Now that California has legalized recreational cannabis, intellectual property attorneys are being flooded with client requests to file state cannabis trademark applications to protect their brand names. Actually, the law does not expressly permit sale of cannabis until January 1, 2018. Nevertheless, cannabis businesses are wise to move quickly to secure their cannabis trademark rights to protect their brand.
Business owners in the cannabis industry are not unlike traditional commercial business owners who want to protect their business and brand names under applicable federal and state trademark registrations. However, legal hurdles to federal protection make it critical for a cannabis business owner to look at other legal protections to secure brand protection. There are three ways in which a cannabis brand owner can establish cannabis trademark rights (federal, state and common law trademarks):
Federal Trademark – Registering the Brand Name with the United States Patent and Trademark Office (USPTO)
Ideally, cannabis business owners could seek federal trademark registration because the benefits include constructive nationwide notice of the trademark owner’s claim, evidence of ownership of the mark, jurisdiction of federal courts, and the ability to obtain treble damages and attorneys’ fees. In addition, federal trademark registration can be used as a basis for obtaining registration in foreign countries via the Madrid Protocol, and registration may be used as a basis to prevent importation of infringing foreign goods. Federal registration also permits use of ® symbol on the goods, and entitles the trademark owner to certain statutory damages in cases of counterfeiting.
A federal trademark registered with the USPTO provides the most comprehensive brand protection available, but it is generally not available because cannabis is still classified as a Schedule 1 narcotic under the federal Controlled Substances Act (CSA). The threshold requirement for registering a federal trademark is that the applicant has made “legal use” of the mark in commerce. The USPTO has continually refused to register marks for use on cannabis and any other goods and services that violate the CSA. Under the CSA, it is unlawful to sell, offer for sale, or use any facility of interstate commerce to transport drug paraphernalia, i.e., “any equipment, product, or material of any kind which is primarily intended or designed for use in manufacturing, compounding, converting, concealing, producing, processing, preparing, injecting, ingesting, inhaling, or otherwise introducing into the human body a controlled substance, possession of which is unlawful under the CSA.”
State Trademark – Registering the Brand Name with the California Trademark Unit
California permits state trademark registration through the Trademark Unit of the Secretary of State. California cannabis business owners should be advised to look to protections offered by registration of a cannabis trademark with the California Trademark Unit.
States such as Washington and Colorado, that have legalized recreational cannabis use, allow business owners to file for state trademark protection. However, California being the unique state that it is, does not permit state trademark registration for cannabis trademarks because it violates the CSA. California has adamantly rejected attempts to register trademarks on cannabis businesses. This might appear contradictory due to California’s legalization of medical marijuana in 1996, and now the legalization of recreational marijuana in 2018.
Sections 14270-14272 of the Model State Trademark Law of the California Business and Professions Code, which are simply titled “Miscellaneous” provides the legal basis for such refusal to permit California state cannabis trademarks. Section 14272 states:
The intent of this chapter is to provide a system of state trademark registration and protection substantially consistent with the federal system of trademark registration and protection under the Trademark Act of 1946 (15 U.S.C. Sec. 1051 et seq.), as amended. To that end, the construction given the federal act should be examined as non-binding authority for interpreting and construing this chapter. (emphasis added)
California’s Model State Trademark Law contains a provision that requires substantial consistency between state and federal trademark registrations. This includes the “legal use in commerce” requirement, which requires legal use at both the state and federal levels. As long as the CSA classifies cannabis as a Schedule 1 narcotic, it will violate federal law, and therefore not qualify for federal or state trademark protection.
There is hope for California cannabis businesses seeking California state cannabis trademark protection. A California bill recently introduced in the Legislature would create a state-level trademark for California cannabis products, providing marijuana businesses new legal protections and greater access to investor capital as California ushers in a sanctioned commercial marketplace. Assembly Bill 64 would expressly allow the California Secretary of State to register trademarks for cannabis goods and services. Cannabis businesses and their attorneys should be following this bill closely.
Common Law Trademark – Using the Brand Name in Commerce
Options for California Cannabis Businesses
There is significant value for a cannabis business to pursue filing of both federal and state trademark applications for ancillary goods and services as the best brand protection strategy currently available. This is based upon a theory that if a cannabis business registers a trademark for ancillary products it might scare off potential copycats and allow the business to be first in line if the federal government eases its classification of cannabis as a Schedule 1 narcotic. Essentially, it provides a foothold upon which a cannabis business can rely to establish brand recognition in the marketplace. Cannabis businesses, however, need to be more circumspect, hoping that a trademark for t-shirts, hats or vaporizers will be enough protection that a business has laid claim to a cannabis trademark.It is advisable to seek the counsel of an experienced attorney if you are seeking to protect your cannabis brand name.