Cannabis & Intellectual Property

Last
month’s Legal Corner discussed how cannabis businesses are seeking to establish
national cannabis brands through franchising and licensing agreements. However,
once a company has spent considerable time and money to distinguish itself, it’s
crucial to consider how to further protect your cannabis brands, products and
logos. Unfortunately, the current schism between state and federal laws
regulating the cannabis industry continues to create barriers for legitimate
cannabis and cannabis-infused products, particularly when it comes to the idea
of a company’s intellectual property.

For
a short period in April 2010, it seemed like the U.S. Patent and Trademark Office
(USPTO) had opened its doors to companies seeking trademark protection for cannabis
brands. The federal agency announced that it had created new trademark category
for medical cannabis. Sadly, this category was short-lived and was eliminated
approximately three months later. The USPTO cited cannabis’ illegal status
under federal law. Because the sale of cannabis remains illegal under federal
law, the sale of cannabis cannot be lawful in interstate commerce, which is a basic
prerequisite for federal trademark and therefore, the category was quickly
eliminated. However, that hasn’t stopped applicants from applying for
trademarks, particularly after Colorado legalized cannabis for recreational
use. The majority of applicants were denied because the applications were in
connection with goods that were not “in lawful use” in commerce. However, some
applications were approved wherein the goods and services focused on
information about cannabis. These applications were accepted because the USPTO
distinguishes between “how-to” services and those that are for informational
purposes only.

Companies
entering into the massive market for medical and recreational cannabis can
still protect their brands despite the uncertain trademark environment. A
fundamental principal of trademark law is that trademark rights are obtained
through use. This is known as common-law rights. Companies can begin to
establish trademark rights simply by using their logos on their goods. After a
business comes up with a distinct trademark, it’s important to engage in a comprehensive
search of state registries, common law databases as well as the Federal
Registrar to make sure the brand or mark doesn’t already fall under trademark
protection. If someone else is already using a similar mark and it is for
similar goods such that it would cause confusion among consumers, your use of
the mark, symbol or logo can be blocked. It’s important to be aware that common
law rights are only as broad as the geographical scope of their use. This
geographical limitation can cause complications when a business wishes to
expand. It will be important to make sure that there are not any prior rights
in that new area.

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Under
the current laws, federal registration will not possible until such a time that
the use and sale of cannabis is legalized by the federal government. However, cannabis
laws and regulations are constantly evolving and a business owner could elect
to file an intent-to-use federal trademark application. Filing such an
application gives the applicant a priority date as of the application date. The
filing-date priority does not become effective until you use your mark and a registration
issues. This can prove helpful in protecting a brand because those who encounter
a pending application while conducting their own trademark search may decide to
avoid potential infringement issues down the road. Taking all steps possible to
maximize the protection of your cannabis brand will prove fruitful as the
industry continues to grow, expand and gain national acceptance.