Mondaq Article: Worldwide: Global Developments And Considerations For Registering Cannabis And Cannabis-Related Trademarks

Mondaq Article: Worldwide: Global Developments And Considerations For Registering Cannabis And Cannabis-Related Trademarks

Ben Natter and Jessica Sblendorio partnered with Mexican colleagues, Mauricio Chozas and Lorena Pinto, from Cuesta Campos to comment on global developments for the registration of cannabis and cannabis-related trademarks in the United States, Canada, Mexico, and the European Union.

Federal trademark registration in the United States provides strong protection for brands and intellectual property. The United States Patent and Trademark Office (“USPTO”) will not grant such protection for marks that cover goods and/or services that are a violation of federal law, regardless of whether the activities associated with the goods or services is legal under state law. See 37 C.F.R. § 2.69. This principle has generally barred businesses in the cannabis industry from being able to register marks associated with their cannabis and cannabis-related goods and services. However, in May 2019, the USPTO issued new guidance on the examination of cannabis and cannabis-related trademarks following the enactment of the 2018 Farm Bill. This guidance will have implications for trademark owners seeking to register their marks in the United States.

Other countries, such as Canada, the European Union, and Mexico, handle the registration of marks for cannabis in a number of ways and legal developments in these countries may make it less difficult to register such marks in the future.

Understanding the global developments and regulations on industries focused on cannabis and cannabis-related goods and services and their ability to register trademarks for cannabis-related industries is critical in providing protection that was previously not available to such businesses. Having an understanding of the current legal landscape to register marks for cannabis and cannabis-related products can help formulate a successful strategy to obtain global protection for trademark owners that market and sell cannabis and cannabis-related products.

United States

Traditionally, it was not possible for trademark owners to federally register marks that related to the manufacturing, distribution, or consumption of cannabis because the Controlled Substances Act (“CSA”) had prohibited the manufacturing, distributing, dispensing, or possessing of controlled substances, such as cannabis and its related preparations. See 21 U.S.C. §§ 812, 841(a), 844(a). The CSA also made it unlawful to sell drug paraphernalia. Because of this, the USPTO had a policy to refuse the registration of all trademark applications for cannabis-based goods and services as illegal under the CSA.

However, on May 2, 2019, the USPTO issued new guidance for examiners relating to cannabis trademark applications. See United States Patent and Trademark Office, Examination Guide 1-19: Examination of Marks for Cannabis and Cannabis-Related Goods and Services After the Enactment of the 2018 Farm Bill (May 2, 2019), https://www.uspto.gov/sites/default/files/documents/Exam%20Guide%201-19.pdf. The key legislative development that was the underlying basis for this guidance was the Farm Bill, passed in December 2018. The 2018 Farm Bill legalized the cultivation of industrial hemp and allows for interstate commerce of hemp-based products. This means that hemp (or cannabis plants and their derivatives, such as cannabidiol (“CBD”) that contain no more than 0.3% tetrahydrocannabinol (“THC”) on a dry-weight basis) is no longer a controlled substance under the CSA. For trademark applications that were filed on or after December 20, 2018 for goods including cannabis or CBD-derived hemp that comply with these parameters will no longer be refused registration as being in violation of the CSA. For applications prior to that date, these applications will be refused due to unlawful use or the lack a bona fide intent to use the mark in lawful commerce in accordance with the CSA. However, the examining attorney will advise that the applicant may request to amend the filing date of the application to December 20, 2018 and recommend other amendments to comply with the relevant requirements for registration. However, the applicant may also choose to abandon the application and file a new application, or respond to the refusal by submitting arguments and evidence in opposition to the refusal.

However, certain applications for cannabis or cannabis-related goods may still raise issues under the Food Drug and Cosmetic Act (“FDCA”). For example, the use of a drug or substance in foods or dietary supplements that are undergoing clinical investigations without approval of the Food and Drug Administration (“FDA”) violates the FDCA. It should be noted that the 2018 Farm Bill did preserve the FDA’s authority to regulate products containing cannabis or cannabis-derived compounds, and because of this, registration of goods containing CBD, such as foods, beverages, pet treats, or dietary supplements, may still be refused as unlawful under the FDCA.

With respect to applications for marks for cannabis or cannabis-related services, there marks will be examined for compliance with the CSA and the 2018 Farm Bill. As discussed supra, the CSA prohibits the manufacturing, distributing, dispensing, or possessing of cannabis that is considered to be marijuana. Marks for services that involve cannabis that constitutes marijuana and covers any of the prohibited activities under the CSA will still be refused registration because such services continue to violate federal law, namely the CSA.

