Although commercial use of a trademark alone triggers rights in a mark, wise business owners endeavor to take advantage of the added benefits and protections conveyed by federal registration. One of the most important benefits of federal trademark registration is a presumption that a registered mark is valid and protectable, but only lawful use of a mark in commerce can give rise to federally protectable trademark rights. Hemp and cannabis businesses face additional hurdles in accessing these benefits because of the ongoing federal illegality of cannabis under the Controlled Substances Act (“CSA”).
Is Federal Trademark Protection Available for Hemp-Based Foods and Beverages?
As we discussed earlier this year in relation to the Ninth Circuit’s ruling on delta-8 THC products in AK Futures, the 2018 Farm Bill (a/k/a the Agriculture Improvement Act of 2018) exempts from the CSA products derived from “hemp,” or cannabis with not more than 0.3% delta-9 tetrahydrocannabinol (THC) on a dry weight basis. Following enactment of the Farm Bill, the Trademark Office adopted a policy permitting registration for cannabis-related products if the application “specif[ies] that they contain less than 0.3% THC.”
This policy does not apply, however, to hemp-derived food, beverage, and supplement products, even if they comply with the CSA. Instead, the Trademark Office rejects applications to register marks for such products as unlawful under another important federal law: the Federal Food, Drug, and Cosmetics Act (FDCA). The Food & Drug Administration (FDA) has taken the stance that it violates the FDCA to introduce food or supplements containing CBD or THC (including delta-8 THC) into interstate commerce, regardless of whether the substances are hemp-derived. Despite an apparent intention to issue regulations governing the sale of such products over three years ago, the FDA has left brands in legal limbo.
A Case Study: CBD Tea Maker Advances Novel Theory for Federal Trademark Registration
Undaunted by the Trademark Office’s policy against registration of CBD beverages, CBD-tea maker Joy Tea, Inc. advanced a novel argument under the intent-to-use provisions of the Trademark Act. It applied to register the mark JOY TEA for its CBD tea under those provisions. Joy Tea claimed that even if its CBD tea could not currently be sold in legal commerce, it reasonably believed the FDA would allow it in the future, pointing to statements in 2018 indicating FDA’S intent to permit certain CBD-infused products. Therefore, it argued, it had the requisite bona fide intent to use the mark in legal commerce eventually. But the Trademark Trial & Appeal Board (TTAB) disagreed, explaining that Joy Tea could not have a bona fide intent to use the mark in commerce on the filing date because CBD-tea violated the FDCA as of that date.
Joy Tea challenged the TTAB’s position on appeal to the Federal Circuit. It also pointed out that pharmaceutical companies routinely file intent-to-use applications for drugs that are not yet FDA-approved. To treat hemp and cannabis differently would create an unfair double standard. But as the government argued in response an applicant cannot premise registration on a speculative intent to eventually use a mark, when existing federal law “prohibits commerce in the applied-for goods.” And unlike the FDA’s unclear position on the future legality of CBD foods, the government argued, pharmaceuticals can be legal once FDA approval is obtained.
Unfortunately, the Federal Circuit did not have the opportunity to weigh in on this debate, as Joy Tea pulled its appeal before hearing or a decision, reportedly for financial reasons. Nevertheless, Joy Tea’s theory would be a boon for the industry, as owners of marks for cannabis and hemp goods could apply for intent-to-use trademark protection, and if legalization occurred within 36 months from allowance, obtain a federal registration with all the accompanying benefits.
Recommendations for Cannabis and Hemp Businesses Seeking Trademark Protection
The current lack of a legal pathway for hemp-infused food and beverages is a bigger issue for the industry than the USPTO’s unwillingness to register marks for these goods. In the absence of FDA guidance, brand owners are subject to constantly changing and potentially conflicting state and local regulations, which make it extremely difficult to do business.
Not all is lost. Hemp-based food and beverage makers can still adopt and use trademarks, securing a modicum of protection under the common law arising from the mere use of a mark, and state registration, regardless of the Trademark Office’s unwillingness to federally register those marks. Brands can also register marks for related, legal merchandise (such as clothing and other ancillary products) to create brand loyalty and goodwill. Cannabis and hemp businesses should continue to invest in protocols, and consult with experienced counsel, to explore alternative paths to promote and protect their brands and ensure compliance with the ever-changing patchwork of federal, state, and local laws and regulations.