Most people's first encounters with the new U.S. Department of Agriculture (USDA)-compliant hemp comes in the form of cannabidiol (CBD) products. Although CBD’s scheduling under the Controlled Substances Act and status with the U.S. Food and Drug Administration (FDA) remain unclear, hundreds of CBD manufacturers are selling CBD online and inside brick-and-mortar retail channels.
Branding is what gives consumers the ability to distinguish one vendor’s products from another’s. And with so many products for sale, manufacturers and retailers need to take deliberate steps to establish their brands by assuring quality products and widespread availability. To achieve this, protecting companies’ brands and tradenames in the marketplace is essential.
Brand name protection is established through trademark law. Trademark owners can establish their rights either through common law or federal trademark registration at the U.S. Patent & Trademark Office (USPTO). Of the two, federal registration is preferred.
Where Do I Start with a Trademark?
Prior to the passage of the Agriculture Improvement Act of 2018 (the 2018 Farm Bill), federal registration of a trademark for CBD products was not available. Therefore, a CBD manufacturers’ only way to protect its brand name was through common law trademark rights. In the case of common law rights, no formal steps need to be taken other than to offer a product for sale under the brand. The basic rule is first in time, first in right. That means the first company that makes a product available under a brand has priority of rights to that brand. However, common law rights have limitations. For example, common law trademark protections are limited to the geographic region in which the branded product is offered for sale.
Since passage of the 2018 Farm Bill, the USPTO has established certain rules that allow CBD manufacturers and retailers to obtain federal trademark registration – provided the mark is used in connection with USDA-compliant hemp-derived CBD that contains less than 0.3% concentration of tetrahydrocannabinol (THC).
Other requirements for federal trademark registration include selling the product in more than one state and submitting appropriate evidence of use of the mark.
Here’s the tricky part—the USPTO generally does not inquire into a brand's marketing claims when determining whether to grant registration. But be aware that registration by USPTO does not equate to legality, and the 2018 Farm Bill explicitly preserves FDA authority to regulate products falling within the FDA’s purview. At the start of July, the White House completed review of pending FDA guidance on marijuana and CBD research. But no new or modified regulation has yet been implemented, hence CBD’s legal status remains frustratingly vague. Food, beverages, dietary supplements, pet treats and other consumables containing added CBD, or tetrahydrocannabinol (THC) of any amount, might still be considered unlawful.
So Now What?
In some cases, applying for federal trademark registration can be complicated and confusing. Before adopting a mark, it is important to conduct proper research to ensure the mark is not confusingly similar to another’s trademark. Additional considerations include making sure to properly identify the classes of goods for which registration is sought. Failing to register or registering in the wrong class of goods could result in rejection of registration, or worse, copycats taking advantage of the lack of registration.
In the case of CBD mark registrations, a raft of additional CBD-specific disclosures need to be made that are not typical in registrations of other marks. For example, many CBD companies have come under fire recently for misidentifying their products as herbal supplements or making medical claims in marketing materials.
While marks without federal registration may be protected within their local market under common law, brands with similar names could pop up in other markets and the original mark holder would still not have access to federal court or statutory damages, nor could criminal charges be brought against infringers. Such is why mark registration is strongly encouraged.
The good news is that federal trademark protection is available for compliant CBD manufacturers and sellers, as well as most other hemp products. In the instance of hemp trademark registrations, hiring a qualified attorney to assist can be advantageous. A manufacturer or seller who does not conduct thorough preliminary research or file the application for registration properly may waste time, money and risk a competitor beating them to the registration.
Gary Michael Smith is an attorney, arbitrator and founding member of Phoenix, Arizona-based Guidant Law Firm, leading the cannabis and hemp practice. He is also a founding director and current president of the Arizona Cannabis Bar Association and board member of the Arizona Cannabis Chamber of Commerce.
Jim Kuzmich is an attorney and founding member of Guidant Law Firm. His practice focuses on entertainment law, corporate law, intellectual property and all types of business transactions.