Creative solutions for cannabis industry IP

• English

While registering trademarks for cannabis products at the USPTO is currently impossible, brands are applying creative solutions to the problem. Leon Steinberg, Managing Director at Dennemeyer, United States, elaborates.

The cannabis industry is growing exponentially in the US, but it is doing so without traditional federal trademark protection. Although marijuana-related brands are flourishing and fortunes are being made, marijuana is still illegal under the federal Controlled Substances Act (CSA).

Accordingly, the current US Patent and Trademark Office (USPTO) policy is to refuse all cannabis-related trademark applications other than hemp-derived products that contain less than 0.3% THC. This policy has forced the cannabis industry to use creative alternatives to protect their brands. In 2019, the cannabis industry has become a multibillion-dollar industry, and 33 states, including the District of Columbia, have some form of legalized cannabis, whether medical, recreational or both. More than 35 million US citizens use marijuana every month, which is more than the number of Americans who smoke cigarettes. Research indicates that the number of cannabis users is growing at over 15% a year.

This rapidly expanding consumer base has spawned an industry that includes growers, distributors, retailers, equipment suppliers, manufacturers of cannabis-infused edible products, magazines, websites, media outlets, clothing lines and paraphernalia manufacturers, including vaporizer companies. New brands are being created and are growing in recognition, but, unlike in other booming industries, it is difficult to protect these brands because the USPTO will not recognize cannabis-related trademarks. With fortunes at stake, the industry has found alternatives to protect brands and prevent consumer confusion.

Non-cannabis mark

The most common technique is to apply for USPTO registration without suggesting that the trademark applies to anything cannabis-related. One example is ‘Cannabliss,’ which covers retail stores featuring tobacco products and smoking accessories. Another example is ‘Pax 2’ which includes smokeless vaporizer pipes for tobacco and other herbal matter. Along with the benefit of protecting brands for ancillary services and products, there is another potential benefit: if the USPTO were to start approving trademarks for cannabis products, companies with cannabis-related marks could be first in line.

The trick here is that the trademark application cannot refer to marijuana or cannabis, and the marks must also cover ancillary goods or services that are unrelated to marijuana and do not violate the CSA. In the light of new guidelines issued in May of this year the application may refer to hemp-derived products with negligible levels of THC, this practice does present some problems in that the federal courts are unlikely to enforce the mark as applied to a cannabis-related product. Some may also argue that because the applicant provides a sworn statement regarding how the mark will be used, the mark may be canceled upon the discovery that it is being used for cannabis products.

State registration

The second common technique is to register marijuana-related marks at state level. This practice presents its challenges:

1. State registration does not constitute a prima facie showing of ownership or validity;
2. If another party obtains federal registration, the state registration owner is limited to use in the immediate geographic area;
3. It protects the brand only in the state where it is registered.
   
   

Some states refuse to register cannabis-related trademarks for the same reasons that the USPTO uses, which adds a layer of complexity. Other states allow cannabis-related marks only if the owner of the mark is licensed to sell cannabis in that state. If a company is pursuing this option, it needs to look at the laws of the states where it is doing business.

Common law protection

Another option is for the cannabis industry to rely on common law protection until the USPTO policy changes. The common law protects brand owners from confusingly similar marks used by others. A showing of seniority by a common law mark can protect that mark in its zone of goodwill and natural expansion. Even if damages may be difficult to obtain under common law theories, injunctive relief is still available to force competitors to stop using a confusingly similar mark.

The inability to register cannabis-related marks at the USPTO is a symptom of a more significant problem: that federal and state laws are at odds. Despite this conflict, however, there are viable brand protection alternatives for the cannabis industry.

Life Sciences Intellectual Property Review first published this article on May 20, 2019.