Federal Registration of Cannabis Trademarks™ and the Natural Zone of Expansion
August 28, 2017
Federal trademarks registered with the United States Patent and Trademark Office (“USPTO”) are valuable business assets that, if possible, should be cultivated and protected. The ® registration symbol can be used in conjunction with a trade or service mark if, and only if, the mark has been granted federal registration.
If a mark has not been granted federal registration, it is unlawful to use the ® registration symbol, so the less prestigious ™ symbol is generally used instead. The ™ symbol can indicate various possibilities: 1) the mark is being used to distinguish goods, and the owner of the mark has common law rights, but no registration application has been filed at either the state or federal level, or; 2) a state registration has been filed (and has been granted or is pending), or; 3) a federal trademark application has been filed and is pending but not yet granted.
Trademark law, at its heart, is built upon the principle of first use – generally, the strongest rights to use a given mark will be granted to the first entity to have actually used it. However, “use” must meet a variety of requirements in order to be considered valid for trademarking purposes. To begin, the use must be within the “ordinary course of trade” for the given industry.[1] Moreover, the use must be “bona fide,” or to put it another way, done in good faith – the applicant must be using the trademark because it has a good faith intention of being recognized by the public as the source of particular goods or services. Token use of a trademark done solely to gain rights in a trademark that the applicant has no or only illusory intentions of using are not sufficient (i.e., think of it as trademark “squatting”). In addition, in order for the USPTO to have authority to issue a federal registration, the use must be “in interstate commerce.” Interstate commerce generally means that the goods or services physically cross state lines; however, there are certain uses that are deemed inherently affecting interstate commerce and therefore eligible for trademark registration.
Cannabis companies face an added difficulty because the USPTO also requires that use of a trademark be “lawful.”[2] To that end, the USPTO will currently not issue trademark registrations for cannabis and related products or paraphernalia under the rationale that, as a matter of law, the necessary use of such goods in interstate commerce violates the federal Controlled Substances Act (“CSA”) and is thereby inherently unlawful. The legality of the use under state law is considered inapposite for purposes of gaining a federal trademark.
Given the USPTO’s refusal to issue trademark registrations for cannabis goods, many applicants have endeavored to gain the value of a trademark by simply applying for a trademark on a broad category of goods, generically described, with the hopes that cannabis will be able to implicitly hide inside that category. This tactic has not met with much success, however – namely, the USPTO inevitably discovers that the goods were described in an overbroad manner (which warrants rejection of the application in its own right) and the only goods on which it is used are deemed “unlawful” (and thus again not entitled to registration). A trademark application is required to identify the goods and services on which the mark is used with a reasonable amount of specificity. Applicants frequently use very broad terms to identify their goods and services in an application, but if an applicant’s actual use is in fact limited only to a much smaller subclass of goods or services, and one which is capable of being easily described for application purposes, the application will be denied unless the goods and services listed are narrowed accordingly – and that is a rule that applies no matter the type of goods being applied for.
That said, many companies do in fact use a mark on a variety of goods within a broad category. An application using the broader category will be accepted in such instances.[3] If the USPTO deems a description of goods to be overbroad, however, the application will be rejected unless amended to narrow the scope of goods claimed.
This is important because the USPTO has discretion to investigate the actual use of a trademark to ensure that it is used in the manner described by the application (as well as in compliance with trademark law, meaning the claimed goods are described with sufficient specificity and that the use is “lawful”). To this end, many examiners at the USPTO look at an applicant’s website and social media pages to see how the applied-for mark is being used. For cannabis companies, such research generally indicates that the trademark is used solely or primarily with regards to cannabis products and thus, the application is rejected on two counts: first, that the goods were described in an overbroad manner and, second, that the use is unlawful. Ordinarily, an application can be amended to narrow the goods being claimed and thus still gain approval, but for cannabis companies, narrowing the scope to identify cannabis products specifically still fails the lawful use requirement.
Yet, there is another approach to consider that has met with success on at least a few occasions. Rather than attempting to protect cannabis products directly by filing for a broad category of goods with the hope that cannabis hides implicitly within the scope of that broad category, protection can be gained by filing for related goods. If cannabis is explicitly disclaimed from the goods being registered, the application on its face does not violate the CSA and should be entitled to registration. While disclaiming desired goods may seem counterintuitive, holding a mark for a specified class of goods or services can still sometimes be used to prevent (and therefore protect against) confusingly similar trademarks on othergoods and services, including the desired goods, despite their not having been listed in the original application.
