Cannabis Trademark Litigation: Web Platform Liability (Mr. T v. Leafly)

24 Sep Cannabis Trademark Litigation: Web Platform Liability (Mr. T v. Leafly)

On August 22, 2019, actor Mr. T, best known as a star of the TV series “The A-Team,” sued Leafly Holdings Inc. for trademark infringement. The lawsuit was filed after Mr. T’s attorneys sent multiple cease and desist letters to Leafly, which were allegedly ignored.

The lawsuit stems from Leafly’s listing of a strain called “Mr. Tusk,” which is sold by third-party cannabis retailers. Leafly utilizes a three-letter periodic table-style tile design for all of its listings, and the particular tile used for the Mr. Tusk strain is “Mrt.”

In his cease and desist letters, Mr. T alleges that Leafly’s unauthorized use of Mr. T’s name “is likely to cause damage to the commercial value of his right of publicity. It also creates a false or misleading inference of endorsement, approval, or sponsorship of [Leafly’s] products by Mr. T and is a violation of his valuable trademark rights.”

In order to prevail on a trademark infringement claim, a plaintiff must show a “likelihood of confusion” on the part of consumers meaning, in this case, that consumers would assume that Mr. T endorses or is in some way affiliated with the Leafly listing. A court will consider eight factors in evaluating a likelihood of confusion argument (AMF Inc. v. Sleekcraft Boats):

• Strength of the mark;
• Proximity of the goods;
• Similarity of the marks;
• Evidence of actual confusion;
• Marketing channels used;
• Type of goods and degree of care likely to be exercised by the purchaser;
• Defendant’s intent in selecting the mark; and
• Likelihood of expansion of the product lines.

Here, of course, both sides contend that analysis of the factors weighs in their favor.

However, and this is what makes this trademark infringement claim particularly interesting, Leafly is not actually using the “Mrt” tile to sell its own products. Leafly does not sell or distribute any cannabis products, and doesn’t come up with the names for the products it lists on its site. Can Leafly then be held liable for infringement of Mr. T’s trademarks?

There has been a good amount of debate in recent years regarding the extent to which e-commerce platforms can be held liable for trademark infringement involving third-party content. The Digital Millennium Copyright Act (DMCA), which applies to copyrights, provides that hosting providers are not liable for third-party copyright infringing content unless they (1) have knowledge of the infringing content; and (2) do not take down the infringing content expeditiously. Although the DMCA does not apply to trademark infringement, courts have applied similar principles based on contributory and vicarious liability.

A case that illustrates where U.S. courts have drawn the line on this issue is that of Tiffany v. eBay, where Tiffany sued eBay for trademark infringement after finding that thousands of pieces of counterfeit “Tiffany” jewelry had been sold on the platform. The court ultimately dismissed Tiffany’s claims, holding that eBay was neither directly nor indirectly liable for third party sales of the counterfeit goods on its platform because Tiffany could not show that eBay had specific knowledge of specific infringing items. eBay therefor had no affirmative duty to remedy the situation.

But here, Mr. T’s attorneys sent multiple letters to Leafly asking that they remove the allegedly infringing content, which Leafly declined to do. Additionally, in his complaint, Mr. T has alleged that “[t]here is a direct connection between the use of ‘Mr. T’ and the commercial purpose of advertising a cannabis strain as it is listed on the Leafly website,” and also that Leafly and Does 1 through 9 (the unidentified cannabis sellers) were “actual, implied or ostensible agents, servants, employees, partners, joint venturers, alter egos and/or co-conspirators of one another, and were at all relevant times … acting on behalf of one another …” It is clear that Mr. T’s counsel does not view Leafly as a mere passive, third-party platform that can’t be liable for the trademark infringement of its advertising customers.

We’ll be curious to see how this one plays out. Mr. T is primarily seeking, through injunctive relief, for Leafly to change the “Mrt” tile. He is not seeking damages. Regardless of the court’s decision, web platforms that provide listing and advertising services for cannabis companies should take note – trademark litigation is expensive, and the conduct of your customers could land you in hot water. Be sure that the agreements you have in place with third parties listing on your site address these types of scenarios, and have a protocol in place for addressing complaints from third-parties of copyright and trademark infringement.