It is a common practice for cannabis companies to give their products names, logos, or identifying artwork that is similar or nearly identical to that of popular brands, products, companies, or famous people. While this practice often is employed in a humorous manner, it exposes companies to trademark-infringement liability. In the event of a lawsuit, a company may be enjoined from using its mark or forced to pay monetary damages to the company bringing the lawsuit. As cannabis products become more mainstream and more states legalize the plant, companies should be aware of the risks so they can take steps to prevent infringement of their own or others’ trademarks.
In May 2021, Mars Canada Inc. and Mars Wrigley, the candy giants that produce M&M’S®, Snickers®, Orbit®, Extra®, and Skittles®, concluded a lawsuit involving the use of the Starburst and Skittles brands (the “Skittles lawsuit”). The defendant company specifically mentioned products called “Medicated Skittles,” “Starburst Gummies,” and “Lifesavers Medicated Gummies” that were sold online illegally in Canada and the United States. On August 12, 2022, Canadian Federal Court Judge Patrick Gleeson ruled three online cannabis retailers must “deliver up and destroy all infringing products and packaging” as well as pay for infringing upon Mars’s trademark.
The Skittles lawsuit was not an outlier. In August 2017, the company that produces Gorilla Glue sued a cannabis company for using “Gorilla Glue” in strain names. The ensuing settlement required the cannabis company to cease using the trademarked name and transfer ownership of its website domain to the Gorilla Glue Company, among other stipulations. Similarly, in July 2019, Mondelēz Canada, maker of the popular Sour Patch gummies, filed a trademark suit against the unknown makers of a cannabis-infused candy called Stoney Patch.
A trademark-infringement lawsuit is not the only risk that comes with the use of potentially infringing marks. These marks will be deemed ineligible for their own trademark protection if they are determined to be infringing upon an existing trademark. In other words, if and when the federal government allows cannabis trademarks to be registered, an application to register a mark for a cannabis product that is similar to an existing trademark—such as Skittles or Gorilla Glue—will be rejected.
A name or logo need not be an exact replica of another to be infringing. Infringement can occur when a name or logo creates a significant risk of consumer confusion with another brand or relies on the recognition of another brand for its popularity.
Companies can avoid the pitfalls of trademark litigation by selecting unique trademarks and rebranding products in a way that makes their brands dissimilar from others. While rebranding comes with a cost, there are benefits, too. As cannabis becomes more commercially mainstream, a unique trademark will help a company differentiate its product from similar products on the shelf, foster a stronger and more unique brand identity, secure the product’s goodwill among its consumer base, and allow for exclusive use of that mark and access to legal remedies if that mark is used or copied by another company.
Beyond avoiding infringement, companies need to be strategic in protecting their trademarks. Their ability to obtain trademark protections for their goods is complicated by the Controlled Substances Act, which classifies cannabis as having no proven medical use and high potential for abuse and dependency. Companies cannot seek federal protection for trademarks that cover products containing cannabinoids not derived from hemp, which was deemed legal by the 2018 farm bill, or THC in quantities greater than that found in hemp. However, cannabis companies can protect their marks in two ways: by obtaining federal trademarks covering ancillary goods or services that are not a product or byproduct of the flower and by registering trademarks covering cannabis products with the state in states where the plant is legal.
First, many companies and brand owners are able to register marks for alternate classes of goods and services. This may apply if a company sells consulting services, education services regarding cannabis use, brand apparel such as T-shirts or baseball caps, or even software or apps showing nearby stores selling cannabis products. For example, the app tökr, which allows users to locate products at nearby dispensaries, obtained a federal trademark registration based on an explanation its services are a marketing platform for medical and recreational marijuana dispensaries.
In states where cannabis is legal, companies may register their trademarks with state trademark authorities. Trademark protections in the U.S. are available on two levels: federal and state. Federally registering with the U.S. Patent and Trademark Office extends trademark rights across the entire nation. Each state also has its own system for trademark management, and a state registration will grant rights within that state’s boundaries only. For example, if a company registers a trademark with the Colorado Secretary of State, that registration will not protect the mark against a federal trademark. However, if a company plans to use the mark only in Colorado, that company could be well served by registering it in that state alone.
Federal registration may not be available for trademarks that do not affect trade “across state, territorial, or international borders.” Either way, registering your trademark provides notice to others that you are using the mark and affords you certain legal rights in the event of trademark infringement.
Andrew Neiman, Esq., represents clients in commercial and business litigation and advises companies about contract-based issues, commercial disputes, labor and employment, corporate governance, securities and equity-related disputes, fraud, breach of fiduciary duty, bankruptcy, and cannabis law. In addition, he frequently represents parties in disputes over ownership of closely held companies.
