Is There A Cannabis Trademark Gold Rush?

USPTO opens door to CBD trademarks as the market booms

The more brands that enter a given market, the more important their trademarks become. In the booming legal cannabis market, however, registering a trademark at the U.S. Patent and Trademark Office remains a dodgy proposition as marijuana remains generally illegal under federal law. 


But as the cannabis industry saw at the end of 2018, the federal government is making an exception for hemp products, and federal trademarking will follow suit.

Last month the USPTO confirmed it is indeed opening the door to federal trademarks for some cannabidiol and hemp-derived products. The Farm Bill of 2018, enacted December 20, is best known for removing hemp from the list of Schedule 1 drugs under the Controlled Substances Act. The bill defined hemp as a cannabis sativa-derived product with a delta-9 tetrahydrocannabinol concentration (THC) of no more than 0.3%.

The USPTO’s May 2 guidelines clarified that cannabis trademarks will be eligible for trademark registration if they’re for goods and services that aren’t regulated by the U.S. Food and Drug Administration and don’t fall under the CSA’s definition or marijuana.

The guidance comes as the USPTO is already receiving thousands of trademark applications, with varying chances of success, in the cannabis space.

“Over the past 18 months we’ve seen a great increase and demand for trademarks” as more companies are taking more cannabis products to market, said Garrett Graff, managing attorney of Hoban Law Group in Denver. Graff’s firm specializes in cannabis law, and he estimates more than half of its clients are seeking help with trademarking or other IP issues.

 

The USPTO was granting some hemp-derived product trademarks up until 2017, when the office reversed course and generally rejected any cannabis-related marks, Graff said. “But in light of the Farm Bill, it seems the door has been reopened there,” he added.

While he wouldn’t call it a “land grab” of companies registering whatever federally lawful CBD or hemp marks they can at the USPTO, Graff said lot of them are moving quickly to protect their brands in that space.

Some barely waited a day after the Farm Bill was signed, according to intellectual property attorney Justin McNaughton, senior counsel at Greenspoon Marder in Nashville, Tennessee.

“We’ve had a number of clients that we’ve actually filed a bunch of these trademarks for on Dec. 21,” McNaughton said. He added that while they were for products that would be considered lawful under the bill, it wasn’t clear at the time how the USPTO was going to respond to those trademark applications.

But with its May 2 guidance, now it’s clear that the USPTO will allow a federal trademark for a cannabis product with a THC content of 0.3% or less, as long as it’s not ingestible. That leaves ointments, oils and topical creams and other substances not in the domain of the Federal Food Drug and Cosmetic Act. “[E]ven if the identified goods are legal under the CSA, not all goods for CBD or hemp-derived products are lawful following the 2018 Farm Bill,” according to the guidance. “Such goods may also raise lawful-use issues under the [FDCA]” — such as CBD in foods or dietary supplements that the FDA is still clinically investigating.

“Keep in mind that the USPTO  guidance is really for its own examiners,” McNaughton said. What those marching orders to examiners will mean for actual trademark applicants, however, isn’t clear cut.

More Brands, More Demand

The USPTO is receiving a glut of trademark applications classified for cannabis products or services. The office is funneling these particular applications to only a couple examiners at the most, McNaughton said, and they’re taking longer than most other trademark classifications to review.

But the demand is understandable — federal trademarks will be pivotal to the national growth of cannabis companies. For years, companies have been able to register for state trademarks in Colorado and many other marijuana-legal states, and they’re relatively inexpensive to get, McNaughton said. A small cannabis company might have been content to operate in Colorado with little regard for what brands were on the market in Oregon. But now that many of these companies are expanding and more markets are opening up across the U.S., they’re finding difficulty entering states where there’s already a confusingly similar brand.

“Right now you can’t throw a rock without hitting a CBD company,” McNaughton said.

By registering a federal trademark, a Colorado CBD company wouldn’t preclude the Oregon brand from using a similar one, but it would restrict the Oregon brand’s growth. McNaughton uses the Burger King example: when the restaurant franchise, which originated in Florida, expanded into Illinois, it ran into another “Burger King” restaurant that was already doing business under that name and had an Illinois state trademark for it. But the Florida Burger King held the federal trademark, giving it priority over the smaller Illinois business. As a result of their litigation in the ’60s, the Florida Burger King had the rights to the name everywhere in the U.S. except for a 20-mile radius of its competitor in Mattoon, Illinois. But the Illinois Burger King couldn’t use the name anywhere else.

“That’s why you have this fight over federal trademarks,” McNaughton said. “You can cut off everybody else’s rights for expansion.” Trademark disputes among cannabis companies are already heated, with parties wanting to enforce their IP over state lines even if it turns out they actually can’t currently. There will be fights over cannabis brand names for years to come, McNaughton said.

A Wider Pathway for Cannabis Marks

In April, the FDA announced it was exploring “potential pathways for dietary supplements and/or conventional foods containing CBD to be lawfully marketed; including a consideration of what statutory or regulatory changes might be needed and what the impact of such marketing would be on the public health.”

People in the cannabis industry, and those merely interested in entering it, thought the world would change the day after the Farm Bill was signed, Graff said. 

That hasn’t been the case exactly. “In reality you have a bureaucratic government that’s going to take time in rolling out policy,” he said.

The wheels of bureaucracy are slowly turning as the FDA mulls new rules and regulations regarding CBD and hemp-derived products. Graff spoke at the FDA listening session the agency held in Washington, D.C., on May 31. 

“We do not yet have any interim guidance from them, and there isn’t any timeline for that,” he said.

More regulatory change in the hemp space is coming from the FDA, and the USPTO is expected to again follow suit.

—Doug Chartier

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