Trademark infringement in the cannabis industry presents a growing legal challenge as the sector rapidly expands amid evolving state and federal regulations. Cannabis companies have been adopting branding that closely resembles well-known trademarks from other industries — particularly food, beverages and pharmaceuticals — leading to confusion among consumers and raising the ire of brand owners. Given that cannabis remains federally illegal in the United States, traditional trademark protections under federal trademark laws are limited, complicating enforcement for both cannabis brands and the owners of established trademarks. As a result, courts and regulatory bodies are increasingly called upon to navigate the complex intersection of intellectual property rights and cannabis commerce.
What Is Trademark Infringement?
A trademark is a word, phrase, symbol or design that identifies and distinguishes the source of goods or services. When you see a specific logo or brand name, you connect it to the company behind it. Trademarks help prevent confusion and allow consumers to make informed choices. The owners of trademarks have exclusive rights to use them in commerce related to their goods or services.
Trademark infringement is the unauthorized use of a trademark or service mark on or in connection with goods and/or services in a way that is likely to cause confusion, deception or mistake about where the goods and/or service came from. The key issue in trademark infringement is consumer confusion — if customers might mistakenly think the product or service comes from the original brand, it’s likely a case of infringement. For example:
– A company selling shoes under the name “Nikkee” might be infringing on Nike’s trademark.
– A local restaurant using the name “Starbux Coffee” could be seen as infringing Starbucks’ trademark.
Even if the mark in question is not exact, the question with trademark infringement is whether the everyday consumer might be confused or misled.
A trademark holder can take legal action against users believed to be infringing upon its trademark(s). If a court finds trademark infringement occurred, the infringing party may have to stop using the trademark, pay damages or even turn over profits made from the infringing use.
Several high-profile trademark infringement cases illustrate the growing conflict between cannabis businesses and established brand owners. In the notable 2018 example is the 2018 case Mondelēz Canada Inc. v. Stoney Patch, et al., the maker of Sour Patch Kids sued a cannabis company that manufactured and distributed THC-infused edibles under the name “Stoney Patch,” claiming that that Stoney Patch’s company name, branding and packaging are all confusingly similar to that of Mondelēz’s Sour Patch Kids. Mondelēz argued that the Stoney Patch branding was intentionally trading off the goodwill and reputation of Mondelēz as a source of high-quality snacks and candies. Similarly, Wrigley Co., a subsidiary of Mars Wrigley, sued California-based Terphogz, LLC in 2021, alleging the use of “ZKITTLEZ” on cannabis-based products, clothing and cannabis-related accessories would damage the Skittles brand and was likely to deceive consumers as to source. This dispute was eventually settled with Terphogz agreeing to discontinuing its “ZKITTLEZ” product line. These cases highlight how cannabis companies, whether intentionally or not, have leveraged the familiarity of well-known trademarks to market their products — an approach that may boost visibility but also invites legal risk.
Consequences of Infringement
The impact of trademark infringement can be severe to brand owners. Customers may struggle to differentiate between the genuine brand and the infringing one, which weakens the brand’s identity and, over time, erodes investments in branding and marketing. If consumers mistakenly purchase infringing products believing they are authentic, their experience can negatively affect their perception of the original brand. Even a single occurrence of a poor-quality product offered by the infringer can damage a company’s reputation in the eyes of the public. Furthermore, the brand owners may face financial repercussions, including loss of sales and the potentially significant cost of legal action to protect their trademarks. Cannabis companies that infringe on trademarks may face not only litigation costs but also product recalls, rebranding expenses and reputational damage.
Particularly for cannabis companies, the cloudiness between state legalization and federal prohibition presents obstacles to building and protecting cannabis brands. Cannabis products cannot receive federal trademark registration. Resultantly, cannabis companies seek trademark protection for cannabis products at the state level, which only applies within the borders of the state where the trademark is registered, and federal trademark registrations for non-cannabis products. This can make it difficult to establish a consistent brand identity across multiple states and can expose cannabis businesses to potential infringement disputes as they expand. Furthermore, the inability to obtain federal protection limits cannabis companies’ ability to enforce their trademark rights effectively.
To mitigate these risks, cannabis companies should invest in preliminary screenings and trademark searches, pursue state-level protections where available, and create original branding that avoids established brands, whether cannabis related or not. Nowfal Akash, the chief information officer at BC Brands, LLC (Breeze Canna) and AI Group Brands, LLC (a house of brands), has been involved in the cannabis industry in Michigan since the passing of the Michigan Marihuana Act in 2008. To protect cannabis brands, Akash recommends having an attorney conduct a preliminary screening or trademark search during the development of a brand.
“When we are creating a new brand, we have preliminary screenings and searches done for our proposed brand names and trademarks early in the development process,” Akash says. “Our goal is to have a general understanding of the national landscape for potential marks prior to expending significant resources. We prefer nationwide screenings compared to in-state screening because we keep an eye on the future and possible expansion of our products. We want to avoid costly legal proceedings when expanding product lines into new states. We also strive to choose brand names and trademarks that are distinct and uniquely ours. We respect the brands and trademarks of others, but also look to protect the goodwill we have built with our brand customers through our high-quality products.”
As the cannabis market matures and evolves, the potential for trademark infringement and consumer confusion grows. The use of confusingly similar or identical trademarks underscores the importance of cannabis companies proactively safeguarding their intellectual property. Cannabis companies should prioritize brand distinctiveness and explore available measures, such as trademark preliminary screenings or clearance searches, to lessen the risk of adopting a trademark already in use.
Paul Hoffer is of counsel at law firm Harness IP. He assists clients ranging from startups to multinational corporations in various industries with trademark clearance, prosecution, enforcement and brand management. He can be reached at phoffer@harnessip.com.