Trademarking Pot-Based Products: Budding cannabis entrepreneurs have a growing list of options

Marijuana is now legal in Michigan, so it is probably a good time to take a look at the intersection of federal and state law and talk about what can or cannot be protected within a cannabis-based business under intellectual property law.

Let’s start with trademarks. Generally speaking, a trademark is a sign or symbol that indicates the origin or source of the goods or services of a business. Trademarks lower cognitive search costs, which is just a fancy way of saying that they help consumers quickly recall and find a business’ product without a lot of effort.

The general rule is that, to qualify for a federal trademark registration, the use of a trademark in commerce must be lawful. This means that, for a mark to be eligible for trademark registration, any goods or services on which the mark is used must not be illegal under federal law. Since the distribution and dispensing of marijuana is prohibited under the federal Controlled Substances Act, federal trademark registration is out.

Budding cannabis entrepreneurs, however, have attempted to obtain marijuana trademarks by filing for registration of them in association with retail store services and not the plant itself. Others have attempted to obtain federal registration by filing on an “intent to use” basis, meaning, that they intend to use the trademark in the future, but have not yet done so. Both of these creative approaches have also been denied by the U.S. Patent and Trademark Office.

This has left marijuana brands with the very limited protection of state trademarks. State trademark registrations serve as a record of the date on which you began to use a trademark … and not much else. They are the administrative equivalent of mailing yourself a copy of your screenplay in a sealed envelope. Not very effective.

Patent law presents a different story, however. The US Patent and Trademark Office has been issuing marijuana-related patents for more than 70 years. These patents have ranged from methods of preparation, drug formulations and methods of treating diseases with cannabis-based products, to devices for THC and CBD (natural compounds found in plants of the cannabis genus) extraction.

And trade secret law is another avenue of protection. In Michigan, a trade secret is information, a formula, a pattern, a method, a technique, or a process that is valuable simply because it is a secret and your competitors do not have it. As long as you make reasonable efforts under the circumstances to maintain the secrecy of your trade secrets, they will remain trade secrets forever.

In the cannabis world, trade secrets may consist of things like extraction methods, processes for creating or infusing edibles, higher-yield growing techniques, customer lists, and vendor lists. To ensure that this proprietary information remains a secret, cannabis companies must adopt policies and procedures that provide such information to employees on a need-to-know basis. We recommend that employers regularly review their employment agreements and physical and digital access controls to ensure that their processes are defensible in any subsequent trade secret litigation.

What about marijuana derivatives, such as CBD? Previously, brand owners who sought federal trademark protection of CBD-related products could obtain trademark registration provided they declared that the goods claimed in their application did not violate federal law, such as the Controlled Substances Act. The Controlled Substances Act defines marijuana to include “all parts of the plant Cannabis Sativa L., whether growing or not; the seeds thereof; the resin extracted from any part of such plant; and every compound, manufacture, salt, derivative, mixture, or preparation of such plant, its seeds or resins.”

Since the Controlled Substances Act explicitly excluded hemp, or “the mature stalks of such plant, fiber produced from such stalks, oil or cake made from the seeds of such plant, any other compound, manufacture, salt derivative, mixture, or preparation of such mature stalks, fiber, oil, or cake, or the sterilized seed of such plant which is incapable of germination,” CBD-based products, which are typically made from excluded hemp, were presumed to be eligible for trademark registration.

In 2016, the DEA published a “final rule” expanding the definition of marijuana under the Controlled Substances Act to include extracts and derivatives. This final rule has pushed the U.S. Patent and Trademark Office to more closely look at applications for CBD products and, potentially, reject them. However, the recently passed 2018 Farm Bill removes both hemp and CBD from those items prohibited under the Controlled Substances Act and delegates the regulation of products containing either to the states. This change in the law will undoubtedly open the door to federal trademark registration.

With marijuana, CBD and hemp are also subject to patent and trade secret protection, without the limitations imposed by federal registration.

As the State of Michigan adopts its regulations for the retail sale of marijuana in the coming year, further states move to legalize or decriminalize, and the federal government reevaluates its traditional prohibition of anything having to do with the drug, this area of law is expected to develop rapidly. As it does, more opportunities for manufacturers, service providers, and other ancillary products and services will arise, including in the Grand Traverse region.

John Di Giacomo is the founding partner of Revision Legal in Traverse City. Revisions Legal litigates nationwide to secure intellectual property rights, protect businesses that thrive online, and understand the connections between law, technology, and business. For more, visit revisionlegal.com or call (231) 714-0100. 

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