07 Nov 2016 Strategic Branding: Use and Registration of Cannabis Related Trademarks
With the legal marijuana industry experiencing rapid growth (up roughly 26% from 2015), many companies engaged in marijuana related business ventures, of both the medicinal and recreational varieties, understand the importance of brand growth through trademark registration and protection.
There are currently 25 U.S. states that have legalized the use of medical marijuana, with Ohio being the most recent state to join the ranks. Washington, Oregon, Colorado and Alaska have legalized marijuana for recreational use, and this issue is on the ballot in California and Nevada this November.
Despite state legalization, marijuana remains classified as an illegal substance under the Controlled Substance Act (“CSA”), which, in turn complicates a company’s ability to federally register trademarks that are associated with such goods. Marijuana is listed as a Schedule-I illicit substance under the CSA, and it is unlawful to sell, offer for sale, or use any facility of interstate commerce to transport drug paraphernalia (21 U.S.C. § 863(d)).
Potential Federal Registration
In order to secure federal registration, a trademark must be used in connection with goods and services that are lawfully used in commerce. Consequently, the U.S. Patent and Trademark Office (“PTO”) will not approve registration of trademarks that are used in connection with illegal goods and/or services. However, the PTO will approve trademarks registered for ancillary goods and services.
Until recently, the PTO was approving for registration marijuana related trademarks so long as the goods and services were ancillary to the actual distribution or provision of marijuana or related services that were deemed unlawful. Marijuana related trademarks have been approved for oils, tinctures, jewelry, and the like. The trademark strategy was designed to secure rights in marks with respect to permissible goods and services to grow brand recognition, and then be ready to file for federal registration if and when marijuana ceases to be an illicit substance under federal law.
A recent decision, however, from the Trademark Trial and Appeal Board (“TTAB”) has increased scrutiny regarding what are considered permissible ancillary goods and/or services. In re Morgan Brown, Serial No. 86362968 (TTAB 2016), Morgan Brown (“Applicant”) applied to register the mark “HERBAL ACCESS” in connection with “retail services featuring herbs,” and the TTAB determined, in affirming the decision of the Examining Attorney, that the mark was not being lawfully used in commerce. While “retail services featuring herbs” may not on its face seem unlawful, the Applicant’s specimen depicting the mark used in connection with the goods/services raised questions with the Examining Attorney and prompted further investigation into Applicant’s website. The specimen in question showed a green cross, which has become the industry symbol for medical marijuana, and Applicant’s website contained numerous pictures of marijuana plants and the following statement: “Your Access Is Granted! Call or stop by today and find out why people consider our marijuana to be the best of the best!”
The Examining Attorney refused registration, a decision affirmed on appeal by the TTAB, based on the determination that Applicant was involved in a per se violation of the law.
Here it seems as if the Applicant was attempting to get around the law by registering its mark for ancillary goods/services that were not actually used in commerce with the applied for mark. If the Applicant had excluded marijuana in its description of “goods/services” the application may have been successful, assuming Applicant did in fact distribute herbs other than marijuana and could produce a specimen depicting such use.
Potential State Registration
Despite the challenges with federal registration, not all hope is lost. In addition to federal law, trademark rights can arise under state and at common law. It should be noted, however, that with respect to marijuana related goods/service, these rights will be recognized only in those states where such goods/service are legal. In general, “common law” trademark rights are established simply when a trademark is used in connection with goods and services; however, these rights are limited to the geographic scope in which the connected goods and/or services are sold or rendered. To expand on those rights, a trademark owner can file a trademark registration in the state in which the connected goods and/or services are sold or rendered. In general, common law and state law trademark rights are only enforceable against other related products and services sold or advertised in that state.
The takeaway here is to remain vigilant about securing and protecting your trademark rights under state and common law where permissible, and taking steps to secure federal registration to the extent possible. To overcome the increasing scrutiny of the PTO, a company should consider providing goods/services that are ancillary to the marijuana related aspects of the, for example, informational services, education and training, clothing or dishware – just be sure to submit a proper specimen that shows the mark used in connection with the ancillary goods/services. In addition, companies should be prepared to rapid fire applications with respect to their marijuana related trademarks or unlawful goods if, or when, marijuana is no longer considered unlawful under the CSA.