Trademarks and Cannabis

The cannabis industry is like the Wild, Wild West out there, guys.  Except the rest of society, that is interacting with and affected by these Cannabis Cowboys, is bound by all the regular rules of modern day society.

See example 1: Deadmaus Vape Suit

See example 2: Hershey’s Edible Suit

And this is a problem that, in my opinion, the federal government has created and perpetuated by not keeping up with the pulse of modern day society.

So, a couple of things: there are “common law” trademark rights – the rights created by simply using your brand out in the world (limited in many ways); state trademark rights – the rights and presumptions conferred by registering your brand with your state (limited, but less limited than common law trademark rights); and federal trademark rights – the rights and presumptions conferred by registering your brand with the United States Patent and Trademark Office (in many ways, most expansive).

The USPTO refuses to grant federal trademark rights to cannabis industry companies because they state that the cannabis industry is not “in lawful use in commerce.”

An opposing counsel told me that it was “just stupid” that a cannabis industry client had attempted to register their trademark with cannabis in the description, knowing full well that cannabis-related trademarks are being denied registration.  But is it stupid?  Let’s break this down.

It seems that the current standard for many trademark attorneys dealing with cannabis industry clients is one of three things:

  1. Refuse to apply for the federal trademark for the client;
  2. Attempt to be as vague as possible in the description; OR
  3. Register surrounding products – t-shirts, hoodies, accessories, etc.

First one…

Pros:

For me, the pro is that I don’t expose myself to liability.  For the client, he or she doesn’t spend money in the short term for, potentially, less effective trademark registration protection or rejection.  The client is creating some trademark rights just by existing, after all, and can also get state trademark protection.

Cons:

Client may end up spending 10 times as much on litigation if there is infringement or if they have to change their name for some reason.  They have fewer options for asserting and policing their rights.  The client has to engage in state-by-state trademark protection strategies as they expand with the risk that someone else will trademark the same thing in the next state or will start a business with the same name in the next state.

I lose the opportunity to help someone and bring another into the Lawyer-Human fold.

Second one…

Pros:

The client establishes, on record, that they are trying to get a federal trademark registration and they might be allowed to get said federal trademark registration if the United States Patent and Trademark Office doesn’t look too closely.

Cons:

They will most likely have their application rejected.  Trademark Examiners aren’t dumb.  They will look at your website.  Then the client is in the position of #1, but also out a few hundred dollars at least.

Side note: It’s best not to commit fraud on official federal documents so by “vague,” I don’t mean “lie.” Not that that doesn’t sometimes happen…

Third one…

Pros:

The client will probably receive at least one federal trademark registration!

Cons:

It’s not for the thing that the client is actually making the most money selling. And since that thing is not protected, it is open to potential infringement.  Just your hoodies and/or rolling papers are protected (or whatever paraphernalia/swag you sell).

OR, how about you guys (USPTO) stop wasting our time with these ridiculous formalities that people are trying to circumvent and clog up the trademark office with and just get with the times, huh?

But in reality, there is my approach (sometimes)…

Apply for the thing that you are selling and making money with for your federal registration AND apply for name reservations or state trademark registrations on a state-by-state basis.  Granted, I don’t work with people attempting to trademark strain names.  I work with people in the product space.

Pros: It covers all of the clients’ bases.  The thing you are actually selling and building a business on is being applied for.  The client is not committing fraud.  Once the Trademark Office opens its eyes to the reality that weed isn’t going away, the clients’ mark will be in line.

Cons: It’s more expensive.  It’s a lengthy process and is the “long game.”  The trademark WILL get rejected.  We will appeal it until we can’t anymore.  However, if someone is infringing on my clients’ trademarks, they have been establishing their rights in the space in which they operate from the get-go.

Is it really worse than the others?  I don’t really think so, but…as they say, there are many ways to skin a cat.  Plus, it may not be right for every client.  That’s the thing about being an attorney…we get to present our clients with options and advise them based on who they are and what they want to achieve.  Each client’s risk tolerance and goals are different.  Go figure.

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