CBD Wins with USPTO’s New Examination Guide for Cannabis Marks, but Lawful Use Requirements Remain Intact

By Magdalena Berger
May 14, 2019

“Only the Lanham Act seems to incorporate the notion that the use of the protected subject matter must be lawful. Patent law and copyright law do not seem to share this interest with trademark law.”

https://depositphotos.com/167144664/stock-photo-cannabis-oil-and-hemp.htmlOn May 2, 2019, the USPTO issued a new examination guide titled “Examination of Marks for Cannabis and Cannabis-Related Goods and Services after Enactment of the 2018 Farm Bill.” A hasty reader may have assumed that this guide would offer options for the cannabis business whose federal trademark applications have been thwarted by the lawful use requirement, but this is not the case.

The lawful use requirement, as explained by the USPTO, mandates that “use of a mark in commerce must be lawful use to be the basis for federal registration of the mark.” TMEP §907, citing to 37 C.F.R. §2.69 and §§1, 45 of the Lanham Act. In other words, if a product cannot be legally sold in interstate commerce then, according to the USPTO, the mark cannot be used legally in interstate commerce and, lacking trademark use, the trademark cannot be registered.

Alas, the new examination guide only allows federal trademark registrations under very narrow circumstances. Under Sections 6 and 297A of the Farm Bill 2018, “the plant Cannabis sativa L. and any part of that plant, including the seeds thereof and all derivatives, extracts, cannabinoids, isomers, acids, salts, and salts of isomers, whether growing or not, with a delta-9 tetrahydrocannabinol [THC] concentration of not more than 0.3 percent on a dry weight basis” are removed from the Controlled Substances Act (CSA). In effect, these plants and their parts have become legal. Similarly, cannabidiol—commonly referred to as CBD—and those CBD products that have very low THC content, have become legal under the CSA. Being legal under the CSA means that these products can be legally sold in interstate commerce.

Celebrations for CBD, Salt in the Wounds for Cannabis

In short, under the Farm Bill, certain products containing CBD, but not having a concentration of more than 0.3 percent of THC, can legally be sold in interstate commerce. There are a few more caveats: The goods have to be derived from “hemp” and they cannot be foods or dietary supplements or pet treats, as these are still unlawful under 21 U.S.C. § 331 (ll).

With the new examination guide, the USPTO clarifies that it now allows federal registration for products that meet those requirements and for services related to these products. Pending applications may have to be amended in some of their specifics: the filing date may need to be amended to the date of the Farm Bill, the specification of goods and services may need to change to address the limited scope of the Farm Bill, and the applicant may be asked to answer inquiries by the examining attorney relating to the applicant’s authorization to produce hemp and that the activities indeed fall under the Farm Bill 2018.

While the CBD industry may breathe a sigh of relief that federal trademark protection is available now, at least for some of its products, the examination guide may feel like salt in the federal trademark wounds for the remainder of the cannabis industry. The Farm Bill and the examination guide open up a tiny door for a small subset of products, but the lawful use requirement still prohibits the vast majority of federal trademark registrations for products and services directly related to cannabis.

A Curious Conundrum

There are plenty of excellent articles detailing options and obstacles that the cannabis industry is facing when dealing with the trademark branch of the USPTO, and when trying to receive some form of intellectual property protection.

However, there is one aspect of the regulation of cannabis products that has received less attention, maybe because it is of a more academic nature: the three main IP rights—patent law, copyright law and trademark law—treat applications for the protection of unlawful products or activities fundamentally differently.

Of course, IP practitioners are well aware that patent law, copyright law and trademark law are different in many ways. Patent law and copyright law find their source directly in the Constitution in Article 1 Section 8, whereas the trademark statute, the Lanham Act, was passed under the commerce clause. Patent law, broadly speaking, protects inventions but only for a very limited time. Copyright law, broadly speaking, protects works of art for a limited but longer time than patent law. Trademark law protects trademarks potentially for an unlimited time, but only if the trademark is continuously used in commerce.

All three acts have requirements that need to be met to acquire the right or the federal registration, but only the Lanham Act seems to incorporate the notion that the use of the protected subject matter must be lawful. Patent law and copyright law do not seem to share trademark law’s interest in policing whether the protected invention or work of art is lawful.

