Cannabis legalization is getting a lot of attention in the country, and many legal commentators have touched on some of the issues at the intersection of trademark law and cannabis-related goods & services. But what happens when cannabis-related trademarks end up in court?
Last year, we talked about Hershey’s Chocolate, Inc. lawsuit (Case No. 2:14-cv-00815-RSL) for Trademark Infringement against Conscious Care Cooperative (Seattle CCC). That case subsequently settled on July 29, 2014 without addressing many of the fun trademark issues some of us were hoping to play out.
But the publisher of the well-known High Times Magazine Trans-High Corp., Inc. has not been shy about asserting its trademark rights in an uneasy area of trademark law (six, as of this writing):
- Trans-High Corp. v. 420 Eyewear, Inc. et al, 1:2003-cv-03053
- Trans-High Corporation, Inc. v. Western et al, 2:2013-cv-01155
- Trans-High Corporation, Inc. v. North West Harvest Fest et al, 2:2013-cv-01551
- Trans-High Corporation Inc. v. Mile High Times LLC et al, 1:2014-cv-02039
- Trans-High Corp. v. Reimers, 2:2014-cv-00279
- Trans-High Corporation. Inc. v. Kerawala et al, 4:2014-cv-00752
All but one of these cases, again, settled without addressing many substantive trademark issues. However, in Trans-High v. Reimers (2:2014-cv-00279), Trans-High successfully deflected Reimers’ counterclaim attempting to cancel Trans-High’s federal trademarks.
In granting Trans-High’s motion to dismiss, U.S. district court judge Lonny Suko on January 12, 2015 provided two very helpful tips for trademark litigators in this area:
Specifically, a registration may be vulnerable to cancellation if the goods and services for which the registration has been issued, are proven to be unlawful. None of the goods and services for which the registrations have been issued are unlawful. The Controlled Substances Act expressly excludes from its scope a party’s mere advertisement or “promotion” of controlled substances and drug paraphernalia. See 21 U.S.C. § 843(c)(1) (“The term `advertisement’ does not include material which merely advocates the use of a similar material, which advocates a position or practice, and does not attempt to propose or facilitate an actual transaction in a Schedule I controlled substance.”)
Having alleged no illegality (nor any other cognizable basis for cancellation), the Court finds Defendants’ legal theory is not cognizable as a matter of law.
 None of the goods and services for which the registrations have been issued are unlawful. The Defendant never alleged that the goods and services identified in the HIGH TIMES registrations are unlawful. Therefore, if you attempt to assert a trademark that is being used for illegal goods, you can expect it to be cancelled via counterclaim by the defendant.
 The Controlled Substances Act expressly excludes from its scope a party’s mere advertisement or “promotion” of controlled substances and drug paraphernalia. See 21 U.S.C. § 843(c)(1). This statement gives trademark holders a bit more flexibility in describing both the legitimacy of common law marks and registered marks as they are asserted in litigation. In essence, following this analysis, you can obtain a trademark for legitimate goods and services, but then use the same mark in promoting the use of controlled substances – which would otherwise likely be held as “scandalous or immoral” by the USPTO.
If removed from the cannabis context, this holding is pretty plain. But it does provide an important lesson to trademark applicants: even if you don’t describe your services as promoting the use of cannabis in your application, you can still edge into those services and successfully defend against an argument to cancel your mark.
At the moment, federal cannabis trademark litigation is relatively quiet, but with a budding industry (pardon the pun), that is likely to change. Further, it will be interesting to see how state trademarks in this sphere are enforced around potential areas of federal law crossover (stay tuned for The Mary Jane Group v. The Taste of Travel).