Tread Carefully

[dropcap class=”kp-dropcap”]A[/dropcap]s an intellectual property and business lawyer practicing in the cannabis space, I pay close attention to legal trends within the industry. In particular, as the industry continues to grow, so too does the amount of cannabis litigation making headlines. The recent increase in cannabis-related intellectual property lawsuits specifically provides some great examples for my clients of what not to do when choosing a brand for their company. The last couple of years have provided a couple of big-name cannabis trademark lawsuits, including the Gorilla Glue dispute and the Tapatío Foods lawsuit.

More recently, the United Parcel Service (UPS) sued a group of cannabis delivery companies for trademark infringement. The lawsuit was filed in the U.S. District Court for the Central District of California on Feb.13, and alleges trademark infringement against United Pot Smokers, UPS420 and THCPlant, all of which market and sell cannabis products. These companies, according to the complaint, offer delivery and logistics services via the websites www.upsgreen.com and www.ups420.com.

In its complaint, UPS accuses the defendants of infringing its family of trademarks, which includes its famous shield logo, and states that the defendants “intended to capitalize off UPS’s extensive goodwill and reputation.” UPS allegedly sent multiple cease and desist letters to the defendants, which were unwisely ignored.

“When you choose a mark as a “parody” of an existing brand, chances are you’re actually infringing a registered trademark, and possibly diluting a famous mark, which is exactly what is alleged in the UPS case.”

The lawsuit includes claims for trademark infringement, trademark dilution, false designation of origin, deceptive advertising and unfair business practices. It includes a request for damages, an end to defendants’ infringement and control over defendants’ websites.

In addition to the UPS case, a trademark-related dispute has recently arisen involving the Harvest dispensaries in San Francisco, California and Harvest Dispensaries Cultivation & Production Facilities, LLC, based out of Arizona. The Harvest dispute involves both state and federal trademark issues, and it illustrates the complexities of trademark litigation in an industry that is divided and contained along state lines and lacking access to complete federal trademark protection.

This recent increase in litigation makes it very clear that cannabis companies are not immune to trademark infringement claims and must choose brands that do not infringe the rights of third parties, including third parties outside of the cannabis industry.

In assessing whether one mark is likely to be confused with another to prove trademark infringement, a court will consider the following factors, which should also be considered by business owners when choosing a brand of their own (AMF Inc. v. Sleekcraft Boats):

• Strength of the mark
• Proximity of the goods
• Similarity of the marks
• Evidence of actual confusion
• Marketing channels used
• Type of goods and degree of care likely to be exercised by the purchaser
• Defendant’s intent in selecting the mark
• Likelihood of expansion of the product lines

The two most basic factors recommended to cannabis clients involve an evaluation before they select a brand. First, is your mark similar to or the same as an existing mark? Second, are you intentionally “riffing” off an existing brand? Parody is not a defense to trademark infringement that will typically fly in a commercial setting. When you choose a mark as a “parody” of an existing brand, chances are you’re actually infringing a registered trademark, and possibly diluting a famous mark, which is exactly what is alleged in the UPS case. And the fact that you knew of the senior trademark would absolutely play against you in litigation, as your infringement would be deemed willful.

These two factors are only the beginning of the analysis. There are instances where similar, or even the same brand names can coexist if the goods those brands are used on are completely different and marketed through separate channels to disparate groups of consumers. The analysis for likelihood of confusion can be quite complex.

Before adopting a new brand name, consult with an experienced trademark attorney and have them perform a trademark clearance search to ensure your brand won’t be infringing any existing registrations. And of course, a bit of basic common sense goes a long way—if by using a particular mark you stand to benefit from the goodwill of an existing brand, it may be wise to rethink your trademark strategy.