For patent law, the Federal Circuit stated in Juicy Whip, Inc. v. Orange Bang, Inc. that any invention is patentable as long as it is “capable of some identifiable benefit.” The fact that the juice machine at issue in the Juicy Whip patent could be considered deceptive was irrelevant under patent law. The Federal Circuit found that patent law was never intended to be the keeper of “health, good order, peace and general welfare.” The idea is that the marketplace and the appropriate authorities such as the FDA are in charge of policing the lawful use being made of these inventions. In the Court’s view, neither it nor the patent office were the best arbiters of all the conflicting laws that an invention could potentially run into.

Copyright law protects works of art and has long faced questions of whether the substance of a work should influence copyrightability. Famously, in 1903, the Supreme Court cautioned against lawyers becoming the “final judges of the worth of pictorial illustrations.” Bleistein v. Donaldson. The Copyright Office also does not consider the truth or falsity of facts in a work. Copyright Compendium Chapter 310.2. The Copyright Office considers obscene works, such as pornographic material, copyrightable unless they fall within the scope of the Child Protection Act. Copyright Compendium Chapter 315. Unsavory or not, a federal copyright registration is possible.

The Origins of Lawful Use

Neither patent nor copyright regulators pretend that they should be the keeper of morals, health or good order. But trademark law demands that trademark regulators consider those types of concerns before granting protection. Patents may cover deceptive products and copyrights may be available for obscene works, but the trademarks department of the USPTO requires that no federal law be broken when the mark is used in commerce in order to obtain a federal trademark registration.

Interestingly enough, it is hard to find the “lawful use” requirement in the Lanham Act itself. The Lanham Act does require that trademarks be used in commerce and it defines commerce as “all commerce which may lawfully be regulated by Congress.” Note though, the absence of the exact term “lawful use”. Just as the Federal Circuit made the decision that patent law is not the keeper of “good order”, the Trademark Trial and Appeal Board decided in the late 1960s that commerce means “lawful commerce.” See, e.g., In re Stellar Int’l. Inc.,159 USPQ 48 (TTAB 1968). (For a detailed overview over the TTAB’s decisions read High Stakes: Marijuana Brands and the USPTO’s “[Lawful]Use” Registration Criterion by Christopher R. McElwain.)

In In Re Stellar, the TTAB reasoned that if there is a Federal Statute prohibiting the flow of goods in commerce it would be contradictory to accept such a shipment as use in commerce under trademark law. The TTAB decisions that created the lawful use requirement were not appealed and the Federal Circuit has never decided on the merits of the TTAB’s interpretation of the definition of commerce.

Did the TTAB go too far by creating the “lawful use” requirement? The answer may lie in part in the Lanham Act’s roots. The Lanham Act was created in part to protect consumers by helping to avoid consumer confusion. By design, the Lanham Act is closer than patent law or copyright law to being a gatekeeper of “the good order” by not granting trademark protection to, for example, deceptive marks or marks that should be free for everyone to use.

However, in 2017, the Supreme Court found that some of the Lanham Act’s gatekeeping requirements were actually going too far and therefor unconstitutional. The Lanham Act used to bar disparaging trademarks from registration, but the Supreme Court struck down that provision in Matal v. Tam based on freedom of speech. Similarly, the Supreme Court is currently considering whether the Langham Act’s bar to registration for immoral or scandalous trademarks is constitutional in Iancu v. Brunetti.

Buzzkill

In conclusion, the new examination guide will help CBD products legalized by the Farm Bill 2018 to receive a federal trademark registration. However, the rest of the cannabis industry still faces rejection from the USPTO under the lawful use requirement. While the lawful use requirement under current trademark registration practice is the odd man out when compared to patent law and copyright law, it could be considered well within the Lanham Act’s consumer protection mandate.

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The Author

Magdalena Berger

Magdalena Berger is an attorney at Curi Platz LLP. She focuses her practice on trademark and copyright matters and is admitted to practice in NY as well as in Germany. She is also an Affiliated Fellow at the Emily C. & John E. Hansen IP Institute at Fordham Law School.

For more information or to contact Magdalena, please visit her Firm Profile Page.

Warning & Disclaimer: The pages, articles and comments on IPWatchdog.com do not constitute legal advice, nor do they create any attorney-client relationship. The articles published express the personal opinion and views of the author and should not be attributed to the author’s employer, clients or the sponsors of IPWatchdog.com. Read more.

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