For those applications that involve services for the production or cultivation of hemp within the meaning of the 2018 Farm Bill, these applicants will have to provide documentation regarding the applicant’s authorization to produce hemp and evidence to support that the applicant’s activities comply with the 2018 Farm Bill. The United States Department of Agriculture (“USDA”) requires that hemp producers have a license or authorization from a state, territory or tribal government with a plan approved by the USDA for the commercial production of hemp. On October 31, 2019, the USDA issued its interim final rule that contained the rules and regulations to produce hemp for commercial purposes.1

Even if trademark owners encounter issues with registering their cannabis or cannabis-related marks, it may possible to apply for state trademark registration in states where cannabis has been legalized in whole or in some form.

Canada

In 2018, Canada became the second country to legalize the recreational use of cannabis on a national level. This change in the legality of cannabis prompted other legal changes, including to the Canadian Trademarks Act. Amendments to the Canadian Trademarks Act recently took effect on June 17, 2019, and provide that Canadian cannabis companies no longer have to demonstrate use of the mark, such as through evidence of a commercial sale of their product or advertisement of a food service, prior to getting their trademark formally registered. Rather, the amendments allow for immediate registration of a trademark once it has completed the advertisement period. They also allow cannabis businesses to utilize the Madrid Protocol and file centrally for registration in 120 countries while relying upon a foundational Canadian application or registration.

It is important to note, however, that the Canadian Cannabis Act, and its supplemental regulations, provide numerous brand element restrictions and marketing restrictions. For example, the Act prohibits the promotion of cannabis or cannabis accessories that (i) appeals to a younger audience; (ii) uses the depiction of an animal, character, or person, whether real or fictional; (iii) communicates information about price and distribution; (iv) provides a testimonial or endorsement, whether displayed or communicated; or (v) provokes an emotion about or image of a way of life such as one that includes glamor, recreation, excitement, risk, vitality or daring. Furthermore, there are also restrictions on the labeling or packaging of products with cannabis or a cannabis accessary that a trademark owner should be aware of when marking cannabis or cannabis-related products. The regulations require that each product label include a standardized cannabis symbol that comports with a certain appearance, size, and placement and that each label include mandatory health warnings and THC content on the packaging.

Despite these restrictions, to date, there are almost 2,000 trademarks listed on the Canadian trademark register with goods or services containing the word “cannabis” or “marijuana”, and many of these applications have been filed within the last two years. Additionally, because there is no longer a use requirement prior to filing these applications, this allows trademark owners to apply for protection prior to entering the Canadian market and may help establish priority rights for the brand owner’s marks. Because of this, the number of registrations is likely to rise following the legalization of cannabis and the amendments to Canada’s Trademarks Act.

European Union

The Member States of the European Union are not uniform regarding the legality of cannabis. However, one possibility for trademark owners seeking to register their marks relating to cannabis or cannabis-related products is to apply directly in countries where cannabis use is legal in some capacity, like in Spain and Belgium where private cannabis growth and consumption is permitted. A trademark owner can also apply to the European Union Intellectual Property Office (“EUIPO”), which does not have an explicit blanket ban on trademark registration for cannabis and cannabis-related products. Nonetheless, it is worth noting that an application may receive an objection on the basis that it is “contrary to public policy or to accepted principles of morality.” See Council Regulation 207/2009, art. 7(1)(f), 2009 O.J (L 78) 1, 3 (EC). As an example, the EUIPO has refused to register the following word marks for goods and services connected to cannabis or cannabis-related products: “WEED”; “VAPZ WEED STIX”; “VAPZ HASH STIX”; and “INDICA”; for lack of distinctiveness of the goods and/or because the marks were considered to be “highly suggestive of an illegal activity.” See Sarah Rasmussen & Lars Karnoe, Cannabis for medical purposes – legal, but how to name the product, LINKEDIN (Jan. 17, 2018) , https://www.linkedin.com/pulse/cannabis-medical-purposes-legal-how-name-product-lars-karn%C3%B8e. Furthermore, applications for design marks, including an image of a marijuana leaf, have also been rejected by the EUIPO.

