Authored By: Christiane Schuman Campbell, Duane Morris LLP

Partner
Duane Morris LLP
30 South 17th Street
Philadelphia, PA 19103-4196
USA

ccampbell@duanemorris.com

 

The current belief among many marijuana entrepreneurs and business owners is that they cannot brand or protect the brands they use for cannabis products and related products and services. Well-founded as it is, the belief is indeed inaccurate. It is absolutely possible—and advisable—to protect these “marijuana marks.”

Protection of marijuana marks requires an understanding of the current and changing legal and regulatory landscape, a detailed perspective of where the industry is and where it’s going, as well as a skilled assessment of current federal and state trademark statutes and rules, to develop a creative and strategic approach to marijuana branding and brand protection.

Federal Trademark Registration and the Lawful Use Rule

First, to address the source of the misconceptions: it is true that one cannot lawfully obtain a U.S. federal trademark registration for a marijuana mark that covers actual marijuana products or directly related goods or services. United States federal trademark registrations are predicated on lawful use of a mark in commerce, and use of marijuana marks for marijuana products or services is not lawful use.

The U.S. Patent and Trademark Office (USPTO) will refuse to register marks that violate this “Lawful Use Rule.” Rooted in Trademark Act Sections 1 and 45, the Lawful Use Rule is violated when the applicant’s application-relevant activities involve a per se violation of federal law, in this case, the Controlled Substances Act (CSA).

The CSA prohibits, among other things, manufacturing, distributing, dispensing or possessing certain controlled substances, including marijuana and marijuana-based preparations. Further, the CSA makes it unlawful to sell, offer for sale or use any facility of interstate commerce to transport drug paraphernalia, i.e., “any equipment, product, or material of any kind which is primarily intended or designed for use in manufacturing, compounding, converting, concealing, producing, processing, preparing, injecting, ingesting, inhaling, or otherwise introducing into the human body a controlled substance, possession of which is unlawful under the CSA. 21 U.S.C. §863.” Thus, most recreational and medicinal marijuana products and services violate the CSA.

The USPTO’s current position is that trademarks for marijuana products necessarily violate the Lawful Use Rule and therefore are not entitled to registration. But back in 2010, recognizing a shift in the legalization landscape, the USPTO added to its Acceptable Identifications of Goods and Services Manual the identification “processed plant matter for medicinal purposes, namely, medical marijuana.” Less than four months later, it pulled the identification and called it a “mistake.” But momentum picked up for applicants seeking federal registration of their marijuana marks and has not dropped off since.

Upon review of applications for what appear to be marijuana marks (based on the marks themselves and/or the identified goods/services), the USPTO will—with limited exception—issue an action inquiring into an applicant’s activities, and whether they violate the CSA. For example, it flagged an application for LE CANNABIS that covered food products, beers, and alcoholic beverages that contained “essences of cannabis.” The applicant has six months to respond.

The following is an excerpt from a USPTO action issued against a presumed marijuana mark, in January 2017:

Among other questions, the CSA asks: To the best of applicant’s knowledge and belief, are the goods/services on which the mark is/will be used compliant with the federal Controlled Substances Act?

If the applicant does not at least answer that question in the affirmative, the application is likely to go up in smoke.

There are a handful of registrations on the Federal Register for what appear to be marijuana marks, that cover Class 5 products (i.e., pharmaceuticals and herbal supplements) though each specifically excludes cannabis and/or marijuana.1 The following are examples:

Registered Mark

Humboldt Apothecary

Relevant Goods

“… herbs and ingredients that are lawful pursuant to the CSA; medicinal herbs none of which are cannabis, marijuana, or its derivatives…none of the foregoing comprised of marijuana or any unlawful substances under the CSA.”

Medicinal herbal extracts for medical purposes; Medicinal herbal preparations; Plant extracts for medical, veterinary, and pharmaceutical purposes; plant extracts for pharmaceutical purposes; none of the foregoing containing cannabis.”

Natural herbal supplements; medicinal herbs; herbs for medicinal purposes; medicinal herbs in dried or preserved form; herbal supplements; medicinal herbal preparations; medicinal herbal extracts for medical purposes.

Registered Mark

Syqe Medical

Pharmaceutical preparations for the treatment of central nervous system diseases; plant extracts for medical and pharmaceutical purposes; none of the foregoing comprising or containing marijuana, hemp, cannabis, or derivatives, extracts or synthetic iterations of marijuana, hemp or cannabis.

