When Canna, China, and IP Overlap

14 Aug When Canna, China, and IP Overlap

As regular readers of this blog will know, cannabis businesses face unique challenges when it comes to protecting their brand, particularly in the context of federal trademark registration. The federal government’s ongoing prohibitions on cannabis with THC levels exceeding 0.3%, as well as on a wide range of CBD products, means that marks identifying those products cannot be registered with the USPTO.

One of the strategies adopted by many cannabis industry participants is the registration of trademarks for goods that are not considered unlawful by federal law. Often this means merch, such as tees, hats, lighters, coffee mugs, and many other products. Trademarks can also be registered for cannabis products that fall within the parameters of legality established by federal law, such as hemp cigarettes.

Of course, cannabis companies eagerly await the day when they will be able to federally register the trademarks for all their products, including what for most of them constitute their core offerings. But as I often point out, brand protection is not a black-and-white matter. Registering a particular trademark (or a few of them) will not by itself protect a brand anymore than signing a single contract will protect them against contractual breaches. By the same token, a lack of federal registrations for key products is not fatal to brand protection efforts.

Registering marks for only some core product offerings, or for ancillary products such as merch, is one strategy deployed. Another strategy (often used in concert with the one just described) is the registration of state trademarks. One of the more interesting byproducts of the cannabis industry’s dramatic growth in recent years has been the boost its given to state trademark registries. Not that long ago, state trademarks were given cursory treatment in any discussion of trademark law, similar to the blue sky laws in the securities context. “Yes, they can be important, but what you really need to know is federal trademark law.” And to be fair, in most cases, it made sense for trademark owners to seek the national protection afforded by federal rights. State trademarks, however, have become a key part of the cannabis brand’s toolkit.

Increasingly, I am finding inspiration in our cannabis IP work for non-cannabis IP work, especially in China. Given the massive number of trademark applications filed in China, both by good faith and bad faith actors, there is a good chance that companies applying for trademarks in China will find one or more of its desired marks have already been registered (or applied-for) by someone else.

In some cases, it is possible for brands to respond directly, for example by filing oppositions or requests to cancel on the basis of non-use. Purchasing the trademarks may also be an option. And there are also situations where the company will need to chart a new path altogether, for example by modifying logos or rebranding so that trademarks they actually own take center stage. And they can also take a page from what cannabis brands are doing.

Just as the federal prohibitions on cannabis block only a segment of the trademark registration universe, a prior China registration does not represent a complete bar against registration of a similar mark. A company can consider registration in classes covering non-core goods. If those happen to be goods the company plans to market, then at least it will enjoy partial protection. Even if they do not plan to market those products, the company can reduce the prior registrant’s space for building its own brand – especially if the prior registration took place in bad faith, for example, by a counterfeiter or dishonest supplier.

Ideally, it won’t be long before cannabis brands are able to enjoy full trademark rights in the United States – and before China closes the loopholes that have allowed bad faith actors to game the trademark system. But for now, be creative!