However, as of June 2019, fifteen cannabis-related trademarks were registered with the EUIPO. As an example, the EUIPO has accepted applications for the marks “SPEKTRUM CANNABIS” and “SPECTRUM CANNABIS” for a wide variety of cannabis-related goods including (i) medical cannabis; (ii) skin care preparations containing cannabis plant derivatives; (iii) food and beverage products containing cannabis; (iv) hemp seeds; (v) pipes and vaporizers for administering medical cannabis; and (vi) various educational, product development, medical, consulting, and advisory services relating to cannabis. With respect to the goods that were accepted for registration, however, the EUIPO did maintain its objection to these marks for certain goods as being contrary to principles of morality, including live cannabis plants, smoking accessories, and the processing and production of cannabis as some examples, and for services that would be viewed as harmful to the health and lives of European Union citizens.

Based upon the refusals of particular marks discussed supra, it seems that cannabis-related marks for any goods or services referring primarily to recreational use of cannabis are likely to be rejected. However, where the use of cannabis is not for recreational purposes, the EUIPO has shown that it is willing to accept arguments that such use is not contrary to “public policy” and waive its objections where it is satisfied that the goods or services relate to the legal and common use of cannabis.

Mexico

On June 19, 2017, a decree that amended several provisions of the General Health Law and the Federal Criminal Code was published in the Mexican Official Gazette. The new amendments imply that the products containing cannabis derivatives, in concentrations of 1% or less of THC and that have wide industrial uses may be commercialized, exported and imported, provided that they meet the requirements established in the health regulation because the authorities considered that these products have broad therapeutic uses and that they constitute a minor problem for public health.

As a result of the foregoing, since 2017, the Mexican legislation has authorized the medicinal, therapeutic and scientific use of cannabis, as well as its production and sale for such purpose. Likewise, it also established that the planting, cultivation or harvesting of marijuana plants will be allowed, as long as it is for medical or scientific purposes.

With respect to recreational use, although the personal possession of cannabis was decriminalized in 2009 and it is legal to possess up to 5 grams for personal consumption, the recreational use of cannabis is forbidden in Mexico. Notwithstanding the above, on November 6, 2018, the Ministry of Interior in Mexico, Olga Sánchez Cordero, filed a legislative proposal for the regulation and control of cannabis, which includes the production for recreational use. Furthermore, in February 2019, the Supreme Court issued a decision that found that the prohibition of recreational use of cannabis is unconstitutional.

Additionally, Mexico is waiting for the issuance of the “Regulations of the General Health Law, in connection with the Cannabis Health Control and its derived products.” Currently, the importation of cannabis is only allowed by authorization from the Health Ministry.

It is important to mention that the Trademark Office has not issued a formal criterion with respect to the registration of cannabis or cannabis-related marks. Currently, the Mexican Trademark Office grants registration to those trademarks whose descriptions include products or services that contain cannabis, as long as they are related to medicinal, therapeutic and scientific uses, for example in classes 3, 5, 32, 33 and 42. However, the current position of the Trademark Office is to not grant registrations to trademarks that contain within its denomination or in its design, elements alluding to cannabis, for example, the word “cannabis” as such, or a drawing of the cannabis plant, because the Mexican Trademark Office considers that its registration would be contrary to the morality and the accepted principles as it would constitute an incitement to consumption of cannabis. Despite these hurdles, it possible to overcome these obstacles when attempting to register a mark related to cannabis in Mexico.

Taken together, these developments may affect the ability of trademark owners to be able register cannabis-related marks beyond what is currently allowed by the Mexican Trademark Office.

Conclusion

Trademark owners in the cannabis industry should be aware of these legal deh3elopments and understand how the registration process works in North America and Europe in order to gain protection for marks for cannabis and cannabis-related goods and serh3ices. Additionally, with the rise in demand in these markets for cannabis and cannabis-related products and serh3ices, there may be an increased number of “trolls” that seek to register intellectual property before the rightful owner and then later attempt to extort payment to transfer the rights to the rightful owner. Being aware of the shifting legal landscape and the possibility of now being able to register these types of marks can be beneficial in crafting a global strategy in order to proh3ide protection to cannabis-related businesses where preh3iously intellectual property protections for their brands was near impossible.

Footnote

1. For the full text of the rule and regulations on hemp production, see https://www.federalregister.goh3/documents/2019/10/31/2019-23749/establishment-of-a-domestic-hemp-production-program.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

AUTHOR(S)
Ben Natter
Haug Partners
Jessica L. Sblendorio
Haug Partners

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