Hershey’s Chocolate, Inc. filed suit (Case No. 2:14-cv-00815-RSL) for Trademark Infringement in U.S. District Court in Seattle against Conscious Care Cooperative (Seattle CCC), a Seattle company which describes itself as "a non- profit cooperative that is dedicated to providing its members the highest quality of organic medicine or Medical Marijuana in Seattle."

What’s bugging Hershey’s exactly? This (photo credits Kiro TV news):

And this:

http://www.komonews.com/news/local/Chocolate-company-suing-Seattle-pot-co-op-for-trademark-infringement-261905731.html

 

According to the Complaint filed Tuesday, June 3, Hershey’s is alleging the following causes of Action

  • Count One: Federal TM infringement of the various REESE’S, REESE’S PUFFS, and MR. GOODBAR marks and/or trade dress. (15 USC 1114)
  • Count Two: Trade dress infringement, false designation of origin, and unfair competition. (15 USC 1125(a)).
  • Count Three: Trademark and Trademark Dilution. (15 USC 1125(c)).
  • Count Four: Violation of Washington State Trademark Dilution Statute. (RCW 19.77.160)
  • Count Five: Violation of Unfair and Deceptive Practices Act. (RCW 19.86.020).
  • Count Six: Common Law Trademark Infringement and Unfair Competition

FEDERAL TRADEMARK LAW AND CANNABIS LAW

Generally speaking, you cannot get federal protection over your cannabis-related marks. Sections 1 and 45 of the Lanham Act only covers "lawful" use in commerce, but THC, the active high-inducing chemical in marijuana, is still very much illegal under the Controlled Substances Act. Not surprisingly, the Feds aren’t too keen on protecting what they still (half-heartedly) believe to be an illegal substance. Therefore, based on priority of use, and federal protection, Hershey’s very clearly has superior rights in its marks to the Seattle CCC.

 WHAT WILL BE THE OUTCOME? 

Of course there are many ways to win (and lose) a case. If you remove the cannabis aspects of this case, it’s fairly straight-forward. Hershey’s has superior rights, and a reasonable jury could view the marks to be confusingly similar. This is a fact question, so it’s unlikely that this aspect would be decided on summary judgment.

But the cannabis elements admittedly cloud the analysis. Do federally-protected TM rights in legal candy trump state-protected rights in cannabis candy? Normally, the answer is "yes", but only a handful of states have legalized medicinal marijuana, and only Washington and Colorado (as of June 10, 2014) have legalized recreational marijuana. Seattle CCC could therefore argue that its customers are in a very niche market and very distinct from Hershey’s customers and that no reasonable consumer could possibly mistake a pot treat coming from Hershey’s.

What about the dilution/tarnishment claims? Is Seattle CCC really "diluting" the Hershey’s mark? Would people truly think that "Reefer’s" came from Hershey’s and that the Seattle CCC will likely cause harm to the fine upstanding Hershey’s name? In my very humble opinion, if someone wants to ingest cannabis, they buy  and ingest cannabis. If someone wants to buy candy, they buy and ingest candy. Sure, maybe some careless parents might leave some cannabis-candy on the counter and Little Johnny and Little Suzy might mistakenly eat it, but regulating that sort of thing shouldn’t be in the wheelhouse of federal trademark law. We have plenty of state-based organizations for that in Washington.

My cynical/tactical thinking is that Hershey’s is looking to cash-in on the national pot craze without actually getting its hands "dirty" in the business. Hershey’s likely wants to collect a settlement and/or license agreement for pot dealers to use its trade dress and trademarks. Obviously this would only be enforceable in Washington state, because – again – the Feds won’t enforce contracts that are illegal under federal law. This way, Hershey’s won’t openly affiliate with drug dealers; won’t have to invest in the infrastructure to make cannabis candy; and will be able to collect some cash on the side from budding industry (couldn’t resist).

I’ll do my best to follow this case very closely and provide more insight as my time permits. Until then, if you have any questions on trademark issues, feel free to contact Mann Law Group.

UPDATE:

Hershey’s is suing a Colorado cannabis dealer as well:

http://www.washingtonpost.com/blogs/govbeat/wp/2014/06/09/hershey-sues-edible-marijuana-company-over-gangja-joy-and-other-candy-bars/