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February
2003

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TOBACCO INDUSTRY NEWS

Florida’s Cigar Industry Challenges Smoking Ban
In ‘Bid for Survival,’ Files Suit Challenging Constitutionality


Tampa, FL - Florida’s cigar industry filed a federal lawsuit in January seeking to overturn an amendment to the state’s constitution passed on November 6, 2002 that prohibits smoking in enclosed indoor workplaces.

The industry group, which is comprised of nine major manufacturers, importers, exporters, and distributors of cigars and cigar leaf tobacco in Florida, contends the amendment would virtually wipe out the industry in Florida because it would prevent the burning of tobacco in cigar factories and cigar-related facilities. Smoking cigars and burning cigar leaf tobacco are essential steps in the manufacture, development, distribution, and sale of cigars and cigar leaf tobacco in Florida.

“This is not about banning smoking. It is about economics and industry survival,” said Norman Sharp, president of the Cigar Association of America. “We are trying to protect an industry whose heritage is at the very foundation of Florida’s cultural and economic history.”

Thousands of jobs and a multi-million dollar infrastructure will be wiped out if the amendment is not overturned, notes Sharpe.

The group of plaintiffs includes Altadis U.S.A, Inc., Swisher International, Inc., J.C. Newman Cigar Company, Caribe Imported Cigars, Central America Tobacco Corp., Toraño Cigars, Puros Indios Cigars, Inc., Oliva Tobacco Co., Inc., A.S.P. Enterprises, Inc., and El Credito Cigar Company.

As a central part of carrying on their legal businesses, the cigar industry tests its products to ensure the quality of cigars and cigar leaf tobacco, to evaluate manufacturing quality, to meet industry standards and federal laws, and to develop new products.

“It is impossible for the industry to comply with the smoking amendment while at the same time exercising our rights to engage in lawful business under federal law,” says Sharpe.

The industry could not challenge the amendment until it became effective on January 7, explained Benjamin H. Hill, III of Hill, Ward and Henderson, lead attorney for the cigar industry. The lawsuit asks the U.S. District Court in Tampa to overturn the amendment because it violates federal law and to prevent Gov. Jeb Bush, Attorney General Charlie Crist, and the Florida legislature from taking steps to implement and enforce the amendment.

The complaint argues that the smoking amendment is invalid under the U.S. Constitution because it is pre-empted by long-standing federal law, it directly burdens and disrupts the flow of interstate and foreign commerce, it unreasonably interferes with commercial activity, and it prohibits the industry from engaging in lawful business, thus depriving industry members of their liberty and property interests.


CAO, Toraño Open CAO Factories

Nashville, TN - Premium cigar maker CAO International is opening its own production facilities in both Estelí, Nicaragua and Danlí, Honduras. The creation of CAO Fabrica de Tabacos represents a partnership between CAO and the Toraño family, who bring four generations of tobacco growing and production expertise to the table.

“This represents a major step for CAO,” said CAO founder and president, Cano A. Ozgener. ‘We have always maintained a major input towards the blend and development of our cigars, however, we are now at a juncture where we felt the time was right to step up and take on the role of cigar manufacturer. We have been working together with the Toraño family for nearly a decade now, so the evolution into this partnership was a logical progression of our relationship. Now, as partners in our own factory, we will be able to secure a better foothold on not only the quality of our products but on the future of CAO.”

CAO Fabrica de Tabacos in Nicaragua and Honduras will be responsible for the production of CAO Gold, CAO Brazilia, and CAO Criollo along with plans for future expansion.


Toraño Opens New Cigar Factory in Dominican Republic

Santiago, D.R. - The Toraño family, along with their partners, the Cuevas brothers, have opened a new premium cigar factory in the Dominican Republic. The newly-built facility, under the name of Cuevas & Toraño, S.A., is located in Santiago.