The USPTO invokes the Lawful Use Rule on both use-based and intent-to-use applications, so if an applicant filed a trademark application today based on its bona fide intent to lawfully use a marijuana mark in commerce in the future (say, when there is legalization at a federal level), the office would still reject it on the basis that the intended use violates the CSA. Dicey, for sure, but it’s the USPTO’s position.

Some parties have attempted to circumvent the U.S. “use in commerce” requirement (and therefore the Lawful Use Rule) by filing U.S. trademark applications based on foreign applications or registrations, instead of based on use or intent-to-use in the U.S. However, the USPTO will also flag these applications as violating the rule. The intent to use a mark in U.S. commerce is implied in any filing that is based on a foreign application or registration. Further, a foreign applicant must meet all requirements for registration set forth in the Trademark Act and relevant rules, and an application for goods or services that violate the CSA falls short.

Bottom line, federal registration is not available for marijuana marks that specifically cover cannabis or related products and services that violate the CSA. However, as a result of dozens of states approving legal medical or recreational cannabis, there is a world of new ancillary products and services, and thus branding and marketing opportunities, in the industry.

Federal Trademark Registration for Ancillary Goods and Services

The registered marks noted above are the outliers. The majority of the allowed or registered marijuana marks on the registry cover ancillary services related to marijuana, but not marijuana or marijuana products. A number cover services in Class 35 (i.e., retail, business and consultation services) or Class 41 (i.e., entertainment and educational services).

Take, for example, the mark TÖKR, which covers an app that allows users to locate pricing for medical marijuana and recreational marijuana from nearby dispensaries owned by others and related marketing and software services. In an official action issued in January 2017, the USPTO inquired into the applicant’s compliance with the CSA, and the applicant responded that its services did not violate the CSA because it did not “manufacture, distribute, dispense, possess marijuana or related products, and did not sell, offer for sale, or use any facility of Interstate commerce to transport drug paraphernalia, etc.” The applicant explained that its services are a marketing platform for medical and recreational marijuana dispensaries and companies, not owned by the applicant, to reach its clientele and patients.

Another applicant, seeking to register its FARM TO FEELING mark for information services for medical use of cannabis, responded to USPTO inquiries by explaining that the applicant offers information to consumers concerning the medical use of cannabis. Specifically, the services are “purely informational, and do not involve the sale, provision, and/or possession of marijuana” or related products.

The point? An application for a marijuana mark with a carefully crafted identification of goods or services that excludes marijuana (and satisfies the USPTO’s inquiries), can theoretically achieve registration and defend against later parties entering the registry with the same or similar marks for competing products and services, and can be used to enforce the mark against those competitors.

State Registration

While technically the Federal Controlled Substances Act categorizes sale, distribution and possession of marijuana as Class 1 felonies, as of press time, nearly 30 states and Washington, D.C. have legalized marijuana in some form, with three additional candidate states well on their way. Eight states and Washington, D.C. have legalized marijuana for recreational purposes. The wheels have been set in to motion along a road that quite possibly leads to the mainstreaming of previously illicit goods and services. This mainstreaming also means marijuana products and services are coming out of the shadows and being marketed and sold under very public and consumer-facing brands. Celebrities like Melissa Etheridge (ETHERIDGE FARMS), Snoop Dogg (LEAFS BY SNOOP, pending before the USPTO), Whoopi Goldberg (WHOOPI & MAYA, pending before the USPTO) and Willie Nelson (WILLIE’S RESERVE, pending and registered before the USPTO) are developing brands or using their own names to market marijuana products.

As a general matter, and at the risk of painting with an overbroad brush, state trademark applications are reviewed with far less scrutiny than federal trademark applications. OK, let’s be honest—they’re barely reviewed at all. However, most state trademark registries follow the USPTO’s classification/identification of goods system, and while states do not specifically have Lawful Use Rules, most state trademark applications require an applicant to prove use of goods or services identified in an application (i.e., state trademark applications are filed based on use and not an intent to use). This means a candidate for state trademark protection should be a mark used in a state that has legalized marijuana, either for medical or recreational purposes. Currently, the trademark registries in at least Oregon, Nevada, Vermont, Arizona, Illinois, Massachusetts, New Mexico, Maine, Rhode Island, Washington and Colorado house trademark registrations for actual marijuana products. Assembly Bill 64 is before the California legislature proposing California’s recognition of marijuana marks at the state level. California has historically opposed state trademarks for federally illegal products.

