By: Jon Avidor and Joshua Weisenfeld
Recent cannabis legalization in 11 states has pushed congress to more formally address the issue of federal regulation and decriminalization. On December 20, 2018, Congress continued this process and moved forward with partial decriminalization of certain types of cannabis and its derivatives by signing the Agriculture Improvement Act of 2018 (“2018 Farm Bill”) into law. The 2018 Farm Bill reclassified cannabis plants, products, and derivatives containing no more than 0.3% THC as “hemp”, and subsequently removed hemp from the list of controlled substances. Passing this bill alleviated some difficulty when protecting cannabis, CBD, and hemp brands. Often when protecting a brand, companies will register their brand as a federal trademark, which was previously unavailable for hemp and CBD products. However, with the removal of hemp from the controlled substance schedule, the United States Patent and Trademark Office (“USPTO”) could no longer deny trademark registrations on hemp products based on their conflict with federal law, therefore legalizing the registration of hemp trademarks.
There are various ways to protect trademarks, using both state and federal law. Typically, a company will first attempt to register its mark through the USPTO as a federal trademark, as a federal trademark is enforceable throughout the United States. However, if a federal trademark is unavailable, a company may seek to register their mark within their state of operation, incorporation, or use. A state trademark, however, is only enforceable against infringers within the state of the trademark’s registration; substantially limiting the mark’s protection.
State registrations have historically been the only option for trademark protection in the hemp and cannabis industries because state trademark offices rely on state law rather than federal law. Subsequently, states that have legalized cannabis tend to have more comprehensive trademark laws that allow for registration of cannabis trademarks.
In practice, the federal trademark registration process requires an applicant to identify the trademark’s use within interstate or international commerce. This is because federal registration is only available for goods or services that are in interstate or international commerce. Meaning if someone were to apply for a federal cannabis trademark, they would have to sign a sworn oath that they are using the mark for goods in interstate commerce, essentially confessing to a violation of federal law. Moreover, the USPTO refuses to register a trademark for any goods or services that violate federal law. So even if someone was willing to admit to the interstate sale of cannabis, the USPTO would refuse to register the mark because cannabis itself violates federal law. Some applicants have attempted to circumvent this rule by showing legal uses of the mark in interstate commerce, but the USPTO has consistently rejected these claims.
This rigid system, as it relates to hemp, recently changed as a result of the 2018 Farm Bill. The reclassification of certain cannabis plants as legal hemp opened the door for hemp companies to apply for federal trademark registrations, since industrial hemp cultivation, manufacture, and distribution are no longer in violation of federal law. This also means that legal hemp can be placed in interstate commerce, so hemp companies can sign sworn oaths stating that their products, which bear the mark, will be legally sold through interstate commerce. More importantly, this admission would no longer be a confession of a federal crime.
In May, the USPTO confirmed this approach when it updated its examination guidelines for legal hemp. The examination guidelines offer federal trademark examiners an in-depth review of the USPTO’s practice prior to the 2018 Farm Bill, along with current approval provisions for registering a cannabis trademark in compliance with federal law. The new guidelines no longer permit trademark examiners to reject cannabis trademark applications based on a violation of federal law and lack of lawful use in interstate commerce. The new guidelines will allow for hemp companies to register trademarks on hemp plants, products, and derivatives in the same manner as any other legal mark. USPTO has started to see an influx of CBD-related trademark applications. However, while it typically takes three months for a trademark application to be reviewed by the USPTO, CBD-related trademark applications may take up to a year to be reviewed.
The USPTO doubled down on their previous restrictions for registering cannabis trademarks for products containing more than 0.3% THC, as the 2018 Farm Bill did not change the legality of this variety of cannabis. Meaning cannabis companies will still be forced to register their cannabis trademarks with the state, while hemp companies may begin to avail themselves of the benefits of federal trademark protection.