Trademarking in the Cannabis Industry: 3 Tips for Success

Put simply, trademarks protect brands, and companies building valuable brands in the cannabis space only own those brands if they seek trademark protection.

“Ultimately, the most successful cannabis companies post-prohibition will have the most valuable brands that are protected the best,” says Tom Zuber, managing partner and co-founder of Zuber Lawler & Del Duca, a law firm that has served cannabis clients for over 12 years. “They will have the most valuable IP and technology that’s protected the best.”

Trademark protection can occur in one of three categories: common law, state registration and federal registration.

Common law trademark protection happens automatically when a brand uses its mark in commerce, Zuber says, and it is the weakest form of protection.

State trademark protection occurs when a brand files an application with the state trademark office, and it is becoming more common as more states legalize and regulate cannabis, Zuber says.

“State trademark protection is important, particularly while prohibition is in place, because it may be easier to sue for trademark infringement in state court than in federal court in states in which cannabis has been legalized,” he says. “That is the case because of federal prohibition, which presumably inspires some federal courts to look dis-favorably upon allowing a plaintiff to capture evidence—lost profits, for instance—relating to cannabis products.”

Federal trademark protection is secured through filing an application with the United States Patent and Trademark Office, and while it can be difficult to obtain due to cannabis’s federally illegal status, it is necessary in the long-term valuation of a brand, Zuber says.

“That’s the most powerful form of protection by far … because it applies to the entire United States and all of its territories,” Zuber says. “It’s difficult to obtain in relation to cannabis brands because of federal prohibition, but it is possible to obtain meaningful trademark protection in relation to cannabis brands by working with an attorney that is fluent in both trademark law and in the particulars of the cannabis industry.”

Here, Zuber outlines his advice for navigating trademark protection in the cannabis space.

1. Protect the brand, not the product.

“With the United States Patent and Trademark Office, the key thing is to recognize the difference between protecting a cannabis brand and protecting a brand in relation to cannabis products, and those are two very different things,” Zuber says.

While the federal trademark statute does not explicitly prohibit obtaining protection for cannabis brands, it does prohibit the registration of any brand’s ownership of cannabis products, he says.

For example, if a company sells cannabis oils under Brand X, the Patent and Trademark Office will not issue trademark registration for that brand name in relation to the cannabis oils. It could, however, be convinced to issue registration for Brand X oil products that do not contain cannabis. Then, under a legal theory called the Zone of Natural Expansion, Brand X could argue in federal court and sue a company selling cannabis oils under Brand X based on that registration for Brand X in relation to non-cannabis oils.

“[You could win a trademark infringement case] in the event that you can convince a jury that the cannabis oils are within the Zone of Expansion of non-cannabis oils, which is to say that a company selling non-cannabis oils could be reasonably expected to expand someday into selling cannabis oils,” Zuber says.

2. Be transparent.

Cannabis companies and their lawyers should be forthright about their involvement in the cannabis industry when filing applications for trademark protection, especially when filing at the federal level, Zuber says. The United States Patent and Trademark Office will likely discover that the company is cannabis-related, and the company could then face opposition or the cancellation of their application due to fraud.

In addition, before investing capital and effort into seeking a trademark, companies should consider hiring an attorney to do a trademark search and report to ensure that another party has not already laid claim to the same trademark, or one similar, Zuber says.

3. Make trademarking a priority.

While most cannabis companies are focused on licensing and the day-to-day challenges of operating their businesses, they should also put a heavy focus on brand protection, Zuber says.

Many times, as Zuber Lawler advises companies that are going public in Canada, they realize that those companies’ brands are being used by other businesses in other states.

“The lack of focus on protecting these brands results in real challenges to their valuation, and that’s something that is better to address before the fact as opposed to after the fact,” Zuber says.

If a brand does not obtain sufficient protection at the federal level, another company can start using the brand in another state, and post-prohibition, it may be difficult to get rights to that brand.