Lex Indicium

IP Challenges for Ganjapreneurs

December 4, 2017


Like any industry, cannabusinesses and ganjapreneurs need to be thoughtful about protecting their proprietary material, in order to mitigate their risk of being ripped off – or worse, being accused of infringing other people’s rights. This post provides a brief overview of trademark and copyright issues to consider when developing and protecting your business in this space.

Protecting Cannabusiness Branding

If your product is king, then your brand is certainly queen. Your brand name, or trademark, tells consumers that a product or service comes from you and not your competitors. Accordingly, identifying and protecting the name of your new business could be fundamental to your success.

Some Quick General Rules on Trademark Protection
Regardless of your industry, under U.S. law, trademark rights involve a business’s use of a name, term, phrase, or logo in connection with the sale of specific goods and services. Generally, the first business to use a name in the marketplace is entitled to claim ownership of it. It is, however, possible to obtain rights beforehand, if an application for registration with the U.S. Patent and Trademark Office is filed. If your business adopts a trademark that is too similar to a mark used by an earlier entity, it can lead to marketplace confusion and potential for infringement claims. Therefore, before settling on a trademark, it is generally advisable to do some clearance searching and analysis of the availability of your name. A trademark attorney can assist in performing the search and analysis, and provide you with a risk profile of the proposed mark. Engaging in this type of clearance can help avoid expensive rebrands and conflicts before significant investments in a trademark have been made.

Once the trademark has been selected and cleared, it is good practice to register it with the USPTO. A federal registration is valuable for a number of technical and legal reasons, but one primary advantage to a start-up is the registration’s ability to ward off junior users. Simply put, obtaining a registration ensures that you have provided constructive notice of your claim to that mark, and it acts as a compelling disincentive to use of a similar mark by your competitors.

Challenges Specific to Cannabusiness Branding
Registering a trademark associated with a cannabis business can be challenging. During the process of filing a trademark application, an applicant must identify the goods and services with which it will use the new name. For example, a cannabis dispensary business would naturally seek to claim use of its mark with marijuana-based preparations and/or products for manufacture or ingestion of such substances. However, the USPTO, which is governed by federal statutory law, will only grant trademark protection for marks used in connection with goods and services that are compliant with federal law. Since marijuana dispensing violates the Controlled Substances Act, any application making claims of dispensing marijuana will be rejected.

There are strategies that can be leveraged to obtain a federal trademark registration, however. For instance, cannabusinesseses often trade in a variety of goods and services that do comply with the Controlled Substances Act, including, for example, providing an educational website on health and wellness, or providing other lawful tobacco products. A mark can be registered with these lawful products and services, as long as it is not also used on products or services that are unlawful.

Applicants should be aware that the USPTO is likely to scrutinize the application to ensure it is compliant. Among the trends we have noticed with applications seeking registration of marks in the cannabis trade are rejections of marks that appear to cover entirely lawful goods, apparently because the mark applied for incorporates the term “Canna.” In addition, examiners often visit applicants’ websites to determine whether products offered under the mark may be prohibited by federal law. If prohibited goods and services predominate otherwise lawful goods offered under your mark, even a carefully crafted trademark application that leaves out mention of illegal goods may be doomed. Therefore, careful counseling regarding the choice of marks, and navigating how those marks are used, is de rigeur in this space.

As an example, the mark Cannabis Mediquette was accepted for registration earlier this year, in connection with providing online cannabis information resources. While on its face, the services described are lawful, the USPTO still required the applicant to go on record with a statement that the services identified in the application did not include the sale of controlled substances, and that applicant believed its services complied with the Controlled Substances Act. Conversely, an application for the mark Higher Purpose, covering medical marijuana information and delivery services, was refused registration because it is unlawful under federal law to dispense marijuana. The examiner for that mark noted that the applicant’s website featured marijuana retail services. It appeared the applicant was trying to claim unlawful goods and services in its application, so registration was refused.

A Note About State Trademark Registrations and Common Law Rights: Importantly, while obtaining a federal registration is preferred, it is not necessary to register your mark federally to protect it or enforce it under state law. So if federal registration is out of the question, a cannabusiness may still be able to enforce rights against junior adopters of similar marks – though that enforcement will be more difficult. One alternative to consider is pursuit of a state trademark registration, rather than a federal registration. Generally speaking, however, the owner of at state trademark registration should consider the enforceability of those rights as more limited than the enforceability of a federal registration.

Your Creative Content

In addition to trademarks, some of the greatest non-product assets you create may include educational and informational content you provide, such as educational brochures, web content, graphics (including logos, which may also be protectable trademarks), and other creative assets that support your business and engage your customers. One of the primary legal vehicles that may be available to protect this content is copyright protection.

Copyright protection is a helpful tool in large part because it extends to almost all original content and expression, regardless of whether the subject matter itself pertains to lawful activitiesAn important limitation to this protection, though, is that copyright only protects the written expression of the content, and not the underlying ideas. For example, if one wrote an article about the health benefits of cannabis, the original words and possibly the organization of that article may be protectable; however, the copyright protection would not restrict someone from reading the article and writing their own story on the same topic, even if that story covered ideas identical to those in the original.

While copyright protection vests upon creation, registration may be an important step, particularly for very valuable content. Registering a copyright is required in order to bring a lawsuit based on copyright infringement, and registering before infringement occurs is required in order to be eligible for potentially higher statutory damage awards (in the event of an infringement claim). Considering the registration fee for a copyright applications is well under $100, applying for copyright registration of certain key assets is often a good insurance policy against competitors lifting content verbatim and without consequences.

In addition to trademark and copyright concerns, there are other intellectual property issues a cannabis start-up may want to consider, including trade secret, patent, confidentiality, and privacy issues. We plan to treat these in later blog posts. In the meantime, please be in touch with questions and comments! And for more insights, updates, and discussions on all things cannabis, head over to Burns & Levinson’s CannaBusiness Advisory blog.

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