United States
AUSSIE BLUES. RUTHERFORD B. HAZE. MANGO CRUSH. H STREET CHEDDAR. SUGAR IN MY BOWL. IT WAS ALL A DREAM. GHOST TRAIN HAZE. These, and dozens of other wildly creative and wonderful trade marks, apply to medical marijuana at the licensed dispensary in Washington, DC, where the writer occasionally has to drive a family member who has a prescription. While the family member visits the inner sanctum, where I am not allowed, I salivate over all the wonderful trade marks on the menus scattered on the coffee table.
But if you ask whether cannabis is legal in the United States, you may get up to 51 answers. While the possession, use and sale of cannabis is not legal under federal law, it is legal to varying degrees in many states. For example, it is legal in Alaska, Colorado, Maine and California, and Washington State (as you may have discovered at INTA this year) to grow and carry up to a certain amount for any purpose. Some states permit only medical use, while some, such as Kansas, do not permit any use. In the District of Columbia, it is legal for medical use, and for recreational purposes, but illegal to sell cannabis. There are rumours of entrepreneurs who give away a bag of pot with every somewhat costly t-shirt you buy.
Because cannabis is not legal under federal law, however, the US Trademark Office will not allow the federal registration of marks where the goods and services include cannabis or goods closely associated with cannabis. Moreover, even legal dispensaries cannot use bank accounts or credit cards, since those are also regulated by federal law. So sacks of dollar bills are required to do business in this world; our dispensary also has a cashpoint in the office.
If the examiner suspects that the goods in your trade mark application may cover cannabis or paraphernalia, they must include this in an office action:
Applicant must submit a written statement indicating whether the goods and/or services identified in the application comply with the Controlled Substances Act (CSA), 21 USC §§801-971.
The CSA prohibits, among other things, manufacturing, distributing, dispensing, or possessing certain controlled substances, including marijuana and marijuana-based preparations. The CSA also makes it unlawful to sell, offer for sale, or use any facility of interstate commerce to transport drug paraphernalia, i.e., “any equipment, product, or material of any kind which is primarily intended or designed for use in manufacturing, compounding, converting, concealing, producing, processing, preparing, injecting, ingesting, inhaling, or otherwise introducing into the human body a controlled substance, possession of which is unlawful under [the CSA].”
Finally, applicant must provide written responses to the following questions:
“Do applicant’s identified services include or involve the sale, distribution, delivery, dispensing, or production of marijuana, marijuana-based preparations, marijuana extracts, or the like?” and
“Do applicant’s services comply with the Controlled Substances Act?”
Since the US strongly recognises common-law rights, the inability to register is not as bad as it could be in a first-to-file jurisdiction. Presumably the owners of those creative cannabis brands can register their marks under state law in states where they are legal, although those registrations have limited use.
Litigation
Many strains of marijuana have been named, as a joke, presumably, after mainstream brands, but now that the marijuana brands are coming into mainstream commercial use, the cease and desist letters are arriving too. The website www.thecannabist.co pointed out that in a kind of coming of age for the cannabis industry, “the guerilla, tongue-in cheek brand names developed during the heyday of underground marijuana [are] now being regarded in the same light as traditional business”.
For example, we were surprised to see that GIRL SCOUT COOKIES was on the menu at the DC dispensary, and learned that after receiving a letter of complaint the name will be phased out. While GORILLA GLUE #1 is still on the menu, it will also be phased out by September 2018, according to the settlement terms of a lawsuit filed by The Gorilla Glue Co against GG STRAINS, LLC. We were surprised to see FRUITY PEBBLES on the menu, but have not heard of any action by Post Cereal, the owner of the cereal brand of the same name.
Hot-sauce maker TAPATIO has sued over use of TRAPATIO for cannabis-infused hot sauce. Hershey has sued over a series of cannabis brands that mimic Hershey brands.
While we are not aware of any cannabis brands sitting in the plaintiff’s seat and suing based on common-law rights, it would be interesting to see if a federal court would accept a lawsuit under the Lanham Act to enforce trademark rights that are not lawful for use in federal commerce, or whether brand owners would be better off pursuing a claim in state court.
Canada
With the federal legislation for the legalization of cannabis having just recently been passed by the Senate in Canada, it is expected that recreational cannabis will officially become legal in Canada on 17 October 2018. The products will be sold to consumers (18 years or 19 years and older depending on the province) in private and licensed stores and in some provinces such as Quebec and Ontario, in government-run facilities across Canada (bricks and mortar and online).
While there are still many questions that need to be answered, the one thing for certain is that the number of trade mark filings covering cannabis (and related products and services) has escalated in the last couple of years. As of 11 June 2018, there are 187 registered marks containing cannabis/marijuana (and related) goods/services and 2042 pending applications. Of these marks, there are approximately 250 where the applicant is an entity located in the U.S. There are approximately 60 applicants in countries outside of the US and Canada. The remaining rights holders are located in Canada with the majority being in Ontario and British Columbia.
