The Blunt Actuality of Trademark Registration for Hashish Marks | Lippes Mathias LLP

As the list of states that have legalized adult cannabis continues to grow, companies are entering the industry at a breakneck pace. However, one of the biggest questions these companies face is how to develop and protect their trademarks under conflicting state and state laws.

With the explosion in digital branding, choosing, building, and protecting a brand name and logos are critical to the long-term success of any business. Registering a trademark or logo with the United States Patent and Trademark Office (“USPTO”) is the standard for protecting a company’s trademark. However, navigating through the state registration of a trademark or logo associated with cannabis-related products or services is a complicated undertaking.

As part of the state registration application for a trademark, the applicant must demonstrate an honest intention to lawfully use the trademark or logo in a trade (see 15 USC Sections 1051 and 1127). Accordingly, the USPTO and the Trademark Trial and Appeal Board (“TTAB”) have consistently rejected the registration of trademarks or logos if the applicant could not prove their legitimate use.

Although legal in many states, the distribution, sale, and possession of cannabis and cannabis-based preparations (i.e. cannabis plant products with a THC concentration of more than 0.3 percent on a “dry weight basis”) is prohibited by the Controlled Substances Act (Sept. USC §§ 812, 841 (a) (1), 844 (a)). Although the 2018 Farm Bill legalized hemp at the federal level, ongoing clinical investigations by the Food and Drug Administration (FDA) into food products and supplements containing CBD have resulted in the USPTO citing the Food, Drug, and Cosmetics Act (“FDCA “), Which prohibits the distribution of products that are subject to such investigations, in order to refuse trademark applications for certain products. Since the THC and CBD compounds are viewed as violating the FDCA, any products containing these cannabinoids are also considered violating the FDCA, which in many cases prevents the USPTO from issuing a trademark registration, even for legal manufacturers of CBD.

The significant possibility of USPTO denial of registration is due in large part to the rigorous investigation the USPTO applies to a trademark application. During this process, the USPTO’s examination attorneys conduct a thorough examination of the applicant, which may include the submission of an affidavit from the applicant stating that the goods or services for which the mark is being applied for do not contain any substances identified according to of the Narcotics Act or the implementation of an independent investigation of the applicant via the Internet. Applicants are also required to submit samples showing the mark or logo used in trade, which can also be an obstacle to registration, especially for cannabis companies that are consumed by adults. Not only has this tightened control prevented companies from registering trademarks for cannabis products, but it has also often prevented applicants from registering a trademark for goods that do not contain cannabis but may be associated with a product containing cannabis. For example, a company attempting to brand a butter product could have its application denied if the investigation uncovered evidence that the butter it sells may be cannabis-infused, or because the brand or logo is based on common terms or images in the Reference connection with cannabis.

In this regard, some applicants submit applications for goods and services unrelated to the actual use, cultivation or sale of marijuana, such as branded clothing or smoking paraphernalia. Although these applications are not directly related to cannabis use, they will still be subjected to the aforementioned screening, which often results in an extended registration process or, in some cases, in the application being rejected. As an additional challenge, the company has an obligation to protect its trademark when registering the application in order to maintain trademark protection. For example, if the registrant of the clothing-related brand PAPERZ wants to prevent a third party from using PAPERZ for the smoking accessories brand, the registrant must provide evidence that the clothing is related to smoking accessories. In order to determine that goods or services are related, one party must demonstrate that consumers believe that both parties’ goods or services are from the same source (i.e. the clothing is also sold by the third party selling the smoking paraphernalia). The connection of goods or services is determined on a case-by-case basis, which makes it difficult to preventively determine whether certain goods or services are related in certain situations where there is no obvious connection (e.g. t-shirts and hats).

Another way a trademark applicant can be denied protection is to use a well-known trademark for edible cannabis products – think cannabis-infused Cheetos, Nerds Ropes, Skittles, and Sour Patch Kids. Many of these big brands have filed federal trademark infringement lawsuits against companies trying to use well-known brand names for candy or snacks to better market their cannabis-infused products. While the Lanham Act allows a parody of a well-known brand, the parody defense is not available if the spoofed product damages the reputation of the existing well-known brand, as previously determined by courts in this case.

With the landscape around trademark rights and cannabis constantly changing, it is important that companies seek legal advice before beginning the application process for a trademark or license for adult use. Lippes Mathias LLP’s Cannabis Practice Team will continue to monitor developments in the cannabis industry, including major developments related to the protection of cannabis intellectual property at the federal and state levels and the impact of such developments on New York’s medical marijuana, cannabinoid and hemp Adult cannabis programs. If you have any questions, please contact one of our lawyers.