Cannabis Trademarks and Legal Use in Commerce

Last week I had the honor of speaking on a panel at Chicago-Kent College of Law, dealing with the unique intellectual property issues faced by the cannabis industry. One issue we discussed at length was exactly what types of federal trademark applications would be rejected by the United States Patent and Trademark Office (USPTO), and on what basis.

The key to determining whether the USPTO will reject a trademark application is not in the substance or form of the mark itself, but in the goods and/or services the mark will be used on. For example, a trademark application will not necessarily be rejected simply because the word cannabis or a graphic of a cannabis leaf is a part of the mark – it’s entirely possible to make legal use of a mark that contains these elements (although these marks may raise issues of “immoral and scandalous matter“). Rather, the USPTO will reject a mark if the specification of goods and services contains goods or services that are illegal. For purposes of the cannabis industry, illegal goods and services are those that violate the Controlled Substances Act.

Another key consideration is that it doesn’t matter how clever the wording of your specification of goods and services is, if you aren’t actually selling goods or services that comply with federal law. For example, calling your goods “dried herbs,” “dried plant matter,” or “agricultural goods” will not fool the examining attorney if what you are actually selling is cannabis. We’ve said this before, but you must actually be selling the goods you specify in your application, or you must have a bona fide intent to sell the goods you specify if you are filing on an intent-to-use basis. And the goods you are selling must comport with federal law.

Late last month, the USPTO Trademark Trial and Appeal Board (TTAB) issued a precedent-setting opinion rejecting an intent-to-use application for POWERED BY JUJU and a use-based application for JUJU JOINTS. The examining attorney on that trademark initially rejected the applications based on a determination that the applicant lacked a bona fide intent to use the marks lawfully in commerce under Sections 1 and 45 of the Trademark Act, 15 U.S.C. §§ 1051, 1127. The specification of goods for both JUJU applications was as follows:

Smokeless marijuana or cannabis vaporizer apparatus, namely, oral vaporizers for smokers; vaporizing marijuana or cannabis delivery device, namely, oral vaporizers for smoking purposes’ in International Class 34.

The TTAB opinion also noted that even an application filed on an intent-to-use basis could be rejected if the record indicates that the identified goods or services are unlawful, because actual lawful use in commerce is not possible. Where the specified goods are illegal under the Controlled Substances Act, “the applicant cannot use its mark in lawful commerce, and ‘it is a legal impossibility’ for the applicant to have the requisite bona fide intent to use the mark.” This means that the strategy we’ve seen some applicants use of “holding” a mark until cannabis is federally legal by filing on an intent-to-use basis does not work.

In this case, the TTAB found that the applicant’s specified goods constituted drug paraphernalia under the Controlled Substances Act, stating that “equipment primarily intended or designed for use in ingesting, inhaling, or otherwise introducing cannabis or marijuana into the human body constitutes unlawful drug paraphernalia under the CSA.” The TTAB looked to the applicant’s evidence regarding the nature of the goods, and determined that they were not “in the same league” as other oral vaporizing apparatuses, such as e-cigarettes.

The applicant in this case made a couple of arguments in support of registration, the first of which was that because there are other pending applications and registrations with the USPTO that reference cannabis, applicant’s application should be treated no differently. But the TTAB opinion distinguishes applicant’s goods based upon, in part, external evidence. Though applicant’s goods clearly constitute paraphernalia under the Controlled Substances Act, the goods registered in other applications include hemp-based products, computer and software services, and consulting in the field of agriculture. Each of these applicants likely had to certify that their goods and services do not violate federal law. And if the USPTO determines, perhaps upon renewal or information from a third party, that a trademark owner is actually selling goods or services that violate the Controlled Substances Act, that registration can be cancelled.

The applicant further argued that because it sold goods only in states that allow for the legal sale of cannabis, its current and intended use therefore constituted lawful use in commerce under the Trademark Act. The TTAB rejected this argument, citing a previous decision that “the fact that the provision of a product or service may be lawful within a state is irrelevant to the question of federal registration when it is unlawful under federal law.” In re Brown, 119 USPQ2d 1350, 1351 (TTAB 2016). In other words, the federal interdiction against cannabis will control over state law cannabis legalization.

And finally, applicant’s last substantive argument was that because it operates in states with regulatory systems that comport with federal directives such as the Cole Memo, its goods should be considered lawful. The TTAB notes, however, that memoranda, including the Cole Memo, are merely advisory and cannot override the Controlled Substances Act. Unfortunately, the TTAB’s view regarding the Cole Memo’s interaction regarding federal law is correct.

Bottom Line: When filling for a federal trademark, the actual goods or services the mark will be used on must be lawful under federal law. Clever wording or obscuring the true nature of your goods will not fool the examining attorneys, who are becoming increasingly more savvy to the “workarounds” used by many applicants in the cannabis industry. Also, do not forget that in many instances you can provide at least some trademark protection for your cannabis brand and logo by securing a trademark from the relevant state trademark office. See Cannabis Trademarks: Back to the Basics.

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