RegTech

Illegal Goods/Services Cannot Obtain Trademark Protection in the United States Patent and Trademark Office.

Trademark Fundamentals : On the most basic level, a trademark is a source identifier; when a consumer sees a name, logo, or slogan sold in conjunction with a good/service, the consumer immediately recognizes the source company, which is selling that product. The computer giant, Apple, is an excellent example of a company that powerfully employs its trademarks to build brand trust and confidence. When a consumer sees the Apple symbol on a laptop he/she (likely) believes that the computer is a quality product merely by virtue of the fact that the computer has the Apple logo on it. Such brand identification is truly the essence of trademark law.

Perhaps one of the most misunderstood features of trademark law is the Use in Commerce requirement.  The idea is that a trademark is not merely a name, logo, or slogan; if this source identifier is not used in conjunction with the sale of a good or service, it is just a catchy piece of creative work and not a bona fide trademark subject to the protections of the Lanham Act and the USPTO. Thus, critically, trademarks must be tethered to goods/services, which are sold in interstate commerce – if the good/service is only sold within a given State and not across State lines, it cannot obtain Federal Trademark Protection.

Trademarks Cannot Be Attached to Illegal Goods/Services

Goods and services that are illegal, at least on the federal level, are not eligible for trademark protection and will with near certainty receive an Office Action rejecting the application. A trademark must be used lawfully in interstate commerce to qualify for federal trademark protection and thus, even if a given State has legalized a particular good, the USPTO would not allow a trademark to register in conjunction with that good if its sale is federally prohibited.

An area of trademark law that is evolving rapidly involves trademark rights related to Cannabis. Presently, the Controlled Substances Act (CSA) outlaws the manufacture, distribution, or possession of particular controlled substances, including cannabis and cannabis-based preparations. Moreover, under the CSA, it is illegal to sell, offer for sale, or operate any facility of instate commerce to transport drug paraphernalia. It is therefore impossible to procure a federal trademark registration for a mark related to marijuana, marijuana strains, pipes and bongs explicitly designed for use with for marijuana, and/or any other ostensibly marijuana related good/service.

Cannabis Trademarks Are Impermissible: No Speculation Needed

The USPTO ruled and the Trademark Trial and Appeal board (TTAB) confirmed that trademarks related to cannabis use cannot be granted since those goods are prohibited by federal statute (See In re PharmaCann LLC, 123 USPQ2d 1122 (TTAB 2017)). In Pharma Canna, the trademark application identified, “retail store services featuring medical marijuana” and “dispensing of pharmaceuticals featuring medical marijuana” as the goods and services to be covered under the trademark. Despite the applicant’s alleged bona fide intent to use the mark with the goods (superficially addressing the Use requirement), the USPTO concluded that the applicant could not allege a bona fide intent to make lawful use of the trademarks because the distribution of cannabis, a controlled substance, is illegal under the Federal Controlled Substance Act.

Cannabis Trademarks: Back Door Strategies

As a branding strategy, companies will very often sell apparel (hats, t-shirts, sweatshirts) tagged with a company name/logo to market their products.  As this pertains to cannabis companies, it may very well be worthwhile to sell a product that does not violate the CSA (like a t-shirt) and apply for a trademark company name under the goods “Apparel”.  This would enable the company to at least procure a trademark on its name, albeit for a lesser good/service.

An additional strategy for cannabis companies is to pursue State Trademarks, which are not bound by the same federal trademark prohibitions restricting goods and services that are federally illegal. Indeed, trademark registration for cannabis goods and services may be pursued in States friendly to cannabis use (Michigan, Colorado etc.) and while these State Trademarks do not cover the mark across the entire United States, they will at least provide a base level of protection in these particular States. 

Abe Cohn is an attorney at Cohn Legal, PLLC, a law firm designed specifically to provide a boutique experience for entrepreneurs. 

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