Trademarks are filed, as noted above, for specific goods and services. But the law recognizes that companies frequently start with a limited number of goods and then expand their offerings to include other goods within the same general category – these new goods are considered part of the company’s “natural zone of expansion.” Thus, a registration for “clothing” (Class 25) will act as a block for “leather goods” (Class 18) because the USPTO has recognized that clothing companies often expand their line of goods such that they act as a source for items from both categories. Thus, the goods are deemed within each other’s natural zone of expansion – in other words, since clothing manufacturers (shirts, pants, etc.) frequently branch out to also manufacture leather goods (belts, etc.), both categories will be examined when competing trademarks are to be filed in either category.
Similarly, the law accounts for the fact that some goods are so “related” (even if they happen to be filed in different classes) that confusion may be likely among consumers if the same or similar marks were used on both, despite the fact that manufacturers of one do not ordinarily evolve to manufacture both. For example, beer exists within Class 32 while wine and spirits exist in Class 33. Despite being different goods in different classes, a mark that has been registered for beer in Class 32 will generally act as a block to any mark that is confusingly similar being registered on wine, vodka, whiskey, etc., even though such goods exist in an entirely separate class. This is true irrespective of the fact that breweries rarely evolve to manufacture wine or vice versa.[4]
With regards to cannabis, both principles can be leveraged to gain a zone of protection that will surround a cannabis mark and protect the mark from being filed by a competing user now or in the future. By identifying classes of goods and services that fall within the natural zone of expansion or “related goods,” cannabis products can be afforded protection, despite not being listed in the application. Essentially, one wants to imagine which class their goods would be filed in once cannabis becomes eligible for trademark protection in its own right, and file in that class (or an adjacent class) to create a reserved space ahead of time.
Depending on the goods and services that a given cannabis company will offer, there are obviously a number of classes in which that company may wish to file. There is no limit to the number of categories a company is allowed to apply for so long as the mark will be used on those goods and services. However, as indicated above, the mark must be actually used on such goods and services and the use must be within the ordinary course of trade, thus a single sale of such goods or services will not be sufficient – an ongoing business effort must be implemented.
Above, it was noted that an applicant must show use of the mark on the applied-for goods in order to apply for a trademark. This can be problematic given that, as also noted above, priority is given to the first user of a given mark. The former rule means that, ideally speaking, a company will use and apply for a mark as soon as possible. Luckily, there is a limited exception to the use necessity in the form of an Intent-to-Use application. Intent-to-Use applications allow a company or individual to file for a trademark before they have used the mark on the applied-for goods, so as to save their “space in line” chronologically speaking. As such, it allows an applicant to reserve rights in a mark while, for example, they are still in the formative stages of their business or waiting on a crop to be harvested. When filing an Intent-to-Use application, the applicant has six months from the date the application is approved in order to actually use the mark. If that six-month period is not enough time, up to five extensions may be filed; in other words, an applicant will have up to three years to actually use the mark. The Intent-to-Use application does involve additional paperwork, and thus additional expense, but it allows companies to reserve a mark without fear that a competitor will beat them to market in a given industry.
This information is provided as an educational service and is not intended as legal advice. For questions related to trademarks or other forms of intellectual property, or would like assistance with the trademark registration process, please contact the Law Offices of Omar Figueroa at (707) 829-0215 or info@omarfigueroa.com to schedule a confidential legal consultation.
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END NOTES
[1] Trademark Manual of Examining Procedure (TMEP) 901.02
[2] See In re Brown, 119 USPQ2d 1350, 1351 (TTAB 2016); John W. Carson Found. v. Toilets.com, Inc., 94 USPQ2d 1942, 1948 (TTAB 2010); In re Midwest Tennis & Track Co., 29 USPQ2d at 1386 n.2 (TTAB 1993); Clorox Co. v. Armour-Dial, Inc., 214 USPQ 850, 851 (TTAB 1982); In re Stellar Int’l, Inc., 159 USPQ 48, 50-51 (TTAB 1968).
[3] By way of an example, an application claiming a mark for “baked goods” will be deemed overbroad if the applicant only actually makes one or two specific baked goods, say cookies. If, however, the applicant makes cookies, brownies, cupcakes, pies, croissants, and bread, the application may be accepted as described.
[4] These rules are not absolute of course, and every application is examined on a case-by-case basis. Many factors go into whether two marks are similar enough to be confusing and thus whether the prior user can reserve the secondary space (i.e., block a newer user from using the similar mark).