The days of flying under the radar are over. Now that medical and/or adult-use cannabis has been legalized in 30 states and the District of Columbia, owners of “mainstream” brands are taking notice, and cannabis businesses need to be careful to avoid infringing someone else’s trademark rights.
Trademark infringement is the unauthorized use of a mark on goods or services in a manner that is likely to cause confusion, deception, or mistake as to the source of the products by consumers. There are multiple factors to evaluate in assessing trademark infringement, including recognizing that not all trademarks are created equal. Owners of strong, distinctive marks may enforce rights against confusingly similar and identical marks for related and identical products, whereas owners of weak or overused marks are generally only able to enforce their rights against identical marks for identical goods and services.
“Famous” marks enjoy the broadest scope of protection. They are enforceable against identical and confusingly similar marks even for unrelated products. Famous trademarks, such as Google, Nike, Gatorade, Starbucks, Hershey’s and K-Mart, are in a category of their own, because they are household names that are more likely to be associated with a specific brand. Determining whether a mark is famous is not always clear, and this principle does not extend to marks that are merely well-known or only have “niche fame,” that is, fame in a particular sector of goods/services. Factors considered include sales volume, duration of use, advertising expenditures and lack of third-party use. An expensive nationwide market survey is often required to establish fame.
Misappropriating a powerful, famous brand has consequences. Famous brands are not only heavily promoted, but they are also aggressively enforced. Moreover, trademark owners have a duty to police their marks, or risk losing exclusive rights. Owners of famous brands go after similar marks that are too-close-for-comfort, because failure to do so damages their brand, both in the eyes of the marketplace and in the courts.
Cannabis products are no strangers to playing on famous marks (Pot-Tarts, KeefKat, Twixed, Rasta Reeses, etc.). While you may think it is fine to adopt a mark that is a parody, a legal defense based on parody may not prevail against a dilution claim by a famous mark owner.
Earlier this year, the Girl Scouts sent a cease-and-desist letter to the Magnolia Oakland dispensary demanding it stop selling the Girl Scout Cookies cannabis strain. To avoid being held liable for infringement, the dispensary removed all Girl Scout Cookies branding from its shelves and returned the product to its supplier with a note explaining that products labeled “Girl Scout Cookies” were no longer acceptable.
Trademark infringement suits concerning famous marks have also made headlines with the dispute between the Gorilla Glue Corp. and GG Strains over the popular Gorilla Glue strains. Based on the fame of the Gorilla Glue mark for adhesives, Gorilla Glue Corp. originally filed a lawsuit against GG Strains in an Ohio federal court alleging infringement and dilution. However, the parties reached a settlement in which GG Strains agreed to cease all use of the Gorilla Glue name. The company now refers to the strains as GG4 or Original Glue, and exclusive GG Strain partners may state that the strain is “formerly known as Gorilla Glue #4” until Sept. 19, 2018. Similar naming conventions apply to the other Gorilla Glue strains.
Additionally, in October 2017, Tapatio Foods, LLC filed an infringement lawsuit against Trapatio, a THC-infused hot sauce, featuring a similar logo with a sombrero-wearing cowboy.
GG Strains settled its dispute without monetary compensation to Gorilla Glue Corp., but other parties have not been so lucky. A federal district court awarded an Oregon artist to pay Starbucks $410,800 in damages for copyright and trademark infringement based on the artist’s “Dabuccino” bongs and dab rigs that looked very similar to Starbucks Frappuccino cups and displayed a similar, green logo.
Trademark owners can seek three types of monetary damages: (a) recovery of the infringer’s profits; (b) lost profits due to the infringement; or (c) a reasonable royalty. Establishing monetary damages is not easy and generally requires the assistance of costly economic experts. Nevertheless, famous mark owners typically have the financial resources to avail themselves of the available remedies.
No brand owner wants to receive a cease-and-desist letter or be served with a lawsuit, especially from a famous mark holder who may have a team of lawyers at its disposal. The progressive legalization of cannabis means that companies now have to compete in a larger economy, requiring brands to be original and creative. In an industry vying to achieve national credibility, there is no room for monkey business.
Mary Shapiro is the Managing Director of Evoke Law, PC. She has extensive experience in trademark law and has been servicing the cannabis industry since 2005. Nicole Syzdek joined Evoke Law as an associate attorney in 2016 and enjoys writing on diverse legal topics relating to cannabis. Evoke Law is an intellectual property law firm located in San Francisco, providing a full range of services for cannabis businesses, including trademark protection and brand management, licensing, packaging/labeling compliance, trade secret protection and Internet policies. For more information, visit www.evoke.law or email iplaw@evoke.law.