Navigating Trademark Cannabis Issues, Backwards and in High Heels
Ginger Rogers was one of the leading female movie stars during the golden age of Hollywood. She is best remembered as Fred Astaire’s dance partner in RKO pictures from 1933–39. Rogers and Astaire performed 33 different dance numbers that dazzled the nation. While the latter may be more famous, the fact is that Ginger Rogers did every dance move Fred Astaire did, but backwards and in high heels. As the legal Cannabis industry continues to expand and the federal prohibition of Cannabis continues, operators are essentially Ginger Rogers, having to do the same dance moves as other legitimate industries, but backwards, in high heels, and one arm tied behind their back. There is no better example of this than in trademark law.
Federal Trademark Law
The federal government provides civil protection for marks registered with the USPTO. 15 U.S.C. § 1051. This simply requires 1). running a check to make sure no one else has registered your mark, 2). be currently using—or intending to use—the mark in commerce, and 3). pay the application fee. This is essential for brands to build credibility and a following. For example, when you buy something called Diet Coke that comes in a silver can, you have a reasonable expectation that the product is made by Coca-Cola. And if an aspiring entrepreneur starts selling soda called “Diet Coke” in a similar looking can, Coca-Cola has a legitimate interest in stopping that person. Since Coca-Cola has registered their mark with the USPTO, Coca-Cola has grounds to get a temporary restraining order against the offender and sue them for damages.
Sounds pretty straightforward, right? Well, unfortunately not for Cannabis entrepreneurs. The second element, using a mark in commerce, precludes them from getting trademark protection.
In 2016, the USPTO Trademark Trial and Appeal Board (TTAB) issued an opinion clarifying its long-standing precedent that for a mark to be "used in commerce” it must be for a federally legal purpose. In re JJ206, LLC, dba JuJu Joints, Serial Nos. 86474701 & 86236122 (2016). Currently, the Controlled Substances Act (CSA) schedules Cannabis as a level one substance, meaning it is federally illegal to sell it. This means that regardless of Cannabis being legal in your state, someone can copy your products dressing and mark exactly and sell it in other states with no recourse.
State Law exists but not germane to most disputes
Many states have their own trademark laws and administration, but they only protect marks within their borders. When conflicts arise between citizens of different states, or the conflict involves interstate commerce, federal law rules. This means state trademark protection is insufficient to protect your brand across the country. Effectively, if you have a Cannabis brand in California and have properly registered your mark with the California Secretary of State, you have protection from others misappropriating your mark within California. But this is worthless if someone uses your mark in Nevada.
How Cannabis Companies operate today
To protect their IP, Cannabis operators follow two tracks. The first is to get federal trademark protection for all non-plant touching elements of their business (e.g. vaporizer batteries, clothing). And the second is to file for trademark protection in the states they are legally operating in.
This website’s primary focus is policy related to plant touching. And so what happens when a California brand finds out someone is selling products using the same name and same packaging but in Nevada?
Because this is an inter-state issue, and there is no federal remedy for plant touching marks, the parties have to resolve the issue between themselves. Operators will typically retain attorneys, who in turn send cease and desist letters and threaten litigation, regardless of not having actual legal support. Attorneys serve an important role as mediators and negotiate a resolution the parties then codify in a consent decree. The consent decree will typically include geographic barriers where the parties will operate with the mark, include recourse if one party breaks it the agreement, and a roadmap on how to resolve a future dispute.
Contract law, not Trademark law, governs the dispute from that point forward.
Recommendations going forward
Cannabis operators today should protect what they have and be thoughtful when developing their brands and IP. They should file for state trademark protection in the jurisdictions they are operating in, and if eligible file intent to use applications in states they have plans to expand into. Operators should choose marks that are arbitrary and not descriptive—so for example an arbitrary mark like “Ethermite” is much more defensible than “Dank Greens.”
In addition, operators should retain attorneys to confront infringing parties for three reasons:
1). Attorneys can facilitate negotiations and help form a consent decree to resolve the dispute.
2). The opposing parties may not be as sophisticated and a demand letter sent early enough could dissuade them from pursuing the infringing mark.
3). If the operator has enough money, it would be a reasonable strategy to engage a lawyer to engage the infringing party to also drain their resources on attorneys fees.
When Cannabis is federally legalized, or there is an exception to the “used in commerce” element to allow the USPTO to accept applications from plant touching Cannabis marks, this will no longer be a problem. But today, compared to other industries this is one unique problem that Cannabis operators must confront. Broadly, Cannabis operators must do the same dance moves as operators in other industries, but due to federal illegality they must do so backwards and in high heels.
