March 1, 2021 | Written By: Manzuri Law

One of the most important business and legal considerations for companies is how to protect valuable intellectual property (“IP”) assets. But businesses in the cannabis space face unique challenges in protecting their trademarks and brands.

 A trademark is any visible indication that goods or services come from a given source (such as a brand, logo, or the trade name of a product). Trademark law ensures that multiple, confusingly similar marks are not used contemporaneously in the same commercial region (i.e., in the same field of business and geographic area). These laws create a means by which consumers can quickly differentiate between the goods of competing producers and make their purchases accordingly.

Why is it important for trademark owners to protect their IP and ensure that their various federal trademark registrations are valid and enforceable? Because competitors could potentially freeride on the goodwill established in a business’s federal trademarks or significantly diminish the value of a brand, either by adopting a confusingly similar mark, using a foreign-language translation of the mark, or integrating the mark into a domain name.

There are various ways to protect trademarks, using both state and federal law. As one might expect, state law is friendlier to cannabis-adjacent trademarks than federal law (at least in states that have decriminalized).

There are three levels of legal protection for trademarks:

  1. The most basic is common law trademark rights, which are created simply by using a mark in commerce with goods or services. No application or government approval is necessary. A common law trademark gives the user the exclusive right to use the mark in a given industry in the user’s existing geographic market. In order to enforce that exclusivity in court, the burden is on the user to prove numerous requirements, including the extent of its geographic market.
  2. In contrast, federally registered trademarks grant exclusive rights to the holder in the entire United States. These rights are superior to common law trademarks. If two companies are using the same mark for the same goods, and one company has a federally registered trademark and the other a common law trademark, the owner of the federally registered trademark has the right to exclude the other company from using the mark.1
  3. States also maintain trademark registries. They are functionally similar to federal registries, with a significant difference being that one’s rights only extend to the state in question.

Trademarking Cannabis at the Federal Level

The United States Patent and Trademark Office (“USPTO”) historically and currently does not register trademarks for marijuana strains, plants or seeds, marijuana dispensaries or dispensary services, or marijuana-related products. This is because federal registration is only available for goods or services that are lawfully in interstate commerce, and since the USPTO asserts that marijuana is illegal as a Schedule I drug under the Controlled Substances Act (“CSA”), applicants cannot satisfy the “lawful use in commerce” requirement.

However, there is a possible workaround: a cannabis business can trademark legal goods and services with the same brand and logos as cannabis products, and eventually expand the trademark to cannabis itself when cannabis is legalized at the federal level. For example, an applicant can apply to trademark e-cigarette batteries, ashtrays, lighters, or other branded merchandise that include the mark the applicant wishes to eventually extend to cannabis-related goods or services. 

Trademarking Hemp: Hemp-Derived Products (like CBD) Treated Differently

The Agriculture Improvement Act of 2018 (“2018 Farm Bill”) decriminalized the cultivation of hemp. The federal government acted quickly to clarify that the IP rules for hemp differ from the rules for cannabis. For example, in 2019 the USPTO published guidance in the form of Examination Guide 1-19,2 stating that trademark registration is available for hemp and goods made from hemp, but not for cannabis.

Specifically, the USPTO’s Examination Guide 1-19 allows for a narrow and limited amount of registration of cannabis related trademarks. The cannabis related trademarks the USPTO allows businesses to apply and register for are: legal hemp, hemp derived CBD, hemp oil and other hemp derived goods, the service of cultivating hemp, and the service of the production of hemp-derived goods.

However, Examination Guide 1-19 not only lays out products and services in areas that are able to obtain a federal registration, but also lists products and services that will be refused registration. The cannabis related trademarks that the USPTO will refuse registration for are trademarks that deal with food, beverages, pet treats, and dietary supplements.

Trademarking Dietary and Nutritional Supplements Involving CBD: Not Allowed

In a precedential decision from June 2020,3 the United States Trademark Trial and Appeal Board (“TTAB”) affirmed the USPTO’s refusal to register a trademark for “hemp oil extracts” when used as an ingredient in dietary or nutritional supplements, finding that the applicant could not lawfully use its mark in commerce because the applicant’s goods were illegal under the Federal Food, Drug, and Cosmetic Act (“FDCA”). The basis for rejection was that the hemp-oil extracts qualified as a “food additive” prohibited under the FDCA because the CBD contained in them is a “drug or biological product for which substantial clinical investigations have been instituted and for which the existence of such investigations has been made public.”

In the decision, the applicant’s mark “CW,” written in standard characters, served to identify the applicant’s brand, “CW Hemp,” as the source of the goods. The mark was to be placed on bottles of the applicant’s hemp extract, advertised as a nutritional supplement to “promote mind and body wellness,” offered in multiple flavors, and recommended to be used in beverage recipes. The goods’ illegality, the TTAB held, is a consequence of their nature and intended use as a dietary supplement. In other words, even though the CBD and the hemp from which it was derived were legal, the TTAB found the intended use as a food supplement to be unlawful based on its reading of the FDCA.

As stated above, the FDCA prohibits any food with a drug or biological substance additive from entering into commerce, if that drug or biological additive is the subject of a substantial clinical investigation that has been made public. Dietary supplements, which the “CW” hemp oil extracts were advertised as, constitute food for the purposes of this statute. Hemp grown legally under the CSA will thus nevertheless be deemed illegal if its use is found to violate the FDCA or another federal law. That is, the use of CBD in food or dietary supplements will be deemed illegal under the FDCA as long as CBD remains the subject of a clinical investigation, regardless of whether the hemp was grown legally under the CSA. Illegal use will override legal cultivation.

At least for the time being, then, the TTAB appears to have taken the position that if goods are marketed as conventional foods or dietary supplements and contain any amount of CBD, the goods are illegal under the FDCA and therefore ineligible for federal trademark registration.

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 1 The only exception occurs if the common law trademark owner can prove it was using its mark before the federally registered trademark owner first used its mark; in that case the owner of the federal registration still has the exclusive rights to the entire United States, except for the actual geographic market of the common law mark owner at the time the mark was federally registered.
2 https://www.uspto.gov/sites/default/files/documents/Exam%20Guide%201-19.pdf.
3 In Re Stanley Bros. Soc. Enterprises, LLC, No. 86568478, 2020 WL 3288093 (June 16, 2020). 

Disclaimer: This article has been prepared and published for informational purposes only and is not offered, nor should be construed, as legal advice.

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