States have rolled back laws restricting marijuana use, with many jurisdictions now allowing recreational cannabis usage. North Carolina is not among those states and has more recently pushed back on popular CBD foods and stores. According to the Charlotte Observer, Charlotte businesses sell CBD, less commonly known as cannabidiol, in oils, smoothies, burgers, smoothies, cocktails, biscuits, empanadas, and acai bowls. Marijuana businesses have grown across the nation despite legal gray areas. In fact, you can now invest in cannabis industry stocks available on the NYSE and NASDAQ. Even CVS is now selling CBD products in over 800 stores in 8 states.
‘The unanswered and emerging legal aspects to the marijuana business provide a lot of problems. More generally, what should businesses do in a legal gray area? Lets look at protecting “illegal” intellectual property. Businesses spend thousands coming up with the right name, logo, and slogan to sell their products, and even more in marketing and developing their brand. Knockoffs could steal their IP and crush their business before the laws are even settled.
Can you trademark illegal subject matter?
In short, not exactly. The United States Patent and Trademark Office (USPTO) has discretion in what terms and products may be trademarked. The NFL’s Washington Redskins fought lawsuits regarding the team’s name for more than 25 years until the Supreme Court ruled disparaging marks can receive trademark protection. As proof from that case, things change. However, the USPTO’s current policy is to not trademark marijuana-related marks, as the subject matter is illegal on the federal level.
So what options are there for a business?
Federal registration is almost always preferred, so much so that you might not realize states offers trademark protection. State registrations are typically cheaper, easier, and faster than federal registration. The downside is obviously they cover only one state. Filing for a state trademark is a good start if in a legal gray area. If the USPTO won’t allow a trademark until federal law changes, trademarks in legalized states will offer some IP protection. State trademarks are typically less scrutinized than federal applications, meaning there is a chance you can receive state trademark protection even if the subject matter has not been legalized.
Intent-to-use trademark applications
Trademarks are typically owned by the first person or entity to use the mark, short of a few exceptions. An intent-to-use application gives priority without proving actual use. This was intended to protect those developing their business before it officially opens. Chevrolet will certainly file an intent-to-use application on a new model name well before the vehicle ever hits the streets. That same idea can get priority on a marijuana or CBD business with the hope it becomes legal within three years, the longest an intent-to-use application can wait before all deadlines lapse. The downsides — outside of the federal laws remaining the same — are additional costs, renewal paperwork every six months, and a possibility the USPTO denies continued extensions. It is a financially riskier proposition.
Narrowly tailored trademark
Trademarks are defined by their description and corresponding international class. An application will raise suspicions if filed under an international class such as tobacco substitutes with a description about marijuana. However, associated products are not illegal. Trans-High Corporation owns the marijuana magazine High Times and nearly 40 trademarks, ranging from websites, podcasts, casino gaming, and resort hotels. Knowing the rest of their portfolio, it is a safe assumption the company plans to, or is currently operating weed resorts. The New York Times revealed plans for a Las Vegas casino with wait staff “carrying trays full of vaporizers and water pipes.” There was the additionalpromise of ample Cypress Hill music playing throughout the casino. The organization appears to have THC-rich plans in legalized states with the use of federally approved trademarks.
How? With limited classes and descriptions narrowly tailored to the federally legal aspects of their goods and services. While marijuana, hemp, cannabis, CBD, and other concoctions may not currently be available for federal trademarks, the surrounding parts are. If enough IP is protected through trademarks, associated products that are similarly confusing may violate those trademarks. If a business offered “High Times CBD oil,” Trans-High Corporation’s surrounding but strong trademarks gives them a solid case for trademark infringement or even trademark tarnishment.
A few creative ideas can help protect business IP, especially for those in a gray legal area. If interested in protecting intellectual property contact our attorneys. Spengler & Agans offers a flat-rate legal checkup for startups and business needing a broad, overall legal review of their business and business practices, including employment issues.