The original Cuevas & Toraño factory is located in Navarrete, Dominican Republic. Says vice president Charlie Toraño, “We are proud to be unique in the industry. No other cigar maker, large or small, owns their own factories in all three of the major cigar-producing countries: Honduras, Nicaragua, and the Dominican Republic. The decision to build this new facility evidences the growth and success of the Toraño family over the recent past.”

The factory is located directly on the road between Santiago and Navarrete. “The impetus for buying this new facility is our ongoing relationship with British American Tobacco (B.A.T.), who has commissioned Cuevas & Toraño, S. A., to manufacture its new line of Dunhill Signed Range premium cigars. We expect to entertain large groups of B.A.T. management and other personnel at the new Santiago facility, as well as hosting trade and consumer events. Thus, the new factory is more spacious and unusually elegant.”

The new Santiago factory also produces the Carlos Toraño Signature Collection premium cigars, which recently earned Smoke magazine’s all-time highest rating for a non-Cuban cigar. It is also the private-label manufacturer for other leading top-rated brands, including La Perla Habana cigars.


Corona Cigar: Survivor

Orlando, FL - Corona Cigar Company was recently profiled on a nationally broadcast segment of cable channel CNBC’s “Squawk Box” morning show. CNBC’s story aired on December 19, 2002, and profiled Corona Cigar Company’s c.e.o. Jeff Borysiewicz as a “survivor” of the cigar boom and bust of the late 1990s. The story highlighted Corona Cigar’s award winning website - www.coronacigar.com - and showed the company’s extensive 1.5 million cigar inventory at the company’s new retail store and world headquarters in Orlando, Florida.

Court to Decide U.S.-Cuba Cohiba Dispute

New York - Legal ownership of the Cohiba brand in the U.S. will be decided in a New York courtroom, following a trademark infringement lawsuit brought by state-owned Empresa Cubana del Tabaco (Cubatabaco) against New York-based General Cigar Holdings Inc.

Nick Simeonidis, senior vice-president and general counsel for General Cigar, said the case was originally supposed to be heard last October, but it’s been delayed and isn’t likely to come to trial until April .

Both sides had moved for summary judgement since no material issues of fact were in dispute, but that motion was denied last summer by Judge Robert Sweet of the Southern District of New York.

“In sum, we’re arguing that we own the trademark,” said Simeonidis in a phone interview. “Cubatabaco knew about this for years and years, and didn’t do anything about it until very late - too late in fact.”

The Cohiba brand, created in 1965 by Che Guevara, was the first cigar brand established by the Castro government following the 1959 revolution. A super-premium cigar for Castro’s private use, it was given out to heads of state and other VIPs. Thanks to their relative scarcity, Cohibas attained a cult status among cigar lovers and, by the early 1970s, were on sale in some Cuban cigar shops. In 1982, Cuba began exporting Cohibas to Europe, where they were an instant hit.

General Cigar first registered the Cohiba name in the United States in 1978, and since the 1980s has been making Cohibas at its factory in the Dominican Republic. The popular “red dot” Cohiba was introduced in 1997.

“Cohiba is now a very well-known brand for General Cigar,” Simeonidis told Smoke­shop.

In February 1997, Cuba attempted to cancel General’s trademark with the U.S. Patent and Trademark Office, but suspended that action when it sued Culbro Corp., the former parent of General Cigar, later that year, accusing Culbro of trademark infringement and false designation of source of origin, among other allegations. In January 1998, the parties agreed to attempt to settle out of court.

But in 2001, Judge Sweet found that General Cigar’s first registration of the Cohiba trademark had been abandoned in the 1980s, and that the case should be resolved on the basis of its second registration in 1992.

The judge also dismissed Cubatabaco’s claims of ownership to the trademark based upon two intellectual property treaties.

“Cubatabaco is trying to make the claim that somehow our registration should be cancelled,” said Simeonidis. “If that were the case, then no one would be able to sell a Cohiba in the U.S. But we don’t think that will happen.”
- Luxner



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