Gonzalez v. Cuccinelli, 985 F.3d 357 (4th Cir. 2021); Telecomms. Rsch. & Action Ctr. v. FCC, 750 F.2d 70 (D.C. Cir. 1984); Solenex LLC v. Bernhardt, 962 F.3d 520 (D.C. Cir. 2020): Offered roadmaps for challenging agency delay (including the need to show harmful consequences beyond “mere delay”), illustrating what Bacardi did not do.
  • Vandenbark v. Owens-Ill. Glass Co., 311 U.S. 538 (1941); Ziffrin, Inc. v. United States, 318 U.S. 73 (1943); Thorpe v. Hous. Auth., 393 U.S. 268 (1969): Cited to emphasize that agencies and reviewing courts apply the law as it exists when the operative decision is made; intervening legal changes can validate outcomes that would have been unavailable earlier.

Legal Reasoning

  1. Identify the only final agency action: The court treated the 2016 Director decision—not the 2006 examiner refusal—as the operative “final action” because Cubaexport timely petitioned for Director review. This matters because the legality of renewal was assessed as of the final agency decision.
  2. Read OFAC’s retroactivity rule as a specificity requirement, not a magic-words requirement: The court focused on 31 C.F.R. § 515.502(a): a license does not validate prior transactions unless it “specifically so provides.” It then held the 2016 license did so because it expressly covered transactions “including those related to” the December 14, 2005 submission and “the payment referenced therein.” The court rejected Bacardi’s argument that the license needed particular retroactivity phrasing; identifying and authorizing the past payment was enough.
  3. Give the license its stated legal effect: Under 31 C.F.R. § 515.203(c), once OFAC authorizes a prior transfer, the license “shall validate such transfer” to the same extent it would have been valid absent the embargo. The court treated this as changing the legal status of the 2005 remittance from “legally void” to “effective as of December 14, 2005.”
  4. Match that effect to the Lanham Act’s renewal structure: The Lanham Act requires registrants to renew by timely filing and “payment” of fees within the renewal window (and limited grace period). Because the validated payment is treated as effective in 2005, the Director did not “renew an expired mark” so much as recognize that the statutory precondition had been satisfied in time once the sanctions barrier was removed.
  5. Reject “refund defeats payment” theory as inconsistent with statutory assignment of responsibility: Bacardi argued “payment” requires agency acceptance; the court emphasized the statute makes timely “payment” something the registrant must do, and warned against a rule that would make renewal hinge on the agency’s later handling of funds. A later refund did not erase timely tender, especially after OFAC’s license validated the transfer.
  6. APA explanation was adequate; delay challenge forfeited: Applying State Farm/Bowman, the court held the Director’s rationale was discernible: the examiner refused renewal due to missing OFAC authorization; Cubaexport later produced a license specifically authorizing the 2005 payment; therefore the payment and filing were effective as of 2005. Bacardi’s critique of the delay failed procedurally (forfeiture) and substantively (much delay was attributable to the OFAC litigation and related proceedings).

Impact

This decision establishes (at least within the Fourth Circuit) a practical rule for the intersection of trademark administration and sanctions law: when OFAC issues a specific license that expressly covers an earlier trademark-renewal fee payment, the PTO may treat the fee as effective as of the original tender date, preserving timeliness under the Lanham Act despite intervening refusal, refund, and years of administrative inactivity.

Likely downstream effects include:

  • Sanctions-sensitive trademark maintenance: Rights-holders facing sanctions barriers may rely on the possibility of retroactive licensing, provided the license expressly identifies the past transaction.
  • Agency finality framing: Parties must focus challenges on the agency’s final action (here, the Director’s decision), because earlier examiner-level decisions may be legally irrelevant once internal review is invoked.
  • Delay challenges must be timely and concrete: The court’s forfeiture holding, paired with its citations to TRAC and related cases, signals that litigants should pursue delay remedies as delay occurs (or show specific prejudice) rather than raise the issue as an afterthought.
  • Payment formalism reduced: The court’s reasoning resists definitions of “payment” that hinge on the payee-agency’s later acceptance/refund mechanics, which can matter in other fee-driven administrative regimes.

Complex Concepts Simplified

  • OFAC “specific license”: A case-by-case written authorization allowing an otherwise prohibited transaction under U.S. sanctions. Here, Cubaexport needed it to lawfully pay the PTO renewal fee.
  • Retroactive validation under 31 C.F.R. § 515.502(a): OFAC licenses normally operate prospectively. A license can reach backward only if it specifically authorizes/validates a past transaction—meaning it must clearly identify that earlier transaction.
  • Validation effect under 31 C.F.R. § 515.203(c): Once OFAC authorizes a prior transfer, the transfer becomes enforceable/valid as if the embargo had not blocked it.
  • Lanham Act renewal: Trademark registrations expire unless the registrant timely files required maintenance documents and pays fees in the statutory period (plus a limited grace period).
  • “Final agency action” (APA): Courts review the agency’s last word that fixes rights/obligations. Because Cubaexport petitioned for Director review, the Director’s 2016 decision—not the 2006 examiner refusal—was the reviewable action.
  • Arbitrary-and-capricious review: Courts do not decide what they would have done; they check that the agency’s reasoning is rational, connects facts to outcome, and addresses the important parts of the problem.
  • Forfeiture: A party can lose an argument by not raising it properly or at the right time. The court held Bacardi forfeited its complaint about the agency’s delay/explanation of delay.

Conclusion

The Fourth Circuit’s core takeaway is that retroactive OFAC authorization can “cure” what would otherwise be a fatal sanctions-law defect in a timely trademark renewal payment. Once OFAC issued a license specifically covering Cubaexport’s December 2005 remittance, the PTO could lawfully treat the fee as effective as of that date and approve renewal within the Lanham Act’s structure. The opinion also reinforces pragmatic APA review: a short explanation suffices when the agency’s path is readily discernible, and litigants must timely and concretely press delay-based objections.