While these states use the USPTO identification and classification system, state trademark registrations have issued marks for goods and services that are NOT identified in the USPTO’s manual, such as cannabis flower and related products, cannabis-infused products, pre-rolled marijuana cigarettes, pharmaceuticals in the nature of marijuana and marijuana products, sustained release cannabis products, edible cannabis products, marijuana plants, and retail and medical cannabis products. Oregon’s state trademark registry is particularly popular with applicants obtaining marijuana marks.

State trademark registrations get a bad rap. They don’t offer national protection, or afford a registrant a presumption of ownership and validity of the underlying trademark on a national stage. They’re often perceived as being of little value, or at least little more than afforded under common law. However, state registrations are relatively cheap and easy to obtain, and do afford the registrant certain benefits under state law. Further, because they are a matter of public record (and significantly records that may be included in a vendor’s clearance and availability trademark search parameters), the state registration would certainly be an effective heads up to any junior user looking to use the same or a similar mark on either a local or (eventual) national stage.

Again, the threshold for state trademark registration is low and scrutiny light, if it’s there at all. Note, however, that each state is different and some states, for example Nevada, have enacted legislation or guidelines that govern the marketing and branding of marijuana products and services. Specifically, Nevada state law offers guidelines for names, logos, signs and advertisements for medical marijuana establishments. Under NAC 453A.402, names, logos, signs and advertisements must be approved by the division administrator and the guidelines specify that:

  • Overall appearance must:
    • Not be appealing to minors.
    • Not contain cartoon-like figures or illustrations.
    • Not contain humor.
    • Not contain the perception of high, fun, recreation, etc.
    • Be tasteful.
    • Be accurate.
  • Typography:
    • Clean fonts preferred.
    • Void script, decorative or gimmicky fonts.
    • Two fonts maximum.

So, before filing a state trademark application for registration of a marijuana mark, it is important to make sure the mark is compliant with other state regulations and guidelines.

Common Law

One of the most fantastic nuances of U.S. trademark law is that trademark rights here are based on use, and not registration. The common law rights that emanate from use are born the moment a mark is first used in commerce. Common law rights are typically narrow in scope and limited to the geographic area in which the mark has been used, but they are rights and can be enforced against third party infringers. Further, there is no codified “lawful use” requirement in order for a mark to be protected at common law, as there is at federal law.

Significantly, Section 43(a) of the Lanham Act affords unregistered marks (i.e., common law marks) protection from infringement, and entitles a common law mark owner to bring an infringement suit in federal court. Section 43(a) does not expressly state or imply that use to substantiate common law rights must be lawful use in commerce, though U.S. courts have yet to be in a position to fully analyze the issue.

Bottom Line

Marijuana marks are protectable. There are protections available through federal registration, state registration and at common law. With the potential for a $50 billion market by 2026, and a shift of the business out from the shadows and into the mainstream, marijuana brands are set to gain significant traction—and garner extraordinary value—for their owners. Not only can marijuana marks be protected but they should be. While there may appear to be a cloud of smoke blurring businesses’ and entrepreneurs’ abilities to protect their marijuana marks, legal counsel with understanding of the industry and the current and changing regulatory landscape, can help bring clarity and help develop a creative and strategic approach to marijuana branding and brand protection.

Christiane Schuman Campbell is a partner in the Philadelphia office of Duane Morris and practices in the area of intellectual property law. She has extensive experience with trademark maintenance and enforcement, including enforcement over the internet. She has handled domain name disputes in federal court and before arbitration panels under ICANN ‘s Uniform Domain Name Dispute Resolution Policy.

Disclaimer: This article is prepared and published for informational purposes only and should not be construed as legal advice. The views expressed in this article are those of the author and do not necessarily reflect the views of the author’s law firm or its individual partners.

1 It is worth noting that, as of press time, there are at least three registered marks on the registry with two unique owners that cover Class 5 products made from cannabis extract, or cannabis oil featuring THC or CBD. It is unclear why these were not flagged as violating the Lawful Use Rule.