A Budding Industry: How Cannabis Companies Are Dealing with Trademark Restrictions
The United States Patent and Trademark Office (USPTO) grants trademark protection for “any word, name, symbol, device or any combination, used or intended to be used to identify and distinguish the goods/services of one seller or provider from those of others, and to indicate the source of the goods/services.”[1] Applicants must identify a good or service to which the mark will apply.[2] However, trademark protection is only available to products that comply with all federal laws and regulations.[3] This requirement poses a problem for companies selling cannabis products that are legal under state law but remain federally illegal.
Cannabis is currently legal for recreational use in eleven states and Washington, D.C.[4] State legalizations have created a multibillion-dollar cannabis industry in which intellectual property protections are a growing concern.[5]
The 2018 Farm Bill distinguished hemp, which has substantially reduced concentrations of the psychoactive component of THC, from marijuana, which contains high concentrations of THC.[6] Hemp is now regulated by the United States Department of Agriculture and has been legalized for interstate commerce.[7] However, the Food and Drug Administration still prohibits trademarks on many hemp and CBD products.[8] Marijuana remains a Schedule 1 substance, and therefore, companies are unable to qualify for federal trademark protection on these products.[9]
In order to gain protection for their cannabis products, companies have been forced to circumvent the federal trademark system. One common tactic has been to gather state trademark protection in many or all of the individual states that have legalized marijuana or hemp.[10] While this tactic provides the best protection for the present market, it limits companies’ brand protection in the event of a new state legalization or federal legalization.
Another tactic has been to create promotional materials not related to the consumption of cannabis, such as T-shirts or stickers, and gain federal trademark protection on these products.[11]
Additionally, patent protection has been granted to companies or individuals with a cannabis-related invention. Unlike with trademarks, the USPTO does not require a product to be federally legal to achieve a patent.[12] Cannabis patents have included grow-house modifications, specialized equipment for transporting cannabis, automation for harvesting the plant, and chemical formulas for marijuana strains.[13]
Perhaps most interesting has been the tactic of filing a vague “intent-to-use” trademark application for products. These vague applications bypass the initial screening stage since the products are not revealed to contain cannabis. “Intent-to-use” applications typically receive a Notice of Allowance (NOA) from the USPTO about eight weeks after publication.[14] Then, within six months of the issue date of the NOA, the company or individual must complete the application to achieve a registered trademark.[15] However, this period can be extended every six months for a total of five extensions, or three years from the initial NOA issuance date.[16] Companies following this approach are effectively taking the gamble that federal laws and regulations will change during this three-year extension time.
In the absence of federal trademark production, the recommended approach has been for companies to pursue all potential workarounds.[17] The cannabis trademark problem highlights the importance of federal trademark protection for budding industries, while also exposing the inefficiency of this system when state and federal laws clash.
Footnotes