The criteria for registering a cannabis-related trade mark are no different than for any other trade mark. The legalization of cannabis coupled with the changes that are being made to the Canadian Trademarks Act are perhaps the catalyst behind the dramatic increase in cannabis-related trade mark filings. Let us speculate. The Canadian Trademarks Act is being amended to include, among other things, the removal of the use requirement in obtaining a trade mark registration. Applicants will no longer have to file a declaration of use (in an existing application) or claim a basis to registration in any new applications filed after the amendments come into effect. In anticipation of these changes foreseen for sometime in early 2019, parties interested in this industry can file now for a wide range of cannabis and cannabis-related products knowing they will not have to prove use in Canada in order to obtain registration.
While it will therefore become much easier to obtain a trade mark for cannabis-related products in Canada, the government is passing fairly comprehensive legislation that will have various prohibitions in relation to the promotion and packaging aspect of such products. Canada intends to legislate for the marketing and promotion of cannabis to mirror the restrictive tobacco legislation – and most recently vaping legislation. Bill (S-5) has passed, essentially equating vaping to smoking. Under the tobacco legislation, trade marks that reflect lifestyle, glamour or vitality are strictly prohibited. Vaping and cannabis legislation aren’t much different.
Additionally, Health Canada wants a hand in packaging cannabis by adopting a regulatory approach to branding. Health Canada released a report earlier this year (after a consultation period) aiming to package cannabis like tobacco along the lines of plain packaging by requiring packaging to be a single, uniform colour (inside and outside) without images or graphics other than the company logo and a standardized cannabis symbol that would need to appear on every label that looks like this:
Notably, the company logo can be no larger than the standardized cannabis symbol. In addition, a mandatory health warning (appearing on a yellow background) must be displayed on every label as well as information on THC and CBD content which must appear in bold text. The first sentence of the health warning message is to be in bold font in both English and French, with the word “WARNING” “MISE EN GARDE” in bold uppercase, followed by a colon. Some proposed health warning messages are “cannabis smoke is harmful”, “cannabis can be addictive”, “do not use if pregnant or breastfeeding” and “do not drive or operate machinery after using cannabis”.
Unsurprisingly, the push for maximum blandness will also extend to the brand name which can be displayed in any font style and size, provided it is equal to or smaller than the health warning message and the font appears in a single, uniform colour with no fluorescent or metallic colours. As for the package itself, there will be prohibitions on the use of fluorescent or metallic colours, foil, cut-outs, embossing and inserts.
Other prohibitions such as the depiction of a person, character or animal, or brand elements that evoke a positive or negative emotion about a way of life that includes, for example, excitement are contained in the legislation with the goal to “protect the health of young persons”. These prohibitions will impact the kind of trade marks and related marketing/promotional campaigns that can be used in Canada.
Speaking of promotion and marketing, there are some rock stars that have entered the Canadian scene. Gene “I’ve never smoked pot in my life” Simmons of Kiss invested $10 million in Invictus MD, a Vancouver-based licensed producer as their “chief evangelist officer”. The Tragically Hip are a creative partner and shareholder in Newstrike Resources Ltd, an Ontario cannabis producer. Organigram, a Moncton, NB, based medicinal cannabis producer through a partnership with those responsible for the Trailer Park Boys TV show, filed the mark Trailer Park Buds.
However, there will be severe restrictions on advertising cannabis (the government does not intend to promote its use) so celebrity endorsements often closely associated with lifestyle advertising will not be allowed with cannabis. It will be interesting to see how the “affiliations” between rock stars and cannabis-producing companies play out over time.
Also off limits, for at least the first year of legalization, are edibles so say goodbye to lollipops, candy, chocolate bars, brownies and cookies that contain cannabis. As popular as they may be and despite their current illegal status allowing Canadians to purchase such edibles online and have them delivered to their front doors, these products won’t be legalized alongside cannabis later this year. The government has undertaken to provide a regulatory framework for edible cannabis products within one to two years of enactment.
As for the trade mark itself, it is worth noting that the Cannabis Act includes a specific provision entitled “Trademarks” stating that the absence of use of a trade mark as a result of compliance with the Cannabis Act constitutes special circumstances that excuse the absence of use for the purposes of the Trademarks Act. One is left to wonder how relevant a trade mark registration may become if registration is maintained but the trade mark cannot be used.
So as a new hazy dawn approaches over the horizon in Canada, we celebrate the opportunities we have in being able to build recreational cannabis brands and provide a launch point for cannabis companies from around the world. Already there are companies offering cannabis advertising services (www.leafly.com), advice on “How do you define your future in an undefined market?” (EY on-line publication) and “4 things to Know about marketing Cannabis Brands” (www.adweek.com). A look at some of the 2000-plus trade mark applications and registrations in Canada suggests that some brands may be more fun than others to market: AIRPLANE MODE, NORTHPOLE 1, JERK CHICKEN & JOINT, DOPE LADIES, FRISKY BEAVER, THE BAKED BAKERS, PANEAPPLE ESPRESSO and of course DAYDREAM.
How it will all unfold before and after legalization is hard to say. However, be it in Canada or in the United States, with some lessons learned from the trail-blazing States of Colorado and Oregon, one thing is certain: we’re in for a few transformational decades ahead. Watch this space.
By Janet Satterthwaite, Potomac Law; Mary Jane Lemenchick , Borden Ladner Gervais; and Stella Syrianos, Robic. The authors are all members of the MARQUES IP Emerging Issues Team
Issue 092
