CB – Don’ts

Creativity abounds in the CBD industry – both in the wide variety of products infused with it, and in the efforts undergone by applicants trying to circumvent the Trademark Act to register per se unlawful CBD-infused products.

The news is replete with articles of emerging and creative ways CBD is being incorporated into goods such as skin care products, eye drops, nutritional supplements, and even sweeteners. Well-known brands and personalities, even Martha Stewart(!), are getting in on the action.

However, the sale of CBD-infused consumables – even in cases where the CBD is derived from hemp – is a per se violation of the Federal Food, Drug, and Cosmetic Act (FDCA). And, as the use of a mark in commerce must be “lawful” for a trademark to qualify for federal registration, the TTAB has consistently held that marks for such products are not federally registrable. Nonetheless, CBD-preneurs continue to file applications for registration, often trying to strategically, albeit unsuccessfully, outwit the PTO.

In a recent non-precedential decision, the Trademark Trial and Appeal Board affirmed the refusal to register a mark for CBD-infused supplements, finding the applicant’s goods to be per se unlawful under relevant sections of the FDCA. The applicant admitted that the sale of its goods would be unlawful under federal law, but boldly asserted that while use in commerce is required under the Lanham Act, the Act does not specify that such use must be lawful. Further, the applicant challenged the PTO’s authority to eclipse state laws and refuse federal registration based solely on Trademark Rule 2.69, arguing that since use of the mark is lawful under Colorado law, it satisfies the use requirements, thereby making the mark eligible for federal registration.

In response, the TTAB noted that Federal circuits have consistently upheld the PTO’s longstanding lawful use requirement and affirmed the refusal to register. As explained by the Ninth Circuit:

as a logical matter, to hold otherwise would be to put the government in the “anomalous position” of extending the benefits of trademark protection to a seller based upon actions the seller took in violation of that government’s own laws. See In re Stellar [Int’l Inc.], 159 USPQ [48 (TTAB 1968) at 51. It is doubtful that the trademark statute – passed pursuant to Congress’s power under the Commerce Clause – “was … intended to recognize…shipments in commerce in contravention of other regulatory acts promulgated [by Congress] under [that same constitutional provision.” Id. Second, as a policy matter, to give trademark priority to a seller who rushes to market without taking care to carefully comply with the relevant regulations would be to reward the hasty at the expense of the diligent.

CreAgri, Inc. v. USANA Health Scis., Inc., 474 F.3d 626, 81 USPQ2d 1592 (9th Cir. 2007).

Section 1(a) of the Lanham Act not only sets forth requirements for registration of a mark based on use in commerce, it also necessitates applicants abide by rules and regulations as specified by the PTO, including Trademark Rule 2.6. This Rule enables the PTO to make any inquiries necessary to facilitate examination – including inquiries as to lawful use of the mark and inquiries as to the exact nature of the CBD-infused goods covered by the application.

So what does this all mean to those seeking to join the CBD bandwagon? The introduction of the pending bill “Hemp and Hemp-Derived CBD Consumer Protection and Market Stabilization Act of 2020” (HR 8179) earlier this month suggests that CBD is marching toward federal approval, at least for dietary supplements. Brand owners seeking a foothold in this space should consider use and registration for currently lawful products – such as skin care products – to start developing brand recognition. They may also want to consider filing placeholder applications for goods that are not currently legal, in the hopes that legalization legislation will be passed during application pendency. Finally, brand owners may want to register their CBD brands locally, with the state trademark offices in their respective areas of business, to provide some additional measure of coverage in the interim.

This article appeared in the September 2020 issue of MarkIt to Market. To view our past issues, as well as other firm newsletters, please click here.