Cannabis Trademark Protection Law

Cannabis trademarks are as critical to the success of cannabis companies as they are in any other sector. In terms of geographical reach and remedies available to protect them, the strongest trademarks are those registered federally. The US Patent & Trademark Office refined its position in 2019 with passage of the 2018 Farm Bill, which removed hemp from the CSA’s definition of marijuana. Now, a product containing cannabidiol (CBD) derived from hemp can achieve federal trademark registration as long as the product is not meant to be eaten, claims no medicinal benefit, and the tetrahydrocannabinol (THC) content is less than 0.3%. Skincare products and cosmetics meet this test. Prior to the 2018 Farm Bill, no trademarks were allowed to be registered for any CBD products or any products that contained any THC.

What, then, are the brand protections available to companies producing, distributing, or retailing medicinal or recreational cannabis? There are two. Although neither provides the level of protection afforded by USPTO-registered trademarks, they are nevertheless valuable.

The first, acquiring common law trademark protection, does not require any special steps beyond using a trademark “in commerce,” i.e., using it on a company’s packaging (and, often, as part of its name). The date a company begins using a trademark is important in any dispute, so maintaining a documentary record of first use is necessary. Adding the familiar ™ symbol to a common law trademark informs anyone looking at it that the company claims IP protection (the ® symbol is reserved for trademarks registered with the USPTO).

The second avenue became available in 2018 when California announced that cannabis companies could register trademarks with the Secretary of State. State trademarks provide less robust protection than their federal counterparts. Still, in many situations, they give a cannabis company the ability to prevent other companies from using identifiers in California that are identical or confusingly similar to its own. Although the cost of registering a trademark with the state of California is not onerous, there are potential pitfalls. The prudent company will retain a trademark attorney to handle the process.

Obtaining a court order requiring another enterprise to stop using identifying marks likely to be confused with a state-registered (or common law) trademark involves overcoming many legal hurdles in addition to showing that the words or designs are confusingly similar. The assistance of a trademark attorney is required to navigate the pitfalls. Perhaps the most crucial general advice is that a company must act to protect a trademark as soon as it becomes aware of a potentially conflicting name or design. Delay of even a few months can be fatal.

Beyond that a California trademark only protects within the state’s boundaries, a second limitation on its effectiveness is that an earlier registered federal trademark or superior common law rights in the state can defeat it. This challenge is not specific to the cannabis industry.

In any other sector, a company holding a California trademark for, say, the past ten years has the right to use its trademark within California even if another company holds a similar federal trademark, as long as the federal trademark has been in use for a shorter period of time. In that situation, the federal trademark will be deemed to hold sway only in 49 of the 50 states. In other words, even though a federal trademark is “senior” to a state trademark, if the state trademark has been in effect longer, it will take precedence in its state. This is sometimes referred to as the “Swiss cheese” effect of the dual (federal and state) trademark registration systems in the US.

In the case of a state-registered cannabis-related trademark, however, because it is considered an illegal trademark under federal law, it has no force against a federally registered trademark. This means that a California cannabis company could find itself barred from using its trademark if a company unrelated to the cannabis sector but with a similar trademark entered the California market. These situations raise highly complex issues and cannot be resolved satisfactorily without the vigorous assistance of a trademark attorney.

One “work-around” some cannabis companies are experimenting with is registering their trademark with the USPTO for products completely unrelated to cannabis. An example is registering a trademark for use on a line of clothing or smoking accessories, like ashtrays and lighters. This will not, strictly speaking, prevent a company with a similar trademark from challenging the use of the cannabis company’s trademark on its cannabis products, but it may be enough of a deterrent to have a practical benefit. Additionally, the cost of this approach can be high because in order for the trademark to have legal heft, the company must be able to demonstrate that it is actively engaged in selling the goods listed in their applications. The company, in other words, must enter an entirely different economic sector, one in which it may not have any particular expertise. Trademarks used by cannabis companies must be chosen with careful consideration to avoid trademark infringement and dilution claims by a third-party because a conservative company with a similar trademark may pursue litigation to avoid an association with cannabis products.

The extent to which this work-around will provide a cannabis company with trademark protection has not yet been tested in court. For example, suppose a cannabis company only markets its clothing line through the same retail channel that sells its cannabis products. In that case, a court may determine its true intent was to register its cannabis products’ trademark and declare the trademark illegal.

In this article, we have only touched briefly upon the myriad of complexities cannabis companies face availing themselves of the essential commercial protections provided by trademark law. Each cannabis company’s circumstances will be unique. Milord Law Group’s expert trademark attorneys are well-versed in this fast-changing area of the law and would be pleased to discuss your needs.