How To Protect Your Cannabis Trademarks In A Legal Landscape That Is Half-Baked – Trademark

In our previous post, we discussed how a cannabis business can
take steps to avoid potential trademark infringement claims. In
this release, we will discuss how a cannabis business can use
trademarks for brand protection – despite the fact that
federal law prohibits filing a cannabis-related trademark.

Acquiring State Trademarks

The most obvious (and widespread) option to protect a cannabis
trademark is to obtain trademark registrations in all states where
the mark is being used. In trademark law, the first use of a mark
within a territory typically establishes trademark ownership in
that territory.

Registering and policing a state trademark is relatively
straightforward. In Michigan, for instance, a certificate of
registration is admissible as evidence of an applicant’s right
to use the mark throughout Michigan (MCL 429.34(3)). Suppose a
trademark is registered with the state. In that case, the
registration is prima facie evidence that the mark is
valid, and the burden of production shifts to a defendant to
demonstrate that the mark is not valid.

Although state registration can provide trademark protection,
such protection is limited geographically. Thus, cannabis companies
are incentivized to register in other neighboring states – as
another company’s mark in a different state may be
substantially similar or identical, thus precluding later
competition and/or expansion into the different state. However, to
get protection in differing states, actual use of the mark in that
state is required. Given the federal implications of cannabis use,
this can create hurdles for protection in the neighboring states.
But the upside is significant as precluding a copycat business from
getting started in another state mitigates the risk of a race for
federal registration once Congress legalizes recreational cannabis
at the federal level. Indeed, expansion plans may be limited or
thwarted by a competing claim for trademark ownership in a
different territory, so growing cannabis companies should seek to
address these trademark issues sooner rather than later.

Trademarking Other Goods or Services

Although federal trademark protections remain unavailable for
cannabis companies, ancillary goods and services that do not
contain a federally unlawful substance could be eligible for
federal trademark registration. Navigating such registration is
tricky, though, as the USPTO often requires companies to declare
that ancillary products will not be used to market marijuana.

If a cannabis business’ trademark is already inextricably
intermingled with products that contain cannabis, a related
strategy is registering cannabis-related goods in states where
recreational cannabis is still illegal – then later extending
the trademark to goods that contain cannabis once it is inevitably
legalized in that state. This strategy draws on trademark law’s
“zone of expansion” doctrine.

The “zone of expansion” doctrine allows the first
applicant to file and receive trademark protection in any product
line to have priority over an intervening user in a new product
line – so long as expansion between the two product lines is
considered “natural.” This is because trademark
protection extends to products that customers reasonably expect the
trademark owner to later sell and expand into (i.e., the
“natural zone of expansion”). Thus, some cannabis
companies sell CBD products, cannabis-related apparel
(i.e., made from hemp and/or displaying cannabis-related
graphics), and smoking accessories—and use these marks at
trade shows and business conferences to build a foundation for
their trademark, which will later encompass their cannabis products
once legalized.

Using USPTO Filing Procedures and Loopholes to Gain
Priority for Federal Trademark Registration

There are other strategies that cannabis companies can take
advantage of, at the federal level, that are higher-risk and more
aggressive—but the risk may be rewarded. For instance,
cannabis companies can file an intent to use (ITU) application,
which allows an applicant to secure its place in line without
having to actually use the mark in commerce. After an ITU
application has been granted allowance, the applicant has six
months to file a statement of use, transforming the ITU allowance
into a federal trademark. Significantly, ITU application can be
extended for three years. So, a cannabis company can file an ITU
application now, declaring that cannabis-related goods and services
will be lawful, and then hope that the statement becomes true
before the three-year window lapses. Notably, certain federal
lawmakers have continued to signal that legalization is on the
horizon, so a cannabis company would have an incentive to file such
an application soon – given the lengthy timeline of
examination/extension. If timed successfully, this tactic would
confer a considerable head start to cannabis companies seeking
nationwide, federal priority for their cannabis trademarks.

Alternatively, yet similarly, cannabis companies can apply for
federal trademark registration, wait for an “Office
Action,” respond, wait for a “Final Office Action,”
and then, before the final response is due, refile the application
to keep the application going (indefinitely). This would also
confer priority over competing marks.

These tactics (and others like them) are just a few ways to
ascertain widespread trademark protections, even though cannabis
trademarks receive varying treatment throughout US jurisdictions.
Competent trademark counsel can make all the difference when
navigating through these murky areas of the law.

The trademark landscape in the context of recreational cannabis
remains murky and riddled with pitfalls for unassuming business
owners. That is why it is important to hire attorneys with
trademark experience who know the cannabis industry and how to
navigate its thorny trademark issues. For any questions relating to
the subject matter of this article, contact Mark Jotanovic or Kory
Steen at Dickinson Wright PLLC.

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.

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