Planting the Seeds for IP Protection of Marijuana Brands

By Jonathan M. Purow

Originally published on Law360 website in December 2015.

There is little question that there is a sea change occurring regarding the legalization of marijuana. A majority of Americans are now in favor of its decriminalization, and four states (and the District of Columbia, subject to the approval of Congress) now permit recreational use of the drug. Only 22 states prohibit the drug under any circumstances. Billions of dollars are being invested into the marijuana industry, tens of millions of dollars are being raised by states taxing its legal sales, and with all that money comes questions about the best means to protect intellectual property in marijuana brands and their related products.

Intellectual Property Protection for Marijuana-Related Products

It has traditionally been possible for applicants to obtain trademark protection for marks that relate to marijuana products. As can be expected, the number of applications that include the term “marijuana” in the goods and services description has risen from 20 in 2012 to 200 apiece in 2014 and 2015. The number of trademark registrations that similarly incorporate “marijuana” in the goods/services description has risen from 12 in 2013 to 33 in 2015. These registrations would be especially appealing if they gave their owners the ability to protect a related marijuana brand (under the theory that the owners could expand their services from tangential products to marijuana itself), but this question won’t be resolved until disputes actually result in litigation and case law. Business owners have been able to obtain trademark or patent registrations for products that can be used either for marijuana or tobacco, such as smoking devices, without issue.

Intellectual Property Protection for Marijuana and Specific Brands

There are many strains of marijuana that were developed over the years that marijuana was completely illegal in the U.S., and more have been developed since in the states where it is now legal. These different strains have tailored effects, and there is no reason to expect that they won’t develop the same consumer loyalty as brands of cigarettes or other products. Conversely, preexisting brands and personalities are branching into the legal marijuana trade. For example, Bob Marley’s family, Tommy Chong, and Willie Nelson are already, or will be, selling their own brands of marijuana. The current issue is that there is no ideal manner to protect these brands, certainly not while marijuana is illegal federally. Federal trademark applications for marijuana are generally denied on the basis that they are barred by the Controlled Substances Act because marijuana is a Schedule I illegal drug, and otherwise have been denied on the basis that such applications violate Lanham Act §1052 (a) (which bars registration for immoral or scandalous materials).

Regardless of the inability to register federally, it is still important for a marijuana brand owner to conduct a pre-use comprehensive trademark search covering websites, business names and state trademark registrations (and not just a search of the federal trademark database) to ensure that they are not adopting a brand name that is identical or confusingly similar to one already in use by a third party. As with any other industry, it would be very damaging for a marijuana business owner to invest time and money into a brand name, only to receive a cease-and-desist letter from a third party with superior trademark rights.

So what alternatives are there for businesses seeking to protect their proprietary brand of marijuana in states where it is legal for medical and/or recreational use? The first option is to register the mark as a trademark with specific states. State registrations are also typically cheaper, so a state-by-state protection model could be feasible provided that the brand is actually in use in each state in which it is registered, as only a few states have the equivalent of a federal intent-to-use application. One drawback is that a state trademark only protects the rights to that trademark in that specific state, so it provides no protection if the brand expands into the state next to it, even if marijuana is legal there as well.

The next question is which states actually permit registration of marijuana brand names, considering how many states have now either legalized medicinal and/or recreational use. Only 22 states declare that marijuana possession and sales are illegal and prohibited entirely, including for medical usage. If a business could get a trademark protection in 28 states based on use, it would be evidence of the owner’s intent to protect the brand nationwide despite the impediments at the U.S. Patent and Trademark Office. There does not appear to be any resource that has researched on a state-by-state basis whether marks for marijuana brands can be registered as trademarks. The potential difficulty with state registration is that 47 of the 50 states have their own equivalent of the morality clause codified in the Lanham Act §1052 (a), which could be used as a basis to deny such applications.[1] It would be difficult to determine which states would accept such applications without actually trying to register a trademark in a marijuana brand name in each state, as few states possess a trademark database that permits searches customizable to the same extent as those that can be performed on the federal trademark database.

