Up In Smoke: USPTO Leaves Cannabis-Related Trademark Application in Ashes

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After years of uncertainty, the USPTO has finally provided insight on how it views applications for cannabis-related marks, suggesting that the use of such marks will be heavily scrutinized.   

In 2016, National Concession Group, Inc. (NCG) filed an application to register the mark “BAKKED” (Serial No. 87168058) and this stylized drop design mark

(Serial No. 87183434) for goods and services related to glass jars and essential oil dispensers. In support, NCG submitted a specimen displaying the respective marks on a device called “The Dabaratus,” which is commonly used for dispersing cannabis oil.

The examiner refused registration because the identified goods (The Dabaratus) were prohibited under Section 863 of the Controlled Substance Act (CSA), and thus could not be used in commerce as required by Sections 1 and 45 of the Trademark Act. On appeal to the TTAB, NCG argued that in addition to dispersing cannabis oil, the device could also be used for dispersing essential oils and, therefore, did not constitute paraphernalia under the CSA. Alternatively, NCG argued that even if it is considered paraphernalia under the CSA, the item was lawful under Colorado state law and registration was proper under Sections 863(f)(1) and 863(f)(2) of the CSA.

The TTAB affirmed the refusal to register in each of NCG’s applications based on extrinsic evidence highlighting that the marks and associated goods were intended or designed primarily for use in connection with inhaling or ingesting a prohibited controlled substance, which is illegal.  The TTAB emphasized the following points in its analysis:

Use in commerce must be lawful.

For every trademark seeking registration, the applicant must demonstrate use of the mark “in commerce” (see15 U.S.C.A. § 1051 (a)(1)). Section 45 of the act defines “use in commerce” as “the bona fide use of a mark in the ordinary course of trade” and encompasses “all commerce which may lawfully be regulated by Congress.” Put simply, “lawful use in commerce” is critical to registration, Gray v. Daffy Dan’s Bargaintown, 823 F.2d 522, 3 USPQ2d 1306, 1308 (Fed. Cir. 1987) (citing 15 U.S.C. § 1052(d)), and if a mark is used on goods that are illegal under federal law, it is ineligible for federal registration(see In re PharmaCann LLC, 123 USPQ2d 1122, 1124 (TTAB 2017)).

The CSA prohibits the sale or distribution of illegal controlled substances in interstate commerce.

The Controlled Substances Act is the federal U.S. drug policy governing the manufacture importation, possession, use, and distribution of certain substances. Section 863 of the CSA presents the most significant hurdle to registering cannabis-related marks because it explicitly prohibits the sale, use of the mail or any other facility of interstate commerce to transport, and the import or export of drug paraphernalia that is defined as “any equipment, product, or material that is primarily intended or designed for use in manufacturing, compounding, converting, concealing, producing, processing, preparing, injecting, ingesting, inhaling, or otherwise introducing into the human body a controlled substance, possession of which is unlawful under [the CSA]” (21 U.S.C. § 863(d)). Sections 812(a) & (c) and 841 & 844 identify marijuana and marijuana-based products as controlled substances and prohibit the possession of each. Accordingly, the CSA considers equipment or products primarily intended or designed for use in ingesting, inhaling, or otherwise introducing marijuana into the human body to be drug paraphernalia and, thus, unlawful under the CSA. 

The TTAB pointed out that even though the identification of the goods and services (essential oil dispenser for domestic use) in NCG’s application did not identify an unlawful purpose, other extrinsic evidence, such as NCG’s website, unabashedly promoted the item as a “dabbing” tool for ingesting marijuana. NCG argued that the device was traditionally intended for use with tobacco products, but the TTAB found that none of the items submitted in support of NCG’s historical use resembled the product and that NCG was unable to show that the device was “traditionally” used for tobacco-based oils or substances. By contrast, the TTAB pointed to several articles identified by the examiner describing “dabbing” as a method for inhaling cannabis concentrates for a quicker high. Ultimately, the TTAB concluded that there was no evidence to support a finding that the item was intended for any use other than “dabbing” and the rejection under the CSA was proper. 

NCG also argued that registration of the marks was appropriate because the CSA contains an exception for items where the manufacture, possession or distribution is authorized by state law, as is the case in Colorado. The TTAB rejected application of that exception, noting that NCG’s rights would not be limited to Colorado but would extend beyond the state’s borders and thus run afoul of the CSA’s prohibitions and the requirements of the act.   

How to Weed Out Issues with Your Mark

The TTAB’s decision reaffirms the difficulty in registering a mark purely related to cannabis or cannabis-based products. However, the ruling does not completely preclude an applicant from obtaining trademark protection. The NCG opinion focused heavily on the applicant’s specimen and its marketed purposes, leaving open the possibility for registration under other goods and services that are permitted under federal law.

Often, clients underestimate the breadth of their mark usage and thus limit potential registration opportunities. It is imperative that clients consider registration in classes beyond their core business to maximize protection.