Cannabis/Marijuana Trademarks: What's the ETA?

What’s the ETA on Cannabis TMs?

                As of the date of this article, a total of 33 states, the District of Columbia, Guam, Puerto Rico and the U.S. Virgin Islands have legalized the use of medical marijuana within their jurisdictions.[i] Florida ranks among one of these thirty-three states, having passed comprehensive legislation, embodied in section 381.986 of the Florida Statutes, addressing the use and regulation of medical marijuana.[ii] Of the 33 states that have legalized medical marijuana, 11 of them have also legalized the recreational use of marijuana for adults over the age of 21.[iii] CBD use, meanwhile, is legal in all 50 states with the exception of Idaho, Iowa, and South Dakota.[iv] With these figures in mind, then, what’s to blame for the hold-up of so many federal trademark applications filed in connection with CBD and cannabis products?

                At its root, the source of the problem is quite simple. The United States Patent and Trademark office (“USPTO”) may only issue trademark registrations for goods and services that may be lawfully used in commerce. “[T]he goods or services to which the mark is applied, and the mark itself, must comply with all applicable federal laws.”[v] What happens when federal law prohibits use of the subject goods, but state law permits it?

                The short answer is that the federal law’s prohibition will trump the state law’s legalization of the exact same product. Pursuant to the Supremacy Clause of the United States Constitution, federal statutes and regulations supersede state statutes and constitute the “supreme Law of the Land.”[vi] An examination of the federal statutory framework is, therefore, necessary to determine the federal government’s stance on use of marijuana products.

                Traditionally, the Controlled Substance Act (“CSA”) has classified marijuana as a Schedule I drug, with the term “marijuana” encompassing “all parts of the plant Cannabis sativa L., whether growing or not; the seeds thereof; the resin extracted from any part of such plant; and every compound, manufacture, salt, derivative, mixture, or preparation of such plant, its seeds or resin.”[vii] Because the CSA criminalizes the manufacturing, distributing, dispensing, and possessing of marijuana, the USPTO has traditionally rejected applications for trademarks associated with goods or services that encompass marijuana or CBD.[viii] As an extract of the marijuana plant, CBD falls within the scope of the CSA’s definition of marijuana.

                Recent legal developments, however, have removed “hemp” from the CSA’s definition of marijuana, which means that cannabis plants and derivatives such as CBD that contain no more than 0.3% tetrahydrocannabinol (“THC”) on a dry-weight basis are no longer controlled substances under the CSA.[ix] In other words, their use is now entirely legal. If an applicant selling goods or services falling within this category of newly legalized products had originally filed a trademark application prior to December 20, 2018, then there are several amendments the applicant will have to make to avoid refusal of the application. First, it will have to revise its identification of goods and services to specifically include language to the effect that the particular product contains no more than 0.3% THC on a dry-weight basis. Second, it will have to amend the filing date of the application to December 20, 2018. Third, if the application was based on use of the trademark in commerce under section 1(a) of the Trademark Act, then it must be amended to an intent to use under section 1(b).[x] Failure to make the foregoing amendments may lead to refusal of the trademark application by the examining attorney or abandonment of the same at the option of the applicant.

                For applications filed after December 20, 2018, only the first amendment noted above will have to be made, provided that there are no other outstanding issues with the application as determined by the examining attorney.

                Notably, this change in the law has no effect on the illegality of food products and other consumables containing CBD. “[R]egistration of marks for foods, beverages, dietary supplements, or pet treats containing CBD will still be refused as unlawful under the [Federal Food Drug and Cosmetic Act, (“FDCA”)], even if derived from hemp, as such goods may not be introduced lawfully into interstate commerce.”[xi] “This is because both CBD and THC are active ingredients in FDA-approved drugs and were the subject of substantial clinical investigations before they were marketed as foods or dietary supplements. Under the [FDCA], [it is] illegal to introduce drug ingredients like these into the food supply, or to market them as dietary supplements.”[xii]

               What about trademarks used in connection with medical or recreational marijuana? By definition, a drug classified as a Schedule I drug under the CSA is one that, “has no currently accepted medical use in treatment in the United States.”[xiii] As such, although various states have legalized the medical use of marijuana based on findings that it does have medicinal properties, the CSA’s classification takes precedence over that of the states’.

               Oftentimes, confusion arises among business owners who have confirmed the legality of medical or recreational marijuana in their state, but who are nevertheless told that they are unlikely to be granted federal trademark registration for their mark due to cannabis’ continuing illegality under federal law. This confusion is even more justified in light of the fact that Congress has temporarily prohibited the Department of Justice from expending funds to prosecute individuals who have complied with state law, i.e. individuals who use or sell medical or recreational marijuana in a state where doing so is legal.[xiv] It seems incongruous for the USPTO, an arm of the federal government, to refuse trademark registration of marks used in connection with goods and services, the prohibition of which is not actively enforced or prosecuted by another arm of the federal government. Although this scenario is admittedly contradictory, courts have been unwilling to side with frustrated business owners who operate their businesses in full compliance with state law. Aside from citing the supremacy of federal law, many courts have supported their rulings using the following rationale:

               Congress currently restricts the government from spending certain funds to prosecute certain individuals. But Congress could restore funding tomorrow, a year from now, or four years from now, and the government could then prosecute individuals who committed offenses while the government lacked funding. Moreover, a new president will be elected soon, and a new administration could shift enforcement priorities to place greater emphasis on prosecuting marijuana offenses.[xv]

               In other words, courts simply cannot rely on the transient nature of politics to support an albeit anticipated change in the law. “[The USPTO] must determine the eligibility of marijuana-related marks for federal registration by reference to the CSA as it is written, not as it might be enforced at any point in time by any particular Justice Department. The CSA in its current form makes Applicant’s intended uses of its marks unlawful, and its marks are thus ineligible for federal registration.”[xvi] In order to prevent outright rejection of trademark applications for CBD and cannabis products, many Examining Attorneys have delayed in issuing Office Action responses for these applications pending clarification of the foregoing federal issues.

              Where does that leave business owners seeking to protect their valuable brands? As an initial matter, common law trademark rights provide a layer of protection to trademark users without the need for filing a federal trademark application. However, the added protections that federal registration confers on trademark owners, such as the exclusive right to use the mark on or in connection with the goods/services listed in the registration, are well worth the wait. Accordingly, business owners should consider filing a federal trademark application to preserve their priority of use with respect to their mark, even where a response from the USPTO might take longer than usual. In the end, trademark owners just might come out on the winning end of the federal waiting game.

For trademark issues related to the foregoing goods and services, feel free to contact Johnson | Dalal at (954) 507- 4500 and ask to speak to one of our qualified attorneys at no charge.  We look forward to answering any questions you may have.