In states that do permit registrations for marijuana brands, one large issue is how to prevent businesses from gaining an unfair competitive advantage through the registration of trademarks in generic terms for marijuana, cannabis species or certain “famous” strains. It is accepted trademark doctrine that plant species are generic because consumers need to be able to describe the specific plant that they are attempting to purchase.[2] However, the examination procedures of the trademark offices of various states are not as thorough as those of the USPTO, so the state offices cannot be relied upon to block applications for generic or descriptive terms. The ultimate determination of whether or not such a marijuana brand name trademarked by a state is valid, or impermissibly generic or descriptive, would rest with the courts if the matter came to litigation.

Common law rights are the most natural means of gaining protection in a marijuana brand name, but it has to be stressed to a client that he/ she must maintain detailed records to protect themselves in case of a future dispute. The client should keep records detailing the first date of use of the brand on every single product, as well as samples on a continuous basis for each product going forward. Any arguments that common law rights protect a zone of expansion are dead in the water if the next state over deems marijuana use illegal.

Another potential protection option, if a business is specifically looking to protect the logo for its brand, is copyright protection. A number of large companies protect their logos with copyright law in addition to trademark law, provided that there is a sufficient level of originality in the logo. The Controlled Substances Act is not a bar to a copyright registration, as it is with federal trademark registrations. The registration of a logo with the Copyright Office would have the added benefit of additional enforcement rights and a path to statutory damages.

Besides protection of the brand name and/or logo, the other question is how to protect the actual marijuana product or a proprietary method of growth. It is currently unclear as to whether the patent office will grant patents in marijuana strains. On the one hand, the patent office has issued patents on applications for smoking paraphernalia that specified it was to be used for marijuana. There is also ample evidence of the medicinal benefits of marijuana, which would counteract the office’s concerns about its legality. Most importantly, the Patent Act does not specifically prohibit immoral or scandalous material in the same manner that the Trademark Act does, and so the patent office has some level of discretion in terms of potentially granting such patents. Yet it would still be surprising if the patent office was ahead of the federal government in “legalizing” patents for marijuana when marijuana is still illegal federally. Despite this ambiguity, companies are starting to test the waters. Centennial Seeds, a producer of marijuana seeds based in Colorado, announced its intention to file a patent application for its seeds in January 2015.[3]

For the time being, trade secret law is the best bet to protect your client’s growing conditions (consisting of the seeds, lighting, heat, moisture and other botanical factors). Your client will therefore have to consistently treat its proprietary information and “secret sauce” as a trade secret, just as Coca Cola does with its formula and KFC does with Colonel Sander’s blend of herbs and spices. Any parties, be they employees or outside parties, will need to sign either an employment agreement or confidentiality agreement before learning confidential information, or else the business risks losing its ability to protect against theft of trade secrets.

Conclusion

It is currently possible to obtain ample intellectual property protection for marijuana-related products. With regard to the drug itself, federal trademark law prohibits registration of a brand name but businesses can potentially gain some level of protection through copyright law, state trademark registrations and common law use. While it is possible that the patent office may soon issue patents for marijuana, for the time being the best means to protect a client’s marijuana product and growing conditions is through trade secret law.

NOTES

[1] Anne Gilson LaLonde et al, TRADEMARKS LAID BARE: MARKS THAT MAY BE SCANDALOUS OR IMMORAL, The Law Journal of the International Trademark Association, Vol. 101 No. 5, 1476, 1477 (September-October 2011)
[2] In re Pennington Seed, Inc., 466 F.3d 1053, 1057 (Fed. Cir. 2006) (quoting In re Hilltop Orchards & Nurseries, Inc., 206 U.S.P.Q. (BNA) 1034, 1036 (T.T.A.B. 1979)) (internal quotation marks omitted)
[3] Jason Blevins, Pot Growers Cultivating in the Shadows Seek U.S. Patent Protection, DENVER POST (Dec. 26, 2014), http://www.denverpost.com/potanniversary/ci_27174732/pot-growers-cultivating-shadows-seek-u-s-patent