Highs and Lows: Intellectual Property in the cannabis industry

Highs and Lows: Intellectual Property in the cannabis industry

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The last ten years has seen a seismic shift in the legal, medical and societal perception of cannabis.

Once a time-honoured trope in teen movies and the scourge of politicians quizzed on the smoking habits of their student days, the cannabis industry is rapidly maturing. Increasing legalisation worldwide and research into a wide range of medical uses is prompting strong interest in its commercial potential from investors and entrepreneurs.

The Global Cannabis Report, published by Prohibition Partners, estimates that global sales of CBD, medical and adult-use cannabis amounted to US$37bn, a figure that could rise to over $102bn by 2026.

The report also offers an overview of legalisation trends regarding different types of cannabis: CBD-based products and medical cannabis are now legal across most of North America (37 states and counting), the EU, and the UK, as well as Latin America. Adult-use products, which typically contain the psychoactive agent THC, are fully legal in Canada, Uruguay and 18 US states, with more markets – notably Germany – expected to follow suit in coming years.

The legalisation of CBD- and THC-based products is coinciding with the growing wellness industry and a trend away from traditional ‘social lubricants’ such as alcohol among a more health-conscious generation. The market is primed for growth, and this naturally has implications both for securing intellectual property rights around cannabis brands, and wider brand protection by other companies.

Here are some of the challenges and issues that have arisen to date:

Cannabis companies cannot obtain federal trade marks at the USPTO

Companies marketing cannabis products in the US face a challenge because US trade mark law prohibits the registration of any products that cannot be lawfully sold across state lines in the US. This prevents the issuing of a federal mark protecting the brand on a national basis.

However, there are two actions companies can take that will offer a degree of protection and help them build their brand. The first is to apply to register their trade marks with individual states where products are legalised. While this won’t offer protection beyond the state line, it can deter local competitors.

The second action is to register marks for related goods and services, but not the cannabis-containing products themselves. Ancillary goods such as lighters, rolling papers, information websites and apparel can be protected, even if the direct cannabis-containing product cannot, and as legalisation becomes more widespread, it helps to build a brand in advance. It is important to note, however, that companies taking this approach must genuinely be offering the products to consumers, or risk cancellation.

In Europe, applying to register marks can also be a challenge, particularly when it comes to using popular cannabis vernacular. In an article for CITMA,  Lionel Parisot, European Trade Mark and Design Attorney at Dennemeyer IP examines the attempt by Germany-based Bavaria Weed GMBH to register its company name as a trade mark in 2018. The EU IPO refused the mark on the grounds that the sale of cannabis for recreational purposes is illegal in Germany, and that “weed” is a term particularly associated with recreational, rather than medicinal, use.

Bavaria Weed appealed, claiming that its product was intended for therapeutic, not recreational use, and further that the wide use of English in the EU – and in particular in countries where cannabis is legal – meant “weed” was a sensible word choice. However, the EU IPO disagreed, confirming its view that the mark “promoted, or at least trivialised” the use of an illegal substance. However, it is worth noting that the mark was granted by the German Patent and Trade Mark office which, says Parisot, may mean applications at local level are the way forward, at least for the time being.

Sugar sweet candy highs

It is also important for brands with no intention of joining the cannabis industry to keep on top of the growing number of applications in the space, and to be alert to potential infringement by companies aiming to trade off existing brands’ goodwill.

Parody has been a major feature in the industry – long before the prospect of legalisation came on the scene – and candy companies are often the target. In a 2015 blog, law firm Harris Bricken pointed to examples such as Hersheys defending its brands against infringement by  “Reefers peanut butter cups” – deploying deceptively similar packaging – on the basis of likelihood of confusion and brand tarnishing by association with illegal activity.

Now, with the THC and CBD edibles market fast-growing, other cases are emerging. In 2021, Wrigley launched an objection against the filing of an intent-to-use application for Zkittlez HEMP & Design for hemp-based clothing. The company also aimed to use TASTETHETRAINBRO and ZKETTLEZ HEMP, plus rainbow colours, which Wrigley alleges infringed its existing marks. This case, along with several similar undertakings where names and packaging styles are very similar to existing candy products, continues. For more on such cases, check out this article by attorneys Stacey C. Kalamaras and Luke S. Zimmerman published in TM Lawyer Magazine.

While parody can be an acceptable reason for mimicking well-known marks, in the case of recreational cannabis products, the risk to consumers is likely to outweigh any parody-based argument. Even where legalised, THC-containing products are only permitted for consumption by adults, therefore products with packaging that could confuse children are unlikely to receive approval, especially where the original brand owners strongly object. In some states, legislative amendments are also under way that would prevent the use of the word “candy” in conjunction with THC edibles. The proposed amendments to the Virginia Consumer Protection Act specifically prohibit sale of goods in packaging that has the addition of trade marks other than those belonging to the original manufacturer.  

Candy brands must also stay alert to deliberate counterfeit products that use their actual (rather than modified) trade marks as such unlicensed products – which are effectively counterfeits – could cause serious harm to consumers.

Wild West market? Cannabis Cowboys Reined in by Clint Eastwood

Cannabis products may be growing in legitimacy, but celebrities are not keen to have their image linked to promotion – especially when it happens without their consent!

Notably, 92-year-old Hollywood legend Clint Eastwood recently won more than $2million in damages after suing a company for illegally using his name in metatags and blog posts to drive traffic to their CBD product website. This followed an earlier case when the famously anti-endorsement actor/director won $6.1million from Lithuanian CBD company Mediatonas UAB for illegally using his name and likeness in a fake interview claiming that he endorsed their products.

There will undoubtedly be more to learn as the legalisation of different types of cannabis products rolls out around the world. It is a fast-moving and diverse market, with the recreational and medicinal strands to consider, and certainly there is a strong role for brand and consumer protection.