Creative Solutions in Trademark Law and the Cannabis Industry
By: Sam Mendez, Strategic Legal Counsel at Cultiva Law
Our previous post covered trademark basics. Below we cover additional concepts such as those that make your trademarks “strong” and “weak,” as well as explore applications to the cannabis industry.
I. Four Types
Trademarks are generally divided into four categories: (1) fanciful or arbitrary, (2) suggestive, (3) descriptive, and (4) generic.
- Fanciful or arbitrary: the strongest of the four, fanciful words are invented for the mark itself, and arbitrary words already exist but have no association with the protected goods. Examples of fanciful words include Kodak or Zillow. Apple is another classic example of an arbitrary mark, as there is no association between computers and apples.
- Suggestive: Not as strong as fanciful or arbitrary marks, but still strong; these marks do not specifically describe the mark, but one can make a reasonable connection between the mark and the protected goods. Coppertone is a good example: it implies the outcome from using the product, that is, a copper-like tone of one’s skin when using sunscreen.
- Descriptive: These marks may be unprotectable, so it is a best practice to avoid using descriptive marks. These marks describe the actual goods, such as Sharp televisions, or International Business Machines, Inc. The latter––IBM––is an interesting case: it began as a descriptive mark, but due to the company’s success and the secondary meaning (see below) achieved by the term “IBM,” IBM is now considered a suggestive mark.
- Generic: These terms are not protectable because they are common terms used to describe the goods. For example, a person could not trademark “Computer” for computers (though, one could sell “Computer”-brand apples) or “Hot sauce” for sauces. Additionally, some terms originated as protected marks, but they became so ubiquitous that they’re now generic and are afforded no Trademark protection, such as escalator and aspirin.
The policy behind why (3) and (4) are weak while (1) and (2) are strong is such: Trademarks exist to identify and differentiate goods from each other. For example, consumers would have a difficult time knowing whether they were buying a business computer or a Business Computer™, and businesses would also be stymied in selling computers if commonly used words were “taken.”
With respect to trademarks, do not be afraid to be creative. In the cannabis industry, plenty of “Mary’s,” “Mary Jane’s,” “Kush,” “Bud,” and similar brands exist, which are commonly used cannabis terms. These are weak marks––and potentially unprotectable––precisely because they are common or descriptive. It is a best practice to make up words, or to apply a completely arbitrary term, to your business.
II. Secondary Meaning
Every business should seek to achieve secondary meaning, which means consumers have come to recognize your mark not just for the product it represents, but also as the source of the products as well, i.e. the business. This is especially valuable when goods are difficult to distinguish among brands, such as cannabis, because most cannabis consumers do not have much knowledge or information when deciding to buy Product A, B, or C.While product labeling regulations enable consumers to purchase cannabis based on its THC content, CBD content, price, and other factors, cannabis companies cannot differentiate themselves from other companies purely based on these factors. If consumers grow to like and trust a particular brand, that brand is going to sell. And once a company can charge based on its brand, the company is going to find itself with some serious cash.
Look at five different hotel rooms and you will probably have a difficult time applying a hotel brand to a particular room. But if a consumer associates “Motel 8” with affordability or “Hilton” with quality, then the consumer will patronize that hotel purely because of that association. The brand has achieved something of value beyond the goods itself: secondary meaning. If a consumer trusts that Apple produces exceptional computers, then they may trust Apple to produce exceptional phones and watches as well. People pay more––a lot more––for a computer purely because it’s an Apple product and they trust Apple has done a good job. That’s why Apple is the world’s most valuable brand.
III. Cannabis & Trademark Law
Our trademark-basics post explained that federal trademarks are generally stronger than state marks: they cover the whole country, involve a more rigorous application process, and provide greater protection. But federal law prohibits trademark protection for illegal goods. Cannabis is still a Schedule I narcotic under the Controlled Substances Act, so any business producing or selling cannabis is still illegal under federal law. In the same vein, any trademark application for a cannabis product will be denied by the U.S. Patent and Trademark Office (USPTO). Cannabis businesses are thus either stuck with state trademark protection only, or are forced to find a workaround.
Some businesses choose to obtain federal trademark protection for their logo, as used on legal goods––sweatshirts, for example––with the hope that owning that mark will provide some federal, or otherwise stronger, protection for their cannabis goods. It is questionable whether this theory will hold up in court––the court has not yet been given the opportunity to decide the issue and come to a conclusion one way or the other. But industry participants should understand that, as far as the USPTO is concerned, a brand will be protected only with respect to the class they apply for. That is, a licensee who obtains federal trademark protection for his or her mark used on sweatshirts, then he or she can only enforce these rights for the mark on sweatshirts, and perhaps other related clothing goods.
This workaround offers some clear advantages: First, it builds a client’s brand. Clients can also form a company that will own the brand, and license the brand to your business that sells cannabis, having an entirely separate company selling sweatshirts. The brand would be protected at the federal level, just not with respect to the actual cannabis product. Second, the client has the mark ready-to-go so that if, or when, cannabis is legalized at the federal level, the client will be well positioned to apply for federal trademark protection with respect to their cannabis product(s), because the brand is already trademarked for sweatshirts. Third, filing a federal trademark only costs $225––a small price to pay for potential protection, even if it is questionable.
Keep in mind that the USPTO will refuse marks for “Immoral and Scandalous Matter,” and cannabis fits squarely in this category. So forget about your pot-leaf trademark. it wouldn’t be that strong of a mark anyway because it is not unique, remember (see Section I, above)?
IV. Maintaining Your Mark
Registering a trademark is only the first step. Trademark protection is good for five years, generally, but owners must continuously use that mark or risk it losing it. Your mark will have to be renewed after the five years are up. Perhaps most importantly, if you see other people using your mark, or a mark that is confusingly similar, it is in your interest to protect your mark. This may be done with a simple cease and desist letter, or through litigation if the infringement is serious enough. If you allow others to use your mark, it is fine in principle, but make sure you establish a written licensing agreement between the parties with strong and clear language stating you own the mark and that the licensee will not misuse or dilute the mark, among other things.
In closing, trademark issues can be invaluable for businesses, but they are aksi complex. Contact us, or an attorney that is well versed in trademark and cannabis laws, to create the best plan for your portfolio.
